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Tuesday, February 26, 2008

Lessons learned

This Iowa blog entry offers another perspective on lessons learned -- and suggests some other good principals for business survival.

Back in 2001, as the technology bubble melted, I thought I had achieved the holy grail of business success. We were selling up a storm, profits were excellent, and (so I thought) my delegation was so effective that I had little to do -- so I could spend time on other fun stuff and leave the heavy lifting to employees, as the business raked in the profits.

Of course, things really weren't so good underneath the surface in 2001, just as they weren't really that secure back in 1989 and 1990 a few years after I started the business -- in fact I was setting myself up for the longest and most painful business implosion of my life. And, as things started falling apart, I attributed the problems to a variety of causes which may have contributed too the difficulties, but were most definitely not their sources.

Today, again, things look promising, but I have no illusions as I am well aware of the recessionary environment affecting much of the marketplace. In part, our current markets are not affected by the recession; as well, our business, by its nature, can do relatively well at the early stages of a recession only to hit the wall later if the recession deepens or lasts too long.
Nevertheless, while it is dangerous to prophesize -- things often turn out different than expected -- I think I can avoid some of the mistakes that got me into trouble previously, and remember the things that helped me out of problems twice in the past.

My mistakes:

Inconsistent hiring and business management practices. We had sales reps on pure commission; we had sales reps on salary; we had reps who worked as 'teams' but under different rules of engagement; and they were hired under different rules and contracts. When things were going well, this did not cause problems; but when things started falling apart, the pain spread quickly, with resentment, envy, and "protect your own hide" behavior. As an example, I hired -- without proper testing and evaluation -- a less than effective sales rep based on the recommendation of another employee; we paid a full salary to this person for several months; while another representative on pure commission, working hard, struggled.

"Disappearing" from the business; falsely thinking I was delegating effectively. With a hired editor, and sales team, I didn't feel a need to spend time with the clients; with the market, and with the employees. "I'm getting in their way; they are doing a good job," I thought. So I travelled, dreamed of new markets, spent hours thinking about complex forward thinking business plans, not listening to client rumblings about some of our business practices; not listening to internal dissentions and hostility; and not seeing the deep and underlying malaise affecting the business.

Failing to respond in a consistent and rapid manner to real problems. Sometimes I just 'left things alone' hoping they would get better; in part because we didn't have clear performance standards, but more because I feared that rocking the boat would turn things into a messy picture. At the worst stage, I increased my disappearance -- taking a long vacation as key employees were struggling, not sure what to do.

Failure to have a clear planning structure, system, and guidelines for business operations. We expanded through 'seat of your pants' philosophies, sometimes digging out of one problem, only to deep into digger ones. With all the inconsistencies in our approaches, when things started going bad, they went from bad to worse as no one sensed leadership, thoughtful response, and everyone felt panic.

So, that is what went wrong. How did I dig myself out of the mess, twice?

I knew my limits, and when I reached them, did what I needed to do. The cuts may have been mismanaged, they may have been brutal, arbitrary, and ill-planned, but I did what I needed to do as the wolf cried at the door. Now, of course, I realize, I could have taken measures much earlier, with less pain for everyone involved.

I hired really talented people to do the work; both rebounds occurred when I (often through luck rather than planning) hired truly competent people. In previous successful periods, these individuals propelled the business forward; in fact, even though these employees have left us; some of their contributions remain legacies to our current operations.

I took hands-on responsibility. I really focused on the basics; rolling up my sleeves, working hard and effectively, and connecting with clients as employees saw that I wasn't living the easy life as others struggled.

But the most important test of the current business rebound is ahead, and I think will be the solution when we hit bumps in the road. Everyone we hire must meet consistent (high) minimum standards; I am staying out the ivory tower, and in touch with clients and our employees, and we will make major decisions only after thoughtful and insightful planning. Will we be able to transcend the previous 'good times' and enjoy lasting prosperity? I think so, but experience will prove the point.

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