Wednesday, March 28, 2001

The Email Quandary

If you're like me, you probably spend a significant proportion of your working hours reading and writing email. The problem is, like most modern marvels of office automation, email can end up increasing, rather than decreasing work.

Even in our small (eight person) organization, we have a radically divergent continuum of email use. Everyone uses email, but some use it just for external communications, while others use it to communicate with an officemate who's 10 feet away. I'm sure that the problem is worse in larger organizations.

The email-centric often treat email like a guided missile: launch it via cc:, and it will use its heatseeker warhead to home in on the correct target. That's just not the case. Email works as a "fire-and-forget" communications medium under the following circumstances:

1) If the author is ending a discussion
2) If the author is opening a discussion that is expected to be very short, e.g. 1-2 exchanges
3) If the author is opening a discussion that is expected to be very long, e.g. a week or more
4) If the author is participating in a free-form discussion which none of the participants wants to end
5) If the email is completely self-contained

By the way, points 4 and 5 explain why email is so incredibly popular as a medium for leisure communication. I've lost count of the jokes, funny stories, Darwin Awards, and LEGO pornography that I've received over the years.

Email is the wrong medium for any complex, interactive discussion that you want to resolve in less than an hour. For these discussions, you need to speak in person, or over the telephone. Any discussion that goes through more than 3 exchanges back and forth should probably be switched to phone or in person.

So when you're tempted to hit the "Reply All" button, remember to do a few things:

1) Use a meaningful subject line
2) Clearly delineate action items
3) Attach an individual person's name to each action item
4) Ask yourself if you really need to send it.

I won't be able to publish on Thursday or Friday, since we'll be moving our office, but we'll resume our regularly scheduled ranting on Monday.

Tuesday, March 27, 2001

Thinking like a startup

To start a successful company in a down economy, you have to think like a startup.

This advice may seem absurd, but it is essential--and little followed.

Throughout history, successful entrepreneurs have followed a few simple rules like minimizing your costs and focusing fanatically on revenue-generating activities. These time-tested rules applied to any situation, from opening a lemonade stand to starting a legal practice.

During the Internet bubble, however, the new wave of "entrepreneurs" abandoned these rules, and started thinking like big companies.

Big companies are run differently from startups. Their style isn't necessarily better or worse (I may never want to work for a bi company, but there are plenty of people who would, and furthermore, would hate the startup existence), just adapted to their circumstances.

Big companies think strategically; startups think tactically.

A big company has to focus on big successes; small victories are mere rounding errors in the quarterly filings. That means placing bets on strategic initiatives and having the patience to wait for results. Hewlett-Packard spent billions over several years to become a PC powerhouse.

A startup has to focus on getting quick revenues. This often means settling for smaller but more readily attainable wins, and avoiding any projects with long payback periods. But having the flexibility to win small victories lets a startup try a lot of different things to experiment its way to a big success.

Big companies invest for the long term; startups minimize costs

A big company will make capital investments that reduce the variable costs of manufacturing a product with a 5-year life cycle.

A startup will manually process a transaction for 2 months to save the $1,000 it would cost to automate the process. A startup simply can't bet on being in the same business in 5 years--or even being in business. The best way to succeed is to minimize fixed costs and up front expenditures so that you maximize your option value.

Big companies believe what they read; startups believe in the cash register

A big company manager will often make decisions based on what she reads in the business press, or see on the news. The big company mentality says that the world is a relatively orderly place, and that the wise businessman listens to the experts.

The startup entrepreneur knows that there are no experts, that all the analysts are full of bullsh*t, and that she can only believe what she knows from experience.

A lot of people are more comfortable with the big company, big picture philosophy. Life is more reasonable, more manageable, more dignified. The new-look entrepreneurs thought this way, trained by top-tier business schools, consultancies, and investment banks.

Unfortunately, applying that philosophy to entrepreneurship practically guarantees disaster. An entrepreneur knows that life is unreasonable, unmanageable, and often unmentionable, and that it takes a streetfighter mentality to succeed.

So if you want to be an entrepreneur, look at the list above, and decide if you're willing to think like a startup.

Monday, March 26, 2001

Big fish, little fish

Successful business people learn to evaluate potential: theirs, their employees, and their businesses. Without an objective evaluation of potential, it's impossible to make good decisions.

The old saw says that it's better to be a big fish in a small pond. In business, however, there's no guarantee that a weaker competitive set will lead to greater success. In fact, the opposite is often true. The truly great rise to the challenge of greater competition, and become even bigger fish when transferred to a big pond.

Take Michael Jordan. Michael Jordan was cut from his junior high school basketball team. From that humble beginning, as a small fish in a small pond, his growth outpaced his surroundings. He was a good high school player, a very good college player, and the greatest player that ever played in the NBA. Each time the bar for his performance rose, his level of play rose even further. Michael Jordan grew with his pond.

In contrast, Steve Alford was better off as a big fish in a small pond. Alford was a legendary player in Indiana high school basketball, had a stellar career at Indiana University, and was a massive failure in the NBA. By the end, he was clearly a small fish in a big pond.

What separated Jordan and Alford wasn't work ethic or mental toughness; Alford was an incredibly hard worker, and a true student of the game of basketball. What separated them was potential. Jordan had "upside." Alford had already maxed out his potential as a ballplayer by the time he entered college.

However, Steve Alford didn't let his failure as a player discourage him. Instead, he became a basketball coach, and is now ascending the coaching ranks, and growing with each new job. He was a good assistant coach, a very good head coach at Southwest Missouri State, and is now an outstanding head coach at the University of Iowa.

The lesson to take away from this is that you need to figure out where you, your employees, and your business stand in terms of potential, and choose accordingly.

If you believe that you have a great deal of upside and potential growth, moving to a bigger pond with stronger competitors will improve your performance and bring about growth. If believe that you are close to your maximum potential, moving to a bigger pond will get you eaten, and you should learn to be content with being a big fish in a small pond.