How much do your good decisions really cost you?

Consider this:

You’re selling a house, so you put it on the market and you get a high offer of R1 million, but you know if its fixed up a bit you could get as much as R1.5 million. So to sell at its highest value, you hire a consultant/designer/whatever [lets call her Sue] to help you with it.

Sue puts together a list of everything you can do that will help and gives it to you. Her list looks something like this:

• general maintenance and repairs – R50,000
• new paving – R50,000
• waterproof and paint roof – R50,000
• garden landscaping – R100,000
• and the cost of employing Sue for the whole time is R50,000.

Total expected cost R300,000.

Two possible scenarios

Scenario 1 – You trust your vision

You dislike the idea of spending an extra R300,000 when all you actually want to do is make more money. You tell Sue to only spend R30,000 on general repairs and maintenance, and forget the rest. She does this and then resigns from the job [so you cut her fee to R20,000 citing any number of legal arguments]. In total you spend R50,000 and after a few weeks of waiting, sell the house for R1.2 million. You give yourself a pat on the back for your excellent money-making skills and the fantastic R150,000 windfall. Well done.

Scenario 2 – You trust Sue [the expert that you hired] and back her

You tell Sue to go ahead. She gets everything done, total cost comes in at the R300,000 and the place sells straight away for R1.7 million. You and Sue see how well you work together, and with the extra profit of R400,000 you start a successful renovation business together that just takes off.

This begs the question...

...what if that house is actually your business [sure, perhaps you’re not trying to sell, but you are trying to maximise its value]. And what if Sue is actually one of your top employees. While your decisions might seem good at face value [extra R150,000 cash], are you sure that they are the best decisions, and that you’re not actually missing out on so much more value [extra R400,000 cash]? Open your mind to this possibility.

To me, the moral of the story – as a great business leader, its not only important to surround yourself with people who are better than you. You must also encourage them, support them and trust them [and the other difficult one – back them with cash when its required]. Because you can go 98% of the way [choose the right people, the right business, get the right tools in place, etc], but if you don’t do that last 2% and finish strong [empower your stars], its all for nothing really.

Do you do Brand You?

How important is building your own brand?

Whether its as an entrepreneur, an employee, a mother or whatever you happen to be, does this really matter?

My guess is that for those three characters above, many people [including myself] would probably easily rank personal branding in descending importance - from highest for an entrepreneur to lowest for a mother. But lately I'm not too sure that's exactly right.

After all, as an employee, don't you only get paid what you think you're worth? And doesn't a brand define value? So, by implication, the better I can build my self-brand as an employee, surely that means it will result in better pay and promotion opportunities.

And as a mother, if your kids have no respect for you as a mother [ie the brand that you portray], what chance do you have of teaching and guiding them well, and bringing them up as healthy, well-adjusted individuals?

Therefore, I think its equally important to all. The scary thing is that your personal 'brand value' is not only relevant to people within your sphere of influence, but to the world - it's how the world perceives you. Full stop.

Respected magazines such as BusinessWeek and FastCompany have expounded on the virtues of self-branding for individuals, and even Anja Merret has chatted to her generation about it too. For those looking for a bit more practical guidance on this topic, Tom Peters wrote this interesting "Brand You Survival Kit".

It's actually been interesting watching the rise of the [my name].com generation - going way back to the feud over Madonna.com right up to where we sit now at every_tom_dick_and_sally.com. But it's working. People are seeing [and creating] value through this process. So why am I so resistant to it?

Well, to me it would seem that my personal brand could be the most important thing in my daily life. And that's DANGEROUS... because that statement means that its all about me. And despite how much the little voice inside my head might want that to be true, its really not.

So I would have to say that what I take out is this - I will have to embrace [rather than just succumb to] the idea of Brand You [Brand Me]. And while doing so, I will have to be verrrrrrrry careful not to get caught up in it, because that's a slippery slope most likely leading to the exact opposite result of that intended.

Anyone with me on this?

Getting back to basics - our 2 most important resources

Big picture view here, so bear with me...

Its quite generally accepted that there are two very important resources we have to manage to create a 'successful' [however you define that] business:

1. Time; and
2. Money

Most people understand the concepts of money management and time management. Funny thing is, we tend to approach these totally differently.

I'd just like to suggest that maybe, as different as they are, there is one big similarity we need to consider:

Just quickly on money, it comes down to whether you are spending the money or investing it... [the tree and the fruit... I'll get into this at some stage too as its a wonderful thing to think about] - where spending money is short-term in nature and while it is often necessary, unnecessary spending is not the best use of it. Similarly, investing is for the long-term and with money invested, although you don't see the benefits now, they come along later.

So, I propose that we look at our time in the same way. We each only have 24 hours a day, and we have to use it wisely.

Right,

• 'Spending' time - there are things we need to do daily to keep going, which are not necessarily valuable in the long run but are important.


• 'Investing' time - we have time to use each day to build for the future - we may not see any 'value' for it today, but using the time this way can change our future.

The main question I want to ask is - Are you just spending your time on daily matters, or are you consciously investing some of your time in the future too. If you neglect the second one, you will survive on a day-to-day basis, but things will never seem to get better.

When investing time - choose wisely in whom, in what and where you invest! Like with money, poor investments will not mean anything. But good investments can bring more than you ever dreamed!

So if I can leave you with a thought [call it daily practice for the big game of business], its this - next time you're out and come across a lonely face over the counter at Woolworths, how can you really 'INVEST TIME IN THAT PERSON' rather than just 'spending time paying for your groceries' - both of them take about 3 minutes, but each can have incredibly different results.

And I know there are at least two earth-shatterers in-the-making out there who realise the importance of how time is invested - here are two mind-shifting posts to have a look at:

• Time to rethink what I'm doing here
• The value of time

Is less really more?

You've surely had those moments when it seems everything is just too much... and you would give a king's ransom to just take out complexity and make things simple again. I know I've felt that way often, when the noise from the world around just becomes too much. TV, radio, work, computers, cellphones, internet, wi-fi, global village, entertainment, and the list goes on. And with everything going on around and all the tasks and responsibilities, sometimes I wish it would all just be a bit easier.

Put simply, sometimes less is actually more.

Its so important I'll say it again -

Sometimes less is actually more!

We have officially moved from the information age to the attention management age. This is equally true in life and in business. Grant Brewer wrote an interesting article entitled "Why are products so complex?". His concluding paragraph hits a very sensitive cord as far as business goes - "One of the keys to overcoming the challenge is to stop trying to please everyone — accept that some potential customers won’t buy your product or service, and this takes courage." Interesting in an age where chasing market share and new customers results in many businesses trying to be everything to everyone.

In business I believe that we are increasingly moving towards a phase where delivering less results in more value.

Think of the choices when trying to buy a product online [a beautiful thing in itself, where the "long tail" truly has impacted our reality]. But imagine this... an online store where the entry page offers two different paths [I see two big buttons to make it easy]:

1. One path for people who don't mind the complexity and want all their choices, the standard e-commerce stores you see now such as e-bay, Amazon, etc.
2. A simpler option - where you follow a path of answering 5 or 6 simple questions which lead to the most logical product to suit your needs.

Let's face it - not everyone wants to customise their toilet seat or be able to choose the colour of the lights inside their desktop computer. Choices, choices, choices.

There's a fortune waiting for those who can bring simplicity back into an already overcrowded life.

How free haircuts could revolutionise the economy...

No, I haven't lost it [just yet]. Just following a train of thought that has challenged me every time I've had a haircut over the last three or four months -

What do you pay for a haircut? R20? R50? R100. Whatever you pay, the price they charge must be worth it to you.

I challenged my barber to really test the value of the service he delivers - what if, for just a month, they stopped charging a fixed price for haircuts, and instead asked customers to pay them what the customer believes the service is worth?

Needless to say, he hasn't yet taken me up on it. I can't really blame him either, because the results would reflect the purest form of honesty regarding the value of his service... and good or bad, this would be quite a pill to swallow. Some customers might not pay a cent and get a free haircut... good for them. Some might pay more than you charge... HEY!

Think about the benefits for a second:

• you know exactly where you stand with all your customers
• customers can never complain about prices or inflation ever again
• the potential for free marketing [word-of-mouth or other media exposure for having the guts to do this] - HUGE
• how can your "competitors" compete with this?

The million dollar question: What if all other businesses ran this way too? Okay so this is just a haircut. How about cellphone service providers. Garden services. Security companies.

The billion dollar question: How could this revolutionise the economy, taking away "pricing-parity" excuses and really delivering value to all people in the country at a relatively affordable price?

And the trillion dollar question: What happens when your competitor starts doing this? How will that change your business? Are you in any way prepared for it?



We can laugh at this now. I can too. But who'll be laughing in 20 [or 10, or maybe even 5] years time when "Freevest" is the JSE's largest company?

Go ahead, make your product as expensive as you want to

Price vs value - the battle rages within each one of us... I'm fascinated by it for a number of reasons [I previously worked in a corporate finance department, being involved in valuation work amongst other interesting stuff; and one of my top projects at the moment is finding a way to cement shareholder value in a creative environment where share price is a big deal]

We all inherently understand this concept of price vs value, but few people seem to consciously grip the fundamental basics of this.

Price is an objective amount assigned to something which represents what the seller believes that something is worth to the buyer.

Value is the buyer's subjective view of what something is worth [with worth being measured in many ways, both tangible and intangible].

Take a simple example - would you rather pay R150 or R1,500 for a pair of sunglasses? Take a pair of Bondi Blu sunglasses costing R150 and Ray-Ban's costing R1,500. Gerrit sees the value of a pair of sunglasses as 'UV protection + comfort = about R120' and he reluctantly pays R150 for the Bondi's. Adele sees the value as 'UV protection + comfort + I look awesome = R2,000' and she gladly pays the R1,500 for the big guns.

Even my own vehicular predisposition - R2.5 million for a Lamborghini = "Where do I pay??", whereas R2.5 million for a Ferrari only adds up to "No thanks, just looking". Even though the cars could be very similar in terms of shape, size, performance, colour, whatever - it all boils down to perception and what my take on value is.

But I digress - back to business and Vinny Lingham touched on this in his recent article on the value of facebook where it's very nicely summarised: "At the end of the day, valuations are really about willing buyer, willing seller, and perceived value to the buyer".

What great businesses do is manage to appeal to what their customers really value - and that is certainly not always easy.

BMW [back to cars, but just for this outstanding example which really highlights the case] has somehow managed to bridge the price / value gap with its amazing 3 series range - Wikipedia states "The 3 Series is the best selling luxury sedan in the United States — 98,000 vehicles were sold in 2005". Sure, our local figures are a lot lower, and you may say what about the Merc C-class, which outsold the 3 by about 3x in August 2007 - but you're missing the point.

My point is this - how many BMW 3's do you see on the road? I know many people who won't buy them simply because they don't want to have the same car that "everyone else" is driving. BMW have successfully taken a luxury car and sold it to the masses. Ten years ago, many people aspired to have a BMW. Now, many people do have one [and even with car prices at the levels they are now]. They managed a 'Henry Ford'-scale revolution with a luxury, high-price [and assumedly high value] item. UNREAL!

The Wiki author's comments are spot-on: "From its sporting origins, the 3 Series success has led BMW to become one of the most recognized brands in the world, in league with Coca-Cola, IBM, The Four Seasons, and American Express. Being an accessible prestige-badge car, the 3 Series' reputation grew from its humble beginnings, winning numerous awards and honors throughout the automotive world. By the early 21st century, the E46 3 Series was the best-selling car of its segment (premium middle class cars),as commonplace in Asia and America as in Europe, while maintaining its prestigious brand and image."


Surely all businesses can take a page out of their book - IT DOESN'T MATTER WHAT YOUR PRODUCT OR SERVICE COSTS - IF YOU DELIVER VALUE TO CUSTOMERS, THEY WILL BUY IT!

What is the real impact of accounting on business?

Here is a quote from 'Tom Peters' True Confessions' [fascinating article for any fans of his] on FastCompany, which sums up very nicely the unquantifiable impact that accounting can have on an organisation -

"Who else? I was supremely pissed off at Robert McNamara. McNamara had been an assistant accounting professor at Harvard Business School. Somebody hooked him up with General Curtis E. LeMay, who was running the U.S. Air Force. The way I remember the story, LeMay didn't know how many airplanes he had or where they were parked. So McNamara the accountant figured out how many planes there were and where they were parked, and he put together a report for LeMay. All of a sudden, where there had been no systems, McNamara introduced systems. Terrific. That makes McNamara the Peter Drucker of the Pentagon -- because Drucker had done the same thing for big companies. But by the time the Vietnam War came and McNamara was secretary of defense, the systems had completely taken over. People were driven out of the equation. McNamara introduced the tyranny of the bean counters. So Robert McNamara was the enemy."

Accountants are notorious for only taking into account the Rand [Dollar] value of anything when making decisions. I disagree with this approach entirely - just because there are some things you can't measure, it doesn't mean they don't exist.

Spending much of my working time in a creative environment [and having been trained in an accounting one], I've been challenged with a similar question lately: how do you balance ENERGY and EXCITEMENT with structure and governance?

Well, I'm searching daily, and I'll be sure to post any breakthroughs [although at this point, there still seems like a long way to go to finding an answer]. But with organisations such as Virgin finding a way to make business fun, we can be sure the answer is out there!

The times, they are a-changing...some more

The times they are a-changing [1]

What's that they say about death and taxes? The only certainties in life are... well, I can think of one other big certainty which makes life worth living, but other than that, its pretty close.

Looking at people's needs, you would probably say with fairly high certainty that doctor's will always be in demand, as sick people (of which there are many) need doctors. Well, according to this Fin24 article, that's not necessarily true. The article talks of how the landscape is changing for regular GP's, and goes on to explain how the entire business model is changing, with the main driver of this change being... you guessed it - attempts to reduce medical costs.

So does this mean that value means nothing? I have always taken the view [although not always easy to do] that cost is not the main focus, rather value is. The old economic conundrum about price vs quality comes to mind here.

Does this mean that value is out the window? As we advance technologically, [not just good but excellent] systems become commonplace and barriers to entry in many industries continue to dwindle... it seems cost is becoming a very large focus indeed. Having trained as an accountant, its easy for me to see why this is important, but something within me balks at the thought of every decision, every business being concentrated on minimising costs.

Just think of what we would be missing out on if this were the case.



Or is it just me?

Lesson in this [one of them, anyway] - in the changing times, cost has become a large driver for many businesses and decisions. We have two choices: accept it, join the hordes and beat that supplier down... or face it head-on and try to prove that value still has its place - after all, if you can deliver an excellent product or service, surely someone will be willing to pay for it?