Steven's Thoughts

The Quest for Innovation

We, at kasina, believe that our competitive advantage is based on our constant pursuit to innovate what we do with our:

• Clients
• Internally
• and our Community

One of the things I have been struggling with is how to make innovation part of our culture. We want to ensure that everyone continues to think about how to improve what we do.

I found this interesting article in the Sunday's NYTimes about the way Rite-Solutions, a software company that builds software for the Navy, ensures they continue to innovate.

They created an internal idea stock exchange where employees can suggest:

• The company invest in new technology
• Enter into a new business channel
• Implement a cost-efficiency initiative

Submitted ideas become mock stocks and employees read an “expect-us” (not a prospectus) detailing how the idea can benefit the company. These ideas-turned-stocks are then listed in the Rite-Solutions “Mutual Fun” board where every employee is given $10K in stock market fantasy funds to buy, sell, and trade in the ideas they believe Rite-Solutions should focus on.

Something like this ensures that everyone in the organization has an incentive to continuously innovate in a playful manner.

 

The modern organization

How would you like to work for a company where:

• You could decide your own salary
• You could decide your own hours
• You had a say in who would be your new boss
• You had access to all the financial information of the company

I am currently reading an interesting book called Maverick that challenges all conventional business rules. The books was first published in 1988 in Brazil and is written by Ricardo Semler, the 34 year old CEO, of Semco a Brazilian manufacturing firm. He describes, in a narrative form, how he transformed his dad's nearly failing company into a successful and as he calls it "natural company".

He did it by involving his employees in hiring and evaluating their bosses, letting them dress however they wanted, letting them participate in major decisions, and sharing 22% of the companies profits.

I will write more about my thoughts on specific pieces from the book that challenge conventional business practices in the next days.

How to manage your responsibilities

At kasina, we just took the Franklin Covey time management course and I feel a little overwhelmed. Why? Well, in the past if I let things fell off the radar, if it meant that other tasks would becme more manageable. In the end, there were a number of obligations that I just missed.

The important thing to remember about the Fraknlin Covey method is that you should start from the top by identifying your values, set your goals, to weekly planning and daily tasks. So I do the following:

1. I review my values weekly, the things that are really important to me, such as my family, health, creativity, compassion and community.
2. Then I review my different roles and the associated relationships I need to foster:
   • My self
   • CEO
   • Father
   • Son
   • etc
3. Then I schedule my week, including all the task for the week
4. Lastly, I review every day to ensure that everything got addressed or get addressed in the future.

Including my roles has really helped me focus on the things that I truly care about. For the few days that I have been doing it, it has help me be much more responsible and in charge of my actions.

Selling it not an art!

As I posted earlier, I am reading the The Rules of Business: 55 Essential Ideas to Help Smart People (and Organizations) Perform At Their Best. One of the quotes that resonated with me was:

"Don't confuse selling with art."
--Jack Taylor, vice chairman, Jordan, McGrath

Firms that are successful at selling have taken control of their wholesaling organization and have stopped letting the wholesalers run the show. These firms have started to take a larger role in determining the activities of their wholesalers to ensure that they are executing on a strategy, rather then playing golf with the same advisors over and over again.

Three things firms have started to do:

1. Focus on less firms, about 15 focus firms, and only pay on these firms
2. Focus on less advisors (150 per wholesaler)
3. Have hybrid wholesalers focus on lower level advisors and prospects

By executing on a sales strategy firms are taking a much more process-oriented sales  approach rather then relying on wholesalers heroic efforts.

Hiring

We continue to look for the right characteristics of an employee. But over the last two years we have learned one important lesson. Our culture is important to us, so we need to hire people who will thrive under our culture. Guy Kawasaki wrote a post on "The Art of Recruiting" where he outlines 10 important hiring tactics that are right on the money.  My take on his 10 points are:

1. Hire better than yourself - I had to bring in Lee, Derek and Mike because they complement my skills. It is also much easier to manage people that are better then you are.
2. Hire infected people - people need to love what they do. When they do they are so much better and will do whatever it takes to get it done.
3. Ignore the irrelevant - we used to think that industry experience was the most important. But if the cultural fit is not there, it is irrelevant.
4. Double check your intuition - the problem with intuition is that you tend to be influenced by external factors such as appearance. We often do our first round interviews by phone. I also always ask every candidate the same set of questions to be able to compare objectively.
5. Check independent references - check with other people in the industry who have worked with the candidate. Everyone should be able to come up with 3 people who are going to support them.
6. Apply the Shopping Center Test - I have not done this, but will test it. "Suppose you're at a shopping center, and you see the candidate. He is fifty feet away and has not seen you. You have three choices: (1) beeline it over to him and say hello; (2) say to yourself, “This shopping center isn't that big; if I bump into him, then I'll say hello, if not, that's okay too;” (3) get in your car and go to another shopping center. My contention is that unless the candidate elicits the first response, you shouldn't hire him."
7. Use all your weapons - people need to see that you have a vision that seems to be more important than money.
8. Sell all the decision makers - we take people out for dinner with a group of us to ensure that they can culturally fit. Spouses are often big influencers. Invite them to join.
9. Wait to compensate - "A common mistake that many organizations make is using an offer letter as the starting point for negotiation. This is very risky because you don't know what reaction this first data point is going to have" A offer letter confirms what everyone has agreed upon. It is the last step in negotiations, not the first one.
10. Don't assume you're done - we had a number of occasions where people pulled out at the last moment.

The Rules of Business

I am currently reading the Rules of Business by Fast Company's editors & writers. Usually when reading a business book you get one to two things out of it and the rest is fluff. This book is the opposite. There are so many important issues that it is hard for me to just read through the book. I have only been able to read one chapter, think about what I read, and then move on to the next.

The book is broken up into 22 sections that represent important business disciplines such as:

• Change
• Creativity and Innovation
• Decision Making
• Leadership

Each section is introduced by a brief description that highlights the main theme of the section. The introduction is followed by 400 quotes from various people including:

• Jeff Bezos
• Andy Grove
• Bill Gates
• Anne Mulcahy
• Tom Peters
• Michael Porter
• Adam Smith

The actual 55 rules are positioned throughout the book.

I found the rules to be less useful then the sections, but overall it has been an important thinking tool for me.

Here a few quotes I liked:

"Every leader needs to clearly explain the top three things the organization is working on. If you can't, you are not leading well."     -Jeffrey Immelt, chairman and CEO GE

"Innovation, like many business functions, is a management process that requires specific tools,rules and discipline - it is not mysterious." -Tony Davila, Marc Epstein, and Robert Shelton

Career vs. Job

Culture is such an important issue for us at kasina. We try very hard to hire people who are self-governing and want to build a great company, rather then just work for a great firm. In order to accomplish this we added six questions to our performance review (we got these questions from some else who I would like to give credit for, but I can't remember who):

• I am known for [two to three things]
• Next year at this time, I'll be known for [one more thing]
• My current projects are challenging me [in the following two ways]
• New things I've learned in the last 90 days include: [two items]
• Important additions to my Rolodex in the last 90 days include: [one to two names]
• My resume is discernibly different from last year's at this time [in one or two ways]

The ultimate outcome should be that our employees don't work for me, or kasina, but to develop their career. This is an important distinction -- having a job or building a career.

If they improve on the above six questions, every six months, they will help us become a great company and will also build an impressive resume that will enable them to further their career anywhere else they will go.       

Company Strategy Offsite

We just got back from our strategy offsite. Three days of intense brainstorming and discussions on how we can improve the way we work with our clients, and more importanly how to create a better firm culture.

We started out reviewing our mission, vision and values to ensure that all of our subsequent decisions will be aligned with them. 

As a result, we left the offsite a more unified company with strategic plans of how to do things better.

I can only recommend this to any firm. At least once a year, plan an offsite and include everyone in the organization. This will enable your firm to get buy in from every level of the organization.

Hire slow and fire quick

The best advice I ever received was to "hire slow and fire quick." It takes so much effort to train and integrate a new team member that you better make sure that the person is a good cultural fit and will not leave after one year.

Fast Company had an good quote by Jeff Bezos:

"I'd rather interview 50 people and not hire anyone than hire the wrong person. Cultures aren't so much planned as they evolve from that early set of people. New employees either dislike the culture and leave, or feel comfortable and stay, so the culture becomes self-reinforcing and very stable."

If it turns out that the person is not a fit and/or does not enjoy being there make sure to cut your ties quickly. It is better for the the organization as well as for that employee. Negativity will drain the overall energy of your team.

Bad Execution Does Not Mean It Is Not Working

How many time have you noticed that an initiative did not pan out? Some of our clients tried hybrid wholesaling and said it didn't work for them. After we took a closer look the execution was actually the problem.

Their hybrid wholesaler had smaller territories, traveled as much as externals and sold less.

Execution is what counts. So many times the failure of a project is because of bad execution, rather then a bad strategy.