Nice Guys Finish Last, but Lead Best

A recent study by the University of Notre Dame shows strong evidence that you are more likely to climb the ladder and make more money if you are basically a jerk (paraphrasing). However, history and common sense tells us that leaders who inspire and motivate instead of bully and repress do the best at growing an organization. Of course, all leaders and managers need a certain strength of heart and tough skin, but too often letting assholes rise to power just means they will bring you down with them.

Fear and Greed Only Goes So Far

A study by MIT shows that jobs which require higher cognitive functions are motivated by autonomy, mastery, and purpose rather than financial incentives. Dictators… er… um… business owners tend to use greed and fear to try to motivate employees because at some level it works. However, as a business evolves and needs more qualified people, such tactics tend to constrict an organization’s ability to attract better and more qualified people. Business owners don’t realize they have to change their management styles to grow.

Tyranny Has a Short Life, Freedom Is Immortal

What military leaders and emergency managers know is that there are good, short-term uses for tight and precise control. However, what separates a hero from a despot is the quick transition to disperse power once the need has passed. As a business owner starts their company, they have to oversee everything and tend to develop an “if you want it done right, do it yourself” attitude. This attitude is also what keeps small businesses… small. If you want to grow, you have to learn to let others take responsibility and maybe even *gasp* do things more their way.

Evolve Beyond Dictatorship, and Don’t Work for Dictators

If you got where you are by handing out orders, punishing subordinates, and keeping people in fear, the reality is that you aren’t going to get any farther. If you are working for a dictator, realize that you won’t be getting any farther either. Be a leader who inspires and seeks to improve himself as well as others. Work for people who inspire you.

1) IT starts broken, the work is fixing it.

When getting technology to work for your business, whatever solutions you choose, they start broken. Nothing works “out of the box”. Computers and software are just dumb unaware tools that need an intelligent person to make them work with your business. Every little process and function won’t do anything “the right way” until it is setup, tested and refined. Business owners make their first mistake here complaining about “I paid [insert sum] for all this stuff, why isn’t it working?” This implies the IT staff is already failing, and their work has just started. It creates undo stress which leads to mistakes and poor communication.

2) If you don’t want to learn, don’t even try.

No technology is 100% intuitive. If you want something that you know how to use right away, then stick to a calculator (the simple ones). New technology means that you, your staff and your IT will all have to learn new tools and processes. Depending on the size of your technology change, you may need to brace yourself and your company for lost productivity and training. Many business owners want the newest tech, but don’t want the burden of adapting to it. They place that burden back on IT with unrealistic demands to make it work more “like it used to”.

3) You can say “just” all you want, it won’t make it cheaper or easier.

“Why is it so hard/expensive/taking so long, I just want….” this sentence is the bane of everyone who has to make technology work. For some reason, business owners think they can get something faster or cheaper by saying “just”. It is easy to think about something we want, it is easy to picture it in our heads, but it is usually very hard for someone to make it happen in real life. Do yourself a favor and ask your IT if something is easy to do or not, don’t try to imply it is easy by saying “I just want…”.

4) Simpler = More Expensive, More Time and More Difficult

The physics of IT is that simplicity and ease of use is inversely proportional to time, cost and effort. Think about Google, the most advanced search engine in the world… and it is just one text box and a search button. Getting that one little text box to do so much took thousands of man hours and millions of dollars. If you want simple and easy to use software that does everything with one-click (or as few as possible) you had better be willing to pay and wait for it. If you want something done fast and cheap… use a spreadsheet.

5) Bigger isn’t better.

When I rant about stupid technology choices businesses make, Todd always reminds me “no one gets fired for picking Microsoft or IBM”. That’s the saddest part; the big name companies have the absolute worst, expensive, bloated, buggy and impractical technology solutions around. However, if an IT manager picks Microsoft and it doesn’t work well they are less likely to take the full blame. However, it an IT manager goes out on a limb and recommends a lesser known solution and it fails to live up to expectations, they are going to take full blame. CEOs should be encouraging IT staff to look for new, more agile and more affordable solutions. While it may cause hiccups from time to time, large companies can save hundreds of thousands of dollars by not just defaulting to big names.

6) No one “has it right”.

Technology is a constantly evolving landscape. There is no “right way” to do anything. No one has it all figured out, period. Worst yet, with the growth of the Internet, all modern technology runs on a complex infrastructure of services run by hundreds of different companies and organizations. If you have the expectation that your IT can make everything work perfectly all the time, you might as well not be in business. The reality is that good IT people love making things work. The only thing you have to do is hire competent and enthusiastic IT people, and then get the @#$&%! out of their way.

Worrying About What Others Are Doing

If you are starting or running your own business, you must have at least some faith in your ability to make decisions. Looking at competition and worrying about what others are doing will only inhibit your ability to be creative and stand-out. It is easy for entrepreneurs to think the grass is greener on the other side, but seldom do you realize that your competition may be watching you with the same thought. You can’t get ahead by watching others, you have to blaze your own path.

Researching to Death

Related to the above, how can you lead if you have to get five opinions on which way to take a leak? Too many people get stifled because they think someone else has all the right answers. The reality is, no one has the right answers. Your solutions have just as much potential to be as flawed or effective as someone elses. Besides, there is no better way to know for sure than to try and fail. A decisive entrepreneur can go through five bad ideas and get to a good one in the time it takes a researcher to take his first timid step.

Wile E. Coyote Syndrome

We have all seen that road-runner crazed carnivore try every idea possible to catch his prey. It leads one to ask, “Why doesn’t he ever just try to get one right?” People have a terrible habit of throwing away an idea just because it doesn’t have immediate results. Often times, an idea is not bad it just needs refining. Working out the kinks in a good idea is what separates good ideas from great businesses.

Bureaucracy and Red Tape

The trend is that large companies will eventual fall to more nimble small companies. Autonomy is required for creativity. At a certain point, a large company has no one left who is empowered to make any important decisions. Those who try to “rock the boat” are quickly punished, and the only ones left are those content enough to not try anything new. Only those companies who learn to empower individuals at all levels to make an impact will be able to continue to stay relevant as they grow.

Impatience

This one I am throwing in. I believe that impatience kills good ideas and business strategies more than any other factor. The time it takes for a new campaign or process to show results is usually much longer than the expectations of those who are judging its worth. While a good sales strategy can show results in weeks, a good marketing strategy can take months, sometimes years. It is the difference between playing a instrument and going to a concert. One gets immediate and short lived results, the other takes time but produces permanent success. Companies that can live in the short and long term are the ones that rise to the top.

Inspiring vs. Reprimanding

Most people know the anxiety that comes from “the boss is in a bad mood today” or “the boss isn’t happy”. Too many employees live in a kind of constant terror. However, if you talk to a coach’s team, “the coach isn’t happy” feels a lot different. A reprimand from a manager always feels like a threat. A coach’s words, even when harsh, are taken in the context of trying to push you to improve. This is because a manager treats you as you are, but a coach treats you as you should be. A manager reprimands and assigns blame; a coach inspires, motivates and doesn’t care about fault.

Expecting Perfection vs. Demanding Perfection

Managers expect perfection and are constantly disappointed. Employees of a manager always feel like failures and that they can never do enough. Coaches demand perfection, but don’t expect it. Coaches are prepared for failure and make sure their teams recover quickly from mistakes. Coaches constantly push their teams toward perfection, raising the employee’s expectations of their own abilities.

Loyalty vs. Resentment

There is a entire economy based off of “I hate my boss” products. People come to resent their managers and bosses as they seem to almost enjoy being a personal manifestation of all our stress and anxiety. Coaches, on the other hand, foster loyalty. This is because coaches are in it to make their teams better. Employees know that the correction or instruction they are receiving from a coach is for their benefit as well as the company’s.

Human Beings vs. Disposable Robots

The bottom line is that if you invest in employees as long term-team members, and not as disposable employees, then you will have a better company. Morale, productivity, quality and competency are all improved when people feel like people.

Educating People to Actually Use Capitalism

Capitalism is a wonderful social economic system. The problem is we don’t raise our children to understand or take advantage of it. From the beginning, we teach our kids to “do what someone else says, and you will be rewarded”. We teach them to fear and obey the institutions which have come before them. All this is contrary to capitalism.

Capitalism is about (or should be about) doing whatever you can do best and finding the needs in the world you can most fill. However, most people have the idea that someone has to “give” them work. As if all the work in the world is owned by a few people, and they are hoarding it. This is absolute insanity. You should not be asking someone else what to do, you should be telling them what YOU DO and why they need you.

No One is Keeping You Down… but You

I know of a lot of businesses who can’t find enough qualified employees to fill the workload they have. The key word here is “qualified”. We are a very entitled people who have grown thinking we can get a few years of education and then coast a steady job until retirement. The reality is that if you stop learning, then your employment situation is on your own head.

My father is close to retirement age, and is still in high demand because he hasn’t stopped learning. Every time I see his desk he has stacks of industry magazines and studies he is going through. Even if he finally “retired” from full time work, he would still have plenty of income from businesses needing his expertise. If you think a few years of college is going to guarantee you a career, you are in for a surprise. In fact, we have learned in our own business that we can’t hire people for what they “learned” in college. We have to hire people based on what they learn on their own time.

We Have So Much Work to Do……

If you don’t think there is a lot of work to do, you aren’t opening your eyes. Business still has inefficiencies-a-plenty. There are lots of people who need to be educated. There are discoveries to be made, cures to be found, and we are still stuck on the same planet for pete’s sake. And if all that is too “glamorous” for you, you can always just to something simple REALLY REALLY well. Heck, we will spread the word to friends and family when we find a restaurant that can just cook an @*!@#! egg right as if we were just cured of leprosy. You can make a fortune doing something new, get rich doing something better, and make a damn good living just doing something right.

Jason’s article here: Fab.com Beta Shop Blog

Todd’s article here: http:www.fatatom.com/blog

Big name freemium software examples are Evernote, Dropbox, Skype, Flickr, MailChimp, and Flavors.me.  The Internet has allowed us to test a myriad of marketing strategies to introduce people to new software, and freemium is winning for a reason.

The Problem with Premium

Premium is the old standard for software, but many still cling to it.  Forcing people to pay large up-front costs just to start using your software, or at least use it for anything productive, front loads the buying process full of barriers to entry.  You are asking potential users to overcome all the doubts and questions about practicality, trust, and usability before they fork over the money for your product.  This creates waste by requiring a huge marketing strategy to address these issues.  You also have to keep selling more software just to break even.  Once you have a user, they aren’t paying you any more money, but you still have to support them.

Demos Don’t Fix It

Making a “demo” of your software doesn’t help much.  Sure, users can get a preview of your software before making a purchase decision, but now you create other barriers.  A user has to invest time and energy in your product knowing that it all goes “poof” if they don’t go ahead and buy it.  People are busy, a 30-day trial often expires before a user can try it out, but longer demos turn into “free” software as people game your product.  Demos are a burden that build more anxiety than confidence.

Freemium for the Win

Freemium is the easiest and most confident key to entry for a new user.  Users are happy to invest time and effort into your software, because they know they can keep it.  They don’t feel anxious because they know they can learn it at their leisure.  The best part is that they have the time and freedom to find out how the software actually impacts their day-to-day life and productivity.  Users are also less likely to build up buyer-resentment since they don’t feel like they HAVE to pay you.  When the time comes that a user needs the premium features, they feel more like it is a choice and not something they are pushed into.  Users are more grateful and less demanding.

Growing Your Own “Herd Mentality”

Just like everything else, people are more likely to use software if they know someone else who is using it and receive a recommendation.  Freemium multiplies this effect.  Freemium grows faster than just about any other model because while people are still making up their mind whether or not to buy from you, they are are already evangelizing for you.

Controlling Your Cost with “Group Think”

When a user forks out cash for a program and then has trouble using it, they are indignant but when people are getting software for free they are less demanding.  Freemium often off-sets the cost of the free users by turning them into volunteer “tech support”.  By providing the tools for users to form a community, they can and will assist each other in learning and understanding the software.  By the time a user converts from free to premium, they are already educated.

Working with the Numbers

There are no major industry studies out yet about the conversion rate of free-to-premium, but the published results of the companies I listed previously combined with my own research, shows an average conversion of 3% between 6-18 months and 5% after 18 months.  Making money with Freemium is all about making sure the income from your 5% pays for all your resources and generates a profit.  Some companies do have conversion rates just passing 10%, but that is a “great if it happens” number I wouldn’t count on.

Further Research:

Evernote – http://techcrunch.com/2009/12/30/evernote-two-million/

Case Studies – http://gigaom.com/2010/03/26/case-studies-in-freemium-pandora-dropbox-evernote-automattic-and-mailchimp/

Illustrations from Disposable (copyright 2011)

You Have 0 Friends

As pointed out very poignantly by a recent episode of South Park, social media accounts can create an appearance of reality, positively or negatively, that is not supported by the real world.  Especially amongst younger users, people artificially invest effort in growing their online numbers as they feel it effects them in real life.

This has created a layer of “fad” hype over the genuinely useful elements of Facebook and Twitter.  All this means that the ways Facebook and Twitter are being used today distort their more long-term practical functions in everyday life.

Just Fooling Yourself

Scientists have shown that people can only really keep up with 150 friends, tops.  After that, you are pretty much just living in an online delusion of spam and fake-followers.  People using Facebook and Twitter to be productive in everyday life are not going to grow past 150, if that.

Facebook and Twitter, at their root, are replacements for email.  They are part of our continual search to find better ways to communicate.  We don’t communicate with thousands of people.  Once you go over 150, you are just broadcasting.

The Search for Better Communication

Facebook has separated friends and followers.  If you are a person, you have friends.  If you are a thing, you have “likes”.  Twitter, however, has no way of distinguishing between communication and broadcasting.  It is important for businesses to understand the difference between communication and broadcasting to understand the future of social media.

Facebook and Twitter are both distorted with hype right now.  People and business think they all need thousands of friends and followers.  When everyone realizes that all these large numbers don’t produce anything, we will start to realize what tools like Facebook and Twitter are really for…. of course, Twitter and Facebook will have to figure that out too.