The great competitor

Some days, you can smile about your competitors' misfortunes. If you listen carefully, you can learn why they failed, so you don't repeat their errors.

Paradoxically, however, as I gloated on hearing the competitors' bad news, I felt a slight shudder of anxiety -- the very wrong things the competitors had done that lead to their losses, I had done myself, with undoubtedly negative consequences. The only difference is one of degree.

Rome is burning. Let's build a mansion.

A few years ago, as my business's downward spiral accelerated, we took a family vacation/business trip, visiting a community where we had some employees in a once-thriving (but now declining) market. I took a few hours from the vacation to meet with a key employees, remarking (somewhat arrogantly) that, since this is a valid business meeting, I would claim two nights of travel, plus the direct costs of getting to the meeting, as a tax deduction.

Three weeks later, realizing our business had reached the red line, I gave (short) notice to the employee and made an enemy for life.

He's losing his job, and I'm taking vacations -- and claiming tax deductions as well -- why wouldn't he be embittered.

My competitor took things a step further. As his business hit a rough spot, he devoted his time, resources, and cash from his business to build a really nice home for his family. Trouble is, he didn't bother paying his taxes. The tax authorities, I learned today, seized everything he owned. His wife left him.

We have a relationship. Let's just use it to make some money.

Most of our business sales arise from understanding supply chain relationships, and ensuring we provide our services at exactly the right place where these relationships count the most.

This is powerful stuff, but we've pushed things too far, without respect for the underlying consideration that, when all is said and done, we must deliver more than we take. Thankfully, this kind of business-damaging behaviour can be repaired, when you realize that the relationship should always be founded on respect for the needs and values of your clients.

Today, I read some fascinating correspondence from a competitor to a third party who had lost business and respect by pushing, arrogantly, for sales without communicating real value. Most interesting are the desperate emails when, after losing the business, the competitor tried vainly for a second chance.

We thankfully have received second chances, but the damage control and repair took several years. We don't take our relationships for granted and look, always, at how we can give rather than take.

Delegation is great. I'll focus on fun stuff.

A few years ago, I thought we had a thriving, viable business with everyone working well at their tasks. So I spent time on things that were more fun and rewarding for me, including (this seems really dumb now) fiddling with an airline's frequent flier program and fighting an Internet-based ponzi scam. At the time, I could rationalize purportedly good business reasons for these distractions, but failed to see that the priority should have been the business.

My competitor, meanwhile, while building his mansion, failed to show up in the office, leaving his employees to do all the work. Trouble is, he wasn't paying his bills or remitting statutory deductions, and his employees were collecting prepayments from clients for services where (after spending the money on personal needs) he didn't have the ability to deliver the end product.

We're picking up the pieces now, delivering some $10,000 in free services to our competitor's victims, one of which is a three-generation business that has survived good and hard times.

Today, as I think about my competitors' failures, I'm thankful that in making the same mistakes that led to their destruction, I didn't go quite as far or deep down the slippery slope; and caught and learned how to change in time.

You may have the same choices.

Trust, relationships, brand and integrity

You most likely appreciate that words have different meanings, depending on context. As well, the meanings can be twisted through your own interpretation and memories -- as well as your clients. (Images and videos are even more powerful emotionally and, likewise, can be doctored both deliberately by experience and perception -- consider how Middle East wars are fought these days as much on the television screen as on the battlefield.)

How, then, do you achieve marketing truth and genuine long-range success? I will go out on a limb and suggest some basic principals, enhanced by recent internal business developments and external memories.

People rarely change in deep, fundamental ways
This means your first impressions are often right, unless the other people you are working with have the ability to put on a good front. Not surprisingly great salespeople (and con artists) are really good at modifying their front to turn you on and to get you to buy stuff (or services) from them. They know how to win your trust. If they are ethical, they will earn it and you will continue with a mutually profitable relationship.

Once burned, twice shy, three times a victim
Most people and businesses deserve a second chance, but you are pushing things if you think this should go for a third round. Of course, in the second chance, you should use common sense -- trust requires you to retain an open mind, be honorable and open in your dealings, and so on, but you will obviously want to watch for warning signs and of course be wary of long-term obligations.

You will often hear only part of the story, and in really major cases, will never find the complete answer
Remember the Post 9-11 anthrax scare -- one which initially most of us thought was part of a planned and diabolical Al Quaeda plot? Turns out that the evidence points to the whole thing being an 'inside job' from a U.S. research scientist seeking an escape from obscurity. Unfortunately the authorities initially got the wrong person, and dragged him through the mud. Then they found a second suspect -- who committed suicide when investigators purportedly were about to lay charges. But the evidence against the second person is not entirely compelling -- there are real holes in the story, and the investigation and public glare could cause unintended consequences. The same sort of thing happens in business and marketing. We use our best understanding of what happens to learn and diagnose issues, but often we cannot completely solve the puzzle. All we can do is get a little closer to the truth.

You'll find your answers in many places, when the time is right and if you are ready to see what is around you
In a recent situation, I triangulated my own experiences, with feedback from colleagues and co-workers, in allowing someone a second chance at a relationship. (This included accepting full responsibilities for my failings in the first edition of the relationship.) Amazingly, as things progressed, people told me things that they had kept to themselves, warning me of risks and unexpected consequences. You should obviously be wary of multiple negative warning signs: If two or three people from different backgrounds and circumstances warn you away, you know there are issues -- and if people you highly trust (based on their own experiences) tell you to watch out, then of course you are likely to land in trouble.

Trust means not freezing up, nor does it mean letting yourself become a sucker
Here you have the big contradiction but truth in marketing and business. With all the sharks out there, you will inevitably be burned once or twice, or more, but if you don't take risks, if you fail to let go and allow your trust to express itself freely, you will never get very far in business or life. The answer of course is to combine your own strong personal focus with a diversity of relationships and revenue and investment sources. Then you can tolerate the occasional mistake, and usually turn it into a long-range opportunity. (A really good con artist, like Bernie Madoff, might get through all your screens described above, but the only people put into destitution were the dumb ones who put everything they owned in his hands -- and recommended their friends to do the same thing.)

Returning home, then . . .

Construction work continues on resorts and new high-end commercial projects in Providenciales, Turks and Caicos. The question is how long this boom will continue, with the business implosion around the world. I suspect that Turks and Caicos developers found funds from a range of offshore investors (probably largely Canadians), taking advantage of the income tax free status of this British dependency.

The travel's done and it is back to 'regular work' tomorrow. Of course, self-employed people like me who really enjoy their work never take a vacation in the conventional sense. As well, perhaps just magnifying things a little, sometimes really big issues occur when I am thousands of miles away from the office. One of these matters -- of profound impact on the company's direction and strategic plans -- reached a critical point on Jan 2 and 3.

The public blog is rarely the right place to express internal business issues as they are developing, but in general, I'm satisfied we are handling things correctly. Openness, communication, transparency, and a regular meeting system help out tremendously.

While I must be oblique about the details here, the underlying issue is trust and the business brand. It is easy to pay lip service to integrity; but you must maintain sustainable and genuine respect for suppliers, employees and clients alike.

Integrity

The stories this week out of Wall Street and Toronto about Bernard Madoff and Marc Dreier touch close to the heart of business. Wealthy, successful, incredibly intelligent people -- purportedly playing by the rules -- have been arrested and charged with serious criminal fraud offences and (formerly) wealthy investors in their schemes face extreme hardship and perhaps destitution.

Why?

What causes people with purportedly excellent reputations to turn out 'bad' (the individuals named here of course are considered innocent until proven guilty in a court of law), and why do people with wealth, intelligence, and capability fall for what are, in effect, scams?

I wish I had an answer, but expect we will find more stories of this sort as the economic recession deepens and problems patched up in an environment of growing wealth are exposed in declining markets. And some of these stories will touch closer than we like to the AEC community. (Note: I have no evidence or even a hint of wrongdoing anywhere within our community, so the previous remark is speculation, not fact.)

Some people are corrupt all along, putting up a show of integrity where, underneath the surface, they are true psychopaths. Others slip gently at first over the line, then fall deeper and deeper into the morass of crime. (And unless you are Mother Teressa, I suspect you've crossed the line at least a few times in your life, only to recover and return to respectability -- just avoiding the one step too far, where your integrity is compromised by the ongoing reality of your circumstances. Yes, you can interpret the previous remark autobiographically, but don't expect me to be totally clear about my transgressions in this public forum.)

Can you avoid being a victim of fraud? And can you decide where the point of stretching the truth just a little, goes beyond fair play and into the realm of dishonour? I won't give a perfect answer here, but offer some thoughts which you will observe are founded in common sense and Jewish values.

If it is too good to be true, it usually (but not always) is.
Beware of gifts from strangers (and exceptional gifts from friends) and beware of short term gain with long-term pain. If someone promises and seems to deliver amazingly good results, stand back and ask if the story is real. Sometimes of course really good stuff happens. Enjoy it.

Trappings are not substance.
Look at where things really are. I know you expect an investment advisor or bank to have a high class establishment, but when you are doing business with real business people, they will often operate in much more modest circumstances.

Know your stuff, and know how to assess people who know stuff you don't know.
That is quite a phrase, but you have a responsibility to not assume anything. I am not a medical doctor, for example, but certainly can research the norms of good health and potential problems -- and also assess whether the doctor is a good at diagnosing.

Put all your eggs in one basket, then remove some of them.
What I mean here is that you need to become great at your chosen field - your objective is to be truly at the peak of your profession, business, or craft -- but you then need to take a few 'eggs' out of that for your investments, and spread them around a little. This way, if something goes wrong in your primary space, you will feel hardship, but not destitution. You will live for another day.

I believe most people are good, most of the time. Most of us live within values of integrity, fair play, and humanity and respect, and share these values with our families, friends, and business associates. A few people are really bad, and a few people are perfect -- I'm neither. You may still be victims of crooks, even if you adapt the ideas expressed here, but I think your chances of victimization and (worse) destitution are much lower if you use some common sense and remember the basics.

The (marketing) cost of business sloth

Today, on the SMPS Listserve, I read three posts about a competing publication that touched close to home -- too close, in fact, because the posts came close to describing some of our own business practices a few years ago. (The competitor will not be named here -- under no circumstances should any business speak negatively of the opposition -- I didn't of course initiate these posts.)

Has anyone had a good or bad experience with (publication name deleted)? They recently approached one of my clients to do a story on one of their projects and assured them that they had created a special edition under a new business model for clients who don't share vendor lists. But when my client said it was okay for them to do the story, the magazine's people contacted the project manager for a vendor/sub list; when he wouldn't give it to them, they went directly to my client's client and requested it from them. My client is really upset and embarrassed that the magazine approached this important client without her knowledge or approval. She said she will never do business with them again. I wondered if this was an isolated problem or if other people have had similar experiences.

This message resulted in the following two postings, both naming the same publication:

My firm will not do business with (name of publication) at all anymore. We had similar experiences. They also contacted our confidential sub list and solicited advertisement on our behalf, even though we told them not to. I have had many unpleasant conversations with them.

and

We worked with them on a couple of corporate profiles, but they merged two of the publications where separate profiles were to appear and they didn't tell me. They just posted both profiles in the same publication. The profiles were written for completely different audiences and distributions, so I was very irate. Eventually I got our money back, but that was the last time we worked with them.

I recommend avoiding them.

Reading these observations, I think of any business which fails to understand the basics when is representatives go out into the marketplace and oversells, under-delivers, and manipulates people for short term gain. I'm haunted by our own previous business practices where, with a lack of management control and common-sense respect for clients and the community, we sometimes stretched ourselves beyond the point of rightfulness to manipulate the process. Sure, we got the sale, but we lost respect for ourselves and our place in the community.

How expensive is it to get things wrong? Consider this: The Society for Marketing Professional Services (SMPS) has more than 6,500 members in most major U.S. cities (and soon will have an Ontario chapter) and the members of this association are responsible for recommending and allocating the marketing budgets of the nation's largest and most successful architectural, engineering and construction businesses. Now anyone who had any doubts about the unnamed competitor, reading these observations, knows what to think about it and its proposals.

On the surface, this type of publicity is no good for us as well, because, gulp, we earn most of our revenue by publishing features about businesses and selling advertising to suppliers largely from lists provided by the featured businesses. But there are differences, and they are fundamental -- and we learned these lessons the hard way.

• You never win long term by misrepresenting short term to get the sale. Ever.
• You can sometimes manipulate the story by going around some one's back. But when you do, you will effectively stab yourself in your own back.
• Conversely, you can achieve the seemingly impossible -- achieving co-operation where you would otherwise not expect it -- by playing fair, expressing creative and sincere generosity, and respecting everyone in the process; regardless of stature.

Clearly, you risk major long-term costs to your reputation and brand if you allow your sales practices to degenerate to the point that you invite and allow the type of negative word-of-mouth represented in the three listserve postings reproduced here. Thankfully, we learned our lesson.

Generosity, greed and the American (Canadian) dream

This image is from istockphoto.com.

Undoubtedly, our lives will be changed by the political and economic drama occurring in Washington and Wall Street. Our industry -- especially the residential side -- has been the most immediately affected by the current crisis, and only a person without any vision would say this won't influence other elements of the economy.

"What can you do about it?", you may be asking.

You need to respect your own needs and those of others. You need to be fair. You need to be responsible for your own circumstances, and not hold anyone else to blame.

I thought these points late yesterday afternoon when, in the midst of a business meeting to discuss a new project with joint venture partners, something didn' feel quite right. In the project, in an effort to invoke participation and support from the other partners, the revenue sharing balance seemed out of kilter (and unfair to me). So -- a mistake at this end -- after the meeting I wrote an email to the other participants making my feelings clear. (Previous postings have outlined the danger of using email for anything contentious.) One colleague responded in another email that he would be happy to leave the project. We need to talk. Maybe his response is the right solution; maybe it isn't, whatever, we need to respect each other to proceed and of course we need to respect the ultimate clients who will be paying for our services.

These types of discussions/decisions are part of business fabric, both small and large (and national/international). We can resort to deceit, to patchy compromises, to imperfect solutions, but if we respect our own needs and those around us, we have a much better chance of finding the right answers.

P.S. Here is an a meaningful and relevant posting in Jeffrey Gitomer's most recent newsletter: Why do businesses succeed or fail? HINT It's not just sales.

Luck, timing or talent

Michael Fraser in a bnet.com posting asks this question: Would You Rather be Lucky, Timely or Good? The question is whether good fortune, persistence, or talent are essential to business success. The answer, most agree, is all have a place in the story.

Interestingly, the first comment describes the fact that in the gold rush, the entrepreneurs who made the real money were the people providing services to the gold miners. And this of course brings me back to that Colorado tourist attraction gold mine which operates a business where a heavy dose of spirituality and apparently genuine (but not overbearing) religious passion underlies its viability.

Stripping away specific religious interpretations, however, I think great business successes require a form of spirituality, framed in positive yet pragmatic perspectives. I'm sure there is some valid social science and psychological interpretations beneath this stuff, but I can see how, in my experience, strange and wonderful things have happened just at the right moment, when I was really ready for them. And these moments correlate with a combination of letting go, accepting, respecting the forces beyond our control, and accepting total personal responsibility for what happens.

The opposite story, I see, in the bitter and angry person who believes an evil force has set course to destroy her family's business. From my own experience, I know that bad guys exist in the business world -- many times putting on truly impressive shows as community leaders and successes. Most of the time, I believe these crooks and, for want of a better phrase, "business psychopaths" are brought down to earth, but equally I'm sure some never get caught. (Note, I am not an angel of perfection!)

As I listened to the victimized person's tirades, I sensed she had some real and valid axes to grind. But wait: In her own remarks, she provided clues to elements of genuine personal responsibility and causality for her own problems, which she brushed off as insignificant.

The next day, at a local industry event, I sat with an industry leader who, just a few years ago, participated in what I could have seen as a business-destroying (and unfair) conspiracy against my company. I didn't see the treatment accorded to my business then as just or fair -- and the person who led the conspiracy is still very much around, and continues (as far as I know) to be hostile to my company.

But I appreciated the difference in attitude from the 'victim' described above that defines my values. As things went from bad to worse, I could see some of the major mistakes I had made, and accepted the fact that, while I had been treated unfairly, I couldn't change the other people involved, but had to accept responsibility for my own decisions, and could change my own ways.

Now, enough time has passed, and most people involved in that conspiracy have accepted me back in their orbit as legitimately in business and therefore I could, in an off-the-record conversation, ask industry leader about the 'victim'. "Oh, she's a nutcase," he said. Then he told me about another business that appears to have been a real victim of a cruel and business-destroying fraud. "Could you write something about them?" he asked.

I had to decline -- it is deadly serious (and dangerous) for a publisher to take on a crook head-on in print or even a blog: The bad guys understand and know the laws regarding libel, often hire the best lawyers, and can bring you down to poverty so fast you won't know what hit you. (Thus validating the 'victim's story.) The key to success in dealing with these situations, of course, is to know the lay of the land, to be nimble, quick, responsible, and patient. Yes, you can do everything wrong and still have good luck -- and everything right, and still fail, consistently. But I've seen enough times how good luck sometimes happens just at the best and most unexpected times, and now more than ever believe the forces behind this good luck are in the realm of spirituality, not business. I believe in G-d.

The white lie

In this JLC Online Thread, Sonny Lykos explains how, even when he could handle work on short notice, he told clients they would have to wait a month for him to do the work to avoid seeming to be desperate for the business; then, the next day, he would call to say that a client had made a last-minute cancellation and he could do the job sooner if desired. The issue, which Sonny sought opinion of others on, is has he violated his concepts of integrity.

The consensus is 'no', this type of white lie is not in any way harmful to the client, nor does it put them in any disadantage. Quite the opposite would be the case if, for example, the contractor said the work could be done the next day, and failed to deliver.

The issue of finesse or 'creative interpretation' in business dealings is important but should not be overstated. Small businesses with one employee working from home sometimes feel a need to rent a mini-office in a 'prestigious' location; or, when asked information about your years of experience (you are just starting out) you cite experience when you were the employee somewhere else. And of course, we are all guilty at times of the lies of omission -- not suggesting a 'problem' with our service that won't help sell it, but isn't necessarily something wrong at our end.

Some thoughts about integrity

How do you measure integrity?

I suppose a quick answer might be: "What do your peers and clients think of you?" But what about the contractor who pays, religiously, nine tenths of his suppliers on time and without dispute, but stiffs the lone guy on the bottom, the one he knows doesn't have the resources for protracted litigation, and then finds some (legitimate) excuse for non-payment. Do the arithmetic: Even allowing for legal costs and a settlement for part of the moneys owed, the contractor has saved perhaps five per cent of his budget -- and that can go a long way to profitability.

Does this stuff happen? Certainly. Does it get worse in recessions? Absolutely. Desperate and ill-informed start-up businesses are usually the best sucker bait for this kind of scam. In many cases, the scammer is either a psychopath who doesn't care, or simply extends his moral relativism a little further than most of us would dare (and yet, when push comes to shove, I'm sure many of us would do our own ill deeds under the right circumstances.)

In one, unique case in Ottawa, industry insiders got so fed up with one general contractor playing these games that they forced his business into bankruptcy -- against his will. This resulted in something very rare, a bankruptcy trial, with witnesses arguing the business was insolvent, while the owners claimed indeed it was viable. Things got really interesting when the bankrupt sent me a letter that would under normal conditions be considered libelous. I read it to the person he had libeled. "Print it," the person he libeled said. "This letter just shows everyone what we are dealing with". One of the major witnesses, by the way, later managed to pull his business in -- and out -- of bankruptcy three times -- and he still controls and runs his enterprise. Evidence of integrity, I suppose, along with a very thick skin for business.

So, as things head south in the marketplace, we'll see some strange, disturbing things happen. Well run businesses suddenly will find their major customer has gone bust -- either because things simply went bad or simply so that the owner could build a mansion in Florida with the purloined assets. Skilled and talented managers will suddenly lose their jobs, and start up their own companies, on the cheap, underbidding established players and sometimes winning the business (and sometimes experiencing victim hood at the hands of swindlers). In our own business, we'll find clients knocking on our doors, signing sizable advertising contracts, and then, (surprise, surprise) not paying their bills. (After all, if you know you are about to go down, why not advertise -- pull some cash in -- and then file the legal papers.)

If this blog entry is somewhat disturbing to you, good, I intended it that way. Those of us who have lived through (and survived) hard times in the past have pretty thick skins, and relatively reliable radar-scopes for cons and scams. But not everyone reading these posts has been through the experience of a real, lasting, and painful recession -- it's been a while. So I'm spending some time giving you the warning signs, and some simple and easy-to-understand advice.

• If you are a subcontractor, and are not currently a member of the American Subcontractors Association, join their local chapter. You'll gain incredibly useful insights into business practices and share early warning information about client-no-pay dangers. Its worth the dues.


• Do you have top notch lawyers and accountants on your side? If not, please find some -- you will probably need them. Make sure your employment contracts are in order, and understand the specific challenges in dismissing older or ill employees even if you are simply asking them to leave because they are not productive and are far too expensive.


• When clients become fewer and harder to find, you need to rethink your marketing; you must define your objectives and seek opportunities in effective and practical ways. If you are in our market areas and wish us to work with you, we'll help you craft some unique and effective solutions. (You'll pay us with some advertising purchases; the ads themselves -- while 100 per cent of our fee -- will only be a part of the solution.)


• Read, participate, interact, and contribute to blogs and forums like this -- the beauty of the Internet is that you can build an instant network of reliable contacts and connections, often in markets far from your home base (and certainly away from your competitors.)

Finally, trust your intuition, your sixth sense, and your instincts. If something doesn't seem right, it probably isn't. But you will also sense when things are going well, and when they are turning for the better. And, eventually, they will.

Untold (good) stories

Dr. Shahzad Khan, director at healthwithcare.ca and BECC Construction Group Ltd's Zulq Malik at Khan's new medical service facility in Markham, Ontario.

Yesterday, I soared among eagles. The exhilaration of sharing hours with bright people who know what they are doing, and conduct their business with down-to-earth integrity, is something to savor -- and repeat wherever possible. With my southern Ontario representative Chase, along with Zluq Malik, president of BECC Construction Group Ltd., Dr. Sharhzad Khan, at healthwithcare.ca (Blu Skye), and Michael Porter and Fred Thoms at Porter Airlines, I learned about the airline business, innovative and entrepreneurial medical practice (which complies with Canada's public health insurance system), integrity, and competence.

Their best stories unfortunately I cannot share publicly -- they related to the interfaces between the competent and less-than-competent, and the resulting consequences: Delays, bad will, litigation, and waste.

In spontaneous conversations, we explored the difference between entrepreneurs who build their businesses with integrity and a long range vision, against the scammers who live for the moment, and seek to screw every cent they can out of the other guys. Our conclusion, business people who 'get it' can sniff out the crooks and phonies pretty quickly; we get burned from time to time, but ultimately clients, suppliers, and peers want to keep doing business with us. Success, we realize, is not all about material trappings -- expensive cars, over sized homes, luxury vacations; 'stuff' does not make the world meaningful -- we can look at the tragedies of people with poor health, failed relationships, and poverty of spirit to see they are not the stories we wish to experience.

(It is a little frustrating that I cannot share the best stories here; the ground-rules in writing these advertising features is the clients must review and approve copy before publication, and in exchange they speak with me freely and without inhibition. And I have enough common sense to respect their confidences.)

What does this have to do with marketing? Everything -- because, as I seek to impress here -- marketing is all about the stuff behind the scenes as much as it is the businesses public presentation. Sure, BECC's Zulq Malik is unabashed in asking his subs and suppliers to help contribute to the costs of the marketing piece we are writing -- but he relates to them with respect, on an equal footing, and seeks to ensure they do well in their business (and since Zulq's business is growing, it makes real sense for the sub to support his marketing process.)

And when I told Michael Deluce about an irritating (but for most people, invisible) flaw in Porter's reservation computer system, he didn't brush the matter off -- he determined to find out and fix the problem.

In the end, you can gloss over the real situation, and try to paper over your image with a public persona -- and you might even get away with it. But if your business heart and soul is founded on innovation, integrity and intelligence, great marketing will propel you forward to higher levels -- and not cost you much money at all.