The E-Myth Revisited – Michael E. Gerber (Part 3 of 3)

February 29, 2012

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All organizations are hierarchical. At each level people serve under those above them. An organization is therefore a structured institution. If it is not structured, it is a mob. Mobs do not get things done, they destroy things.

-Theodore Levitt, Management for Business Growth

 

Draw up an Organization Chart that outlines all of the positions that will exist in your company once it has reached its full potential.

At the beginning, not only will you be working in each position, you will be working on each position; basically, you’ll be doing the work that the position requires but you should also be evaluating and improving the position itself.

If everybody is doing everything, no one is responsible for anything.

Once you’ve refined the procedure for fulfilling a position, document it in an Operations Manual – then your employee prospects theoretically don’t even need experience.

Job procedures that are documented in Operations Manuals should primarily be Technician jobs (fairly straightforward labour work).

Two keys to working with employees are to treat them seriously and with respect, and to take your business seriously. When you treat your employees respectfully, they’ll want to return the favour; by demonstrating how seriously you take your business, the only way for your employees to reciprocate your respect is to respect your business (and the jobs they currently hold in it!).

Gerber shares a story about an amazing hotel he visited that embodied every great characteristic a small business can hold. He asked to talk to the manager and some of the employees in order to understand why this business was so great:

“The first thing that surprised me when I came to work here,” the Manager said, “was that the owner took me seriously. I mean, think about it. Here I was, a kid, with absolutely no experience in this business. But he never treated me that way. He treated me as though I were a serious adult. Somebody worth talking to about what he obviously considered important.” (197-198)

“It was like the hotel was an expression of who he was, a symbol of what he believed in. So if I hadn’t taken the hotel seriously, it would have looked like I wasn’t taking him seriously, as a man whose values I respected.”

People do not simply want to work for exciting people. They want to work for people who have created a clearly defined structure for acting in the world, where they can test themselves and be tested – a “game”.

Hiring experienced managers can be a downside because they will manage by the standards they learned at someone else’s business, not your standards.

 

You need people who want to play your game, not people who believe they have a better one.

-Michael E. Gerber

 

People that attribute their problems externally seek to fix the world so that they can remain the same.

 

When you hear something, you will forget it.
When you see something, you will remember it.
When you do something, you will understand it.

-Chinese proverb

SPIN Selling – Neil Rackham (Guest poster: Sebastian Cass)

February 27, 2012

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Sebastian Cass has been a good friend of mine for many years.

Recently, we’ve been enjoying the work of best-selling author and Forbes columnist Michael Ellsberg. In one of Ellsberg’s most famous public appearances, a speech he gave at the Google headquarters, he recommended the book SPIN Selling by Neil Rackham. Since this was the second time it had been endorsed by someone I respected (the other person being Josh Kaufman, author of the The Personal MBA: Master the Art of Business), I decided that I should check it out for myself sometime in the near future.

Sebastian, on the other hand, was eager to read it right away since he has already worked in several sales jobs and possesses an utterly absurd amount of knowledge on the subject. Less than two days later, he had finished it.

So I’ve invited Sebastian to guest post about SPIN Selling and he’s agreed to share his notes and thoughts about the book with you guys today. In this post, you’ll learn about some of the most uncommon, unconventional wisdom behind sales and why the phrase, “high-integrity sales” is not a contradiction in terms. (D.S.)

 
SPIN Selling contains by far the best advice I’ve ever come across when it comes to selling. This short explanation is only meant to show you the specific things I took from it and why I think it’s a great tool for sales/marketing professionals looking to improve their results exponentially.

This book is based on a massive amount of research conducted by the Huthwaite group and by Rackham himself. The advice of the book is aimed at “large” ticketed items, items that will sometimes take longer than a single sales call to sell. The term “SPIN” is an acronym for the 4 kinds of questions that make the model, they break down as follows:

-Situation questions: A question in which the seller finds facts about the current state, short and long term plans, and overall condition of the buyer’s company
(Note: Research shows that they are not very critical in making a sale successful, and one should keep them short as a customer might become impatient.)

-Problem questions: These are the types of questions that most people should consider improving, they’re designed to find any dissatisfactions or hassles that the customer is having at the moment (these should be aimed at the kinds of problems the customer would no longer have if he owned your product).

-Implication questions: This is where conventional selling techniques verge off, most training would direct people to give solutions that their product could offer to solve the customers “needs” as explained by the customer in the previous phase, however, this model takes it a step further. Implication questions are meant to show the customer/buyer the implications and future hassles his current problems will lead him to (ie: fast turnover on workforce, training costs of new employees, time that could be spent more wisely). In short it makes his problems become EXPLICIT NEEDS; he is now aware that the problem is more severe and he is now looking for a solution.

-Need-payoff questions: This is the final step in which the seller posses a different set of questions. These are aimed to get the customer/buyer talking about how if he had a solution to his now-explicit needs (from the implication stage) and the other ways in which having such solution (seller’s product) could help him (customer/buyer) and his business.

 

The SPIN model however is only one part of the bigger 4 part breakdown of a sales call. The whole model looks like this:

Opening –> Investigating (SPIN model for questioning comes in here) –> Demonstrating Capability –> Obtaining Commitment.

Opening: the research shows that staying on point is key, conventional wisdom on opening may not work so well for bigger sales, specially “starting off with chit-chat” or “open by demonstrating advantages”; a good rule of thumb to follow will be to establish:
-who you are
-why you’re there (but not by giving away product details)
-your right to ask questions.

Investigating: I’ve explained above in the SPIN model.

Demonstrating capabilities: The main thing to learn from this is the difference between features, advantages (usually referred in sales training as benefits), and “true” benefits.

Features – have low impact over the long and short term, they don’t really relate to the customer. Over-featuring a product will always lead to price objections, which might either be a service or disservice to the product depending on whether the price is low or high respectively.

Advantages – these are the ways that a customer/buyer could benefit from using the product, but since it does not tie in to their Explicit Needs, they’re very easy to forget.

(True) Benefits – They tie in strongly to the customer/buyer’s explicit needs and are the answer to their Need-Payoff statements. Customers/buyers will remember them because they relate to their deepest needs.

Obtaining commitment: the main point here is to understand the four kinds of outcomes that can come from a sale.

  • No Sale
  • Continuation
  • Advance
  • Sale

Since immediate No Sale/Sale situations only make up 10% of sales calls for high price items, one should pay attention to Continuation and Advances instead.

Continuation is usually made up of flattery of the product: “that was a great presentation”, “we look forward to hearing more”, but no actual commitment to follow the relationship in any meaningful way. This is why they are considered unsuccessful.

Advances on the other hand offer a “next step” kind of mentality. The sale won’t be done right there, but both parties are taking steps forward and it is considered a success since it’s more likely to lead to an actual sale.

The book also covers how research suggests that the areas in which most sales training focus most of their energy (closing techniques, open-closed questions, objection handling) are far less effective for large sales. Instead there’s obtaining commitment, SPIN model for questioning, and objection prevention.

……

These are the main points I drew from this book; I’d recommend you read the book if you saw any information here you’d like to improve and/or learn more about. I’ve decided that I’m going to work in a position in sales that pays solely on commission for the next little while. The items I’m aiming to sell will be high-ticketed items (cars sales, real estate, corporate tech solutions).

I’m not doing this for the financial remuneration but rather to apply the skills and mindsets that this book has taught me. As with anything you read, I also recommend that once you finish SPIN Selling (either the actual book or just my notes) you should take action in the near future to practice the ideas that Rackham presents.

Entelechy – the becoming actual of what was potential.

This word is used towards the end of the book to emphasize the importance of actually integrating any skill one learns in order to make it truly ingrained. I included here as well to reiterate its importance.

Until the next time guys.

-Sebastian Cass

The Six Pillars of Self-Esteem – Nathaniel Branden

February 22, 2012

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Self-concept is destiny. If you have a high opinion of yourself, you’re more likely to get positive emotional feedback from others which will reinforce your strong self-image; if you have a low opinion of yourself, you’re more likely to get negative feedback from others, “proving” that you were right all along.

Healthy self-esteem correlates with:

  • rationality
  • realism
  • intuitiveness
  • creativity
  • independence
  • flexibility
  • ability to manage change
  • willingness to admit and correct mistakes
  • benevolence
  • cooperativeness
Poor self-esteem correlates with:
  • irrationality
  • blindness to reality
  • rigidity
  • fear of the new and unfamiliar
  • inappropriate conformity or inappropriate rebelliousness
  • defensiveness
  • over-compliant or over-controlling behavior
  • fear of, or hostility to, other people

“The union of two abysses does not produce a height.”

“Poor self-esteem places us in an adversarial relationship to our well-being”

Self-efficacy is the conviction that we are able to think, to judge, to know, and to correct our errors. It is trust in our mental processes and abilities. It is not the conviction that we can never make an error. It is trust in our processes, not necessarily in the outcomes.

“Self-esteem is not a substitute for the knowledge and skills one needs to operate successfully in the world. But it does increase the likelihood that one will obtain those skills.”

Physical manifestations of self-esteem:

  • eyes that are alert, bright, and lively
  • shoulders that are relaxed, yet erect
  • hands that tend to be relaxed and graceful
  • arms that tend to hang in an easy, natural way
  • a posture that tends to be unstrained, erect, well-balanced
  • a walk that tends to be purposeful
  • a voice that tends to be modulated with an intensity appropriate to the situation and with clear pronunciation

Pillar #1 – The Practice of Living Consciously

“We cannot feel competent and worthy while operating in a mental fog.”

“Self-esteem is the reputation we acquire with ourselves.”

Pillar #2 – The Practice of Self-Acceptance

“In the most fundamental sense, self-acceptance refers to an orientation of self-value and self-commitment that derives from the fact that I am alive and conscious. As such, it is more primitive than self-esteem. It is a pre-rational, pre-moral act of self-affirmation. It is a kind of natural egoism that is the birthright of every human being.”

“(Self-acceptance) is our willingness to experience, rather than disown, whatever may be the facts of our being at a particular moment.”

“The mind that honors sight, honors itself.”

We are not moved to change that which we deny in the first place.

When you have a thought, feeling, or emotion that you have trouble accepting, at least accept the fact that you’re resisting it.

“Chronic tension coveys some form of internal split, some form of self-repudiation.”

“If our liabilities pose the problem of inadequacy, our assets pose the challenge of responsibility.”

Pillar #3 – The Practice of Self-Responsibility

Mindset: “I am responsible for the achievement of my desires.”

“I am responsible for my own happiness.”

In every organization there are those who wait for someone else to provide a solution and those who take responsibility for finding it.

“Embracing self-responsibility not merely as a personal preference, but as a philosophical principle entails one’s acceptance of a profoundly important moral idea. In taking responsibility for our own existence, we implicitly recognize that other human beings are not our servants and do not exist for the satisfaction of our needs.”

Pillar #4 – The Practice of Self-Assertiveness

“Self-assertiveness means honoring my wants, needs, and values – and seeking appropriate forms of their expression in reality.”

There are some people, usually teenagers or immature young adults, that practice “self-assertiveness” by reflexively saying “no” to everything. But self-assertiveness is ultimately defined not by what you are against but by what you are for.

“Self-assertiveness asks that we not only oppose that which we deplore, but that we live and express our values.”

One of the ways we build self-esteem is to be self-assertive when it is not easy to do so.

Pillar #5 – The Practice of Living Purposefully

“To live without purpose is to live by chance…outside forces bounce us along like a cork floating on water, with no initiative of our own to set a specific course. Our orientation to life is reactive rather than proactive.”

“The root of our self-esteem is not our achievements, but those internally generated practices that, among other things, make it possible to achieve”

Pillar #6 – The Practice of Personal Integrity

To live with integrity is to have principles of behavior to which we remain loyal in action

The issue is not so much whether we are “perfect” in our integrity but rather how concerned we are to correct such breaches as might exist.
 
 
Guilt can serve the desire for efficacy by providing an illusion of efficacy, even if the situation was out of your control (“If I had only done X, it would have been different…”).

“The higher the level of consciousness of which we operate, the more we live by explicit choice and the more naturally does integrity follow as a consequence.”

The mindset that “only I will know if I lie” implies that you think your opinion doesn’t matter, and that only the opinions of others matter.

The six pillars provide a standard for judging parental policies (“Does this encourage self-responsibility?”, etc.)

The statement “I am enough” does not mean that I have nothing to learn and nothing to grow to, it means: “I accept myself as a value as I am.”

You cannot stimulate innovation and creativity without also focusing on self-esteem.

The Power of Eye Contact – Michael Ellsberg (Part 1)

February 18, 2012

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Eye contact can land you a job. It can get you a date. It can deepen your connections with the people you love. It can make or break business relationships. It can help win a fight. It can win over an audience.

Simply put, eye contact is one of the most powerful tools in human face-to-face interaction. The Power of Eye Contact is your concise guide to harnessing the potent force of eye contact.

-Amazon.com description

 

Chapter 1: What Bill Clinton Knows About Eye Contact

 

It would seem to be in our self interest not to have our emotions out on display as they are through our eye contact, but primatologist Frans de Wall explains that human beings are cooperative animals and our emotional transparency helps others trust us better.

The “Duchenne” smile: the true smile of enjoyment, involves, most importantly, a movement of a muscle around the eye, which causes the eye coverfold to move down slightly.

This muscle “does not obey the will” – every other aspect of a smile can be faked except for this phenomenon.

Charles Darwin’s description of the eyes during rage:

The eyes are always bright, or may, as Homer expressed it, glisten with rage. They are sometimes bloodshot, and are said to protrude from their sockets – the result, no doubt, of the head being gorged with blood, as shown by the veins being distended.

Charles Darwin’s explanation of “sparkling”, happy eyes:

A bright and sparkling eye is as characteristic of a pleased or amused state of mind, as is the retraction of the corners of the mouth and upper lip…Their brightness seems to be chiefly due to their tenseness, owing to the contraction of the orbicular muscles and to the pressure of the raised cheeks. But, according to Dr. Piderit…the tenseness may be largely attributed to the eyeballs becoming filled with blood and other fluids, from the acceleration of the circulation, consequent on the excitement of pleasure…Any cause which lowers the circulation deadens the eye. I remember seeing a man utterly prostrated by a prolonged and severe exertion during a very hot day, and a bystander compared his eyes to those of a boiled codfish.

Everyone has mirror neurons that allow us to experience the emotional states of others. One of the implications of this is that in large group settings such as concerts, it feels as if the audience morphs into a single entity that experiences and expresses emotions at an even higher level.

Imagine being gazed at by a sea of eyes – lustful eyes, hungry eyes, beckoning eyes – whenever you are in a public area like a bus or skytrain. This is reality for most women.

 

Chapter 2: How to Become a Master of Eye Contact in Two Weeks

 

A proven, well-documented way to overcome all sorts of anxiety is called systematic desensitization. You put gradually expose yourself to the object of your anxiety, first in your imagination, then, over time, in the real world. The main purpose of this is to give you concrete reference experiences that you won’t die by doing whatever it is that you fear. It gets you more comfortable with fear itself.

Exercise: walk down the sidewalk and look into the eyes of every person that walks towards you long enough to see their eye color, then look away.

Prolonged eye contact is often associated with aggression or seduction, but if you just want to practice confident behavior you can avoid being too intense by keeping a neutral facial expression and/or softening the intensity of your focus.

As a rule of thumb, don’t initiate eye contact from far away – that’s called staring.

When you break eye contact, break it laterally, not vertically. That is, if someone is on your right, break eye contact by looking ahead or to your left, not by looking down – that’s extremely low-status behavior.

(In response to the common question, “Should I look at one eye, or try to look at both”) “When talking with someone new, maintain a relatively soft, gentle, wide focus in general, taking in your entire conversation partner’s face, with the eyes  in the center of your field of vision [not the bridge of the nose].” (49)

An intense gaze requires the muscles around the eyes to become tense; a soft gaze allows the facial muscles around the eyes to relax.

Ellsberg stresses, however, that it is natural and even necessary to look away at times during a conversation:

Taking in someone’s eyes is one of the most psychologically salient experiences we can have – there are so many shades of nuance and meaning to interpret…So it’s understandable that when we are using a lot of our “processing power” to remember something, come up with our next train of thought, or formulate our opinion on something, we have to tune out this rich additional source of input. (53-54)

“You’d come across as a complete freak if you made pure 100% eye contact in any conversation. What I’m talking about in this book is adding 20 to 30 percent more eye contact into your conversations.” (54)

Author Marie Forleo also sheds light on common misconceptions about eye contact:

Many people who get into eye contact start trying to “do” eye contact, like it’s this technique that’s sooo profound…You shouldn’t be trying to “do” eye contact all the time. It’s annoying to others. Let it happen naturally. Just look at the people around you as the human beings they are, and the eye contact will come naturally and perfectly.

The E-Myth Revisited – Michael E. Gerber (Part 2 of 3)

February 18, 2012

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“Pretend the business you own – or want to own – is the prototype for 5,000 more just like it.” (98)

If you create a solid foundational system for your business that employees can follow, it will make your business more system-oriented and less dependent on the whims and quirks of your employees. The better your system, the less that the quality of your employees matters.

One of the main benefits of having a written Operations Manual and a structure behind your business is that it helps the customer get a uniformly predictable, reliable service. This means that if the customer likes the service, he knows the next time he purchases it, it will be just as good.

The basic expectation of customers is that they will get a consistent experience. Do not regularly violate this expectation.

Basically, think of your business itself as a product.

 

“Creativity thinks up new things. Innovation does new things.” -Theodore Levitt, Harvard professor

Anytime you improve anything about your business, you will make more money than you would have otherwise.

“Innovation continually poses the question: ‘What is standing in the way of my customer getting what he wants from my business?’” (121)

Quantification – numerically measuring the impact of an innovation.

The only way to know the exact impact of an innovation is through rigorous quantification (ex: counting how many people came through the door at the time of a promotion).

Orchestration – ensuring that a good innovation is implemented every single time by eliminating employee discretion.

Without orchestration, you can’t have a franchise.

 

If you don’t know what your Primary Aim is, you can’t know if you’re moving toward it.

Ask yourself the following questions:

  • What do I wish my life to look like?
  • How do I wish my life to be like on a day-to-day basis?
  • How much money will I need to do the things I wish to do? By when?

Strategic Objective – a clear statement of what your business must do to reach its Primary Aim.

The first standard of your strategic objective is money: how much money do you expect your business to make? Unexpected circumstances always happen, but some estimate is better than no estimate.

Focus on core values when defining your business. Commodities are just the things that your customer walks out with, your product is what your customer feels after dealing with your business.

Nerve – Taylor Clark (2/2)

February 4, 2012

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“The more certainty and control we think we have about a potential threatening situation, the less stress we will feel.” (98, emphasis added)

In World War 2, despite having the highest mortality rate in the military, dogfighters were more happy with their jobs and felt less stress than almost every other division of troops. They believed that their piloting skill would determine their survival, not luck – they felt they were in complete control of their fate.

“In study after study, researchers have found that the most stressful occupations are those in which employees must deal not just with high demands, but with little control over their workdays.” (104)

Cultivating a strong internal locus of control is key to reducing stress in your life.

UC Irvine psychologist Salvatore Maddi claims to have found the three most important attitudes about stress, which he calls the “Three C’s”:

  • Commitment: as stress mounts, remaining involved in the world instead of evading reality
  • Control: realizing that you’re never helpless, even in the toughest circumstances
  • Challenge: perceiving a crisis not as a threat, but as an opportunity for growth

“Under stress, our natural tendency is to forget about our surrounding environment and focus instead on the immediate threat. The more people can resist this and pay attention to what’s really happening, the better they do under fire.” (120-1)

“(Psychologist Anders Ericsson’s) work adds an important caveat…Not all experience will help you improve decision-making under stress…Experience needs two characteristics to be effective: it has to be challenging, focusing on your weaknesses, and it has to include feedback that allows you to fine-tune your approach.” (121)

“[R]ecent research has shown that when we’re nervous or threatened, (short-term memory) is the kind of memory that is most prone to falling apart.” (147)

“Performance pressure harms individuals most qualified to succeed by consuming the working memory capacity that they rely on for their superior performance.” (Beilock and Carr, 2005) (150)

“(NYU psychology professor Joshua) Aranson’s research has revealed that kids who are cued to believe they can improve their test scores with practice tend to see exams as a challenge rather than a threat, performing better – and feeling less anxiety – than those who see their brainpower as set in stone.” (151)

“I don’t think I’m any smarter than anyone else who’s done well on Jeopardy! – I think I just handle the pressure better. There’s stuff I come up with when I’m actually playing Jeopardy! that I wouldn’t get if if I were just watching it on TV. The adrenaline focuses me.” -Brad Rutter, Jeopardy! Ultimate Tournament of Champions winner

A bias that is the root of many people’s performance anxiety is the “illusion of transparency” bias – we tend to believe that our internal emotional states are more obvious to others than they truly are.

“It’s not a case of getting rid of the butterflies. It’s a question of getting them to fly in formation.” -Jack Donohue, former Canadian Olympic basketball coach

“Fueled by what psychologists have deemed ‘normalcy bias,’ humans in crisis have a troubling tendency to deny that anything out of the ordinary is going on.” (242)
 

In combat, you do not rise to the occasion – you sink to the level of your training.

-Dave Grossman, psychology intructor, West Point military academy