Eating Own Cooking:
Last year my wife and I went on a little getaway to Las Vegas. We had booked our hotel online, and we got a great rate on your normal room at one of the nicest hotels in Vegas. When we checked in, the woman at the front desk took a liking to us. She saw that we were on a romantic getaway, and she mentioned that most of the regular rooms were booked for a business convention. As she handed us our key cards, she mentioned she had upgraded our room, adding, “I am not going to tell you about the room now. You can thank me later when you see it.”
When we opened the door to our room, we gasped. She had upgraded our $69 room to one of the presidential suites. It was on the twenty-seventh floor and had a 180-degree view of Las Vegas. The suite was 2,200 square feet. It came with an entryway, a formal dining area, a living area, a huge bedroom, and two bathrooms. My favorite part was the master bath suite. It had an all-glass shower and a huge hot tub that overlooked the city. And we did, indeed, thank this very kind front-end manager.
When I came back after this spectacular vacation with my wife, I was describing to Curtis this hotel we stayed in. At this point in our business, Curtis was still working full time in his other job, and we were not making the progress we wanted in this new partnership. As we chatted, it hit me that I knew what would motivate Curtis. He wanted to take his wife on a vacation and stay at the same hotel my wife and I had just enjoyed—and in the same room!
I told him I had a reward in mind, and we made a list of four or five things that needed to happen. We posted this list in the hall of our office, along with a picture of this fantastic resort. The goal was that when those five steps were achieved and our business was stabilized, Curtis could quit his job and come into the business full time. But equally rewarding to him was that he could also take his wife on an all expense paid trip to stay in this same hotel. I found a picture of this hotel and drew stick figures of Curtis and his wife staying on the twenty-seventh floor and enjoying the view. I even added a picture of its world-renowned restaurant because I knew his wife likes to dine at exclusive restaurants. On the bottom of my artwork, I added a deadline of thirty-five days to earn this reward. Curtis was salivating, even though we were not sure how this was going to happen. But we did reach each of our goals, and Curtis and his wife did get to have a fantastic vacation. And my reward was that I now had him working with me in our business full time.
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Reward Yourself
Some people are good about rewarding team members and employees, but they’re not so good at rewarding themselves. I’ve fallen into that trap myself more than once; but I think I’ve finally learned that if I have an emotional meltdown, it’s usually because I haven’t followed through on feeding my inner-self.
Just as I was taking the frightening leap from being employed at a full-time job to being a full-time entrepreneur, I was playing basketball and blew out my Achilles tendon, which had to be repaired surgically. Six weeks later, while pushing too hard at my physical therapy, I blew it out again. This was a tough time. It’s not in my nature to sit around, but all I could do was sit in my bed and work on my computer. I had started a small business, but there was very little I could do to move it forward. I knew that I had the choice to either sink or swim, but I felt myself sinking—and fast.
I finally called my partners into my bedroom, where we talked about our predicament. In mapping out what we could do to salvage the situation, I proposed that if we achieved the success we had our sights on, we would reward ourselves, together with our wives, by going on a cruise. We went to work, and as I lay in bed day after day, I pictured success as sitting with my partners and our wives on an upper deck, toasting our success as we watched the sun set. That image drove me to achieve my goals, even though the odds were stacked against me.
We did indeed hit our goal, and I cannot convey the depth of my joy and satisfaction as we sat around that table and I offered this simple toast, “We did it. We made it.”
With that lesson in mind, consider what would have happened had we not taken the celebratory trip? All too often, people intend to give themselves rewards, but then they become martyrs. They start thinking, “I am just too busy,” or “I should put this money back into the business.” I know that had I not taken that dreamed-about cruise, my subconscious would have revolted, which would have damaged my desire to dig deep and sacrifice in the future.
I use little rewards throughout the day to motivate myself, particularly when I’m really having a tough day. When I’m dealing with difficult issues, I might tell myself something like, “When I get through this, I’m going to go outside and smell the air and I’m going to watch the ducks for ten minutes.” There are all kinds of ways we can reward ourselves quietly throughout the day, and they can help us keep our head above water.
Don’t Give Out Rewards Until They are Actually Earned
Being a fundamentally nice guy, I have made the mistake multiple times of giving a reward when the performance didn’t warrant it. Every time that I have done this, I have ended up regretting it. Even though you may feel for a minute that you’ve done the right thing, you’ve likely created a pattern and behavior system that will bite you in the end. In some cases, being “nice” has been the death knell of my businesses.
My family and I have traveled to Nepal several times, and I am always overwhelmed by the rampant poverty. Like anyone who has traveled there, I have been approached countless times by small children who must beg in the streets for what little they have, and I always ponder what I—as one person with limited means—can do to help.
The last time we were there, several young beggars followed my sons, our two Sherpas, and me everywhere we went. They were filthy, and their ragged clothes were soaked with urine. They approached us repeatedly, gesturing to their mouth and then their stomach to show us they were hungry.
I believe that giving a person a handout does little to change his or her circumstances, but it broke my heart to see these small boys, who were about the ages of my younger boys. Then I hit upon an idea.
We were in the middle of a central square where countless people gather each day to worship and shop. While there are numerous trash cans in the square, no one seems to use them, and the area is covered with what looks like years of debris. I decided I could solve two problems at once, so I offered one of the beggars 100 rupees (about $1.40) for every bag of trash he picked up and put in a trash can. Given that the daily income for an adult in Nepal is about $2, that seemed like a powerful incentive.
What I was asking would have taken a couple of minutes, but this little boy looked at me like I was nuts and ran off. Another little boy approached me, and I made the same offer. He indicated he would do it, but wanted payment up front. Now, I may be a soft touch, but I’m not stupid, so I told him he would get paid upon completion of the work. He, too, ran off.
The third boy who approached me was the dirtiest and scrawniest of the bunch. I really thought my plan had merit, so I upped the offer to 500 rupees. His initial reaction was to give me a look that said, “No one picks up trash. Not even beggars. What kind of crazy American are you?” But this time, I grabbed a bag and started picking up trash myself. He soon joined in, and was stuffing trash into his bag as quickly as he could. There was so much trash that our efforts were like trying to drain a pond using a teaspoon, but we were at least doing something to make a dent. And soon others were joining in, including a gentleman who runs a humanitarian organization who saw my impetuous project as having some potential.
When we finished working and I paid the boy, he couldn’t have been more proud. And several shopkeepers around the square began making similar offers to other boys who clearly were in need.
I realize that we made a very small dent in the problems of world hunger and cleaning up the environment that day. But I also know that those who watched, including my sons, learned that rewards need be based on our efforts, not our wishes—and that the right reward system can provide the motivation to get to work and make a difference.
The Whip
I’ve had partners who used the whip. There certainly are times when you have to discipline. However, my contention is that the whip needs to be used very sparingly—and never as an immediate reaction. If you whip someone (verbally, of course), you may get a burst of incredible performance. But you will inevitably lose your long-term productivity (and your top performers) if you punish too often.
I have seen people who use the whip over and over. Soon the people around them reach the breaking point and basically say, “I don’t care. Whip me to death. I am done.” They check out, and apathy sets in. I know a young, up-and-coming executive who was a master with the whip. Unfortunately, he was so hungry to prove himself that he burned through all the people around him. Now, no one in our area will work for him.
There is a fine balance between knowing when to reward and knowing when to discipline. When there is an out-of-bounds problem, discipline needs to be meted out. In our home, we do not have the long lists of rules I have seen some parents enforce. Instead, the rules we do have are rules that fit with our core values, and we are very strict with these few rules. I often say to my kids. “You will make some mistakes. That is how you learn. Just don’t make the big mistakes!” Too many little rules can create confusion and can actually undermine the more important rules.
Seeing the Value in Failure
In my current company, we have set four sets of quarterly goals this year. Honestly, I hope we miss one of these goals. I do not want to miss the first set or the second, but if we miss the third goal it gives me a opportunity to point out that this is what a little failure feels like, and your success is not guaranteed. I’ve managed teams that developed a bit too much ego. That can lead to arrogance and missed goals. If you handle such situations well, it will bring your team back to where they’re hungry and want to win again.
For years I have proudly proclaimed the strategy of sitting underneath the table of feasting giants and eating the scraps and crumbs that fall from the table. A bootstrapper’s dream is to get into that little market segment that isn’t being addressed by several large players, exactly.
In Bootstrap Business I go so far as to outline a landscape matrix that actually shows how to very deliberately get between several large companies and make sure you don’t infringe on their territory, while still eking out that little crack of opportunity.
I have deployed this countless times. There is; however, one danger. When the market starts to mature, sometimes the giants reaches down and pick up the scrap, and in the process–squish you like an ant.
Indeed, this happened to my team this week. Google released a new algorithm update and indeed it dramatically changed our channel. Simultaneously, another giant that we work with got up from the table. When the two big fat giant bellies hit each other we got squished in between. Needless to say, it’s very painful when that occurs, and it can actually be life threatening to the business.
In this situation, I believe we will recover, but it’s caused me to outline three distinct things that you need to do when deploying this type of opportunistic strategy.
1. Understand the giants eating patterns. How long do they eat? When is it time for them to move? In the case of Google, they release algorithm updates every so often. So, when you see the signs of movement you better get out from underneath their feet as they get up from the table.
2. Give yourself cushion either to the left or to the right. This means, have the ability to either push to your supply side or push to the customer side. If you get squished right between two giants with no place to move, you end up getting your margin squeezed, squeezed, squeezed.
Transactional businesses are wonderful, because they provide a repetitive income flow, but if you are not careful you can end up getting squeezed right to death. Either own the customer and control it, or make sure that you can control the supply cycle. I have discussed this principle many times and I have always stated:
- Never maintain only one supplier.
- Never rely on only one customer.
Well now I need to kick myself in the pants, because in the businesses currently getting squished, we basically have one supplier and one customer. That is always a precarious situation to be in.
3. Move from the table as quickly as you can. Once you get profitable, make sure you can then quickly move and transition to a place or a pocket where the giants aren’t quite as likely to rumble over the top of you. Once you’ve filled your belly, look for the exit door as quickly as you can.
I still contend that finding a really hot sector that is on a wave, where there are giants pounding the table, and where money and scraps are falling onto the floor–is a great strategy. Just beware there is a downside. I’m personally committed to using these opportunistic businesses to leverage and become viable quickly. Then I rapidly move in to more value transactional, longer-term engagement types of businesses. I encourage you to try it too.
The moral of the story is…keep your head up and your eyes open when you are sitting next to giants.
Keep Your System Simple
It’s important to not overcomplicate your system of goals and rewards. In one of my early ventures, I created a chart that had eighteen different targets to hit and a simple “REWARD” written across the top. My employees were unclear as to what the priorities were and what the reward would be. I have found it’s best to have three or four target goals to hit, with a very specific reward at the end. The goals we typically fail to achieve are the ones that are complex and unclear.
Employees should also feel free to devise their own systems (within reason, of course). My son and his friends came up with their own motivating reward. They had a Burger King crown they kept in the office. They were all highly competitive, and they would have contests to see which one could create the most web links on a given day. The winner then got to wear the crown. The reward didn’t cost me anything, and it was fun to see these seventeen-year-old boys engage in an all-out push to optimize their web sites, just for the reward of wearing a paper crown.
One of the benefits of having a team set its own goals and rewards is that the members learn to govern their own behavior. That way I don’t have to micromanage my teams.
Avoid the Entitlement Mentality
When I was managing Mitsubishi Electric, I was still young and not completely financially stable myself. I had an awesome killer team that was also young and hungry. I began the practice of taking them out to lunch every Friday. I would pay for their lunch myself because I didn’t feel the company should have that expense. This was my personal way of showing my appreciation. A few months into this, I ended up in a tough stretch where I was traveling almost nonstop. As a result, there were a few Fridays where we didn’t make it to lunch. Soon, there was muttering and complaining. Morale dropped. These employees had become so accustomed to going to lunch each Friday that they felt they were entitled to this perk. What started as a good intention led to my being the bad guy because I did not consistently provide them with their expected lunch.
I had a similar experience with my crew of teenagers. I would stock the fridge with food and soda pops so they could grab something to eat after they finished school and before they started to work. A few times we got so busy I failed to replenish the quickly consumed food items. Almost immediately, some of the boys started murmuring, “I can’t believe it, there aren’t any burritos or Hot Pockets in the fridge.” If I have erred, it is because sometimes I have rewarded too quickly or too often.
Allow For Some Flexibility
Situations change, and sometimes you need to change with them. I’ve lived through shifts in markets where even though my team gave an incredible effort, they fell a bit short of the original goal. In those situations I still gave the reward so the team didn’t lose steam. However, be careful not to reward when the reward is not merited.
I employ a group of mothers who work for me from their homes. They are motivated and hard working. I told them once that if they had ten consecutive days of making $500 in profit, I would give each of them a large bonus. These women worked their hearts out. At the end of the period, I saw that while they were only clearing $300 to $400 on the weekdays, on the weekend their profits were $800 to $1,000. Even though they did not have the ten consecutive days, on an average they were well over the target I had set. I told them that in this instance, average really does count for something, and they earned their reward.
Last night my wife and I had a rotten guacamole, terrible night. I had been traveling all week long doing lectures and I was dead tired. I got home at 9:30 or 10:00 p.m., spent a little time with the family, and finally made it to bed about 11:30 p.m. At midnight someone began banging at our door, the dogs started yipping, and come to find out our second son had forgotten his key and was banging on the door to get in. We painted smiles on our faces, went out to let him in, spent a few minutes talking with him, and then crawled back into bed.
At 1:00 in the morning we heard the shower running and couldn’t figure out what was going on. The dogs start barking again, and at this point I almost didn’t dare go back to sleep.
We were again woken up at 4:30 a.m. when in stomped our 3rd son, ready to go to Drivers Ed at 5:00 in the morning. Again at 7:00 a.m. the 4th son headed to school and finally at 8:00 a.m. our final son departed. By the time we get him to school, needless to say, very little sleep had actually taken place.
My wife and I did eventually get a hearty laugh out of it when we figured out who had been showering in the middle of the night. We discovered that Nathan (Drivers Ed son) had looked at the clock wrong, got up at 1:00 a.m., showered, got dressed and completely ready, and then realized that the clock had said 1:00 a.m., not 4:00 a.m. I still chuckle thinking of it now.
This pretty much sums up the counsel that I gave in three of the lectures this week. The sequence of Zigging and Zagging is critically important. There is a reason why Zig #1 is Drive to Profitability, Zag #2 is Add Resources, and Zig #3 is Add a Scale Element.
Indeed the timing is critical.
So frequently people attempt to jump directly to Zig #3, which is a scale element. This is exactly what Nathan did this morning—causing havoc to our entire family. It of course is the perfect thing to do…have a shower and get dressed…but 1:00 in the morning is not the perfect time to take the action. The same thing is true with scale and so many other aspects of your business.
You see, when you are making cookies–how you put the ingredients in, and the order in which you put them in, is as important as the ingredients themselves. The sequencing and timing of how we build our businesses and how we take action is actually the trickiest part of making a perfect batch of business cookies…or getting a good nights sleep…or getting dressed properly and appropriately.
Remember when you are zigging and zagging: Zig #1 Drive to Profitability, Zag #2 Add Resources, followed by Zig #3 which is a Scale Element. Don’t get tempted to jump directly to Zig #3. Always nail it before you scale it.
What Will Motivate Your People?
Before developing your system of rewards, remember that what motivates one person may not motivate the next. When I was general manager of About.com’s web services division, I had a highly talented engineer named Earl who worked for me. He was, without question, one of our brightest engineers, but I continually struggled to figure out how to motivate this guy. I regularly gave out bonuses, rewards, and incentives that everyone else loved, but Earl did not seem to care. Nothing I offered seemed to motivate him, and I knew his contributions were affected by his apathy toward my rewards system.
As we were planning our first Christmas party, I finally figured out what motivated Earl. During a planning session, he asked if he could play a piano number for the entertainment. I didn’t think much about it, but told him that would be fine. The night of the Christmas party, Earl walked in, all decked out in a tuxedo, complete with flowing tails. When he sat down to play the piano, it was clear he cared deeply about his performance, and he delivered his delightful number with the flare of a concert pianist. Everyone cheered and clapped for him, and then he stood up and gave an overly exaggerated bow. From that point forward, I knew what motivated him. He didn’t care about things or money. He loved recognition and any opportunity to perform and take a bow.
As the New Year began, I implemented what I dubbed “Lunch and Learn with Earl.” Twice each month, we’d have a Lunch and Learn where the company would buy lunch and the junior engineers could visit with this master engineer. They would ask him questions, he would impart his wisdom, and at the end they would all clap and Earl would beam. The junior engineers learned a great deal from Earl, and Earl loved the recognition. Productivity went through the roof.
I had another employee who would always get really excited about the rewards I proposed, but before she achieved her goal, she would simply go out and buy the same thing she was going to be rewarded with. And while she did good work, I knew she could be doing far more. This pattern caused me immense frustration, but I finally found out that what she really wanted was for us to pay for her tuition at school and call it a scholarship. By listening carefully to things she said, I learned that her parents had plenty of money, but they had always drilled into their children how they had gone through college on scholarships. This young woman had good grades, but because she had no real financial need, she hadn’t been able to get a scholarship. So, I developed a reward system that provided her with the scholarship she so desperately wanted.
It’s also important to figure out what the people you are trying to motivate do not want. I’ve learned that a reward for one person may actually feel like a punishment for another. A few years ago, we established a reward for the young men who were working for CastleWave to go to Las Vegas and see the Blue Man Group. We set up a very specific goal and also very specific rewards, which included going to the Stratosphere and riding on a roller coaster set atop of one of the tallest hotels that juts out over the city. These boys, with one exception, worked extra hard because they loved the idea of this trip. When they weren’t focused on the work, it was all they talked about. The exception happened to be a different personality type. He was one of our key engineers who was a little shy and did not like big crowds. In fact, the thought of going to Las Vegas with a bunch of loud teenagers couldn’t have been less motivating.
Gratefully, he came to me and let me know that he really did not want to go on this trip. So, I found something else that motivated this engineer, and took the other boys when they reached their goal. If I had ignored his needs, the outcome might have been tragic. He was a key member of the team, and he could have subconsciously tried to sabotage the goal for the rest of the group because he did not want to go on the trip.
For the past 25 years I have been a strong supporter of a large, not for profit, youth organization that helps young men become strong, valiant adults. I have contributed financially, but more importantly—I’ve contributed endless time and personal resources.
Thursday I had occasion to go into the regional offices for some administrative approvals on behalf of a young man attempting to do a service project. As I walked in I actually bristled, expecting a negative exchange. Regretfully the very negative exchange I was hoping not to encounter, did in fact occur. As I approached the high desk, a smug woman peered over her glasses at me in a condescending manner, before any words were spoken. The following exchange was caustic, demeaning, and completely inappropriate. In the end I was denied both verbally and emotionally. The organization refused to discuss this young man and his project.
As I drove home I not only felt a bit of sadness, but a little bit of right indignation. I came to the conclusion that I would not be able to support this organization any longer.
The woman behind the desk had no idea who I was, my background, or the level of contribution that I have made to the organization through the years. Sadly most of my peers and influential colleagues have privately expressed this same level of frustration with the organization.
Although very powerful in its values, the organization does not espouse to live and operate by these same values. Instead the leadership conducting the bureaucratic portion of the business reflects values that are the exact opposite of helpful, friendly, courteous, kind, and cheerful.
When I think of failed businesses I know some met their demise because of these kinds of rough exchanges.
The reality is—as we treat our customers poorly, as we exchange caustically or negatively—very seldom do we get the luxury of having someone come out and vocally make a proclamation like I have just made. We live in a world of social media, and tweets and like buttons. Therefore what happens is word spreads, customers vote with their dollars, and they quietly vanish.
In your business, remember to take care to be respectful, to listen, and to treat your clients kindly. You never know who will be walking through the doors or standing across the desk from you. It is now easier than ever to share bad customer service stories.
Repeatedly mistreating an individual has a huge negative impact. Each interaction has social consequences that can literally make or break your business.
Luckily, I have several inverse examples of this too. I am continually impressed every time I pull up to my local tire store and the individuals run out to my car to greet me. They actually run out to my car to greet me.
I’m equally impressed with the organization where I now buy all my computers. I’m basically in love with Apple. Every time I go into one of the stores the geniuses at the bar greet me appropriately. They are courteous. They go out of their way to engage and help me resolve my problems. Often they go to the point of covering things that aren’t even under warranty.
Now what is the result of that kind of behavior?
Well, I don’t have any PC computers; every computer in every one of my offices is now a Mac. That’s the result of treating a customer properly. You catch more bees with honey.
Indeed, I begin where I started. We vote with our dollars and we go silently for good or for bad.
As you have been rushing from goal to goal or from zig to zag, have you ever found yourself asking, “Why am I doing this?” If you haven’t created and implemented a system of rewards for yourself and those around you, you’re going to find yourself burning out long before you reach your beacon in the fog. Success and money alone are insufficient motivators. I have found that if I tie a reward to the successful completion of each zig, I stay far more motivated than if I never pause to enjoy some benefit specifically tied to its completion. And I find I’m much more enthused about beginning the next zag.
We humans are really not much different from Pavlov’s salivating dogs. If we catch a glimpse of a slab of meat, we will drool, salivate, and do just about anything to get to it. My family has what I view as miserable, little dog that is half-poodle and half-Chihuahua. She is the most high-maintenance little mutt I have ever met. She does not like me, and I do not like her. The problem is the rest of my family loves this dog, so she and I have put up with each other. She will have absolutely nothing to do with me, unless I have a little piece of meat in my hand. Then she views me as her best friend, and her behavior shifts dramatically. She pants and begs and pleads for that little piece of meat. And, more important, she will do anything I ask. Interestingly, she does not like just any kind of meat. She likes the little slices of cheap lunchmeat that I am sure are not healthy for dogs. Our other dog will eat anything I give her, but not this little mutt. From the day we got her, I have had to find the things that specifically work for her.
We all have things that motivate us. The legendary football coach Vince Lombardi said, “Coaches who can outline plays on a blackboard are a dime a dozen. The ones who win get inside their player and motivate.” Recognizing that reality, and then consciously and deliberately motivating yourself and your teams using rewards, is one of the most powerful tools I have found, whether it’s in my personal, family, and professional life.
When planning and executing each zig and zag, you should attach a reward to each target. If you find the right rewards for your people, once they hit their goal they will be willing and even anxious to turn toward the next goal.
Every great leader knows how to motivate people. It does not matter if you are a CEO, a coach, a school teacher, a middle manager, or a parent, a big part of your job is being the psychologist or therapist who knows how to put out little rewards that get the people around you to behave consistently in working toward the goals you’ve established. Lee Iacocca said, “Start with good people, lay out the rules, communicate with your employees, motivate them and reward them. If you do all of those things effectively, you can’t miss.” Lee Iococca (b. 1924). U.S. Businessman. Talking Straight (chapter 4, “Good Business—More in Management”)(1988).
