There are natural laws that govern how business acts and responds to the world. The more we understand these laws, the more we can work within them and be successful. The less we understand about these laws, the more likely we are to bang ourselves and our businesses up against them, and it hurts when we do. Over the next few postings, I’m going to share some of the natural laws I’ve observed.
#1 Pick Any Two
Downstairs, in my recording studio, there’s a sign on the wall. It’s very simply designed, printed off of my computer, tacked onto my bulletin board. But it’s the first of my laws of business.
It reads: “Good. Fast. Cheap. Pick any two”
At first glance, it’s often confusing to people. It’s not immediately clear what it means. But it demonstrates the ongoing tradeoffs and compromises that we face in business, and in life. It presents three qualities that are desirable in any circumstance. Then it points out that you can’t have all three.
Let’s consider all of the situations this simple law addresses:
First, “If you want it good and fast, it won’t be cheap.” Have you ever needed something done really fast? It’s got to be done by this Friday! So you call someone to do it, and they quote you the price.
Ouch.
Why so high? Well, because they’re going to have to really scramble, and really put out some time and effort to do a good job on such short notice. They might have to put off some other clients. So, they’re gonna charge you for it.
Another situation. Maybe you want something, say, a website. You want it done well, so it’s going to take some real effort to do, and you want it done soon. What that means is that you’re going to have to sink some real overtime into getting it done by your goal. It might not cost you extra money, but it won’t be cheap in terms of work, time, and effort.
Second, “If you want it good, and cheap, it won’t be fast.” So, maybe it’s important that something be done very well, and it be implemented effectively, and maybe cost is a big factor, and you want it cheap, or you don’t want to put in a lot of immediate effort. Then you have to be willing to accept that it will take some time to happen. No overnight successes here.
Often the providers are very busy, and they’ll be willing to work your project in. They’ll do a good job, but since you’re not paying top dollar, it won’t be a priority. As a result it’s good, and it’s cheap, but it’s not fast.
Third, “If you want it cheap and fast, it won’t be good.” If you’re not willing to pay the price, either in financial costs or in human effort, and you need it now, the results will be less than satisfactory. This, sadly, is one of the more common ways that this fundamental law is misunderstood. All too often, people jump into a venture because they think that with very little effort, and in only a few weeks, their business will be successful and bringing in the bucks.
But let’s look at that: With low effort (cheap), and little time (fast), it won’t be effective (good).
So, where do you sit? What can you do? Where do you fall into these equations?
Well, let’s say you’ve got a lot of time in the day, but you want to get it rolling soon. Well, then you’re in the “Good and Fast” category. You can put in the effort (making it not cheap). But let’s say that you’re working this part-time. You’ve got a regular job and a family to be with. In that case you want it “Good and Cheap”. It may take you a while to get it done, but with relatively lower effort per day invested, you get the job done. It’s a great website and good, solid business plan, but it just takes a little longer to implement it. But hey, that plan worked for the tortoise when he beat the hare!
The plan you definitely don’t want to buy is the “fast and cheap” package. Because of the three, that’s the one that brings results that are not good. And no matter what else happens, if it’s not effective, nothing works.
So…
Pick any two!
Tuesday, January 18, 2005
Tuesday, January 11, 2005
When Good Advertising Goes Bad
OK, we all know that ads are a part of life. It seems that there isn’t a single aspect of our lives these days that hasn’t somehow been infiltrated by advertising.
I remember in the early days of cable TV, back when it was called “pay TV”, one of its big selling points was that there wouldn’t be any ads. The stations would make money by the fees that viewers paid.
Well, I’ve got basic cable, now, and the ads are more prevalent and more annoying than the basic network ads. With the advent of the shopping networks, there are now channels that are “All ads, all the time”.
There’s junk mail in my mailbox, spam in my inbox, ads on my door, ads on websites, ads on busses and billboards. I went to the movies a bit ago, and I sat through, I’m not exaggerating, here, 10 minutes of ads and 15 minutes of previews before the feature started.
And, of course, advertising drives the web.
Now, advertising is not all evil. We are businesspeople. We need to get the word out about our products and services. The more I’m involved in both business and business mentoring, the more I am convinced that advertising drives business. Those that advertise thrive, those that don’t—die.
But we, as the advertisers, need to be very careful about how we advertise. It’s easy to get giddy with the new ways and possibilities for promotions that new technologies bring to us. But just because something can be done, doesn’t mean it should be done. There are some ways of advertising that, beyond simply not working, will actually turn your potential customers against you.
A colleague forwarded to me an article by Jakob Nielsen, author of “Designing Web Usability” and owner of http://useit.com, that showed me in some very clear terms what people don’t like about internet advertising. Take a look at this chart from the article:
Design Element -- Users Answering"Very Negatively"or "Negatively"
Pops-up in front of your window -- 95%
Loads slowly -- 94%
Tries to trick you into clicking on it -- 94%
Does not have a "Close" button -- 93%
Covers what you are trying to see -- 93%
Doesn't say what it is for -- 92%
Moves content around -- 92%
Occupies most of the page -- 90%
Blinks on and off -- 87%
Floats across the screen -- 79%
Automatically plays sound -- 79%
This serves pretty well as a “Ten Commandments” of web-based advertising. These “Thou-Shalt-Not’s” show quite plainly what people don’t like.
And, these tricks have been shown to go beyond simply not being very effective. They take the realm of advertising to new lows, where customers actually get tangibly upset and send nasty letters to both the advertiser and the host sites. Ads are supposed to catch people’s interest and make them intrigued enough to click through to your site, not bring them pounding on your door, screaming for blood, with torches and pitchforks.
So, part of the lesson is: Don’t advertise this way, and don’t let others advertise on your site this way.
But another part of the lesson is: Don’t let your own internal site design emulate any of these annoying and frightening strategies. Don’t build pop-ups into your site. Think twice before you have music start automatically playing on your site. Don’t have deceptive links that trick you into clicking.
Once again, having clear and honest content that delivers valuable information and products to your customers is the best way to go!
I remember in the early days of cable TV, back when it was called “pay TV”, one of its big selling points was that there wouldn’t be any ads. The stations would make money by the fees that viewers paid.
Well, I’ve got basic cable, now, and the ads are more prevalent and more annoying than the basic network ads. With the advent of the shopping networks, there are now channels that are “All ads, all the time”.
There’s junk mail in my mailbox, spam in my inbox, ads on my door, ads on websites, ads on busses and billboards. I went to the movies a bit ago, and I sat through, I’m not exaggerating, here, 10 minutes of ads and 15 minutes of previews before the feature started.
And, of course, advertising drives the web.
Now, advertising is not all evil. We are businesspeople. We need to get the word out about our products and services. The more I’m involved in both business and business mentoring, the more I am convinced that advertising drives business. Those that advertise thrive, those that don’t—die.
But we, as the advertisers, need to be very careful about how we advertise. It’s easy to get giddy with the new ways and possibilities for promotions that new technologies bring to us. But just because something can be done, doesn’t mean it should be done. There are some ways of advertising that, beyond simply not working, will actually turn your potential customers against you.
A colleague forwarded to me an article by Jakob Nielsen, author of “Designing Web Usability” and owner of http://useit.com, that showed me in some very clear terms what people don’t like about internet advertising. Take a look at this chart from the article:
Design Element -- Users Answering"Very Negatively"or "Negatively"
Pops-up in front of your window -- 95%
Loads slowly -- 94%
Tries to trick you into clicking on it -- 94%
Does not have a "Close" button -- 93%
Covers what you are trying to see -- 93%
Doesn't say what it is for -- 92%
Moves content around -- 92%
Occupies most of the page -- 90%
Blinks on and off -- 87%
Floats across the screen -- 79%
Automatically plays sound -- 79%
This serves pretty well as a “Ten Commandments” of web-based advertising. These “Thou-Shalt-Not’s” show quite plainly what people don’t like.
And, these tricks have been shown to go beyond simply not being very effective. They take the realm of advertising to new lows, where customers actually get tangibly upset and send nasty letters to both the advertiser and the host sites. Ads are supposed to catch people’s interest and make them intrigued enough to click through to your site, not bring them pounding on your door, screaming for blood, with torches and pitchforks.
So, part of the lesson is: Don’t advertise this way, and don’t let others advertise on your site this way.
But another part of the lesson is: Don’t let your own internal site design emulate any of these annoying and frightening strategies. Don’t build pop-ups into your site. Think twice before you have music start automatically playing on your site. Don’t have deceptive links that trick you into clicking.
Once again, having clear and honest content that delivers valuable information and products to your customers is the best way to go!
Wednesday, January 05, 2005
The Power of Thinking Small
(But in a Big Way)
Often, people will ask me in frustration, "How am I supposed to compete with WalMart (or insert the name of whatever huge national or multi-national retail chain here)? They're huge! I'm small. They've got buying power! I don't. Bla, bla, bla..."
I've heard it in so many different ways, and in so many variations, but it all comes down to the same thing. And it also comes down to the same answer.
You're right. You can't compete.
At least, you can't if you try and compete on their terms. Why? For the exact same reason that were spelled out in the first place. But if you compete on your own terms, it can still work, and work very well.
I recently came across an article in the newsletter of the "Just Plain Folks" website (a support site for independent songwriters). Even though it spoke directly to the music business, I'm finding more and more that it applies to all businesses. Let me share with you an excerpt or two:
"I have a notion that we're turning a corner (or experiencing a swing in the pendulum) where an artist who focuses on a smaller number of fans and serves them with a high level of direct interaction and communication will be the new model for success, even in the face of new technology and the shift in old school music business procedures. I think a new definition of success will be the artist who has 5000 passionate fans worldwide who spend 20-30 dollars a year on your creative output. You'll communicate with weblogs, supply them with regular unique songs and videos via digital files, share the details on the creation of and motivation behind your work on a regular basis, almost like you're a unique reality show for your fans. You will creatively serve them in a way that the 'industry' can't and/or won't.
"Rather than spending your time begging for recognition from the mass media or trying to reach critical mass numbers to get a 'deal' and make a living, you'll do the opposite of the competition and play 'small ball'. Earning 100-150K per year, while maintaining 100% control over your artistic vision and output is the way to do it in the future. Releasing music as it's made and not on some corporate schedule will free artists in a way we haven't seen in our lifetimes. Focusing only on those who get and appreciate what you do rather than spinning your wheels trying to appeal to the masses will make you far more artistically productive and will allow you to take more artistic risks and to grow far more quickly and deeply than our current system allows."
No matter what your product line, the same principle holds.
You see, I'm seeing two trends in business right now. A trend toward bigness, toward buy-everything-at-one-store hugeness. And I'm also seeing a trend toward smallness. Toward niche markets. Toward finding things that you can do well, even if it's to a smaller audience, and going after that audience with gusto. And, by finding that audience, you can grow big.
That doesn't mean it's going to be easy. Business was never easy. But it's not difficult, either. By that I mean, you'll have to work at it, but the work isn't hard.
Here's some guidelines:
ONE-Identify your passions. One thing that the big stores don't have is passion. How can they? They're so scattered they can't bring a focus on anything. It's tough to be passionate about EVERYTHING, right? So, pick something you love, something you're good at.
TWO-Identify your opportunities. The next step is to take it from interests and hobbies to the business world. Is there a demand? Can you find a source for the products? Can you offer them for a reasonable price?
THREE-Identify your audience. Selling is a two-way street, and you can't ignore that you need customers. If you don't know who you want to bring to your shop, you won't be able to invite them in. You have to know who they are, and where they are, and what other things they're interested in. Since you have some passion about whatever it is you're selling, it's likely that you, yourself, are in that audience, so you'll be able to relate to them.
FOUR-Serve your audience better than anyone else can. In the musical model above, it lists many ways that you can serve your customers, beyond just selling to them. Be informative, instructional. Blog. Keep them up to date on changes, not only in your business, but also in the whole industry. You are in a position to be their best friend in one area. Do you think WalMart is gonna do that?
And so it is, that by thinking small, or narrow, you can grow big.
Often, people will ask me in frustration, "How am I supposed to compete with WalMart (or insert the name of whatever huge national or multi-national retail chain here)? They're huge! I'm small. They've got buying power! I don't. Bla, bla, bla..."
I've heard it in so many different ways, and in so many variations, but it all comes down to the same thing. And it also comes down to the same answer.
You're right. You can't compete.
At least, you can't if you try and compete on their terms. Why? For the exact same reason that were spelled out in the first place. But if you compete on your own terms, it can still work, and work very well.
I recently came across an article in the newsletter of the "Just Plain Folks" website (a support site for independent songwriters). Even though it spoke directly to the music business, I'm finding more and more that it applies to all businesses. Let me share with you an excerpt or two:
"I have a notion that we're turning a corner (or experiencing a swing in the pendulum) where an artist who focuses on a smaller number of fans and serves them with a high level of direct interaction and communication will be the new model for success, even in the face of new technology and the shift in old school music business procedures. I think a new definition of success will be the artist who has 5000 passionate fans worldwide who spend 20-30 dollars a year on your creative output. You'll communicate with weblogs, supply them with regular unique songs and videos via digital files, share the details on the creation of and motivation behind your work on a regular basis, almost like you're a unique reality show for your fans. You will creatively serve them in a way that the 'industry' can't and/or won't.
"Rather than spending your time begging for recognition from the mass media or trying to reach critical mass numbers to get a 'deal' and make a living, you'll do the opposite of the competition and play 'small ball'. Earning 100-150K per year, while maintaining 100% control over your artistic vision and output is the way to do it in the future. Releasing music as it's made and not on some corporate schedule will free artists in a way we haven't seen in our lifetimes. Focusing only on those who get and appreciate what you do rather than spinning your wheels trying to appeal to the masses will make you far more artistically productive and will allow you to take more artistic risks and to grow far more quickly and deeply than our current system allows."
No matter what your product line, the same principle holds.
You see, I'm seeing two trends in business right now. A trend toward bigness, toward buy-everything-at-one-store hugeness. And I'm also seeing a trend toward smallness. Toward niche markets. Toward finding things that you can do well, even if it's to a smaller audience, and going after that audience with gusto. And, by finding that audience, you can grow big.
That doesn't mean it's going to be easy. Business was never easy. But it's not difficult, either. By that I mean, you'll have to work at it, but the work isn't hard.
Here's some guidelines:
ONE-Identify your passions. One thing that the big stores don't have is passion. How can they? They're so scattered they can't bring a focus on anything. It's tough to be passionate about EVERYTHING, right? So, pick something you love, something you're good at.
TWO-Identify your opportunities. The next step is to take it from interests and hobbies to the business world. Is there a demand? Can you find a source for the products? Can you offer them for a reasonable price?
THREE-Identify your audience. Selling is a two-way street, and you can't ignore that you need customers. If you don't know who you want to bring to your shop, you won't be able to invite them in. You have to know who they are, and where they are, and what other things they're interested in. Since you have some passion about whatever it is you're selling, it's likely that you, yourself, are in that audience, so you'll be able to relate to them.
FOUR-Serve your audience better than anyone else can. In the musical model above, it lists many ways that you can serve your customers, beyond just selling to them. Be informative, instructional. Blog. Keep them up to date on changes, not only in your business, but also in the whole industry. You are in a position to be their best friend in one area. Do you think WalMart is gonna do that?
And so it is, that by thinking small, or narrow, you can grow big.
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