Sun Tzu on Managing Troops - Part 2 of 6

“The consummate leader cultivates the Moral Law and strictly adheres to method and discipline; thus it is in his power to control success.” - Sun Tzu, The Art of War

Discipline and Accountability

When Sun Tzu wrote The Art of War, the reigning king asked him to prove the merit of his work by applying it to a group of untrained women. To do so, Sun Tzu organized 180 women into formation and named the king’s two favorite concubines as officers. Here’s what happened:

Sun Tzu went on: “When I say ‘Eyes front,’ you must look straight ahead. When I say ‘Left turn,’ you must face towards your left hand. When I say ‘Right turn,’ you must face towards your right hand.

Again the girls assented. The words of command having been thus explained, he set up the halberds and battle-axes in order to begin the drill. Then, to the sound of drums, he gave the order ‘Right turn.’ But the girls only burst out laughing. Sun Tzu said: ‘If words of command are not clear and distinct, if orders are not thoroughly understood, then the general is to blame.‘

So he started drilling them again, and this time gave the order ‘Left turn,’ whereupon the girls once more burst into fits of laughter. Sun Tzu: ‘If words of command are not clear and distinct, if orders are not thoroughly understood, the general is to blame. But if his orders are clear, and the soldiers nevertheless disobey, then it is the fault of the officers.‘

So saying, he ordered the leaders of the two companies to be beheaded… and straightaway installed the pair next in order as leaders in their place. When this had been done, the drum was sounded for the drill once more; and the girls went through all the evolutions, turning to the right or to the left, marching ahead or wheeling back, kneeling or standing, with perfect accuracy and precision, not venturing to utter a sound. Then Sun Tzu sent a messenger to the King saying: ‘Your soldiers, Sire, are now properly drilled and disciplined, and ready for your majesty’s inspection. They can be put to any use that their sovereign may desire; bid them go through fire and water, and they will not disobey.”

Before I continue, I want to point out that I’m not advocating the beheading of concubines or employees. Such practices within your business would likely have a devastating impact on morale.

The principle, though, is a good one. If you clearly outline your expectations and the penalty for failing to meet them, they must then be enforced. If they’re not enforced, they’re meaningless and your entire staff will realize this. The best way to handle this, in my opinion, is to get your employees to help set the penalties for breaking the rules. Decide collectively what should happen to someone who is habitually late for work. Then, when the situation arises, be sure you follow through. Sun Tzu explains it like this: “If a general shows confidence in his men but always insists on his orders being obeyed, the gain will be mutual.”

Reward for Success

“For them to perceive the advantage of defeating the enemy, they must also have their rewards.” - Sun Tzu, The Art of War

I realize the story above comes across a little harsh and Machiavellian, but there is a flip side to properly managing your troops. Discipline must come first, but you should also reward your employees for their hard work. In war, the victorious general should share the spoils of war with his men because it was by their effort and their sacrifice that victory was achieved. Likewise if your business has an extremely successful year, your employees should reap some of that reward. They were the ones who made it happen. They were the ones following your (sometimes totally unreasonable) orders. Shouldn’t they get a little something for all their hard work?

If employees aren’t rewarded for their performance, the only incentive is to avoid being punished for doing poorly. This is a great way to breed an apathetic and mediocre workforce. So give them praise and encouragement. Share with them the spoils of war, and they’ll be ready to fight.

What’s Next?

Sun Tzu on Tactics - Part 3 of 6*

*Coming Soon, check back in a few days…

Sun Tzu, The Art of War and Your Business - Part 1 of 6

“Opportunities multiply as they are seized.” - Sun Tzu, The Art of War

I was inspired by a recent post by Harry over at Men With Pens. His post was a study of The Book of Five Rings, “A classic text on the Japanese Way of the Sword,” as it applies to writing and working as a freelancer. He discusses the five elements of swordplay and how they are equally relevant to writing and, I would argue, all aspects of running a business. I won’t try to summarize the entire post, because you should really check it out for yourself, but here are the five elements: Ground (Building your foundation - discipline and stability), Water (Adaptability - staying calm in the face of adversity and change), Fire (Taking Action - putting your passion to good use), Wind (Style - finding the best approach), and The Void (Attitude - what binds it all together). Seriously, go read the whole post, it’s well worth your time.

Harry’s post reminded me of something I had long since forgotten. When I was 15 I started a neighborhood lawn mowing business, and one of my clients (AKA neighbors) gave me a copy of Sun Tzu’s The Art of War and told me I could learn everything I needed to know about business from that book. I thought he was crazy at the time, but years later, after running a business, I get it.

Corporate America - Our Battlefield

Sun Tzu was a Chinese general and military strategist in the sixth century BC. His book, The Art of War, consists of 13 chapters, each devoted to one of the aspects of warfare. Even though the book was written 2500 years ago, the concepts are still applicable today. Because the free market is governed by the interplay of competing businesses, many of Sun Tzu’s lessons have withstood the test of time. Historians have claimed that Napoleon, one of history’s greatest strategists, studied The Art of War. More recently, executives at corporations like Google and Microsft have begun to apply its lessons in the corporate world.

While I definitely think the book is worth checking out, some parts are more relevant than others. Take, for instance, Sun Tzu’s theories on the use of fire to destroy an enemy’s camp. I could give you a very creative interpretation of its application, but it would either be complete BS or it would give you the impression that I support arson. Instead, let me break down what I think are the most relevant of his teachings:

Managing Your Troops: The art of discipline, accountability, respect and admiration.

Tactics, Measurement and Calculation: The art of planning so that you have ensured victory before you’ve begun.

Leveraging Advantage: The art of avoiding strength and attacking weakness.

Adaptation: The art of reacting to circumstance, changing tactics, and constantly innovating.

Leadership: The art of balancing responsibilities, doing what’s right, and inspiring loyalty.

*Coming Soon, why not subscribe and make sure you catch the rest of the series?

As Sun Tzu said,

“If you know the enemy and know yourself, your victory will not stand in doubt; if you know Heaven and know Earth, you may make your victory complete.”

Never underestimate the power of planning. Develop a solid business plan and revisit it regularly to see how things are progressing. Do the same for marketing with a comprehensive marketing strategy. Analyze your market and your competition. Train your staff and reward them for a job well done. Apply these concepts to your business and it will grow.

I’ll see you on the battlefield.

The Cost of Poor Service

Don’t Waste My Time

My last post about customer service got me thinking about other experiences I’ve had as a consumer recently. A few months ago I was having some issues with the company that hosts my website (IPowerWeb.com). I called them and spent an hour on hold before finally reaching someone. He assured me that the problem would be taken care of within 24 hours and I would be informed as things progressed. A week later I called again, waited an hour again, and got the same explanation. He said they’d give it “top priority.” Several weeks later the problem still wasn’t resolved. I spoke with someone via their online chat support, and they finally pushed me over the edge:

Clem: Hi Kyle. I apologize for the wait time. My name is Clement, how are you today?
Kyle: i’m doing fine thanks, how are you?
Clem: I am great.
Clem: We apologize for any inconvenience this may have caused you. Currently, our internal tools are not functioning. Hence, I am unable to check your account. Could you please contact us after few minutes, so that we can assist you in a better way? Our internal tools will work fine after few hours.
Kyle: I just spent 45 minutes on hold on both the phone and this chat. And this was after receiving no response to emails I have been sending for two weeks. Am I going to have to wait on hold again in a few hours?
Clem: We apologize for any inconvenience this may have caused you. Currently, our internal tools are not functioning. Hence, I am unable to check your account. Could you please contact us after few minutes, so that we can assist you in a better way? Our internal tools will work fine after few hours.
Kyle: I’m really not impressed with the service I’ve received in the last few weeks. I just waited in line 45 minutes to be told to call back later so I can wait in line again?
Clem: Did you receive my last message?
Kyle: I did, did you receive mine?
Clem: I apologize for any inconvenience this has caused you.
Clem: We apologize for any inconvenience this may have caused you. Currently, our internal tools are not functioning. Hence, I am unable to check your account. Could you please contact us after few minutes, so that we can assist you in a better way? Our internal tools will work fine after few hours.
Kyle: Can someone from support get in contact with me when the tools are functioning again? I’ve had very little luck contacting you, and I can guarantee I won’t put you on hold
Clem: Unfortunately, we will not contact you. Please make sure to contact after 15 minutes.
Clem: I apologize for any inconvenience this has caused you.
Kyle: Can you at least tell me why my last three emails to tech support have gone completely unanswered?
Clem: I apologize for any inconvenience this has caused you.
Clem: We apologize for any inconvenience this may have caused you. Currently, our internal tools are not functioning. Hence, I am unable to check your account. Could you please contact us after few minutes, so that we can assist you in a better way? Our internal tools will work fine after few hours.
Kyle: I understood the message the first 3 times
Chat session has been terminated by the site operator.

Needless to say, I terminated our contract with them, and took all of my clients’ accounts with me. I was livid after this conversation, which was just the cherry on top of several weeks of abysmal service. Not only did I take my business elsewhere, but I’ve instructed everyone I know to steer clear of IPowerWeb.

Lessons to be Learned

I mentioned in my last post that if you can make a customer say “Wow! What great service!” they’ll be Customers For Life. On the other hand, if you treat customers poorly it could come back to haunt you. You will almost certainly lose their business, but the cost could be even higher…

Take this blogger, for instance, who had horrible experiences with Sprint/Nextel.

Or this one, which talks about Dell’s plummeting customer service ratings.

Which reminds me… I’ve had my own run-ins with Dell. A few months back I plugged in my nearly-brand-new laptop and got an unbelievable electrical shock from it that left my arm numb the rest of the day. It fried the computer too, which I was actually far more concerned about. I called Dell, unhappy but civil, and explained what happened. His response? “We apologize that our product caused you this pain, and suggest that you put some ointment on the shocked area, then carefully unplug the computer.” Ointment? Really? Thanks Dell.

Avoiding Customer Service Disasters

A recent study by the University of Colorado indicates that Customer Service scores in service businesses are dependent upon five main factors:

1. Timeliness of initial response to the customer’s request/problem.
2. Clarity of the employee’s initial understanding of the customer’s request/problem.
3. Completeness of the resolution provided by the company.
4. Timeliness of the resolution provided by the company.
5. Courtesy of all employees involved in providing the resolution.

It’s not brain surgery. Respond to customer needs quickly, completely, and courteously and they’ll be happy! If I spend an hour on hold, it won’t matter if the service I receive is stellar. I wasted an hour listening to your crappy elevator music on hold.

7 Keys to Happy Customers

1. Respond to customers quickly. We live in an impatient world. We’ve all gotten irritated by having to wait three minutes at a drive through window. Same idea here - your customers will appreciate that you’re not wasting their time.
2. Make customers feel important. Let them know you appreciate their business, and want to make sure they’re happy.
3. If you screwed up, admit it. Then make things right. Offer them a free month of service, a free upgrade, or a small gift. Studies have shown that even the most inconsequential gift improves a person’s perceptions of the gift giver.
4. Keep your customer informed. If something is going to take longer than expected, call them and let them know. Give them periodic updates so they know what’s going on. Wagonwork Collision Center, a collision repair shop in Alexandria, VA, calls their customers twice a week with updates on the repair process.
5. Ask yourself: “What would a remarkable leader do?” Kevin Eikenberry says “Remarkable leaders set the pace in creating a mindset that is focused on customers and meeting/exceeding their needs.” Don’t just meet your customers’ needs. Predict them. Exceed their expectations so that they can’t wait to come back.
6. Hire and train the right people. Some people just aren’t cut out to be working with customers. Guy Kawasaki says it has to start from the top. As the owner or manager, you’re setting an example to be followed. Treat customers right and then make sure your employees are too. You’d be surprised how much impact your actions have on your company’s culture.
7. Measure your results. Every company, large or small, needs to follow up with customers. Ask them if they’re satisfied with the relationship, if there’s anything you could do to make it better,  etc.. My company conducts phone surveys semi-annually, tracks all the responses in a database, and looks for improvements and shortcomings over time. We do this for some of our clients as well. Without the stats to prove it, how can you be sure you’re satisfying your customer?

Your customers are too important to your business to leave these things to chance. Document your standard operating procedures (the “How-To” guide to running your business) and make sure they’re followed. Make sure everyone in your organization is focused on delivering the best possible experience to your customers. Maybe one day the rest of the world will catch on and I won’t have any customer service horror stories to tell. We can dream, right?

Customer Service: Is it Dead?

Crappy Service - An Epidemic

Last week I walked into a sandwich shop and the woman at the counter, without even making eye contact, asked “What are you havin’?” in the most uninterested way possible. It took me a second to respond because I was so taken aback. I thought “If I’m going to be treated like this, maybe I should take my money to the restaurant next door.” What’s really sad though is that most people don’t even think twice when they are treated this way as customers. Is anyone else bothered by this?

The Cost of Poor Service

Do companies realize how detrimental poor service can be to their bottom line? Consider these statistics:

• Acquiring new customers can cost five times more than satisfying and retaining current customers.
• A 2% increase in customer retention has the same effect on profits as cutting costs by 10%.
• The average company loses 10% of its customers each year
  • Source - Living on the Edge of Chaos: Leading Schools into the Global Age

• 68% of lost customers are turned away by the negative attitude or indifference of a service provider.
  • Source - Survey conducted by the American Society for Quality

Can your business afford to lose 10% of its customers every year? How can you keep even your most demanding customers satisfied?

Forget About Satisfying Your Customers

Several years ago my company decided to forget about satisfying our customers. You heard me. We decided that any business could satisfy their customers. Customer expectations are so low these days that as long as they get what they came for without being verbally abused, they’ll be satisfied. What we wanted were Raving Fans. (Do yourself a favor and pick up a copy of this book… It’s a quick read and it’ll totally change the way you approach your business).

How do you get raving fans? I remember a conversation i had with Michael Giarrizzo Sr. on my very first business trip. His family has virtually owned the collision repair market in Ohio for decades. Their company, DCR Systems, routinely receives 100% Customer Satisfaction ratings because they believe in creating raving fans. Michael told us about a customer who left his garage door opener in his car, when he was supposed to put it in his rental. Giarrizzo called him, asked for his work address, and delivered the door opener to the man at his office. The customer didn’t have to ask, didn’t have to pick it up, and wasn’t inconvenienced by not having the door opener that night when he got home. With that simple action, Giarrizzo earned a customer for life.

Creating “Wow” Moments

The Ritz-Carlton is well known for their exceptional customer service. Bellmen are trained to look for name tags on luggage as guests arrive. They then use hidden radios to inform the desk clerks of the guests’ names, and the guests are then mysteriously addressed by name. Wow!

It’s a simple concept: if your service makes a customer stop and say “Wow!”, they’re going to come back the next time they need your product or service. They’re going to tell friends and family about their experience and recommend you to everyone they know. Examples are everywhere…

Stephen from Freakonomics writes about his Wow moment with Zappos, a popular shoe retailer:

My wife had ordered a pair of sandals from Zappos. When they arrived, she found that they didn’t fit. She tried to order the right size, but Zappos was sold out of her size. So here’s what the company offered: she could return the sandals (for free), Zappos would refund the purchase price and they’d send her a $25 coupon toward her next purchase.

But wait — there’s more! Zappos also offered to try to locate a pair of the sandals in her size from another vendor. (Hah! Sure, they will!) Fifteen minutes later, the company called my wife and told her they’d found her sandals, in her size, at another online merchant — “and,” the Zappos clerk told her, “they’re even cheaper at this other site!”

Another blogger, Zaz LaMar, wrote a post called “I Heart Zappos” after a particularly heartwarming encounter with the company.

Just search Google for “blog great customer service” and you’ll find countless links to happy bloggers telling the world about the experiences they’ve had with companies that made them say “Wow!” These raving fans are providing businesses with free advertising and testimonials simply because they were so impressed. What could be better??

How do you wow your customers? How do you keep them from taking their business elsewhere? As a consumer, have you ever had a “Wow” Moment? Tell us about it!

Business Owner or Hat Rack?

As an entrepreneur, business owner or manager, how many hats do you wear? Dave McClure, Master of 500 Hats, “refers to the many hats that entrepreneurs have to wear as they get a new startup venture off the ground. It’s also a reminder to entrepreneurs to spend time identifying all those hats, find talented people to wear them productively, and gradually take off & transfer the hats to others who can best help the business grow. “

As a small business owner, I’ve worn more than my share of hats. I mentioned in my last post that I’ve been the project manager, programmer, designer, account manager, marketing manager, and so on. Chris Garrett pointed out that by starting my own blog, I’ve just given myself ten more hats to worry about. Now I’m writing, researching, networking, etc. in addition to all the things I’m already doing. It occurred to me that I’m spending more time as a hat rack than as a business owner. A business owner should be negotiating deals, formulating strategies. A hat rack keeps hats from falling on the ground, getting trampled and lost.

Sadly, for most entrepreneurs this is a necessary evil. If I’d had the cash for a professional accountant, I would have hired one. God knows I’m clueless when it comes to accounting. Matt Inglot points out in his blog that the areas we struggle in tend to be the hats we spend the least time wearing. That explains why, before we hired an accountant, our accounting hats only showed up once a year in early April.

You can learn a lot about yourself by looking at the way you solve problems like drooping sales. A tech-savvy owner might put his programming hat on and implement a cutting-edge CRM application to better track leads and customer information. A marketer will put his marketing hat on and find new ways to reach customers or new target markets to enter. The engineer will reach for his inventor’s hat and start working on his next big idea, guaranteed to draw crowds of customers. Which hat do you reach for? A true entrepreneur will consider each hat in turn, weighing his options until he comes up with the best combination of hats for the task at hand.

Unloading a Few Hats

The hardest thing for most business owners to do is let someone else wear a few hats. In The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It, Michael Gerber outlines some of the dangers of taking this step. By hiring people to do the jobs I hate, I’m ensuring that they get the attention they deserve. But to whose standards? Not mine. I’m just trusting that the new guy knows what he’s doing. And then when he cooks the books and disappears with all of my money, who do I have to blame?

The critical component in effectively delegating tasks is learning how to handle each task yourself, THEN deciding how to delegate. You’re in charge. You have to set the rules.

Start by creating an Organizational Chart. It may seem ridiculous in a company with one to three employees, but this is critical. Take a look at my company’s first org chart. Initially, all of those boxes were filled with just two names.

Once you have the chart, create a position contract and job description for each box. For each position, what are the expectations? As VP of Marketing, what are my responsibilities? How do I know I’m fulfilling them? Who do I report to? Who reports to me? This should all be clearly defined when there are only a few employees, because it will get much harder the larger the company gets.

You should now have an Organizational Chart and a stack of position contracts. For each box that has your name on it, sign the position contract to seal the deal. This is especially important in partnerships, where responsibilities are not clearly defined. There’s got to be some accountability right from the start.

As you grow, you now have the structure to hire employees and present them with clearly defined roles. Each new employee takes one of your hats, and signs a contract indicating that they understand what is expected of them. This is just a small step forward, but it’s a step most small businesses never take. Once you start hiring, you need to worry about training, communication, record keeping, and all sorts of other things well beyond the scope of this post. More on all that later…

Your turn… what hats are you wearing? What hat do you instinctively reach for when there’s work to be done?

Other Bloggers on The E-Myth

Naomi at IttyBiz wrote a (not surprisingly) great post last week about how to make the jump toward starting a business when you hate your current job. Johnathan posted a number of statistics from the book over at WiseVisions. Marc Melvin presents a great summary of the goal behind The E-Myth: creating a “place of community that has purpose, order, and meaning… A place where the generally disorganized thinking that pervades our culture becomes organized and clearly focused on a specific worthwhile result.” Michael Gerber’s blog is definitely worth checking out too. Pick up a copy of The E-Myth, it’ll be worth your while.

Welcome to OnYourBusiness!

A few weeks ago I found myself thinking “I should really start a blog.” My next thought was “Wait a minute… Why?”

Hmm… Sadly, I’m getting too old for “Because everyone else is doing it” to be an acceptable response. That was a sobering realization in and of itself. So I had to give it a little more thought.

Ultimately, this is why I started OnYourBusiness:

• Sharing My Experiences - I’m always referring friends and clients to articles and resources that I’ve found useful. Why not share these with a broader audience? As a small business owner, I’ve been the Project Manager, Programmer, Database Analyst, Graphic Designer, Secretary, Customer Service Rep, Sales Rep, Marketing Manager, Accountant, etc… I’m constantly reading books and articles about these topics, and applying them to my own business. There’s a lot of great information out there, but there’s also a lot of crap. Hopefully most of my posts will be among the former.
• Networking - For anyone interested in starting a small business, networking is key. I’ve been inspired by some great bloggers, and wanted to reach out in the same way they have. So many opportunities in my life and my business have materialized out of the nowhere through the connections I’ve made. So drop me a note, introduce yourself! Maybe one day that connection will pay off.
• Fame and Fortune - Probably a long shot, but hey I can dream right?

So that’s why I’m here. Those are the things I’ve set out to accomplish with OnYourBusiness. More importantly, why are you here? Leave a comment and let me know…