If you're new to negotiating or find it difficult, here are some missteps to avoid.
Every entrepreneur spends some time haggling, whether it is with customers, suppliers, investors, or would-be employees. Most business owners are street smart, and seem to naturally perform well in negotiations. You probably have a trick or two—some magic phrases to say, perhaps—that can help you gain the upperhand. But, often, the moment you get into trouble in a negotiation is when something careless just slips out. If you are new to negotiation, or feel it is an area where you can improve, check out these tips on precisely what not to say.
1. The word "between." It often feels reasonable—and therefore like progress—to throw out a range. With a customer, that may mean saying "I can do this for between $10,000 and $15,000." With a potential hire, you could be tempted to say, "You can start between April 1 and April 15." But that word between tends to be tantamount to a concession, and any shrewd negotiator with whom you deal will swiftly zero-in on the cheaper price or the later deadline. In other words, you will find that by saying the word between you will automatically have conceded ground without extracting anything in return.
2. "I think we're close." We've all experienced deal fatigue: The moment when you want so badly to complete a deal that you signal to the other side that you are ready to settle on the details and move forward. The problem with arriving at this crossroads, and announcing you're there, is that you have just indicated that you value simply reaching an agreement over getting what you actually want. And a skilled negotiator on the other side may well use this moment as an opportunity to stall, and thus to negotiate further concessions. Unless you actually face extreme time pressure, you shouldn't be the party to point out that the clock is loudly ticking in the background. Create a situation in which your counterpart is as eager to finalize the negotiation (or, better yet: more eager!) than you are.
3. "Why don't you throw out a number?" There are differing schools of thought on this, and many people believe you should never be the first person in a negotiation to quote a price. Let the other side start the bidding, the thinking goes, and they will be forced to show their hands, which will provide you with an advantage. But some research has indicated that the result of a negotiation is often closer to what the first mover proposed than to the number the other party had in mind; the first number uttered in a negotiation (so long as it is not ridiculous) has the effect of "anchoring the conversation." And one's role in the negotiation can matter, too. In the book Negotiation, Adam D. Galinsky of Northwestern's Kellogg School of Management and Roderick I. Swaab of INSEAD in France write: "In our studies, we found that the final outcome of a negotiation is affected by whether the buyer or the seller makes the first offer. Specifically, when a seller makes the first offer, the final settlement price tends to be higher than when the buyer makes the first offer."
4. "I'm the final decision maker." At the beginning of many negotiations, someone will typically ask, "Who are the key stakeholders on your side, and is everyone needed to make the decision in the room?" For most entrepreneurs, the answer, of course, is yes. Who besides you is ever needed to make a decision? Isn't one of the joys of being an entrepreneur that you get to call the shots? Yet in negotiations, particularly with larger organizations, this can be a trap. You almost always want to establish at the beginning of a negotiation that there is some higher authority with whom you must speak prior to saying yes. In a business owner's case, that mysterious overlord could be a key investor, a partner, or the members of your advisory board. The point is, while you will almost certainly be making the decision yourself, you do not want the opposing negotiators to know that you are the final decision maker, just in case you get cornered as the conversation develops. Particularly in a high-stakes deal, you will almost certainly benefit from taking an extra 24 hours to think through the terms. For once, be (falsely) humble: pretend like you aren't the person who makes all of the decisions.
5. "Fuck you." The savviest negotiators take nothing personally; they are impervious to criticism and impossible to fluster. And because they seem unmoved by the whole situation and unimpressed with the stakes involved, they have a way of unnerving less-experienced counterparts. This can be an effective weapon when used against entrepreneurs, because entrepreneurs tend to take every aspect of their businesses very personally. Entrepreneurs often style themselves as frank, no-nonsense individuals, and they can at times have thin skin. But whenever you negotiate, remember that it pays to stay calm, to never show that a absurdly low counter-offer or an annoying stalling tactic has upset you. Use your equanimity to unnerve the person who is negotiating with you. And if he or she becomes angry or peeved, don't take the bait to strike back. Just take heart: You've grabbed the emotional advantage in the situation. Now go close that deal.
http://www.inc.com/guides/2011/01/five-things-to-never-say-while-negotiating.html
3/4/11
Making a Trigger Fire On Column Change
I was working with some SQL Server triggers today at work, the triggers were used to track changes to a Price column on a table. Whenever the Price column changed, we wanted to track that in a separate table so we could have a price history. So I setup the trigger on the Price column and set it to fire on INSERTs and UPDATEs. Here was the trigger at this point:
CREATE TRIGGER trg_SavePriceHistory ON myTable
FOR INSERT, UPDATE
AS
IF UPDATE(Price)
BEGIN
DECLARE @newPrice decimal(18,2)
DECLARE @itemId int
SET @newPrice = (SELECT Price FROM Inserted)
SET @itemId = (SELECT ItemID FROM Inserted)
INSERT INTO PriceHistory (NewPrice, ItemID) VALUES (@newPrice, @itemId)
END
Its pretty straightforward, check to see if the Price column was updated and if it was then make a new entry in the PriceHistory table with the new price and the item�s id. After a little while, I realized that every update statement that included the Price column was setting off the trigger. It made sense, I guess I assumed that it would only fire when the value of the Price column actually changed, not if it simply got written with the same value. For instance, if I ran the following INSERT statement:
INSERT INTO myTable (Price) VALUES (10);
Then the trigger would fire and the price would get logged. Now suppose I update the record that I just inserted with the same value for price (assume the id = 1):
UPDATE myTable SET Price = 10 WHERE ItemID = 1;
Now the trigger will fire again, which is what I don�t want. I only wanted the trigger to fire if the value had changed. I was kind of scratching my head, being new to triggers and all, about how I could get that to work. I started writing an email to an internal mailing list, when it hit me in one of those �Aha!� moments. Inside each trigger are 2 special tables called �Inserted� and �Deleted�. The Deleted table holds the values of the record before its state was changed by my UPDATE statement and the Inserted table holds the values of record after my UPDATE statement. All I had to do was compare the Price columns from each table and see if they were different; if they were the same, then I could just exit my trigger. So heres what the trigger looked like after I modified it (modifications in red):
CREATE TRIGGER trg_SavePriceHistory ON myTable
FOR INSERT, UPDATE
AS
IF UPDATE(Price)
BEGIN
DECLARE @newPrice decimal(18,2)
DECLARE @oldPrice decimal(18,2)
DEClARE @itemId int
SET @newPrice = (SELECT Price FROM Inserted)
SET @oldPrice = (SELECT Price FROM Deleted)
IF @newPrice != @oldPrice
BEGIN
SET @itemId = (SELECT ItemID FROM Inserted)
INSERT INTO PriceHistory (NewPrice, ItemID) VALUES (@newPrice, @itemId)
END
END
This is all probably very obvious to someone familiar with triggers, just thought I would help someone else out if they were looking for this.
-----------------------------------------------------------------------
COMMENT:
Hi Ben,
I may be wrong but I don’t think your code will work correctly when updating sets: the inserted and deleted tables are what thet are: tables and not rows.
You are logging the changes to one row, not a set.
The following code works for an update trigger.
You can add similar code for delete and insert statements (or you can change this one to cover the three possibilities)
INSERT INTO PriceHistory(ItemId, OldPrice, NewPrice)
SELECT I.ItemId, D.Price, I.Price
FROM INSERTED I INNER JOIN DELETED D ON I.ItemId = D.ItemId
WHERE I.Price != D.Price
Kind regards,
Karel Vandenhove
http://benreichelt.net/blog/2005/12/13/making-a-trigger-fire-on-column-change
CREATE TRIGGER trg_SavePriceHistory ON myTable
FOR INSERT, UPDATE
AS
IF UPDATE(Price)
BEGIN
DECLARE @newPrice decimal(18,2)
DECLARE @itemId int
SET @newPrice = (SELECT Price FROM Inserted)
SET @itemId = (SELECT ItemID FROM Inserted)
INSERT INTO PriceHistory (NewPrice, ItemID) VALUES (@newPrice, @itemId)
END
Its pretty straightforward, check to see if the Price column was updated and if it was then make a new entry in the PriceHistory table with the new price and the item�s id. After a little while, I realized that every update statement that included the Price column was setting off the trigger. It made sense, I guess I assumed that it would only fire when the value of the Price column actually changed, not if it simply got written with the same value. For instance, if I ran the following INSERT statement:
INSERT INTO myTable (Price) VALUES (10);
Then the trigger would fire and the price would get logged. Now suppose I update the record that I just inserted with the same value for price (assume the id = 1):
UPDATE myTable SET Price = 10 WHERE ItemID = 1;
Now the trigger will fire again, which is what I don�t want. I only wanted the trigger to fire if the value had changed. I was kind of scratching my head, being new to triggers and all, about how I could get that to work. I started writing an email to an internal mailing list, when it hit me in one of those �Aha!� moments. Inside each trigger are 2 special tables called �Inserted� and �Deleted�. The Deleted table holds the values of the record before its state was changed by my UPDATE statement and the Inserted table holds the values of record after my UPDATE statement. All I had to do was compare the Price columns from each table and see if they were different; if they were the same, then I could just exit my trigger. So heres what the trigger looked like after I modified it (modifications in red):
CREATE TRIGGER trg_SavePriceHistory ON myTable
FOR INSERT, UPDATE
AS
IF UPDATE(Price)
BEGIN
DECLARE @newPrice decimal(18,2)
DECLARE @oldPrice decimal(18,2)
DEClARE @itemId int
SET @newPrice = (SELECT Price FROM Inserted)
SET @oldPrice = (SELECT Price FROM Deleted)
IF @newPrice != @oldPrice
BEGIN
SET @itemId = (SELECT ItemID FROM Inserted)
INSERT INTO PriceHistory (NewPrice, ItemID) VALUES (@newPrice, @itemId)
END
END
This is all probably very obvious to someone familiar with triggers, just thought I would help someone else out if they were looking for this.
-----------------------------------------------------------------------
COMMENT:
Hi Ben,
I may be wrong but I don’t think your code will work correctly when updating sets: the inserted and deleted tables are what thet are: tables and not rows.
You are logging the changes to one row, not a set.
The following code works for an update trigger.
You can add similar code for delete and insert statements (or you can change this one to cover the three possibilities)
INSERT INTO PriceHistory(ItemId, OldPrice, NewPrice)
SELECT I.ItemId, D.Price, I.Price
FROM INSERTED I INNER JOIN DELETED D ON I.ItemId = D.ItemId
WHERE I.Price != D.Price
Kind regards,
Karel Vandenhove
http://benreichelt.net/blog/2005/12/13/making-a-trigger-fire-on-column-change
3/2/11
25 Ways to Waste Your Money
Has your budget sprung a leak?
Nearly everyone has spending holes. And as with other kinds of leaks, you may have hardly noticed them. But those small drips can quickly add up to big bucks. The trick is to find the holes and plug them so you can keep more money in your pocket. That extra cash could be the ticket to finally being able to save, invest, or break your cycle of living from paycheck to paycheck.
Here are 25 common ways people waste money. See if any of these sound familiar, then look for ways to plug your own leaks:
1. Carrying a balance. Debt is a shackle that holds you back. For instance, if you have a $1,000 balance on a credit card that charges an 18% rate, you blow $180 every year on interest. Get in the habit of paying off your balance in full each month.
2. Overspending on gas and oil for your car. There's no need to spring for premium fuel if the manufacturer says regular is just fine. You should also check to make sure your tires are optimally inflated to get the best gas mileage. And are you still paying for an oil change every 3,000 miles? Many models nowadays can last 5,000 to 7,000 miles between changes, and some even have built-in sensors to tell you when it's time to change the oil. Check your manual to find the best time for your car's routine maintenance.
3. Keeping unhealthy habits. Smoking costs a lot more than just what you pay for a pack of cigarettes. It significantly increases the cost of life and health insurance. And you'll pay more for homeowners and auto insurance. Add in various other expenses, and the true cost of smoking adds up dramatically over a lifetime -- $86,000 for a 24-year-old woman over a lifetime and $183,000 for a 24-year-old man over a lifetime, according to "The Price of Smoking" (The MIT Press).
Another habit to quit: indoor tanning. There is now a 10% tax on indoor tanning services. As with cigarettes, the true cost of tanning -- which the World Health Organization lists among the worst-known carcinogens -- is higher than just the price you pay each time you go to the salon.
4. Using a cell phone that doesn't fit. How many people do you know who have spent hundreds of dollars on fancy phones, and then pay hundreds of dollars every month for the privilege of using them? Your phone is not a status symbol. It is a way to communicate. Many people pay too much for cell phone contracts and don't use all their minutes. Go to BillShrink.com or Validas.com to evaluate your usage and see if you can find a plan that fits you better. Or consider a prepaid cell phone. Compare rates at MyRatePlan.com.
5. Buying brand-name instead of generic. From groceries to clothing to prescription drugs, you could save money by choosing the off-brand over the fancy label. And in many cases, you won't sacrifice much in quality. Clever advertising and fancy packaging don't make brand-name products better than lesser-known brands.
6. Keeping your mouth shut. No one wants to be a nuisance. But by simply asking, you may be able to snag a lower rate on your credit card.
When shopping, watch for price discrepancies at the cash register, and make a habit of asking, "Do you have a coupon for this?" You might even be able to haggle for a lower price, especially on seasonal or perishable items, floor models or big-ticket purchases. Many stores will also match or beat their competitors' prices if you speak up. And try asking for a discount if you pay cash or debit -- this saves the store the cut it has to pay the credit-card company, so it may be willing to give you a deal. It doesn't hurt to ask.
7. Buying beverages one at a time. If you're in the habit of buying bottled water, coffee-by-the-cup or vending-machine soda, your budget has sprung a leak. Instead, drink tap water or use a water filter. Brew a homemade cuppa joe. Buy your soda in bulk and bring it to work. (Better yet, skip the soda in favor of something healthier.)
8. Paying for something you can get for free. There's a boatload of freebies for the taking, if you know where to look. Some of our favorites include restaurant meals for kids, credit reports, software programs, prescription drugs and tech support. You can also help yourself to all the books, music and movies your heart desires at your local library for free (or dirt cheap).
9. Stashing your money with Uncle Sam rather than in an interest-earning account. If you get a tax refund each April, you let the government take too much money in taxes from your paycheck all year long. Get that money back in your pocket this year -- and put it to work for you -- by adjusting your tax withholding. You can file a new Form W-4 with your employer at any time.
10. Being disorganized. It pays to get your financial house in order. Lost bills and receipts, forgotten tax deductions, and clueless spending can cost you hundreds of dollars each year. Start by setting up automatic bill payment online for your monthly bills to eliminate late fees and postage costs. Then get a handful of files to organize important receipts, insurance policies, tax documents and other statements.
Finally, consider using free budgeting software such as Mint.com to see exactly where your money goes, making it much harder for you to lose track of it.
11. Letting your money wallow in a low-interest account. You work hard for your money. Shouldn't it work hard for you too? If you're stashing your cash in a traditional savings account earning next-to-nothing, you're wasting it. Make sure you're getting the best return on your money. Search for the highest yields on CDs and money-market savings accounts. And consider using a free online checking account that pays interest, such as ones offered by Everbank and ING Direct.
Your stocks and mutual funds should be working hard for you, too. If they've been lagging behind their peers for too long, it could be time to say goodbye. Learn how to spot a wallowing fund or stock.
12. Paying late fees and missing deadlines. Return those library books and movie rentals on time. Mail in those rebates. Submit expense reports on time for reimbursement. And if you make a bad purchase, don't just stuff it in the back of the closet and hope it goes away. Get off your duff, return it and get your money back before you lose the receipt.
13. Paying ATM fees. Expect to throw away nearly $4 every time you use an ATM that isn't in your bank's network. That's because you'll pay an ATM surcharge, and your own bank will hit you with a non-network fee. Consider switching to a bank, such as Ally Bank, that doesn't charge ATM fees and reimburses you for fees other banks charge. Another way to avoid fees if there's not an ATM in your bank's network nearby is to get cash back when you make a purchase at the grocery store or drugstore.
14. Shopping at the grocery store without a calculator. Check how much an item costs per ounce, pound or other unit of measurement. When you comparison-shop by unit price, you save. For example, if a pack of 40 diapers costs $13, that's 33 cents per diaper. But if you buy a box of 144 diapers for $35, that's 24 cents per diaper. You save 27%! (Of course, buying more of something only saves money if you use it all. If you end up throwing much out, you wasted money.)
15. Paying for things you don't use. Do you watch all those cable channels? Do you need those extra features on your phone? Are you getting your money's worth out of your gym membership? Are you taking full advantage of your Netflix, TiVo and magazine subscriptions? Take a look at what your family actually uses, then trim accordingly.
16. Not reading the fine print. Thought you were being smart by transferring the balance on a high-rate credit card to a low-rate one? Did you read the fine print, though? Some credit-card companies now charge up to 5% for balance transfers. Also watch out for free checking accounts that aren't so free. Some banks are starting to charge fees unless you meet certain criteria.
17. Mismanaging your flexible spending account. For some people, that means failing to take advantage of their workplace FSA, which lets employees set aside pre-tax dollars for out-of-pocket medical costs. Other people fail to submit receipts on time. And the average worker leaves $86 behind in his or her use-it-or-lose-it FSA account each year, according to WageWorks, an employee benefits provider.
18. Being an inflexible traveler. You'll save a lot of money on travel if you're willing to be flexible. Consider traveling before or after peak season when prices are lower. Or search for flights over a range of dates to find the lowest fare. Booking at the last minute also can save you money because hotels and airlines slash prices to fill rooms and planes. And flexibility pays off at blind-booking sites, such as Priceline or Hotwire, which offer deep discounts if you're willing to book a room or flight without knowing which hotel or airline (or other details about the flight) you're getting until you pay.
19. Sticking with the same service plans and the same service providers year after year. Hey, we're all for loyalty to trusted service providers, such as your bank, insurer, credit-card company, mutual fund, phone plan or cable plan. But over time, as prices and your circumstances change, the status-quo may not be the best deal any more. Smart consumers are always on the lookout for bargains.
20. Making impulse purchases. When you buy before you think, you don't give yourself time to shop around for the best price. Take the time to compare prices online, read product reviews and look for coupons when appropriate.
Make it a policy to give yourself a cooling-off period in case you're ever tempted to make an impulse purchase. Go home and sleep on the decision. More often than not, you'll decide you don't need the item after all.
21. Dining out frequently. Spending $10, $20, $30 per person for dinner can be a huge drain on your wallet. Throw in a $6 sandwich for lunch every day and you've got quite a leak. Learning to cook and bringing your lunch from home can save a couple hundred bucks each month. When you do go out, consider getting carry-out instead of dining in (you'll save on the tip and drink), skip the overpriced appetizer and dessert, and search the Web for coupons ahead of time.
22. Trying to time the stock market. In trying to buy low and sell high, many people actually do the opposite. Instead, employ the simple strategy of "dollar-cost-averaging." By investing a fixed dollar amount at regular intervals, you smooth out the ups and downs of the market over time. If you take out the emotion and guesswork, investing can become less stressful, less wasteful and more successful.
23. Buying insurance you don't need. You only need life insurance if someone is financially dependent upon you, such as a child. That means most singles, seniors or kids don't need a policy. Other policies you can probably do without include credit-card insurance (better to use the premium to pay down your debt in the first place), rental-car insurance (most auto policies and credit cards carry some coverage), mortgage life insurance and accidental-death insurance (a regular term-life insurance policy will do the trick).
24. Buying new instead of used. Talk about a spending leak -- or, rather, a gush. Cars lose 20% of their value the moment they're driven off the lot and 65% in the first five years. Used models can be a real value because you can get a car that's still in fine working order for a fraction of the new-car price. And you'll pay less in collision insurance and taxes, too.
Cars aren't the only things worth buying used. Consider the savings on pre-owned books, toys, exercise equipment, children's clothing and furniture. (Of course, there are some things you're better off buying new, including mattresses, laptops, linens, shoes and safety equipment, such as car seats and bike helmets.)
25. Procrastinating. Time is an asset money can't buy. Start investing for retirement as soon as possible. For instance, if a 40-year-old saves $300 a month with an 8% return per year, he'll have $287,000 by age 65. If he had started saving 15 years earlier at age 25, he'd have more than $1 million.
http://finance.yahoo.com/banking-budgeting/article/112202/25-ways-to-waste-your-money
Nearly everyone has spending holes. And as with other kinds of leaks, you may have hardly noticed them. But those small drips can quickly add up to big bucks. The trick is to find the holes and plug them so you can keep more money in your pocket. That extra cash could be the ticket to finally being able to save, invest, or break your cycle of living from paycheck to paycheck.
Here are 25 common ways people waste money. See if any of these sound familiar, then look for ways to plug your own leaks:
1. Carrying a balance. Debt is a shackle that holds you back. For instance, if you have a $1,000 balance on a credit card that charges an 18% rate, you blow $180 every year on interest. Get in the habit of paying off your balance in full each month.
2. Overspending on gas and oil for your car. There's no need to spring for premium fuel if the manufacturer says regular is just fine. You should also check to make sure your tires are optimally inflated to get the best gas mileage. And are you still paying for an oil change every 3,000 miles? Many models nowadays can last 5,000 to 7,000 miles between changes, and some even have built-in sensors to tell you when it's time to change the oil. Check your manual to find the best time for your car's routine maintenance.
3. Keeping unhealthy habits. Smoking costs a lot more than just what you pay for a pack of cigarettes. It significantly increases the cost of life and health insurance. And you'll pay more for homeowners and auto insurance. Add in various other expenses, and the true cost of smoking adds up dramatically over a lifetime -- $86,000 for a 24-year-old woman over a lifetime and $183,000 for a 24-year-old man over a lifetime, according to "The Price of Smoking" (The MIT Press).
Another habit to quit: indoor tanning. There is now a 10% tax on indoor tanning services. As with cigarettes, the true cost of tanning -- which the World Health Organization lists among the worst-known carcinogens -- is higher than just the price you pay each time you go to the salon.
4. Using a cell phone that doesn't fit. How many people do you know who have spent hundreds of dollars on fancy phones, and then pay hundreds of dollars every month for the privilege of using them? Your phone is not a status symbol. It is a way to communicate. Many people pay too much for cell phone contracts and don't use all their minutes. Go to BillShrink.com or Validas.com to evaluate your usage and see if you can find a plan that fits you better. Or consider a prepaid cell phone. Compare rates at MyRatePlan.com.
5. Buying brand-name instead of generic. From groceries to clothing to prescription drugs, you could save money by choosing the off-brand over the fancy label. And in many cases, you won't sacrifice much in quality. Clever advertising and fancy packaging don't make brand-name products better than lesser-known brands.
6. Keeping your mouth shut. No one wants to be a nuisance. But by simply asking, you may be able to snag a lower rate on your credit card.
When shopping, watch for price discrepancies at the cash register, and make a habit of asking, "Do you have a coupon for this?" You might even be able to haggle for a lower price, especially on seasonal or perishable items, floor models or big-ticket purchases. Many stores will also match or beat their competitors' prices if you speak up. And try asking for a discount if you pay cash or debit -- this saves the store the cut it has to pay the credit-card company, so it may be willing to give you a deal. It doesn't hurt to ask.
7. Buying beverages one at a time. If you're in the habit of buying bottled water, coffee-by-the-cup or vending-machine soda, your budget has sprung a leak. Instead, drink tap water or use a water filter. Brew a homemade cuppa joe. Buy your soda in bulk and bring it to work. (Better yet, skip the soda in favor of something healthier.)
8. Paying for something you can get for free. There's a boatload of freebies for the taking, if you know where to look. Some of our favorites include restaurant meals for kids, credit reports, software programs, prescription drugs and tech support. You can also help yourself to all the books, music and movies your heart desires at your local library for free (or dirt cheap).
9. Stashing your money with Uncle Sam rather than in an interest-earning account. If you get a tax refund each April, you let the government take too much money in taxes from your paycheck all year long. Get that money back in your pocket this year -- and put it to work for you -- by adjusting your tax withholding. You can file a new Form W-4 with your employer at any time.
10. Being disorganized. It pays to get your financial house in order. Lost bills and receipts, forgotten tax deductions, and clueless spending can cost you hundreds of dollars each year. Start by setting up automatic bill payment online for your monthly bills to eliminate late fees and postage costs. Then get a handful of files to organize important receipts, insurance policies, tax documents and other statements.
Finally, consider using free budgeting software such as Mint.com to see exactly where your money goes, making it much harder for you to lose track of it.
11. Letting your money wallow in a low-interest account. You work hard for your money. Shouldn't it work hard for you too? If you're stashing your cash in a traditional savings account earning next-to-nothing, you're wasting it. Make sure you're getting the best return on your money. Search for the highest yields on CDs and money-market savings accounts. And consider using a free online checking account that pays interest, such as ones offered by Everbank and ING Direct.
Your stocks and mutual funds should be working hard for you, too. If they've been lagging behind their peers for too long, it could be time to say goodbye. Learn how to spot a wallowing fund or stock.
12. Paying late fees and missing deadlines. Return those library books and movie rentals on time. Mail in those rebates. Submit expense reports on time for reimbursement. And if you make a bad purchase, don't just stuff it in the back of the closet and hope it goes away. Get off your duff, return it and get your money back before you lose the receipt.
13. Paying ATM fees. Expect to throw away nearly $4 every time you use an ATM that isn't in your bank's network. That's because you'll pay an ATM surcharge, and your own bank will hit you with a non-network fee. Consider switching to a bank, such as Ally Bank, that doesn't charge ATM fees and reimburses you for fees other banks charge. Another way to avoid fees if there's not an ATM in your bank's network nearby is to get cash back when you make a purchase at the grocery store or drugstore.
14. Shopping at the grocery store without a calculator. Check how much an item costs per ounce, pound or other unit of measurement. When you comparison-shop by unit price, you save. For example, if a pack of 40 diapers costs $13, that's 33 cents per diaper. But if you buy a box of 144 diapers for $35, that's 24 cents per diaper. You save 27%! (Of course, buying more of something only saves money if you use it all. If you end up throwing much out, you wasted money.)
15. Paying for things you don't use. Do you watch all those cable channels? Do you need those extra features on your phone? Are you getting your money's worth out of your gym membership? Are you taking full advantage of your Netflix, TiVo and magazine subscriptions? Take a look at what your family actually uses, then trim accordingly.
16. Not reading the fine print. Thought you were being smart by transferring the balance on a high-rate credit card to a low-rate one? Did you read the fine print, though? Some credit-card companies now charge up to 5% for balance transfers. Also watch out for free checking accounts that aren't so free. Some banks are starting to charge fees unless you meet certain criteria.
17. Mismanaging your flexible spending account. For some people, that means failing to take advantage of their workplace FSA, which lets employees set aside pre-tax dollars for out-of-pocket medical costs. Other people fail to submit receipts on time. And the average worker leaves $86 behind in his or her use-it-or-lose-it FSA account each year, according to WageWorks, an employee benefits provider.
18. Being an inflexible traveler. You'll save a lot of money on travel if you're willing to be flexible. Consider traveling before or after peak season when prices are lower. Or search for flights over a range of dates to find the lowest fare. Booking at the last minute also can save you money because hotels and airlines slash prices to fill rooms and planes. And flexibility pays off at blind-booking sites, such as Priceline or Hotwire, which offer deep discounts if you're willing to book a room or flight without knowing which hotel or airline (or other details about the flight) you're getting until you pay.
19. Sticking with the same service plans and the same service providers year after year. Hey, we're all for loyalty to trusted service providers, such as your bank, insurer, credit-card company, mutual fund, phone plan or cable plan. But over time, as prices and your circumstances change, the status-quo may not be the best deal any more. Smart consumers are always on the lookout for bargains.
20. Making impulse purchases. When you buy before you think, you don't give yourself time to shop around for the best price. Take the time to compare prices online, read product reviews and look for coupons when appropriate.
Make it a policy to give yourself a cooling-off period in case you're ever tempted to make an impulse purchase. Go home and sleep on the decision. More often than not, you'll decide you don't need the item after all.
21. Dining out frequently. Spending $10, $20, $30 per person for dinner can be a huge drain on your wallet. Throw in a $6 sandwich for lunch every day and you've got quite a leak. Learning to cook and bringing your lunch from home can save a couple hundred bucks each month. When you do go out, consider getting carry-out instead of dining in (you'll save on the tip and drink), skip the overpriced appetizer and dessert, and search the Web for coupons ahead of time.
22. Trying to time the stock market. In trying to buy low and sell high, many people actually do the opposite. Instead, employ the simple strategy of "dollar-cost-averaging." By investing a fixed dollar amount at regular intervals, you smooth out the ups and downs of the market over time. If you take out the emotion and guesswork, investing can become less stressful, less wasteful and more successful.
23. Buying insurance you don't need. You only need life insurance if someone is financially dependent upon you, such as a child. That means most singles, seniors or kids don't need a policy. Other policies you can probably do without include credit-card insurance (better to use the premium to pay down your debt in the first place), rental-car insurance (most auto policies and credit cards carry some coverage), mortgage life insurance and accidental-death insurance (a regular term-life insurance policy will do the trick).
24. Buying new instead of used. Talk about a spending leak -- or, rather, a gush. Cars lose 20% of their value the moment they're driven off the lot and 65% in the first five years. Used models can be a real value because you can get a car that's still in fine working order for a fraction of the new-car price. And you'll pay less in collision insurance and taxes, too.
Cars aren't the only things worth buying used. Consider the savings on pre-owned books, toys, exercise equipment, children's clothing and furniture. (Of course, there are some things you're better off buying new, including mattresses, laptops, linens, shoes and safety equipment, such as car seats and bike helmets.)
25. Procrastinating. Time is an asset money can't buy. Start investing for retirement as soon as possible. For instance, if a 40-year-old saves $300 a month with an 8% return per year, he'll have $287,000 by age 65. If he had started saving 15 years earlier at age 25, he'd have more than $1 million.
http://finance.yahoo.com/banking-budgeting/article/112202/25-ways-to-waste-your-money
3/1/11
How to Assemble a Team to Buy a Business
Sure, there are the obvious experts you need by your side when buying a business. But did you consider a technology analyst, who could help evaluate the state of the company's technology? It could create leverage in negotiations.
You've decided it's time to finally buy your own business. Now what? Obviously buying a business can be a risky proposition, not unlike buying a house. And just like when you go about a home for the first time, you'll want to make sure you're not going in blind. That means that you need to assemble a team of skilled advisers to help guide your decisions that might range from evaluating business plans to nailing down the financing needed to make the deal. "Anyone buying a business will always be at a disadvantage even when they're asking the right questions because there are things sellers would rather not tell you, like that 75 percent of their business comes from a single client," says Carol Roth, a Chicago-based business strategist with Intercap Merchant Partners and author of The Entrepreneur Equation. "That's why you need to build a sharp team that can help uncover as many skeletons as possible."
And what kinds of experienced professionals should you include on the team you assemble to buy a business? There are three key experts that you must have at the table with you and six others that are strongly recommended.
Assembling a Team to Buy a Business: The 3 Key Experts
1. The Accountant
One expert you can't afford not to have on your team is an accountant who has experience in performing due diligence and buying businesses. The rub is that many accountants or CPAs think they know what they're doing when it comes to crunching the numbers of a business involved in a sale. Not so, says Bill Watson, whose company, Advanced Business Group, in Nashville, Tennessee, helps buy, sell, and value businesses. "I'm a CPA, and I can tell you that the average CPA is not out buying and selling businesses every day so they don't understand deal structure," he says. "It's not like buying a car." There are nuances to buying a business that the accountant you hire needs to be aware of. For instance, if you were to look at the books of a small business, you need to understand where and how the owner used "chargebacks," those ambiguous tax deductions like insurance charges or vacation expenses that business owners have the habit of burying in their books. In other words, a skilled accountant can help you uncover many of those skeletons hiding in the business's closets in an effort to evaluate what you should or shouldn't pay for.
2. The Lawyer
Just as when you go about choosing a CPA to join your team, you should target an attorney who specializes in mergers and acquisitions to give you the best advice when it comes to buying a business, says Roth. "This is not a case where you want to save a few dollars by hiring your cousin who happens to be a lawyer, but specializes in divorce law," she says. The reason is that you want an expert who knows how to review documents, such as environmental variables, and the kinds of contracts that might be in place with the current business owner. One of the most common sticky situations that many business buyers get into involves change-of-control issues related to leases or vendors, says Roth, where, based on a sale of the business, those relationships are no longer transferable—something that could dramatically change your appetite in terms of buying the business. "A good transactional lawyer can help you understand what contracts are null and void when you buy a business," says Roth.
3. The Intermediary
While entrepreneurs tend to pride themselves on their ability to go it alone, there are many reasons why it makes sense to bring on an experienced intermediary such as a business broker or investment banker to help shepherd your way through the business-buying process. Not only can an experienced banker or broker show you the ropes when it comes to what to expect throughout the entire process, they can also play a key role when it comes to playing hard ball with the seller, says Roth. "It can be really beneficial to have someone to play the 'bad cop' during negotiations," she says. "That way the buyer can ask the tough questions but blame it on their intermediary while preserving the relationships with employees and key partners they will need to run the business moving forward." In many cases, intermediaries can also pay for themselves, Roth says, by negotiating special deal terms or by finding hidden skeletons in the business they sniff out.
Assembling a Team to Buy a Business: 6 Additional Experts That Are Highly Recommended
4. Business Valuation Specialist
While settling on a price for the business you want to buy is something that your investment banker or broker will help with, it can also be valuable to reach out to someone who specializes in valuing companies, not unlike what an appraiser does with homes. A good valuation will take the business's financial strengths and weaknesses into account relative to its assets and cash flow, among other metrics.
5. Financing Expert
Unless you're planning on buying your new business with cash, you'll also need to have someone on your team that will help you secure the financing you'll need to get the deal done. Ideally, you'll be able to rely on someone who can walk you through the options available—bank loans, credit, etc.—as well as which ones make the best sense for you.
6. Real Estate Adviser
On a general level, most every business will have some real estate or property component linked to it, such as a lease, a deed, or even an option to buy additional land to expand upon in the future. That means it's wise to bring on someone who can help you weigh the pros and cons when it comes to the real estate details of the business you're considering buying. One organization to consider contacting for advice is The Counselors of Real Estate, www.cre.org, a professional association of commercial real estate advisers.
7. Insurance Agent
As an owner of a business, you'll also need to understand what you need to insure it. Therefore, it would be wise to get good counsel from an insurance agent or expert who can help map out what kind of coverage you might need regarding fire, error and omission, etc., before pulling the trigger on the deal.
8. Industry Expert
If you are interested in buying a business you already know something about, perhaps because you've worked for or owned a similar one in the past, you might not need to rely on someone to explain how the business works. If you are making a leap into a new industry, however, it makes sense to find someone you trust who has deep experience in that industry and can help you evaluate where the business stands relative to its competition and its customers.
9. Technology Analyst
Few companies these days operate without computers, whether it's to market themselves or to take orders from customers. That means that when you buy a business, you're also buying the equipment and data that the company has accumulated in its history—all of which can be extremely valuable to you. But, if the business has not kept on top of its information technology, perhaps by not backing up key data or by not investing in the best technology, you might want to bring in an expert who can help evaluate the state of the company's information technology infrastructure. Plus, if the company's technology is subpar, it could create some leverage in negotiations.
You've decided it's time to finally buy your own business. Now what? Obviously buying a business can be a risky proposition, not unlike buying a house. And just like when you go about a home for the first time, you'll want to make sure you're not going in blind. That means that you need to assemble a team of skilled advisers to help guide your decisions that might range from evaluating business plans to nailing down the financing needed to make the deal. "Anyone buying a business will always be at a disadvantage even when they're asking the right questions because there are things sellers would rather not tell you, like that 75 percent of their business comes from a single client," says Carol Roth, a Chicago-based business strategist with Intercap Merchant Partners and author of The Entrepreneur Equation. "That's why you need to build a sharp team that can help uncover as many skeletons as possible."
And what kinds of experienced professionals should you include on the team you assemble to buy a business? There are three key experts that you must have at the table with you and six others that are strongly recommended.
Assembling a Team to Buy a Business: The 3 Key Experts
1. The Accountant
One expert you can't afford not to have on your team is an accountant who has experience in performing due diligence and buying businesses. The rub is that many accountants or CPAs think they know what they're doing when it comes to crunching the numbers of a business involved in a sale. Not so, says Bill Watson, whose company, Advanced Business Group, in Nashville, Tennessee, helps buy, sell, and value businesses. "I'm a CPA, and I can tell you that the average CPA is not out buying and selling businesses every day so they don't understand deal structure," he says. "It's not like buying a car." There are nuances to buying a business that the accountant you hire needs to be aware of. For instance, if you were to look at the books of a small business, you need to understand where and how the owner used "chargebacks," those ambiguous tax deductions like insurance charges or vacation expenses that business owners have the habit of burying in their books. In other words, a skilled accountant can help you uncover many of those skeletons hiding in the business's closets in an effort to evaluate what you should or shouldn't pay for.
2. The Lawyer
Just as when you go about choosing a CPA to join your team, you should target an attorney who specializes in mergers and acquisitions to give you the best advice when it comes to buying a business, says Roth. "This is not a case where you want to save a few dollars by hiring your cousin who happens to be a lawyer, but specializes in divorce law," she says. The reason is that you want an expert who knows how to review documents, such as environmental variables, and the kinds of contracts that might be in place with the current business owner. One of the most common sticky situations that many business buyers get into involves change-of-control issues related to leases or vendors, says Roth, where, based on a sale of the business, those relationships are no longer transferable—something that could dramatically change your appetite in terms of buying the business. "A good transactional lawyer can help you understand what contracts are null and void when you buy a business," says Roth.
3. The Intermediary
While entrepreneurs tend to pride themselves on their ability to go it alone, there are many reasons why it makes sense to bring on an experienced intermediary such as a business broker or investment banker to help shepherd your way through the business-buying process. Not only can an experienced banker or broker show you the ropes when it comes to what to expect throughout the entire process, they can also play a key role when it comes to playing hard ball with the seller, says Roth. "It can be really beneficial to have someone to play the 'bad cop' during negotiations," she says. "That way the buyer can ask the tough questions but blame it on their intermediary while preserving the relationships with employees and key partners they will need to run the business moving forward." In many cases, intermediaries can also pay for themselves, Roth says, by negotiating special deal terms or by finding hidden skeletons in the business they sniff out.
Assembling a Team to Buy a Business: 6 Additional Experts That Are Highly Recommended
4. Business Valuation Specialist
While settling on a price for the business you want to buy is something that your investment banker or broker will help with, it can also be valuable to reach out to someone who specializes in valuing companies, not unlike what an appraiser does with homes. A good valuation will take the business's financial strengths and weaknesses into account relative to its assets and cash flow, among other metrics.
5. Financing Expert
Unless you're planning on buying your new business with cash, you'll also need to have someone on your team that will help you secure the financing you'll need to get the deal done. Ideally, you'll be able to rely on someone who can walk you through the options available—bank loans, credit, etc.—as well as which ones make the best sense for you.
6. Real Estate Adviser
On a general level, most every business will have some real estate or property component linked to it, such as a lease, a deed, or even an option to buy additional land to expand upon in the future. That means it's wise to bring on someone who can help you weigh the pros and cons when it comes to the real estate details of the business you're considering buying. One organization to consider contacting for advice is The Counselors of Real Estate, www.cre.org, a professional association of commercial real estate advisers.
7. Insurance Agent
As an owner of a business, you'll also need to understand what you need to insure it. Therefore, it would be wise to get good counsel from an insurance agent or expert who can help map out what kind of coverage you might need regarding fire, error and omission, etc., before pulling the trigger on the deal.
8. Industry Expert
If you are interested in buying a business you already know something about, perhaps because you've worked for or owned a similar one in the past, you might not need to rely on someone to explain how the business works. If you are making a leap into a new industry, however, it makes sense to find someone you trust who has deep experience in that industry and can help you evaluate where the business stands relative to its competition and its customers.
9. Technology Analyst
Few companies these days operate without computers, whether it's to market themselves or to take orders from customers. That means that when you buy a business, you're also buying the equipment and data that the company has accumulated in its history—all of which can be extremely valuable to you. But, if the business has not kept on top of its information technology, perhaps by not backing up key data or by not investing in the best technology, you might want to bring in an expert who can help evaluate the state of the company's information technology infrastructure. Plus, if the company's technology is subpar, it could create some leverage in negotiations.
1/25/11
Excellent SQL Server Backup and Maintenance Solution
One of the first things I have to do after I’ve installed Dynamics GP and created the DYNAMICS, TWO and company databases, is setup jobs to backup and optimize those databases. The best method I’ve found to do that is a free solution developed by Ola Hallengren that can be found here. This solution received the 2010 Editor’s Choice Bronze Award for best Free SQL Tool, while the SQL Server Community gave it the Gold. After a previous write-up of this solution Ola contacted me directly asking for my feedback, and he has been in touch several times since – he clearly cares about his solution and makes regular improvements as SQL Server features are added or changed.
The solution can be installed by downloading and running a single sql script – direct link here. Upon opening the script in SQL Management Studio, I typically make two changes. First I change the value of the @BackupDirectory parameter, highlighted below, to point to the location I want the backups stored. The backup job will create a folder with the server name in this folder, with folders for each database below that, followed by folders for each of the backup types – full, differential, and log.
The second change I make is that I like to keep 3 days worth of backups on disk if possible, and the scripts defaults to cleaning up backups older than 24 hours, so I like to change that to 72 hours. This can certainly be done afterwards by editing the job step but I like to do it up front. I usually do a quick find and replace operation on “24, ” replacing with 72.
After the replace is completed, I run the script and the highlighted jobs below are created. From there I open each job, set the desired schedule for each one, and I’m done.
I use this script because I want consistently configured backup and database maintenance jobs on all of the SQL Servers I manage for my customers. It takes 10-15 minutes to configure and I love that it’s smart enough to not throw an error on the whole transaction log job if someone creates a new company and the recovery is still set to Simple – it skips that database and moves on to the next one. It is also much smarter then the SQL Server Maintenance Plans about whether it rebuilds or reorganizes the databases indexes. Visit Ola’s site, http://ola.hallengren.com/ to read more about the solution or view the documentation.
http://www.andynifong.com/blog/2011/1/24/excellent-sql-server-backup-and-maintenance-solution.html
How to avoid Malware
What is malware?
The term "malware" comes from the two words "malicious software," and refers to any software that is designed to cause damage to a computer, server, or network.
Viruses, spyware, worms, key loggers, and Trojans are examples of malware. If you click links that are disguised as images, audio, or video files which might appear on suspicious websites or in Instant Messages (IMs) or email messages, you might expose your computer to malware. In some cases, malware can even be hidden in files that have been uploaded to reputable websites. Malware can:
•Corrupt data.
•Slow down your computer.
•Use your email or instant message(IM) program to spread itself to other computers.
•Erase everything on your computer.
•Result in identity theft or give a criminal access to your web accounts.
1. Don't use file sharing applications. If I see Limewire, Bearshare, or Kazaa on a program list in a PC I can find malware approximately 100% of the time. There is simply no way to safely download with these programs because you can't trust the source.
2. Never open an email attachment if you don't know what it is. Even if you know the person who sent the email beware of attachments. Many computers with infections will send out email to everyone on their address book without the owner ever being aware.
3. If you get pop-ups when opening a web page don't click inside the pop-up to close it. Always click the red "x" in the upper right corner. The "cancel" or "close" button in the pop-up might have unintended effects. clicking inside the pop-up allows code to run that may not be what the button indicates. ie. by clicking inside the pop-up you may be allowing a virus to take control of your computer.
4. If you get a message from your computer warning you that it is infected and you need to download suchandsuch software to remove the virus, don't do it. At this point you are already infected, downloading the fake virus remover will only make it worse. No legit software ever uses this tactic.
5. Avoid free downloads unless you are absolutely sure you can trust the source. Often these freebies are packaged with a good deal of adware, so be careful.
Most of the time good common sense will keep your computer safer than whatever virus protection you have installed. Start practicing safe web viewing and you will find you rarely have a problem with malware.
The term "malware" comes from the two words "malicious software," and refers to any software that is designed to cause damage to a computer, server, or network.
Viruses, spyware, worms, key loggers, and Trojans are examples of malware. If you click links that are disguised as images, audio, or video files which might appear on suspicious websites or in Instant Messages (IMs) or email messages, you might expose your computer to malware. In some cases, malware can even be hidden in files that have been uploaded to reputable websites. Malware can:
•Corrupt data.
•Slow down your computer.
•Use your email or instant message(IM) program to spread itself to other computers.
•Erase everything on your computer.
•Result in identity theft or give a criminal access to your web accounts.
1. Don't use file sharing applications. If I see Limewire, Bearshare, or Kazaa on a program list in a PC I can find malware approximately 100% of the time. There is simply no way to safely download with these programs because you can't trust the source.
2. Never open an email attachment if you don't know what it is. Even if you know the person who sent the email beware of attachments. Many computers with infections will send out email to everyone on their address book without the owner ever being aware.
3. If you get pop-ups when opening a web page don't click inside the pop-up to close it. Always click the red "x" in the upper right corner. The "cancel" or "close" button in the pop-up might have unintended effects. clicking inside the pop-up allows code to run that may not be what the button indicates. ie. by clicking inside the pop-up you may be allowing a virus to take control of your computer.
4. If you get a message from your computer warning you that it is infected and you need to download suchandsuch software to remove the virus, don't do it. At this point you are already infected, downloading the fake virus remover will only make it worse. No legit software ever uses this tactic.
5. Avoid free downloads unless you are absolutely sure you can trust the source. Often these freebies are packaged with a good deal of adware, so be careful.
Most of the time good common sense will keep your computer safer than whatever virus protection you have installed. Start practicing safe web viewing and you will find you rarely have a problem with malware.
The Carbon:Nitrogen Ratio (C:N) in Composting
Did you know that all organic matter has a ratio of Carbon to Nitrogen (C:N) in their tissues? For microorganisms, carbon is the basic building block of life and is a source of energy, but nitrogen is also necessary for such things as proteins, genetic material, and cell structure.
Balance of C:N is Key
Decomposition of organic materials in your compost pile is greatly increased when you create the proper balance between the carbonaceous materials (called BROWN because they are dry) and the nitrogen-rich materials (called GREEN because they are more fresh and moist).
In compost lingo, this balance is referred to as the Carbon-Nitrogen ratio, and shown as C:N.
Now, it is true that most people simply don't give a hoot about this scientific hocus-pocus stuff. Waste is waste! And when you just want to throw the stuff away, you're not inclined to stop a moment to ask, "Gosh, is this Carbon or Nitrogen?"
But magic is afoot out there in nature. And much of the sleight of hand of composting, whether you are aware of it or not, has to do with the organic materials' content of Carbon and Nitrogen. Blow this stuff off and you might get a surprise when you open the lid to your bin: it may reek to holy hell, like rotten eggs or ammonia, or it may just be sitting there doing absolutely nothing! Which is to say your pile has become a cold couch potato, and it ain't going nowhere fast!
So, back to this necessary balance between the Carbon content of your waste material and the Nitrogen content. For best performance, the compost pile, or more to the point the composting microorganisms, require the correct proportion of Carbon for energy and Nitrogen for protein production. Compost scientists have determined that the fastest way to produce fertile, sweet-smelling compost is to maintain a C:N ratio somewhere around 25 to 30 parts Carbon to 1 part Nitrogen, or 25-30:1. If the C:N ratio is too high (excess Carbon), decomposition slows down. If the C:N ratio is too low (excess nitrogen) you will end up with a stinky pile.
A Little More Science Behind the C:N Ratio
Microorganisms that digest compost need about 30 parts of carbon for every part of nitrogen they consume. That's a balanced diet for them. If there's too much nitrogen, the microorganisms can't use it all and the excess is lost in the form of smelly ammonia gas. Nitrogen loss due to excess nitrogen in the pile (a low C:N ratio) can be over 60%. At a C:N ratio of 30 or 35 to 1, only one half of one percent of the nitrogen will be lost. That's why you don't want too much nitrogen (fresh manure, for example) in your compost: the nitrogen will be lost in the air in the form of ammonia gas, and nitrogen is too valuable for plants to allow it to escape into the atmosphere.
Scientists have determined four conditions that are constant for all residue decomposition:
1.A maximum of 35% of the carbon in fresh organic material will be converted into soil humus IF there is sufficient nitrogen present.
2.A minimum of 65% of the carbon in fresh organic material will be given off to the atmosphere as carbon dioxide due to microbial respiration. (Uh-oh! An argument could be made that composting contributes to greenhouse gases and warming of the Earth's atmosphere. However, consider this, nature is always decomposing everywhere; so, what you are doing in your little compost bin is a mere iota of carbon release compared to nature's vast compost bin in forests, rangeland, etc.)
3.The humus formed from the decomposition of fresh organic material will contain approximately 50% carbon and 5% nitrogen. In other words, the C:N ratio of the humus is 10:1.
4.Most fresh plant material contains 40% carbon. The C:N ratio varies because of differences in nitrogen content, not carbon content. (Note: Dry materials are generally in the range of 40 to 50 percent carbon, and sloppy, wet materials are generally 10 to 20 percent carbon. Therefore, the most important factor in estimating the carbon-to-nitrogen ratio of plant or food waste is how much water is present).
HOW TO USE THE C:N RATIO
Principle #1: The Ideal 30:1 Ratio
A hot, fast pile (with temperatures up to 140°F/60°C) is obtained when the C:N ratio of all the materials you add averages 30:1 (50:1 is adequate for most slower, lower-temperature piles). You can be sure, then, that the little microbes are stuffing themselves. Of course, this is ideal: you may not necessarily obtain this!
Don't Make This Mistake: This ratio describes the chemical composition of a material and does not mean that you need a volume of brown materials that is thirty times greater than the amount of green matter! Don't make this mistake!
Principle #2: 2 Parts Green to 1 Part Brown
(The best stragey to mix your compostable materials)
Generally speaking, you can get C:N ratios of 30:1 to 50:1 by adding two parts of a GREEN material to one part of a BROWN material to your bin. A "part" can be defined as a certain quantity of the material, such as two 5-gallon buckets of GREEN and 1 packed bucket of BROWN.
Play with the chart below. For example, food scraps, grass clippings and leaves come close to an average of 30:1. How? Add-up the Carbon side of the ratio for all three materials, i.e. 15, 17, 60, and divide by the number of materials, i.e. three. 92/3 = about 31:1.
Experiment (this isn't a perfect world!) to find your own style. Many people have very good success with equal parts. Just don't have too much brown or too much green!
QUESTION: "Can I use 1-part GREEN and 1-part BROWN?"
ANSWER: Yes you can. The best combination would be a mixture of GREEN sources, as shown on the left of the chart below and a BROWN source such as leaves (notice that leaves have a fairly low C:N ratio compared to other carbonaceous materials shown on the right of the chart. Leaves are ideal for composting!). Researchers have determined that effective compost can be made with equal parts GREEN and BROWN, or with 2 parts GREEN and 1 part BROWN.
QUESTION: I am confused. Half the articles I read suggest using 2-parts BROWN to 1-part GREEN. The other half say to use 2-parts GREEN to 1-part BROWN. WHAT IS CORRECT?!
ANSWER: When authors/researchers call for 2-parts BROWN, they are considering the fact that common BROWNS such as leaves or hay, etc. have a lot of fluff or air in a particualr volume as compared to the more matted volume of GREEN. So, they might say use two shovels full of BROWN and one shovel full of GREEN. We don't dispute this advice if you use unshredded leaves or hay. However, when shredded, a large volume of leaves/hay is cut to about 1/4 its mass. Therefore, 2-parts of such shredded BROWN would be too much carbon for the 1-part volume of GREEN. Experiment to see what happens.
Our caution to using the 2-parts BROWN to 1-part GREEN approach is that one can easily overestimate the volume of BROWNS whereas in fact the GREENS are vital for getting the pile heated (but not too many or you get smelly material). Too much BROWN and the pile is too dry and will not heat up. We attempt to use the scientifically known make-up of Carbon and Nitrogen in materials and use the the C:N Ratio formula for computing the balanced ratio. This is why the 2-parts GREEN to 1-part BROWN has been promoted. Our best advice is to try both formulas for GREENS and BROWNS. You may be surprised at what you find: probably good compost!
Use this Rule of Thumb when viewing the chart below
•Any organic matter that has a C:N ratio generally smaller than 30:1 is considered a GREEN.
•Any organic matter that has a C:N ratio generally larger than 30:1 is considered a BROWN.
Common Home Compostable Materials & C:N Ratios
(Example: Food Scraps has a Carbon:Nitrogen Ratio of 17:1,
meaning 17 parts Carbon to 1 part Nitrogen)
TIPS TO REMEMBER
Balance of C:N is Key
Decomposition of organic materials in your compost pile is greatly increased when you create the proper balance between the carbonaceous materials (called BROWN because they are dry) and the nitrogen-rich materials (called GREEN because they are more fresh and moist).
In compost lingo, this balance is referred to as the Carbon-Nitrogen ratio, and shown as C:N.
Now, it is true that most people simply don't give a hoot about this scientific hocus-pocus stuff. Waste is waste! And when you just want to throw the stuff away, you're not inclined to stop a moment to ask, "Gosh, is this Carbon or Nitrogen?"
But magic is afoot out there in nature. And much of the sleight of hand of composting, whether you are aware of it or not, has to do with the organic materials' content of Carbon and Nitrogen. Blow this stuff off and you might get a surprise when you open the lid to your bin: it may reek to holy hell, like rotten eggs or ammonia, or it may just be sitting there doing absolutely nothing! Which is to say your pile has become a cold couch potato, and it ain't going nowhere fast!
So, back to this necessary balance between the Carbon content of your waste material and the Nitrogen content. For best performance, the compost pile, or more to the point the composting microorganisms, require the correct proportion of Carbon for energy and Nitrogen for protein production. Compost scientists have determined that the fastest way to produce fertile, sweet-smelling compost is to maintain a C:N ratio somewhere around 25 to 30 parts Carbon to 1 part Nitrogen, or 25-30:1. If the C:N ratio is too high (excess Carbon), decomposition slows down. If the C:N ratio is too low (excess nitrogen) you will end up with a stinky pile.
A Little More Science Behind the C:N Ratio
Microorganisms that digest compost need about 30 parts of carbon for every part of nitrogen they consume. That's a balanced diet for them. If there's too much nitrogen, the microorganisms can't use it all and the excess is lost in the form of smelly ammonia gas. Nitrogen loss due to excess nitrogen in the pile (a low C:N ratio) can be over 60%. At a C:N ratio of 30 or 35 to 1, only one half of one percent of the nitrogen will be lost. That's why you don't want too much nitrogen (fresh manure, for example) in your compost: the nitrogen will be lost in the air in the form of ammonia gas, and nitrogen is too valuable for plants to allow it to escape into the atmosphere.
Scientists have determined four conditions that are constant for all residue decomposition:
1.A maximum of 35% of the carbon in fresh organic material will be converted into soil humus IF there is sufficient nitrogen present.
2.A minimum of 65% of the carbon in fresh organic material will be given off to the atmosphere as carbon dioxide due to microbial respiration. (Uh-oh! An argument could be made that composting contributes to greenhouse gases and warming of the Earth's atmosphere. However, consider this, nature is always decomposing everywhere; so, what you are doing in your little compost bin is a mere iota of carbon release compared to nature's vast compost bin in forests, rangeland, etc.)
3.The humus formed from the decomposition of fresh organic material will contain approximately 50% carbon and 5% nitrogen. In other words, the C:N ratio of the humus is 10:1.
4.Most fresh plant material contains 40% carbon. The C:N ratio varies because of differences in nitrogen content, not carbon content. (Note: Dry materials are generally in the range of 40 to 50 percent carbon, and sloppy, wet materials are generally 10 to 20 percent carbon. Therefore, the most important factor in estimating the carbon-to-nitrogen ratio of plant or food waste is how much water is present).
HOW TO USE THE C:N RATIO
Principle #1: The Ideal 30:1 Ratio
A hot, fast pile (with temperatures up to 140°F/60°C) is obtained when the C:N ratio of all the materials you add averages 30:1 (50:1 is adequate for most slower, lower-temperature piles). You can be sure, then, that the little microbes are stuffing themselves. Of course, this is ideal: you may not necessarily obtain this!
Don't Make This Mistake: This ratio describes the chemical composition of a material and does not mean that you need a volume of brown materials that is thirty times greater than the amount of green matter! Don't make this mistake!
Principle #2: 2 Parts Green to 1 Part Brown
(The best stragey to mix your compostable materials)
Generally speaking, you can get C:N ratios of 30:1 to 50:1 by adding two parts of a GREEN material to one part of a BROWN material to your bin. A "part" can be defined as a certain quantity of the material, such as two 5-gallon buckets of GREEN and 1 packed bucket of BROWN.
Play with the chart below. For example, food scraps, grass clippings and leaves come close to an average of 30:1. How? Add-up the Carbon side of the ratio for all three materials, i.e. 15, 17, 60, and divide by the number of materials, i.e. three. 92/3 = about 31:1.
Experiment (this isn't a perfect world!) to find your own style. Many people have very good success with equal parts. Just don't have too much brown or too much green!
QUESTION: "Can I use 1-part GREEN and 1-part BROWN?"
ANSWER: Yes you can. The best combination would be a mixture of GREEN sources, as shown on the left of the chart below and a BROWN source such as leaves (notice that leaves have a fairly low C:N ratio compared to other carbonaceous materials shown on the right of the chart. Leaves are ideal for composting!). Researchers have determined that effective compost can be made with equal parts GREEN and BROWN, or with 2 parts GREEN and 1 part BROWN.
QUESTION: I am confused. Half the articles I read suggest using 2-parts BROWN to 1-part GREEN. The other half say to use 2-parts GREEN to 1-part BROWN. WHAT IS CORRECT?!
ANSWER: When authors/researchers call for 2-parts BROWN, they are considering the fact that common BROWNS such as leaves or hay, etc. have a lot of fluff or air in a particualr volume as compared to the more matted volume of GREEN. So, they might say use two shovels full of BROWN and one shovel full of GREEN. We don't dispute this advice if you use unshredded leaves or hay. However, when shredded, a large volume of leaves/hay is cut to about 1/4 its mass. Therefore, 2-parts of such shredded BROWN would be too much carbon for the 1-part volume of GREEN. Experiment to see what happens.
Our caution to using the 2-parts BROWN to 1-part GREEN approach is that one can easily overestimate the volume of BROWNS whereas in fact the GREENS are vital for getting the pile heated (but not too many or you get smelly material). Too much BROWN and the pile is too dry and will not heat up. We attempt to use the scientifically known make-up of Carbon and Nitrogen in materials and use the the C:N Ratio formula for computing the balanced ratio. This is why the 2-parts GREEN to 1-part BROWN has been promoted. Our best advice is to try both formulas for GREENS and BROWNS. You may be surprised at what you find: probably good compost!
Use this Rule of Thumb when viewing the chart below
•Any organic matter that has a C:N ratio generally smaller than 30:1 is considered a GREEN.
•Any organic matter that has a C:N ratio generally larger than 30:1 is considered a BROWN.
Common Home Compostable Materials & C:N Ratios
(Example: Food Scraps has a Carbon:Nitrogen Ratio of 17:1,
meaning 17 parts Carbon to 1 part Nitrogen)
| GREEN (Nitrogen) | BROWN (Carbon) |
Aged Chicken Manure 7:1 Fresh manures are way to hot and can burn your plants and roots! | Leaves 60-80:1 One of the most important ingredients for composting, especially shredded or broken down (leaf mulch). |
Food Scraps 17:1 | Straw, Hay 90:1 |
Coffee Grounds 25:1 | Sawdust 500:1 Commercially produced compost is high in sawdust or shredded bark chips. Use very sparingly! |
Grass Clippings - Fresh 17:1 Dry clippings would be higher in Carbon. Therefore, use as carbon source if necessary. | Woody chips & twigs 700:1 Be sparing. Best use is small material at bottom of bin or pile. |
Fresh Weeds 20:1 Make sure you don't compost weeds with seeds, unless you insure that your pile gets hot - over 140°F/60°C. | Shredded Newspaper 175:1 Has no nutrient content. Best used in vermicomposting. Always shred and soak in water for fast breakdown. |
Fruit Wastes 25-40:1 | Nut shells 35:1 |
Rotted Manure 20:1 Horse manure should not be used because it contains undigested seeds that can sprout in the bin. | Pine Needles 80:1 Use sparingly. Very acidic and waxy; breaks down slowly. |
Humus (soil) 10:1 This is nature's natural ratio. Use sparingly in pile. Best used to "seal" the pile by putting a 1-2 inch layer on top. | Corn Stalks 60:1 Shred or cut up in small pieces for fast break down. |
Seaweed 19:1 | Peat Moss 58:1 Has no nutrient value. In the bin it is mostly filler. |
General Garden Waste 30:1 | NOTE The C:N Ratios given in this chart are average and may slightly vary according to source, researcher or scientist! |
TIPS TO REMEMBER
- The 2-to-1 ratio of Greens to Browns is your best bet when creating a Batch Pile. This will aid you in creating about a 30:1 C/N Ratio. Adequate enough to get a hot pile.
- A 1-to-1 Ratio works well with the Add as You Go Pile as well as the Batch Pile. This will aid you in creating about a 50:1 C/N Ratio, adequate enough to get a warm pile.
- Stockpiling of leaves and food scraps or yard waste is perhaps the best composting strategy to make a heap large enough for the microorganisms to get hot and bothered.
1/24/11
Holiday Functions
Often it is useful to return the date of a holiday for a given year, perhaps for a schedule application. Neither Excel nor VBA have any built in functions for working with holidays -- you have to create your own. Holidays can be thought of as being either Fixed or Floating. Fixed holidays are those that occur on the same day each year, such as Christmas. Floating holidays are those which occur on different days in different years. For example, Thanksgiving (in the US) occurs on the fourth Thursday of November. Therefore, we need a function that will calculate the fourth Thursday. We'll generalize that function, in both VBA and worksheet function form, to return the Nth day-of-week for any month and year.
Other floating holidays are a bit harder to calculate. For example, in the US, Memorial Day occurs on the last Monday of May. Depending on the year, this may be either the 4th or 5th Monday. So we need a function to calculate the number of Mondays in May. We'll generalize this to compute the number of any day-of-week in any month and year.
Finally, there is Easter, whose actual date is some bizarre result of the phases of the moon. I don't claim credit for the formulas for calculating Easter shown below, nor do I claim to understand why the work, but they do.
Fixed Holidays
For fixed holidays, such as Christmas, this is simple since the date of the holiday does not change from year to year. For example, use the following to return the date of Christmas in the current year:
=DATE(YEAR(NOW()),12,25)
Floating Holidays
Other holidays, however, are not assigned to a specific date. For example, Thanksgiving Day is defined to be the 4th Thursday of November. Therefore its exact date will change from year to year. For Thanksgiving, we have an explicit VBA function:
Public Function ThanksgivingDate(Yr As Integer) As Date
ThanksgivingDate = DateSerial(Yr, 11, 29 - _
WeekDay(DateSerial(Yr, 11, 1), vbFriday))
End Function
We can generalize this to holidays that are defined as the Nth Day of some month, such as Martin Luther King's birthday, celebrated on the 3rd Monday of January. The following function will return the Nth DayOfWeek for a given month and year:
Public Function NDow(Y As Integer, M As Integer, _
N As Integer, DOW As Integer) As Date
NDow = DateSerial(Y, M, (8 - WeekDay(DateSerial(Y, M, 1), _
(DOW + 1) Mod 8)) + ((N - 1) * 7))
End Function
To return the date of the 3rd Monday in January of 1998, use
=NDow (1998, 1, 3, 2)
The NDow function can also be written as a worksheet formula:
=DATE(Yr,Mon,1+((Nth-(DoW>=WEEKDAY(DATE(Yr,Mon,1))))*7)
+(DoW-WEEKDAY(DATE(Yr,Mon,1))))
Where Yr,Mon, and DoW are cell references or values indicating Year, Month, Nth, and Day-Of-Week.
This will work fine for most floating holidays. However, Memorial Day is celebrated on the Last Monday of May. To compute this date, we first need a function to tell us how many Mondays there are in the month.
Public Function DOWsInMonth(Yr As Integer, M As Integer, _
DOW As Integer) As Integer
On Error GoTo EndFunction
Dim I As Integer
Dim Lim As Integer
Lim = Day(DateSerial(Yr, M + 1, 0))
DOWsInMonth = 0
For I = 1 To Lim
If WeekDay(DateSerial(Yr, M, I)) = DOW Then
DOWsInMonth = DOWsInMonth + 1
End If
Next I
Exit Function
EndFunction:
DOWsInMonth = 0
End Function
Calling this function will tell us how many Mondays there are in May, 1998.
=DOWsInMonth(1998, 5, 2)
The DOWsInMonth can also be written as a worksheet function with the following array formula. Note that it will not work properly unless you press CTRL+SHIFT+ENTER instead of just ENTER when you first enter the formula and whenever you edit it later. If you do this properly, Excel will display the formula in the formula bar enclosed in curly braces {}.
=SUM((WEEKDAY(DATE(B3,C3,(ROW(INDIRECT
("1:"&DAY(DATE(B3,C3+1,0)))))))=D3)*1)
where B3 is the year, C3 is the month, and D3 is the day of week (1=Sunday, 2=Monday, ..., 7=Saturday)
There are 4 Mondays in May, 1998. The we can pass this into the NDOW function, to return 25-May-1998, the date of Memorial Day. Therefore, the formula to return the date of Memorial Day in 1999 would be
=NDow(1999,5,DowsInMonth(1999,5,2),2)
Many organizations recognize holiday dates on dates different than those of the actual date. Typically, this is done when the day of week of the holiday falls on a weekend and holidays are observed to make a three-day weekend. The general rule is that if the holiday falls on a Saturday, it is observed on the Friday before the holiday. If the holiday falls on a Sunday, it is observed on the following Monday. The following formula will return a Friday if the holiday falls on a Saturday, a Monday if the holiday falls on a Sunday, or the date itself if it falls on a weekday.=IF(WEEKDAY(A2, 1)=1,A2+1,IF(WEEKDAY(A2,1)=7,A2-1,A2)) where A2 is the date of the holiday. In VBA, you can use the following function:
Function Observed(TheDate As Date) As Date
If Weekday(TheDate, vbSunday) = 1 Then
Observed = TheDate + 1
ElseIf Weekday(TheDate, vbSunday) = 7 Then
Observed = TheDate - 1
Else
Observed = TheDate
End If
End Function
where TheDate is the date if the holiday.
Easter
Worksheet Formula For Easter
You can calculate the date of Easter with formula below. It is accurate for the years from 1900 to 2368. The formula is:
=FLOOR("5/"&DAY(MINUTE(YYYY/38)/2+56)&"/"&YYYY,7)-34
where YYYY is a four digit year between 1900 and 2368. The formula returns an incorrect for some years past 2369.
VBA Function For Easter
The date of Easter can be computed in VBA. The algorithm below is from the United States Naval Observatory, at Computing The Date Of Easter.
Public Function EasterUSNO(YYYY As Long) As Long
Dim C As Long
Dim N As Long
Dim K As Long
Dim I As Long
Dim J As Long
Dim L As Long
Dim M As Long
Dim D As Long
C = YYYY \ 100
N = YYYY - 19 * (YYYY \ 19)
K = (C - 17) \ 25
I = C - C \ 4 - (C - K) \ 3 + 19 * N + 15
I = I - 30 * (I \ 30)
I = I - (I \ 28) * (1 - (I \ 28) * (29 \ (I + 1)) * ((21 - N) \ 11))
J = YYYY + YYYY \ 4 + I + 2 - C + C \ 4
J = J - 7 * (J \ 7)
L = I - J
M = 3 + (L + 40) \ 44
D = L + 28 - 31 * (M \ 4)
EasterUSNO = DateSerial(YYYY, M, D)
End Function
You can call this from a worksheet cell with a formula like
=EasterUSNO(YYYY)
where YYYY is a four digit year.
http://www.cpearson.com/excel/holidays.htm
http://www.cpearson.com/excel/Easter.aspx
Other floating holidays are a bit harder to calculate. For example, in the US, Memorial Day occurs on the last Monday of May. Depending on the year, this may be either the 4th or 5th Monday. So we need a function to calculate the number of Mondays in May. We'll generalize this to compute the number of any day-of-week in any month and year.
Finally, there is Easter, whose actual date is some bizarre result of the phases of the moon. I don't claim credit for the formulas for calculating Easter shown below, nor do I claim to understand why the work, but they do.
Fixed Holidays
For fixed holidays, such as Christmas, this is simple since the date of the holiday does not change from year to year. For example, use the following to return the date of Christmas in the current year:
=DATE(YEAR(NOW()),12,25)
Floating Holidays
Other holidays, however, are not assigned to a specific date. For example, Thanksgiving Day is defined to be the 4th Thursday of November. Therefore its exact date will change from year to year. For Thanksgiving, we have an explicit VBA function:
Public Function ThanksgivingDate(Yr As Integer) As Date
ThanksgivingDate = DateSerial(Yr, 11, 29 - _
WeekDay(DateSerial(Yr, 11, 1), vbFriday))
End Function
We can generalize this to holidays that are defined as the Nth Day of some month, such as Martin Luther King's birthday, celebrated on the 3rd Monday of January. The following function will return the Nth DayOfWeek for a given month and year:
Public Function NDow(Y As Integer, M As Integer, _
N As Integer, DOW As Integer) As Date
NDow = DateSerial(Y, M, (8 - WeekDay(DateSerial(Y, M, 1), _
(DOW + 1) Mod 8)) + ((N - 1) * 7))
End Function
To return the date of the 3rd Monday in January of 1998, use
=NDow (1998, 1, 3, 2)
The NDow function can also be written as a worksheet formula:
=DATE(Yr,Mon,1+((Nth-(DoW>=WEEKDAY(DATE(Yr,Mon,1))))*7)
+(DoW-WEEKDAY(DATE(Yr,Mon,1))))
Where Yr,Mon, and DoW are cell references or values indicating Year, Month, Nth, and Day-Of-Week.
This will work fine for most floating holidays. However, Memorial Day is celebrated on the Last Monday of May. To compute this date, we first need a function to tell us how many Mondays there are in the month.
Public Function DOWsInMonth(Yr As Integer, M As Integer, _
DOW As Integer) As Integer
On Error GoTo EndFunction
Dim I As Integer
Dim Lim As Integer
Lim = Day(DateSerial(Yr, M + 1, 0))
DOWsInMonth = 0
For I = 1 To Lim
If WeekDay(DateSerial(Yr, M, I)) = DOW Then
DOWsInMonth = DOWsInMonth + 1
End If
Next I
Exit Function
EndFunction:
DOWsInMonth = 0
End Function
Calling this function will tell us how many Mondays there are in May, 1998.
=DOWsInMonth(1998, 5, 2)
The DOWsInMonth can also be written as a worksheet function with the following array formula. Note that it will not work properly unless you press CTRL+SHIFT+ENTER instead of just ENTER when you first enter the formula and whenever you edit it later. If you do this properly, Excel will display the formula in the formula bar enclosed in curly braces {}.
=SUM((WEEKDAY(DATE(B3,C3,(ROW(INDIRECT
("1:"&DAY(DATE(B3,C3+1,0)))))))=D3)*1)
where B3 is the year, C3 is the month, and D3 is the day of week (1=Sunday, 2=Monday, ..., 7=Saturday)
There are 4 Mondays in May, 1998. The we can pass this into the NDOW function, to return 25-May-1998, the date of Memorial Day. Therefore, the formula to return the date of Memorial Day in 1999 would be
=NDow(1999,5,DowsInMonth(1999,5,2),2)
Many organizations recognize holiday dates on dates different than those of the actual date. Typically, this is done when the day of week of the holiday falls on a weekend and holidays are observed to make a three-day weekend. The general rule is that if the holiday falls on a Saturday, it is observed on the Friday before the holiday. If the holiday falls on a Sunday, it is observed on the following Monday. The following formula will return a Friday if the holiday falls on a Saturday, a Monday if the holiday falls on a Sunday, or the date itself if it falls on a weekday.=IF(WEEKDAY(A2, 1)=1,A2+1,IF(WEEKDAY(A2,1)=7,A2-1,A2)) where A2 is the date of the holiday. In VBA, you can use the following function:
Function Observed(TheDate As Date) As Date
If Weekday(TheDate, vbSunday) = 1 Then
Observed = TheDate + 1
ElseIf Weekday(TheDate, vbSunday) = 7 Then
Observed = TheDate - 1
Else
Observed = TheDate
End If
End Function
where TheDate is the date if the holiday.
Easter
Worksheet Formula For Easter
You can calculate the date of Easter with formula below. It is accurate for the years from 1900 to 2368. The formula is:
=FLOOR("5/"&DAY(MINUTE(YYYY/38)/2+56)&"/"&YYYY,7)-34
where YYYY is a four digit year between 1900 and 2368. The formula returns an incorrect for some years past 2369.
VBA Function For Easter
The date of Easter can be computed in VBA. The algorithm below is from the United States Naval Observatory, at Computing The Date Of Easter.
Public Function EasterUSNO(YYYY As Long) As Long
Dim C As Long
Dim N As Long
Dim K As Long
Dim I As Long
Dim J As Long
Dim L As Long
Dim M As Long
Dim D As Long
C = YYYY \ 100
N = YYYY - 19 * (YYYY \ 19)
K = (C - 17) \ 25
I = C - C \ 4 - (C - K) \ 3 + 19 * N + 15
I = I - 30 * (I \ 30)
I = I - (I \ 28) * (1 - (I \ 28) * (29 \ (I + 1)) * ((21 - N) \ 11))
J = YYYY + YYYY \ 4 + I + 2 - C + C \ 4
J = J - 7 * (J \ 7)
L = I - J
M = 3 + (L + 40) \ 44
D = L + 28 - 31 * (M \ 4)
EasterUSNO = DateSerial(YYYY, M, D)
End Function
You can call this from a worksheet cell with a formula like
=EasterUSNO(YYYY)
where YYYY is a four digit year.
http://www.cpearson.com/excel/holidays.htm
http://www.cpearson.com/excel/Easter.aspx
How to Find Money in Your Business
The solution to a cash flow problem is often right at your fingertips. Fear and concern can keep us from piecing together answers that can make a significant difference. When cash-strapped clients call for a session, we turn over a few stones that are damming up their cash flow and often resolve the immediate problem with a few simple changes or action steps.
Some common oversights and mistakes made by business owners are directly related to a lack of confidence or self worth. Some are related to a fear of looking at, and understanding, their numbers and some are simply due to lack of experience or knowledge. If you identify with any of these roadblocks reach out to someone who can help so you can put yourself firmly in the driver’s seat. Here are a few ideas that might just get the cash flowing and profits moving.
Review your accounts receivable (AR) – Who owes you money? How long have these outstanding invoices been on the books and what are you doing to collect them? The longer you allow these invoices to remain unpaid the less chance you have of collecting on them. Small business owners are often afraid to “get too pushy” for fear of jeopardizing future business. Ask yourself if you really want to do business with someone who doesn’t value your services enough to pay you on a timely basis. Ask yourself if YOU value your services and how these outstanding invoices reflect on your own values. Remember, the efforts that you put into collections could be put toward marketing instead. But meanwhile, make some phone calls, send letters and, if necessary, have an attorney draft a letter for you and nudge the late pays into action.
Review your terms - What are the terms that you apply to your sales? Do your clients pay you upfront? Do they pay a portion in advance and have 30, 60 or 90 days to pay the balance? I once worked with a client who provided a service in the wedding industry. She collected 30% at the time the order was placed and the remaining balance on the wedding day. We changed her collection terms to 1/3rd upon booking, 1/3rd 30 days prior to the event and the 1/3rd on the day of the event. This simple adjustment really loosened things up for her and gave her a safety net.
Charge your worth – Okay, here’s the real issue for many soloists. Wow! I can’t count the times that I have heard people say they haven’t raised their fees in 10 years or that they feel sorry for people who can’t afford their services. There is nothing wrong with a little pro bono work, for sure, but please don’t end up in the poor house to compensate for someone else’s financial concerns. If you do offer a reduction in fees or product cost communicate the terms clearly and make sure it’s not to your own detriment. Also, do a little competitive analysis by researching services and products similar to yours to see what the going rates are. Do you hear yourself making excuses to support your decision to charge lower rates? If so, talk to your accountant, coach, mentor or advisory board to gain perspective. Unless you are submitting RFP’s for government contracts the lowest bid doesn’t always win. Re-evaluate your pricing and make sure you are valuing your services and products as much as you hope that your clients will.
Evaluate your expenses – Another common cash flow issue is created by excess spending. For example, do you have contractors that you send jobs to because you want to keep them happy? We know that outsourcing is a priority so that your time is free to build your business, but if this is done to excess during a low revenue point it can backfire. I often hear concerns like, “Janie has been doing work for me for years and I can’t cut down on her hours.” Yes, it’s difficult when you feel responsible for a portion of someone else’s income, but in the long run these temporary cuts will keep you in the black long enough to rebuild and move forward in a stronger position so that you can resume sending work their way.
In this down economy, some soloists are holding on to office space that may no longer be necessary. If you need to make cuts like this, look for the advantages and give yourself a timeframe to work within. If you have a plan that you believe will turn things around, schedule a date to reevaluate your spending. It’s easy to get caught up in the “what if’s” when we are making decisions like letting go of an office. What if things turn around? What if my clients find out? Make a list of your pros and cons and understand your financial limits. Removing the stress of added expenses will help you to focus more clearly on solutions and growing your business.
http://www.inc.com/marla-tabaka/how-to-find-money-in-your-business.html
Some common oversights and mistakes made by business owners are directly related to a lack of confidence or self worth. Some are related to a fear of looking at, and understanding, their numbers and some are simply due to lack of experience or knowledge. If you identify with any of these roadblocks reach out to someone who can help so you can put yourself firmly in the driver’s seat. Here are a few ideas that might just get the cash flowing and profits moving.
Review your accounts receivable (AR) – Who owes you money? How long have these outstanding invoices been on the books and what are you doing to collect them? The longer you allow these invoices to remain unpaid the less chance you have of collecting on them. Small business owners are often afraid to “get too pushy” for fear of jeopardizing future business. Ask yourself if you really want to do business with someone who doesn’t value your services enough to pay you on a timely basis. Ask yourself if YOU value your services and how these outstanding invoices reflect on your own values. Remember, the efforts that you put into collections could be put toward marketing instead. But meanwhile, make some phone calls, send letters and, if necessary, have an attorney draft a letter for you and nudge the late pays into action.
Review your terms - What are the terms that you apply to your sales? Do your clients pay you upfront? Do they pay a portion in advance and have 30, 60 or 90 days to pay the balance? I once worked with a client who provided a service in the wedding industry. She collected 30% at the time the order was placed and the remaining balance on the wedding day. We changed her collection terms to 1/3rd upon booking, 1/3rd 30 days prior to the event and the 1/3rd on the day of the event. This simple adjustment really loosened things up for her and gave her a safety net.
Charge your worth – Okay, here’s the real issue for many soloists. Wow! I can’t count the times that I have heard people say they haven’t raised their fees in 10 years or that they feel sorry for people who can’t afford their services. There is nothing wrong with a little pro bono work, for sure, but please don’t end up in the poor house to compensate for someone else’s financial concerns. If you do offer a reduction in fees or product cost communicate the terms clearly and make sure it’s not to your own detriment. Also, do a little competitive analysis by researching services and products similar to yours to see what the going rates are. Do you hear yourself making excuses to support your decision to charge lower rates? If so, talk to your accountant, coach, mentor or advisory board to gain perspective. Unless you are submitting RFP’s for government contracts the lowest bid doesn’t always win. Re-evaluate your pricing and make sure you are valuing your services and products as much as you hope that your clients will.
Evaluate your expenses – Another common cash flow issue is created by excess spending. For example, do you have contractors that you send jobs to because you want to keep them happy? We know that outsourcing is a priority so that your time is free to build your business, but if this is done to excess during a low revenue point it can backfire. I often hear concerns like, “Janie has been doing work for me for years and I can’t cut down on her hours.” Yes, it’s difficult when you feel responsible for a portion of someone else’s income, but in the long run these temporary cuts will keep you in the black long enough to rebuild and move forward in a stronger position so that you can resume sending work their way.
In this down economy, some soloists are holding on to office space that may no longer be necessary. If you need to make cuts like this, look for the advantages and give yourself a timeframe to work within. If you have a plan that you believe will turn things around, schedule a date to reevaluate your spending. It’s easy to get caught up in the “what if’s” when we are making decisions like letting go of an office. What if things turn around? What if my clients find out? Make a list of your pros and cons and understand your financial limits. Removing the stress of added expenses will help you to focus more clearly on solutions and growing your business.
http://www.inc.com/marla-tabaka/how-to-find-money-in-your-business.html
Selecting the right mulch for your garden or landscape
Any gardener will tell you that mulching is an essential element of landscaping. However, there is more to mulching than just spreading some straw or peat moss around your trees, shrubs and flowers. Mulch should, at the very least, have these qualities: insulate plants & roots, increase water retention, be attractive, have a pleasant odor or be odor free, allow water and air to penetrate soil and it must stay in place. Although there may not be an ideal or perfect mulch, several come close. Finding the right mulch for your purposes just takes a little research and maybe a few trips to the home improvement store or local garden supply store.
Before deciding what material to use as mulch, you need to decide between organic mulch and inorganic mulch for your landscaping. Both inorganic and organic mulch have certain characteristics that make each ideal for certain types of mulching projects. For example, organic mulches are eco-friendly and provide a continuous source of organic matter to the surface of the soil. However, if organic mulches are kept too wet they can breed mold. Hay, straw and other organic mulches may contain weed seeds that will be introduced to your yard and garden through the mulch. The merits of organic mulch probably outweigh the problems though. For instance, organic mulches alter the soil providing aeration in soil heavy with clay and more moisture retention in sandy soils. Inorganic mulch also has its own unique characteristics that make it both ideal at times and a detriment at other times. Inorganic mulch lasts much longer than organic mulch because the materials do not decay like the materials in organic mulch. Furthermore, most inorganic mulches prevent weeds or even completely inhibit weed growth. However, inorganic mulches are difficult to remove once they are in place, can prevent moisture and air from circulating through the soil and do nothing to improve or add nutrients to the soil.
Knowing when to mulch is also a key element to proper mulching. There are two seasons for mulching: growing season and dormant season. Mulching during growing season helps to maintain moisture until the new plants have become fully established. Furthermore, mulching during growing season reduces loss of soil and soil erosion until turf or plants are established. Mulch should not be applied until the soil has warmed up to promote active root growth - - if not, the mulch will keep the ground cool and roots will not grow. Dormant season mulching protects plants and roots from severe temperature changes by maintaining a constant soil temperature. However, dormant season mulching should not be done too early in the season or it will prevent plants from developing key processes that help them survive cold weather. Furthermore, pruning, fertilizing or doing anything to stimulate plant growth should be avoided after dormant season mulching has been done.
Some general precautions when using mulch include:
**Do not use reflective mulch (white rock, shiny pebbles, etc.) at the base of a building or home. They reflect the summer heat toward the house as well as damage plant roots by causing too much warmth during dormant winter months.
**It is not wise to use wood mulch around homes because this type of mulch attracts termites and other insects that will enter your home through cracks and spaces in the foundation and walls.
**Using mulch on soil that is poorly drained (soil that retains moisture and water) can cause the soil to be too wet for plants.
**Leaves, sawdust and shredded bark (all organic mulch) should be moist when they are applied to lawns and gardens. If they are dry, they will soak up the moisture from the soil leaving plants without water.
http://www.associatedcontent.com/article/5542944/in_search_of_the_perfect_mulch_for.html
Before deciding what material to use as mulch, you need to decide between organic mulch and inorganic mulch for your landscaping. Both inorganic and organic mulch have certain characteristics that make each ideal for certain types of mulching projects. For example, organic mulches are eco-friendly and provide a continuous source of organic matter to the surface of the soil. However, if organic mulches are kept too wet they can breed mold. Hay, straw and other organic mulches may contain weed seeds that will be introduced to your yard and garden through the mulch. The merits of organic mulch probably outweigh the problems though. For instance, organic mulches alter the soil providing aeration in soil heavy with clay and more moisture retention in sandy soils. Inorganic mulch also has its own unique characteristics that make it both ideal at times and a detriment at other times. Inorganic mulch lasts much longer than organic mulch because the materials do not decay like the materials in organic mulch. Furthermore, most inorganic mulches prevent weeds or even completely inhibit weed growth. However, inorganic mulches are difficult to remove once they are in place, can prevent moisture and air from circulating through the soil and do nothing to improve or add nutrients to the soil.
Knowing when to mulch is also a key element to proper mulching. There are two seasons for mulching: growing season and dormant season. Mulching during growing season helps to maintain moisture until the new plants have become fully established. Furthermore, mulching during growing season reduces loss of soil and soil erosion until turf or plants are established. Mulch should not be applied until the soil has warmed up to promote active root growth - - if not, the mulch will keep the ground cool and roots will not grow. Dormant season mulching protects plants and roots from severe temperature changes by maintaining a constant soil temperature. However, dormant season mulching should not be done too early in the season or it will prevent plants from developing key processes that help them survive cold weather. Furthermore, pruning, fertilizing or doing anything to stimulate plant growth should be avoided after dormant season mulching has been done.
Some general precautions when using mulch include:
**Do not use reflective mulch (white rock, shiny pebbles, etc.) at the base of a building or home. They reflect the summer heat toward the house as well as damage plant roots by causing too much warmth during dormant winter months.
**It is not wise to use wood mulch around homes because this type of mulch attracts termites and other insects that will enter your home through cracks and spaces in the foundation and walls.
**Using mulch on soil that is poorly drained (soil that retains moisture and water) can cause the soil to be too wet for plants.
**Leaves, sawdust and shredded bark (all organic mulch) should be moist when they are applied to lawns and gardens. If they are dry, they will soak up the moisture from the soil leaving plants without water.
http://www.associatedcontent.com/article/5542944/in_search_of_the_perfect_mulch_for.html
Amazon's "Customers who bought this item also bought..."
This set of views is designed to show related items purchased with an inventory item in Dynamics GP.
This is similar in concept to Amazon's "Customers who bought this item also bought..."
The final view should ideally be restricted to a single item and will return items that have been bought (invoiced) with the
restricted item and the % of times they were bought together.
Using Fabrikam as a example, if you run this for item '5-Fee', you'll see that item '5-TVLLABOR' was on the same invoice as '5-Fee' 56%
of the time. The goal is to find related products for suggestive selling or product positioning.
These were built as views to allow them to be built into a Smartlist Builder based Smartlist. The use of views means that performance
suffers because the view has to hold all of the combinations and it may slow down with a large number of items and transactions.
I also have a Stored Procedure at http://www.dynamicaccounting.net that does the same thing and is more efficient.
That is a better option for custom programming, Crystal Reports or SSRS.
*/
--Create view to build denominator for % calc. This is the number of invoices per item.
Create View RelatedItems_InvoiceCount as
Select ItemNmbr as ItemNumber, COUNT(SOPNumbe) as InvoiceCount
FROM sop30300
WHERE sopnumbe IN (SELECT sopnumbe FROM SOP30300) and SOPTYPE=3
Group by ITEMNMBR
--Create view to hold the the relationships. This holds other items on the same invoice as an item.
Create View RelatedItems_Relationship as
SELECT SOP30300.SOPTYPE, SOP30300.SOPNUMBE, SOP30300.ITEMNMBR, SOP30300_2.ITEMNMBR AS RelatedItem
FROM SOP30300 INNER JOIN
SOP30300 AS SOP30300_2 ON SOP30300.SOPTYPE = SOP30300_2.SOPTYPE AND SOP30300.SOPNUMBE = SOP30300_2.SOPNUMBE
WHERE (SOP30300.SOPNUMBE IN
(SELECT SOPNUMBE
FROM SOP30300 AS SOP30300_1)) AND (SOP30300.SOPTYPE = 3) and SOP30300.ITEMNMBR <>SOP30300_2.ITEMNMBR
GROUP BY SOP30300.SOPTYPE, SOP30300.SOPNUMBE, SOP30300.ITEMNMBR, SOP30300_2.SOPNUMBE, SOP30300_2.SOPTYPE, SOP30300_2.ITEMNMBR
order by itemnmbr
--Create view to hold both related items and the % of common invoices they appeared on
Create View RelatedItems_PcntAlsoBought as
SELECT RelatedItems_Relationship.itemnmbr as ItemNumber, RelatedItems_Relationship.RelatedItem AS RelatedItem, IV00101.ITEMDESC AS Description,
Cast(cast(COUNT(SOPNUMBE) as decimal(8,2))/ CAST( RelatedItems_InvoiceCount.InvoiceCount as decimal(8,2)) *100 as decimal(8,2)) AS PcntAlsoBought
FROM RelatedItems_Relationship INNER JOIN
IV00101 ON RelatedItems_Relationship.RelatedItem = IV00101.ITEMNMBR
INNER JOIN
RelatedItems_InvoiceCount ON RelatedItems_Relationship.ItemNmbr = RelatedItems_InvoiceCount.ItemNumber
Where RelatedItems_Relationship.ITEMNMBR in (Select ITEMNMBR from IV00101)
GROUP BY RelatedItems_Relationship.itemnmbr,RelatedItems_Relationship.Relateditem, IV00101.ITEMDESC, RelatedItems_InvoiceCount.InvoiceCount
--Execute the view limiting it to one item and sorting by highest %
Select * from RelatedItems_PcntAlsoBought where ItemNumber='5-Fee'
Order by 4 desc
This is similar in concept to Amazon's "Customers who bought this item also bought..."
The final view should ideally be restricted to a single item and will return items that have been bought (invoiced) with the
restricted item and the % of times they were bought together.
Using Fabrikam as a example, if you run this for item '5-Fee', you'll see that item '5-TVLLABOR' was on the same invoice as '5-Fee' 56%
of the time. The goal is to find related products for suggestive selling or product positioning.
These were built as views to allow them to be built into a Smartlist Builder based Smartlist. The use of views means that performance
suffers because the view has to hold all of the combinations and it may slow down with a large number of items and transactions.
I also have a Stored Procedure at http://www.dynamicaccounting.net that does the same thing and is more efficient.
That is a better option for custom programming, Crystal Reports or SSRS.
*/
--Create view to build denominator for % calc. This is the number of invoices per item.
Create View RelatedItems_InvoiceCount as
Select ItemNmbr as ItemNumber, COUNT(SOPNumbe) as InvoiceCount
FROM sop30300
WHERE sopnumbe IN (SELECT sopnumbe FROM SOP30300) and SOPTYPE=3
Group by ITEMNMBR
--Create view to hold the the relationships. This holds other items on the same invoice as an item.
Create View RelatedItems_Relationship as
SELECT SOP30300.SOPTYPE, SOP30300.SOPNUMBE, SOP30300.ITEMNMBR, SOP30300_2.ITEMNMBR AS RelatedItem
FROM SOP30300 INNER JOIN
SOP30300 AS SOP30300_2 ON SOP30300.SOPTYPE = SOP30300_2.SOPTYPE AND SOP30300.SOPNUMBE = SOP30300_2.SOPNUMBE
WHERE (SOP30300.SOPNUMBE IN
(SELECT SOPNUMBE
FROM SOP30300 AS SOP30300_1)) AND (SOP30300.SOPTYPE = 3) and SOP30300.ITEMNMBR <>SOP30300_2.ITEMNMBR
GROUP BY SOP30300.SOPTYPE, SOP30300.SOPNUMBE, SOP30300.ITEMNMBR, SOP30300_2.SOPNUMBE, SOP30300_2.SOPTYPE, SOP30300_2.ITEMNMBR
order by itemnmbr
--Create view to hold both related items and the % of common invoices they appeared on
Create View RelatedItems_PcntAlsoBought as
SELECT RelatedItems_Relationship.itemnmbr as ItemNumber, RelatedItems_Relationship.RelatedItem AS RelatedItem, IV00101.ITEMDESC AS Description,
Cast(cast(COUNT(SOPNUMBE) as decimal(8,2))/ CAST( RelatedItems_InvoiceCount.InvoiceCount as decimal(8,2)) *100 as decimal(8,2)) AS PcntAlsoBought
FROM RelatedItems_Relationship INNER JOIN
IV00101 ON RelatedItems_Relationship.RelatedItem = IV00101.ITEMNMBR
INNER JOIN
RelatedItems_InvoiceCount ON RelatedItems_Relationship.ItemNmbr = RelatedItems_InvoiceCount.ItemNumber
Where RelatedItems_Relationship.ITEMNMBR in (Select ITEMNMBR from IV00101)
GROUP BY RelatedItems_Relationship.itemnmbr,RelatedItems_Relationship.Relateditem, IV00101.ITEMDESC, RelatedItems_InvoiceCount.InvoiceCount
--Execute the view limiting it to one item and sorting by highest %
Select * from RelatedItems_PcntAlsoBought where ItemNumber='5-Fee'
Order by 4 desc
1/20/11
Reinvent Your Business Before It’s Too Late
Sooner or later, all businesses, even the most successful, run out of room to grow. Faced with this unpleasant reality, they are compelled to reinvent themselves periodically. The ability to pull off this difficult feat—to jump from the maturity stage of one business to the growth stage of the next—is what separates high performers from those whose time at the top is all too brief.
The potential consequences are dire for any organization that fails to reinvent itself in time. As Matthew S. Olson and Derek van Bever demonstrate in their book Stall Points, once a company runs up against a major stall in its growth, it has less than a 10% chance of ever fully recovering. Those odds are certainly daunting, and they do much to explain why two-thirds of stalled companies are later acquired, taken private, or forced into bankruptcy.
There’s no shortage of explanations for this stalling—from failure to stick with the core (or sticking with it for too long) to problems with execution, misreading of consumer tastes, or an unhealthy focus on scale for scale’s sake. What those theories have in common is the notion that stalling results from a failure to fix what is clearly broken in a company.
Having spent the better part of a decade researching the nature of high performance in business, we realized that those explanations missed something crucial. Companies fail to reinvent themselves not necessarily because they are bad at fixing what’s broken, but because they wait much too long before repairing the deteriorating bulwarks of the company. That is, they invest most of their energy managing to the contours of their existing operations—the financial S curve in which sales of a successful new offering build slowly, then ascend rapidly, and finally taper off—and not nearly enough energy creating the foundations of successful new businesses. Because of that, they are left scrambling when their core markets begin to stagnate.
In our research, we’ve found that the companies that successfully reinvent themselves have one trait in common. They tend to broaden their focus beyond the financial S curve and manage to three much shorter but vitally important hidden S curves—tracking the basis of competition in their industry, renewing their capabilities, and nurturing a ready supply of talent. In essence, they turn conventional wisdom on its head and learn to focus on fixing what doesn’t yet appear to be broken.
Thrown a Curve
Making a commitment to reinvention before the need is glaringly obvious doesn’t come naturally. Things often look rosiest just before a company heads into decline: Revenues from the current business model are surging, profits are robust, and the company stock commands a hefty premium. But that’s exactly when managers need to take action.
To position themselves to jump to the next business S curve, they need to focus on the following.
The hidden competition curve.
Long before a successful business hits its revenue peak, the basis of competition on which it was founded expires. Competition in the cell phone industry, for instance, has changed several times—for both manufacturers and service providers—from price to network coverage to the value of services to design, branding, and applications. The first hidden S curve tracks how competition in an industry is shifting. High performers see changes in customer needs and create the next basis of competition in their industry, even as they exploit existing businesses that have not yet peaked.
Netflix, for example, radically altered the basis of competition in DVD rentals by introducing a business model that used delivery by mail. At the same time, it almost immediately set out to reinvent itself by capturing the technology that would replace physical copies of films—digital streaming over the internet. Today Netflix is the largest provider of DVDs by mail and a major player in online streaming. In contrast, Blockbuster rode its successful superstore model all the way to the top, tweaking it along the way (no more late fees) but failing to respond quickly enough to changes in the basis of competition.
The hidden capabilities curve.
In building the offerings that enable them to climb the financial S curve, high performers invariably create distinctive capabilities. Prominent examples include Dell with its direct model of PC sales, Wal-Mart with its unique supply chain capabilities, and Toyota with not just its production method but also its engineering capabilities, which made possible Lexus’s luxury cars and the Prius. But distinctiveness in capabilities—like the basis of competition—is fleeting, so executives must invest in developing new ones in order to jump to the next capabilities S curve. All too often, though, the end of the capabilities curve does not become apparent to executives until time to develop a new one has run out.
Take the music industry. The major players concentrated on refining current operations; it was a PC maker that developed the capabilities needed to deliver digital music to millions of consumers at an acceptable price. High performers are continually looking for ways to reinvent themselves and their market. P&G long ago recognized the untapped customer market for disposable diapers. The company spent five years perfecting the capabilities that would allow diapers to be priced similarly to what customers were then paying services to launder and deliver cloth diapers. Amazon.com CEO Jeff Bezos notes that it takes five to seven years before the seeds his company plants—things like expanding beyond media products, working with third-party sellers, and going international—grow enough to have a meaningful impact on the economics of the business; this process requires foresight, early commitment, and tenacious faith in the power of R&D.
The hidden talent curve.
Companies often lose focus on developing and retaining enough of what we call serious talent—people with both the capabilities and the will to drive new business growth. This is especially true when the business is successfully humming along but has not yet peaked. In such circumstances, companies feel that operations can be leaner (they’ve moved far down the learning curve by then) and meaner, because they’re under pressures to boost margins. They reduce both head count and investments in talent, which has the perverse effect of driving away the very people they could rely on to help them reinvent the business.
The high performers in our study maintain a steady commitment to talent creation. The oil-field services provider Schlumberger is always searching for and developing serious talent, assigning “ambassadors” to dozens of top engineering schools around the world. These ambassadors include high-level executives who manage large budgets and can approve equipment donations and research funding at those universities. Close ties with the schools help Schlumberger get preference when it is recruiting. Not only does Schlumberger keep its talent pipeline flowing, but it’s a leader in employee development. In fact, it is a net producer of talent for its industry, a hallmark of high performers.
By managing to these hidden curves—as well as keeping focused on the revenue growth S curve, it must be emphasized—the high performers in our study had typically started the reinvention process well before their current businesses had begun to slow. So what are the management practices that prepare high performers for reinvention? Let’s look first at the response to the hidden competition curve.
Edge-Centric Strategy
Traditional strategic-planning methods are useful in stretching the revenue S curve of an existing business, but they can’t help companies detect how the basis for competition in a market will change.
To make reinvention possible, companies must supplement their traditional approaches with a parallel strategy process that brings the edges of the market and the edges of the organization to the center. In this “edge-centric” approach, strategy making becomes a permanent activity without permanent structures or processes.
Moving the edge of the market to the center.
An edge-centric strategy allows companies to continually scan the periphery of the market for untapped customer needs or unsolved problems. Consider how Novo Nordisk gets to the edge of the market to detect changes in the basis of competition as they’re occurring. For example, through one critical initiative the pharma giant came to understand that its future businesses would have to address much more than physical health. The initiative—Diabetes Attitudes, Wishes, and Needs (DAWN)—brings together thousands of primary care physicians, nurses, medical specialists, patients, and delegates from major associations like the World Health Organization to put the individual—rather than the disease—at the center of diabetes care.
Research conducted through DAWN has opened Novo’s eyes to the psychological and sociological needs of patients. For example, the company learned that more than 40% of people with diabetes also have psychological issues, and about 15% suffer from depression. Because of such insights, the company has begun to reinvent itself early; it focuses less on drug development and manufacturing and more on disease prevention and treatment, betting that the future of the company lies in concentrating on the person as well as the disease.
Moving the edge of the organization to the center.
Frontline employees, far-flung research teams, line managers—all these individuals have a vital role to play in detecting important shifts in the market. High performers find ways to bring these voices into the strategy-making process. Best Buy listens to store managers far from corporate headquarters, such as the New York City manager who created a magnet store for Portuguese visitors coming off cruise ships. Reckitt Benckiser got one of its most successful product ideas, Air Wick Freshmatic, from a brand manager in Korea. The idea was initially met with considerable internal skepticism because it would require the company to incorporate electronics for the first time—but CEO Bart Becht is more impressed by passion than by consensus.
If strategy making is to remain on the edge, it cannot be formalized. We found that although low and average performers tend to make strategy according to the calendar, high performers use many methods and keep the timing dynamic to avoid predictability and to prevent the system from being gamed.
As quickly as competition shifts, the distinctiveness of capabilities may evaporate even faster. By the time a business really takes off, imitators have usually had time to plan and begin their attack, and others, attracted to marketplace success, are sure to follow. How, then, do companies build the capabilities necessary to jump to a new financial S curve?
Change at the Top
Some executives excel at running a business—ramping up manufacturing, expanding into different geographies, or extending a product line. Others are entrepreneurial—their strength is in creating new markets. Neither is inherently better; what matters is that the capabilities of the top team match the firm’s organizational needs on the capabilities S curve. Companies run into trouble when their top teams stay in place to manage the financial S curve rather than evolve to build the next set of distinctive capabilities.
Avoiding that trap runs counter to human nature, of course. What member of a top team wants to leave when business is good? High performers recognize that a key to building the capabilities necessary to jump to a new financial S curve is the early injection of new leadership blood and a continual shake-up of the top team.
Early top-team renewal.
Consider how the top team at Intel has evolved. Throughout its history, the semiconductor manufacturer has seen its CEO mantle rest on five executives: Robert Noyce, Gordon Moore, Andy Grove, Craig Barrett, and current CEO Paul Otellini. Not once has the company had to look outside to find this talent, and the transitions have typically been orderly and well orchestrated. “We discuss executive changes 10 years out to identify gaps,” explains David Yoffie, who has served on the Intel board since 1989.
Simple continuity is not Intel’s goal in making changes at the top, however; evolving the business is. For instance, when Grove stepped down from the top spot, in 1998, he was still a highly effective leader. If continuity had been Intel’s overwhelming concern, Grove might have stayed for another three years, until he reached the mandatory retirement age of 65. But instead, he handed the baton to Barrett, who then implemented a strategy for growing Intel’s business through product extensions.
Indeed, each of Intel’s CEOs has left his mark in a different way. Grove made the bold decision to move Intel away from memory chips in order to focus on microprocessors, a transition that established the company as a global high-tech leader. Since he took the helm, in 2005, Otellini has focused on the Atom mobile chip, which is being developed for use in just about any device that might need to connect to the web, including cell phones, navigation systems, and even sewing machines (for downloading patterns).
Through structured succession planning, Intel ensures that it chooses the CEO who is right for the challenges the company is facing, not simply the person next in line. And by changing CEOs early, the company gives its new leadership time to produce the reinvention needed, well before deteriorating revenues and dwindling options become a crisis.
Balance short-term and long-term thinking.
Ensuring that the team is balanced with a focus on both the present and the future is another critical step in developing a new capabilities curve. When Adobe bought Macromedia in 2005, then-CEO Bruce Chizen took a hard look at his senior managers to determine which of them had what it took to grow the company to annual revenues of $10 billion. What he found was a number of executives who lacked either the skills or the motivation to do what was necessary. Consequently, Chizen tapped more executives from Macromedia than from Adobe for key roles in the new organization. Those choices were based on Adobe’s future needs, not on which executives were the most capable at the time.
Chizen wasn’t tough-minded just with others. At the relatively young age of 52, and only seven years into his successful tenure, he handed over the reins to Shantanu Narayen, his longtime deputy. The timing might have seemed odd, but it made good sense for Adobe: The company faced a new set of challenges—and the need for new capabilities—as it anticipated going head-to-head against larger competitors like Microsoft.
In other cases, the executive team might need to gather fresh viewpoints from within the organization to balance long-established management thinking. Before Ratan Tata took over at India’s Tata Group, in 1991, executives had comfortably ruled their fiefdoms for ages and rarely retired. But the new chairman began easing out those complacent executives (not surprisingly, some of their departures were acrimonious) and instituted a compulsory retirement age to help prevent the future stagnation of his senior leadership. The dramatic change opened dozens of opportunities for rising in-house talent who have helped Tata become India’s largest private corporate group.
Organize to avoid overload.
Finally, high performers organize their top teams so that responsibilities are more effectively divided and conquered. Three critical tasks of senior leadership are information sharing, consulting on important decisions, and making those decisions. Although many companies have one group that performs all three functions, this can easily become unwieldy.
An alternative approach, which we observed in many high performers, is to split those tasks—in effect, creating teams nested within teams. At the very top are the primary decision makers—a group of perhaps three to seven people. This group then receives advice from other teams, so hundreds of people may be providing important input.
Surplus Talent
Business reinvention requires not just nimble top teams but also large numbers of people ready to take on the considerable challenge of getting new businesses off the ground and making them thrive. High performers take an approach that is, in its way, as difficult as changing out top leadership before the company’s main business has crested: They create much more talent than they need to run the current business effectively—particularly talent of the kind that can start and grow a business, not just manage one. This can be a hard sell in the best of times, which is probably why so many avoid it.
One of the signs that a company has surplus talent is that employees have time to think on the job. Many of our high performers make time to explore a regular component of their employees’ workweek. (Think Google and 3M.) Another is a deep bench—one that allows promising managers to take on developmental assignments and not just get plugged in where there is an urgent need. High performance companies aggressively search out the right type of candidate and then take action to strengthen individuals for the challenges ahead.
Hire for cultural fit.
High performance companies begin with the expectation that they are hiring people for the long term—a perspective that fundamentally alters the nature of their hiring and development practices. They don’t just look for the best people for the current openings; they recognize that cultural fit is what helps ensure that someone will perform exceptionally well over time.
One company that gets this right is the Four Seasons Hotels and Resorts. It specifically looks for people who will thrive in a business that treats customers like kings—because, quite literally, some guests could be. “I can teach anyone to be a waiter,” says Isadore Sharp, CEO of the luxury hotel chain in his book Four Seasons: The Story of a Business Philosophy. “But you can’t change an ingrained poor attitude. We look for people who say, ‘I’d be proud to be a doorman.’”
Reckitt Benckiser also puts cultural fit at the top of its hiring priorities. Before candidates begin the application process, they can complete an online simulation that determines whether they are likely to be a good match with the firm’s exceptionally driven culture. The candidates are presented with business scenarios and asked how they would respond. After reviewing their “fit” score, they can decide for themselves whether they want to continue pursuing employment with the company.
Prepare for challenges ahead.
Making sure that new employees are fit to successfully navigate the tough stretches in a long career requires something we call stressing for strength. At low-performer companies, employees may find themselves wilting when faced with unexpected or harsh terrain. High performers create environments—often challenging ones—in which employees acquire the skills and experience they will need to start the company’s next S curve. The goal is partly to create what our Accenture colleague Bob Thomas, in his book on the topic, calls “crucible” experiences. These are life-changing events, whether on the job or not, whose lessons help transform someone into a leader.
Crucible experiences can—and should—be created intentionally. When Jeff Immelt was still in his early 30s and relatively new in his career at GE, he was tapped by then-CEO Jack Welch and HR chief Bill Conaty to deal with the problem of millions of faulty refrigerator compressors—despite his lack of familiarity with appliances or recalls. Immelt later said he would never have become CEO without that trial-by-fire experience.
Give employees room to grow.
After choosing and testing the right employees, companies must give them a chance to develop. To truly enable them to excel in their work, companies should take a hard look at exactly what people are required to do day by day.
UPS has long known that its truck drivers are crucial to its success. Experienced drivers know the fastest routes, taking into account the time of day, the weather, and various other factors. But the turnover rate for drivers was high, partly because of the hard physical labor required to load packages onto the trucks. So UPS separated out that task and gave it to part-time workers, who were more affordable and easier to find, allowing a valuable group of employees to concentrate on their capabilities and excel at their jobs.
Companies can also use organizational structure to provide employees with ample opportunities to grow. Illinois Tool Works, a global manufacturer of industrial products and equipment, is organized into more than 800 business units. Whenever one of those units becomes too large (the maximum size is around $50 million in sales), ITW splits that business, thus opening up managerial positions for young talent. In fact, it’s not uncommon for ITW managers to start running a business while they’re still in their 20s.
And high performance businesses aren’t afraid to leapfrog talented employees over those with longer tenure. After A.G. Lafley took over at P&G, for example, he needed someone to run the North American baby-care division, which was struggling. Instead of choosing one of the 78 general managers with seniority, he reached lower in the organization and tapped Deborah Henretta. Lafley’s move paid off. Henretta reversed 20 years’ worth of losses in the division and was later promoted to group president of Asia, overseeing a $4 billion-plus operation.
Breaking the mold in one way or another—as leaders have done at UPS, ITW, and P&G—is critical to building surplus talent in the organization. It not only keeps key individuals (or groups, in the case of UPS’s drivers) on board; it also signals to the organization as a whole that no compromises on talent will be made in order to achieve short-sighted cost savings.
Even top organizations are vulnerable to slowdowns. In fact, an economic downturn can exacerbate problems for companies already nearing the end of their financial S curve. (See the sidebar “Why Now?”) Even in the best of times, business crises—whether they are caused by hungry new competitors, transformational technology, or simply the aging of an industry or a company—come with regularity. Companies in other industries may be feeling great, while your business (or industry) faces its own great depression.
In the face of all these challenges, companies that manage themselves according to the three hidden S curves—the basis of competition, the distinctiveness of their capabilities, and a ready supply of talent—will be in a much better position to reinvent themselves, jumping to the next S curve with relative ease. Those that do not are likely to respond to a stall in growth by creating an urgent and drastic reinvention program—with little likelihood of success.
About the Research
At Accenture, we have been conducting the High Performance Business research program since 2003. Starting from the premise that all performance is relative, we examined sets of peer companies. Previous research on high performance had compared companies head-to-head across industries, but that approach ignored the differences in average profitability, maturity, and risk from one industry to another, making it a contest among industries rather than among companies.
We settled on 31 peer sets for our initial study, encompassing more than 800 companies and representing more than 80% of the market capitalization of the Russell 3000 Index at the time. We analyzed performance in terms of 13 financial metrics to assess growth, profitability, consistency, longevity, and positioning for the future. In most cases, we applied the metrics over a 10-year span.
The businesses that performed extraordinarily well over the long term had all made regular transitions from maturing markets to new, vibrant ones. To find out how these organizations were able to maintain a high level of performance, we conducted years of follow-on investigation, creating special teams from our industry and business-function practice areas. Team members’ expertise and experience was supplemented by contributions from independent researchers and scholars.
Today, the program includes regional and global studies of high performance, to take into account the explosive success of many emerging-market companies.
Jumping the S Curve
High performers are well on their way to new-business success by the time their existing businesses start to stall.
The Hidden S Curves of High Performance
Three aspects of a business mature—and start to decline—much faster than financial performance does. They need to be reinvented before you can grow a new business.
Why Now?
Why do economic slowdowns call for innovation and reinvention? Reduced sales and increased discounting tend to squash companies’ revenue S curves. Worse, the S curves do not stretch back out as conditions improve. Companies lose ground in four key areas:
Intellectual Property
Patent offices don’t put years back on the clock just because a company’s sales tapered off in a bad economy. This can have a devastating effect on, for instance, pharmaceuticals, where generics constantly challenge proprietary drugs as patents expire.
Technology
Economic downturns can slow the introduction of new technologies, but not for long. Witness the fate of some manufacturers of plasma televisions, which have been forced to exit the business under the double whammy of the downturn and steady improvements in LCD and LED sets.
Competition
Companies looking to grow sales in a recession must take market share from competitors. As they press advantage, already weakened companies face possible extinction. In the movie-viewing market, for instance, companies that dominate newer channels have driven bricks-and-mortar retailers into bankruptcy.
Consumer Tastes
Novelty wears off, regardless of the economy. Even though they’ve bought less during the downturn, consumers accustomed to the idea of “fast fashion,” for example, will not be interested in last year’s styles.
http://hbr.org/2011/01/reinvent-your-business-before-its-too-late
The potential consequences are dire for any organization that fails to reinvent itself in time. As Matthew S. Olson and Derek van Bever demonstrate in their book Stall Points, once a company runs up against a major stall in its growth, it has less than a 10% chance of ever fully recovering. Those odds are certainly daunting, and they do much to explain why two-thirds of stalled companies are later acquired, taken private, or forced into bankruptcy.
There’s no shortage of explanations for this stalling—from failure to stick with the core (or sticking with it for too long) to problems with execution, misreading of consumer tastes, or an unhealthy focus on scale for scale’s sake. What those theories have in common is the notion that stalling results from a failure to fix what is clearly broken in a company.
Having spent the better part of a decade researching the nature of high performance in business, we realized that those explanations missed something crucial. Companies fail to reinvent themselves not necessarily because they are bad at fixing what’s broken, but because they wait much too long before repairing the deteriorating bulwarks of the company. That is, they invest most of their energy managing to the contours of their existing operations—the financial S curve in which sales of a successful new offering build slowly, then ascend rapidly, and finally taper off—and not nearly enough energy creating the foundations of successful new businesses. Because of that, they are left scrambling when their core markets begin to stagnate.
In our research, we’ve found that the companies that successfully reinvent themselves have one trait in common. They tend to broaden their focus beyond the financial S curve and manage to three much shorter but vitally important hidden S curves—tracking the basis of competition in their industry, renewing their capabilities, and nurturing a ready supply of talent. In essence, they turn conventional wisdom on its head and learn to focus on fixing what doesn’t yet appear to be broken.
Thrown a Curve
Making a commitment to reinvention before the need is glaringly obvious doesn’t come naturally. Things often look rosiest just before a company heads into decline: Revenues from the current business model are surging, profits are robust, and the company stock commands a hefty premium. But that’s exactly when managers need to take action.
To position themselves to jump to the next business S curve, they need to focus on the following.
The hidden competition curve.
Long before a successful business hits its revenue peak, the basis of competition on which it was founded expires. Competition in the cell phone industry, for instance, has changed several times—for both manufacturers and service providers—from price to network coverage to the value of services to design, branding, and applications. The first hidden S curve tracks how competition in an industry is shifting. High performers see changes in customer needs and create the next basis of competition in their industry, even as they exploit existing businesses that have not yet peaked.
Netflix, for example, radically altered the basis of competition in DVD rentals by introducing a business model that used delivery by mail. At the same time, it almost immediately set out to reinvent itself by capturing the technology that would replace physical copies of films—digital streaming over the internet. Today Netflix is the largest provider of DVDs by mail and a major player in online streaming. In contrast, Blockbuster rode its successful superstore model all the way to the top, tweaking it along the way (no more late fees) but failing to respond quickly enough to changes in the basis of competition.
The hidden capabilities curve.
In building the offerings that enable them to climb the financial S curve, high performers invariably create distinctive capabilities. Prominent examples include Dell with its direct model of PC sales, Wal-Mart with its unique supply chain capabilities, and Toyota with not just its production method but also its engineering capabilities, which made possible Lexus’s luxury cars and the Prius. But distinctiveness in capabilities—like the basis of competition—is fleeting, so executives must invest in developing new ones in order to jump to the next capabilities S curve. All too often, though, the end of the capabilities curve does not become apparent to executives until time to develop a new one has run out.
Take the music industry. The major players concentrated on refining current operations; it was a PC maker that developed the capabilities needed to deliver digital music to millions of consumers at an acceptable price. High performers are continually looking for ways to reinvent themselves and their market. P&G long ago recognized the untapped customer market for disposable diapers. The company spent five years perfecting the capabilities that would allow diapers to be priced similarly to what customers were then paying services to launder and deliver cloth diapers. Amazon.com CEO Jeff Bezos notes that it takes five to seven years before the seeds his company plants—things like expanding beyond media products, working with third-party sellers, and going international—grow enough to have a meaningful impact on the economics of the business; this process requires foresight, early commitment, and tenacious faith in the power of R&D.
The hidden talent curve.
Companies often lose focus on developing and retaining enough of what we call serious talent—people with both the capabilities and the will to drive new business growth. This is especially true when the business is successfully humming along but has not yet peaked. In such circumstances, companies feel that operations can be leaner (they’ve moved far down the learning curve by then) and meaner, because they’re under pressures to boost margins. They reduce both head count and investments in talent, which has the perverse effect of driving away the very people they could rely on to help them reinvent the business.
The high performers in our study maintain a steady commitment to talent creation. The oil-field services provider Schlumberger is always searching for and developing serious talent, assigning “ambassadors” to dozens of top engineering schools around the world. These ambassadors include high-level executives who manage large budgets and can approve equipment donations and research funding at those universities. Close ties with the schools help Schlumberger get preference when it is recruiting. Not only does Schlumberger keep its talent pipeline flowing, but it’s a leader in employee development. In fact, it is a net producer of talent for its industry, a hallmark of high performers.
By managing to these hidden curves—as well as keeping focused on the revenue growth S curve, it must be emphasized—the high performers in our study had typically started the reinvention process well before their current businesses had begun to slow. So what are the management practices that prepare high performers for reinvention? Let’s look first at the response to the hidden competition curve.
Edge-Centric Strategy
Traditional strategic-planning methods are useful in stretching the revenue S curve of an existing business, but they can’t help companies detect how the basis for competition in a market will change.
To make reinvention possible, companies must supplement their traditional approaches with a parallel strategy process that brings the edges of the market and the edges of the organization to the center. In this “edge-centric” approach, strategy making becomes a permanent activity without permanent structures or processes.
Moving the edge of the market to the center.
An edge-centric strategy allows companies to continually scan the periphery of the market for untapped customer needs or unsolved problems. Consider how Novo Nordisk gets to the edge of the market to detect changes in the basis of competition as they’re occurring. For example, through one critical initiative the pharma giant came to understand that its future businesses would have to address much more than physical health. The initiative—Diabetes Attitudes, Wishes, and Needs (DAWN)—brings together thousands of primary care physicians, nurses, medical specialists, patients, and delegates from major associations like the World Health Organization to put the individual—rather than the disease—at the center of diabetes care.
Research conducted through DAWN has opened Novo’s eyes to the psychological and sociological needs of patients. For example, the company learned that more than 40% of people with diabetes also have psychological issues, and about 15% suffer from depression. Because of such insights, the company has begun to reinvent itself early; it focuses less on drug development and manufacturing and more on disease prevention and treatment, betting that the future of the company lies in concentrating on the person as well as the disease.
Moving the edge of the organization to the center.
Frontline employees, far-flung research teams, line managers—all these individuals have a vital role to play in detecting important shifts in the market. High performers find ways to bring these voices into the strategy-making process. Best Buy listens to store managers far from corporate headquarters, such as the New York City manager who created a magnet store for Portuguese visitors coming off cruise ships. Reckitt Benckiser got one of its most successful product ideas, Air Wick Freshmatic, from a brand manager in Korea. The idea was initially met with considerable internal skepticism because it would require the company to incorporate electronics for the first time—but CEO Bart Becht is more impressed by passion than by consensus.
If strategy making is to remain on the edge, it cannot be formalized. We found that although low and average performers tend to make strategy according to the calendar, high performers use many methods and keep the timing dynamic to avoid predictability and to prevent the system from being gamed.
As quickly as competition shifts, the distinctiveness of capabilities may evaporate even faster. By the time a business really takes off, imitators have usually had time to plan and begin their attack, and others, attracted to marketplace success, are sure to follow. How, then, do companies build the capabilities necessary to jump to a new financial S curve?
Change at the Top
Some executives excel at running a business—ramping up manufacturing, expanding into different geographies, or extending a product line. Others are entrepreneurial—their strength is in creating new markets. Neither is inherently better; what matters is that the capabilities of the top team match the firm’s organizational needs on the capabilities S curve. Companies run into trouble when their top teams stay in place to manage the financial S curve rather than evolve to build the next set of distinctive capabilities.
Avoiding that trap runs counter to human nature, of course. What member of a top team wants to leave when business is good? High performers recognize that a key to building the capabilities necessary to jump to a new financial S curve is the early injection of new leadership blood and a continual shake-up of the top team.
Early top-team renewal.
Consider how the top team at Intel has evolved. Throughout its history, the semiconductor manufacturer has seen its CEO mantle rest on five executives: Robert Noyce, Gordon Moore, Andy Grove, Craig Barrett, and current CEO Paul Otellini. Not once has the company had to look outside to find this talent, and the transitions have typically been orderly and well orchestrated. “We discuss executive changes 10 years out to identify gaps,” explains David Yoffie, who has served on the Intel board since 1989.
Simple continuity is not Intel’s goal in making changes at the top, however; evolving the business is. For instance, when Grove stepped down from the top spot, in 1998, he was still a highly effective leader. If continuity had been Intel’s overwhelming concern, Grove might have stayed for another three years, until he reached the mandatory retirement age of 65. But instead, he handed the baton to Barrett, who then implemented a strategy for growing Intel’s business through product extensions.
Indeed, each of Intel’s CEOs has left his mark in a different way. Grove made the bold decision to move Intel away from memory chips in order to focus on microprocessors, a transition that established the company as a global high-tech leader. Since he took the helm, in 2005, Otellini has focused on the Atom mobile chip, which is being developed for use in just about any device that might need to connect to the web, including cell phones, navigation systems, and even sewing machines (for downloading patterns).
Through structured succession planning, Intel ensures that it chooses the CEO who is right for the challenges the company is facing, not simply the person next in line. And by changing CEOs early, the company gives its new leadership time to produce the reinvention needed, well before deteriorating revenues and dwindling options become a crisis.
Balance short-term and long-term thinking.
Ensuring that the team is balanced with a focus on both the present and the future is another critical step in developing a new capabilities curve. When Adobe bought Macromedia in 2005, then-CEO Bruce Chizen took a hard look at his senior managers to determine which of them had what it took to grow the company to annual revenues of $10 billion. What he found was a number of executives who lacked either the skills or the motivation to do what was necessary. Consequently, Chizen tapped more executives from Macromedia than from Adobe for key roles in the new organization. Those choices were based on Adobe’s future needs, not on which executives were the most capable at the time.
Chizen wasn’t tough-minded just with others. At the relatively young age of 52, and only seven years into his successful tenure, he handed over the reins to Shantanu Narayen, his longtime deputy. The timing might have seemed odd, but it made good sense for Adobe: The company faced a new set of challenges—and the need for new capabilities—as it anticipated going head-to-head against larger competitors like Microsoft.
In other cases, the executive team might need to gather fresh viewpoints from within the organization to balance long-established management thinking. Before Ratan Tata took over at India’s Tata Group, in 1991, executives had comfortably ruled their fiefdoms for ages and rarely retired. But the new chairman began easing out those complacent executives (not surprisingly, some of their departures were acrimonious) and instituted a compulsory retirement age to help prevent the future stagnation of his senior leadership. The dramatic change opened dozens of opportunities for rising in-house talent who have helped Tata become India’s largest private corporate group.
Organize to avoid overload.
Finally, high performers organize their top teams so that responsibilities are more effectively divided and conquered. Three critical tasks of senior leadership are information sharing, consulting on important decisions, and making those decisions. Although many companies have one group that performs all three functions, this can easily become unwieldy.
An alternative approach, which we observed in many high performers, is to split those tasks—in effect, creating teams nested within teams. At the very top are the primary decision makers—a group of perhaps three to seven people. This group then receives advice from other teams, so hundreds of people may be providing important input.
Surplus Talent
Business reinvention requires not just nimble top teams but also large numbers of people ready to take on the considerable challenge of getting new businesses off the ground and making them thrive. High performers take an approach that is, in its way, as difficult as changing out top leadership before the company’s main business has crested: They create much more talent than they need to run the current business effectively—particularly talent of the kind that can start and grow a business, not just manage one. This can be a hard sell in the best of times, which is probably why so many avoid it.
One of the signs that a company has surplus talent is that employees have time to think on the job. Many of our high performers make time to explore a regular component of their employees’ workweek. (Think Google and 3M.) Another is a deep bench—one that allows promising managers to take on developmental assignments and not just get plugged in where there is an urgent need. High performance companies aggressively search out the right type of candidate and then take action to strengthen individuals for the challenges ahead.
Hire for cultural fit.
High performance companies begin with the expectation that they are hiring people for the long term—a perspective that fundamentally alters the nature of their hiring and development practices. They don’t just look for the best people for the current openings; they recognize that cultural fit is what helps ensure that someone will perform exceptionally well over time.
One company that gets this right is the Four Seasons Hotels and Resorts. It specifically looks for people who will thrive in a business that treats customers like kings—because, quite literally, some guests could be. “I can teach anyone to be a waiter,” says Isadore Sharp, CEO of the luxury hotel chain in his book Four Seasons: The Story of a Business Philosophy. “But you can’t change an ingrained poor attitude. We look for people who say, ‘I’d be proud to be a doorman.’”
Reckitt Benckiser also puts cultural fit at the top of its hiring priorities. Before candidates begin the application process, they can complete an online simulation that determines whether they are likely to be a good match with the firm’s exceptionally driven culture. The candidates are presented with business scenarios and asked how they would respond. After reviewing their “fit” score, they can decide for themselves whether they want to continue pursuing employment with the company.
Prepare for challenges ahead.
Making sure that new employees are fit to successfully navigate the tough stretches in a long career requires something we call stressing for strength. At low-performer companies, employees may find themselves wilting when faced with unexpected or harsh terrain. High performers create environments—often challenging ones—in which employees acquire the skills and experience they will need to start the company’s next S curve. The goal is partly to create what our Accenture colleague Bob Thomas, in his book on the topic, calls “crucible” experiences. These are life-changing events, whether on the job or not, whose lessons help transform someone into a leader.
Crucible experiences can—and should—be created intentionally. When Jeff Immelt was still in his early 30s and relatively new in his career at GE, he was tapped by then-CEO Jack Welch and HR chief Bill Conaty to deal with the problem of millions of faulty refrigerator compressors—despite his lack of familiarity with appliances or recalls. Immelt later said he would never have become CEO without that trial-by-fire experience.
Give employees room to grow.
After choosing and testing the right employees, companies must give them a chance to develop. To truly enable them to excel in their work, companies should take a hard look at exactly what people are required to do day by day.
UPS has long known that its truck drivers are crucial to its success. Experienced drivers know the fastest routes, taking into account the time of day, the weather, and various other factors. But the turnover rate for drivers was high, partly because of the hard physical labor required to load packages onto the trucks. So UPS separated out that task and gave it to part-time workers, who were more affordable and easier to find, allowing a valuable group of employees to concentrate on their capabilities and excel at their jobs.
Companies can also use organizational structure to provide employees with ample opportunities to grow. Illinois Tool Works, a global manufacturer of industrial products and equipment, is organized into more than 800 business units. Whenever one of those units becomes too large (the maximum size is around $50 million in sales), ITW splits that business, thus opening up managerial positions for young talent. In fact, it’s not uncommon for ITW managers to start running a business while they’re still in their 20s.
And high performance businesses aren’t afraid to leapfrog talented employees over those with longer tenure. After A.G. Lafley took over at P&G, for example, he needed someone to run the North American baby-care division, which was struggling. Instead of choosing one of the 78 general managers with seniority, he reached lower in the organization and tapped Deborah Henretta. Lafley’s move paid off. Henretta reversed 20 years’ worth of losses in the division and was later promoted to group president of Asia, overseeing a $4 billion-plus operation.
Breaking the mold in one way or another—as leaders have done at UPS, ITW, and P&G—is critical to building surplus talent in the organization. It not only keeps key individuals (or groups, in the case of UPS’s drivers) on board; it also signals to the organization as a whole that no compromises on talent will be made in order to achieve short-sighted cost savings.
Even top organizations are vulnerable to slowdowns. In fact, an economic downturn can exacerbate problems for companies already nearing the end of their financial S curve. (See the sidebar “Why Now?”) Even in the best of times, business crises—whether they are caused by hungry new competitors, transformational technology, or simply the aging of an industry or a company—come with regularity. Companies in other industries may be feeling great, while your business (or industry) faces its own great depression.
In the face of all these challenges, companies that manage themselves according to the three hidden S curves—the basis of competition, the distinctiveness of their capabilities, and a ready supply of talent—will be in a much better position to reinvent themselves, jumping to the next S curve with relative ease. Those that do not are likely to respond to a stall in growth by creating an urgent and drastic reinvention program—with little likelihood of success.
About the Research
At Accenture, we have been conducting the High Performance Business research program since 2003. Starting from the premise that all performance is relative, we examined sets of peer companies. Previous research on high performance had compared companies head-to-head across industries, but that approach ignored the differences in average profitability, maturity, and risk from one industry to another, making it a contest among industries rather than among companies.
We settled on 31 peer sets for our initial study, encompassing more than 800 companies and representing more than 80% of the market capitalization of the Russell 3000 Index at the time. We analyzed performance in terms of 13 financial metrics to assess growth, profitability, consistency, longevity, and positioning for the future. In most cases, we applied the metrics over a 10-year span.
The businesses that performed extraordinarily well over the long term had all made regular transitions from maturing markets to new, vibrant ones. To find out how these organizations were able to maintain a high level of performance, we conducted years of follow-on investigation, creating special teams from our industry and business-function practice areas. Team members’ expertise and experience was supplemented by contributions from independent researchers and scholars.
Today, the program includes regional and global studies of high performance, to take into account the explosive success of many emerging-market companies.
Jumping the S Curve
High performers are well on their way to new-business success by the time their existing businesses start to stall.
The Hidden S Curves of High Performance
Three aspects of a business mature—and start to decline—much faster than financial performance does. They need to be reinvented before you can grow a new business.
Why Now?
Why do economic slowdowns call for innovation and reinvention? Reduced sales and increased discounting tend to squash companies’ revenue S curves. Worse, the S curves do not stretch back out as conditions improve. Companies lose ground in four key areas:
Intellectual Property
Patent offices don’t put years back on the clock just because a company’s sales tapered off in a bad economy. This can have a devastating effect on, for instance, pharmaceuticals, where generics constantly challenge proprietary drugs as patents expire.
Technology
Economic downturns can slow the introduction of new technologies, but not for long. Witness the fate of some manufacturers of plasma televisions, which have been forced to exit the business under the double whammy of the downturn and steady improvements in LCD and LED sets.
Competition
Companies looking to grow sales in a recession must take market share from competitors. As they press advantage, already weakened companies face possible extinction. In the movie-viewing market, for instance, companies that dominate newer channels have driven bricks-and-mortar retailers into bankruptcy.
Consumer Tastes
Novelty wears off, regardless of the economy. Even though they’ve bought less during the downturn, consumers accustomed to the idea of “fast fashion,” for example, will not be interested in last year’s styles.
http://hbr.org/2011/01/reinvent-your-business-before-its-too-late
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