In this post, I’m going to give you a run-down of some of my guiding principles in how I approach decision making.
When possible, I do my best to attribute, but I’m very confident I have adopted concepts that I’ve read and later forgot. We can assume none of my ideas are truly new anyway. This isn’t intended as a list of my unique discoveries and contributions, but more an analysis of how I currently think about running a business.
- Always, Always, ALWAYS Protect the Downside – If you run out of money, you’re dead. If you stay alive, you can figure out any challenge if you have enough time and creativity. When considering a major capital investment or anything that will hit your cash flow hard, prepare for the absolute worst case scenario. Take the time to flesh out best case, medium case, and absolute worst case projections. Then prepare for the worst case scenario. And if you can’t survive the worst case scenario, have a good long think if the venture is worth it.
- One Time is a Blip, Three TImes is a Trend – Whenever you’re looking at the “key performance indicators” in your business, you’re looking for trends. It’s never so much about the amount of revenue in a given time period; it’s about it’s relation to what’s come before. Never overreact to a single blip up or down in a given week or month and ever underreact to three consecutive movements up or down over weeks or months. To apply this concept, make sure you’re tracking the most important numbers in your business on a weekly and monthly basis, be on the lookout for trends, and create clear systems for what happens when things are going the wrong way.
- Mediocre Idea with Great Execution Always Beats Great Idea with Mediocre Execution – Just like in fitness, a poor program executed with consistency and commitment will outpace a great program done half-heartedly. The missing piece in most business initiatives is almost always follow through. When rolling out a new program or initiative, be clear about timelines (including when the program or initiative will end) and who “owns” it and is accountable. Then EXECUTE EXECUTE EXECUTE.
- “Feedback is the Breakfast of Champions” – Ken Blanchard – One of the most important jobs in any business (or life!) is to find out what is actually true. Since no human is capable of seeing things as they truly are, aggregating a wide variety of perspectives is important. This data helps you make much better decisions about every element of your business. Make sure your business has some function to continually get feedback from your clients and customers and track changes over time.
- You Own Your Feedback, I Own The Analysis – When it comes to feedback, some people/ organizations don’t want to hear any because they’re afraid of what they may learn. On the other hand, some people/ organizations overreact to every piece of feedback. The master skill is to be able to truly consider the perspectives of others without losing the option to go another way. Creating systems to aggregate feedback will be very helpful here to separate one-off concerns verse ongoing issues/ trends. (See one systems solution HERE.)
- As Much System As You Need, As Little As You Need – As a business grows, you’ll want to create systems so important functions happen consistently. If you don’t have clear systems, your team won’t be able to reproduce results internally or with clients. (EXAMPLE: No phone call script when someone calls your business.) On the other hand, if you provide too much structure, you can make your team overly focused on executing a process to the detriment of the intended outcome. (EXAMPLE: Word for word phone call script.)
Additionally, a good system should make things more efficient, but all too often it makes bureaucracy/ less efficiency. Balancing systems with humanity is an art. To assess how well a system is working:
- Be clear on the goal of a given system
- Hold people accountable to exacting standards of execution
- Track how successful the system is achieving the goal
- Make the system looser or more rigid
- We Give Each Other What We Lack – In any organization, you want enough diversity of personality style and skillsets that you have constant tension and disagreement. Yep. You read that correctly. As the saying goes “when two executives agree on everything, one of them is expendable.” We of course want to process the conflict in a healthy way, but diversity of perspective leads to better outcomes. Yes, you’ll want alignment of values. But you’ll make better decisions if you’re able to think through all sides of an issue. When hiring people for your team, be careful you’re not accidentally creating a culture of groupthink.
- Whoever Says No The Most Wins – Strategy is about what you don’t do. It’s about the meetings you won’t take, the services you won’t offer, the books you won’t read, etc. The one bit of context I’ll offer is this; when we’re talking about professional ideas/ opportunities, the “hustle” part of building a career/ business will require experimentation and saying yes to many things. However, after you reach a certificate ain level of establishment, success requires continued simplification and the ability to turn down opportunities to focus on what really matters most. Time is the only non-renewable resource. Periodically audit your commitments and make sure they’re truly reflective of your personal mission and life goals.
- Planning Fallacy is the Goddamn Devil – Most humans are truly terrible at guesstimating how long things will take. Everything from writing blog posts, to how long your commute will take, to how long a project will take. Two things will help here. First of all, use deadlines to force yourself to at least try to hit your marker. Second of all, by using even arbitrary deadlines over time, you will start to get better at guesstimating how long things will actually take. This will help you be more realistic about what you’re committing to (and what you’re not going to commit to).
- The Most Important Ability is Dependability – More so than any other skillset, much of success in business (and life!) is simply being dependable. It’s the core of trust. Every time you make a commitment and then don’t follow through, trust is damaged. For many people it’s not so much a lack of integrity so much as a lack of organizational skills. Adopt some system to write down and schedule your commitments so you can be sure to build trust with your team and clients/ customers.
- Write Down All Commitments (and Deadlines) After Meetings – I STILL fuck this up sometimes. But if you want to immediately improve the quality of all your business relationships/ outcomes, get in the habit of ending meetings with clear, written down commitments with clear deadlines and clear accountabilities/ ownership. Even highly adept communicators sometimes come away from conversations with different perceptions about what was actually said..
- “Seek First To Understand” – Stephen R. Covery – Of all the 7 Habits of Highly Effective People, this one may be my favorite. A genuine willingness to really listen to other people and hear where they’re coming from invariably leads to better outcomes in virtually all encounters. Whenever you have an upset customer or team member, do your best to avoid any impulse to defend or explain yourself, and instead ask open-ended questions. 95% of the time genuinely listening and caring about a concern will make the situation better. Furthermore, there’s almost always useful information to be learned. More thoughts HERE
- Over-Communication Is A Myth – Your team never knows what’s going on in your brain unless you tell them. Sometimes this is with good reason. Sometimes you aren’t clear on what you’re going to do in a situation. But never forget, most people feel supported by knowing as much about what’s going on possible. Even clarifying “I’m still undecided on what to do here, I’ll need another week to keep thinking on it” can be valuable. As the leader, you’re in the driver’s seat, and everyone else is in the backseat of a long passenger van. If you keep making hard turns without a sufficient heads-up, they’re going to get nauseous.
SIDE NOTE: Too much poor communication is a real thing. Too many poorly written emails or unclear announcements with too many words will actually leave your team more confused. Clarity in writing and speaking, both in content and delivery, is an important indicator of clarity in thinking. If this is a weak point for you, consider getting coaching in writing and speaking.
- The “Hedgehog” Test – The “hedgehog” concept from Jim Collins’s Good to Great remains my favorite way to consider a new venture. When looking at launching a new program or business idea, ask yourself three questions:
- Can I/ we be word-class at this?
- Do I/ we love it?
- Does it make sense financially?
All too often when looking at business ideas, one of these pieces is missing. Oftentimes the person LOVES the idea but never took the time to look at the numbers and see if it’s financially viable. Alternatively, many people can get lured into something that’s potentially lucrative, but not consider if they’ll love the hell out of it (in which case it won’t really be lucrative for long because it will be a slog).
I can say for me, most of my best ideas started as something I genuinely wanted to do first and thought people would dig, and then I pursed after running numbers to see if it could be sufficiently profitable. Unless you’re doing it purely for fun, both points matter.
- All Business Advice Is Sometimes Wrong and Sometimes Right – If you study both the theory and application of business, you’ll often seen conflicting points of view. While at first blush this may seem because one of the ideas is correct and one is wrong, all advice is applicable in certain contexts. Even a broken clock is right twice a day. When considering adopting some business advice, consider both your current context and the historical, professional, and personal context of the book’s author, guru, advice-giver, etc. Advice written for a manager in an established Fortune 500 company in the late 90’s doesn’t always translate to an entrepreneur dealing with a spike in growth in a small business in the late 2010’s.
- “There Are No Silver Bullets. Just Lots of Lead Bullets” – Ben Horowitz – When looking to solve a business challenge, it’s going to be very rare that there’s one thing that’s going to take care of an issue. Challenges are usually multi-factorial. So are most solutions. You do want to do your best to separate out variables when implementing solutions, because it helps you learn what’s actually effective. But appreciate that for most business struggles, it’s rarely “one thing” causing a given challenge, which means a single solution rarely does the trick. Don’t look for a silver bullet, look for several lead bullets.
Well there’s my list. Would love to hear some of yours. What principles have you found to be effective in running your business?