How Much Can You Save By Cancelling Your Chamber Membership?

by Jack Harris

Think about that question while I ask you a few others. Picture a scale from 1 to 100 that measures product quality, trustworthiness, quality of service, industry leadership and other factors that buyers consider before doing business.

When a potential customer buys from your competitor, and not from you, how many points separate your two companies on the buyer’s scale? Two or three? That’s a typical spread in industries that compete head-on for big contracts. Five to ten points? That’s quite a gap, enough to put you out of business if you’re consistently on the short end.

How much would you have to spend on advertising, guerrilla marketing, social network buzzing and other strategies to raise the public’s image of your company by three points? By five points? Don’t even try to put a price on ten points; if you’re a small business, you’ve never written a check that big. Reputation, trust, esteem—they’re hard to earn, and harder to buy.

Unless you’re a chamber member. Last year the Shapiro Group conducted the first study I’ve seen that rigorously isolates the effect of chamber membership from other variables in consumer opinions of businesses. (see link to study, below) Among the study’s key findings: “if [potential buyers] know that a small business is a member of its local chamber, the business enjoys a 44% increase in its consumer favorability rating, a 57% increase in its local reputation, and a 63% increase in the likelihood that consumers will patronize the business in the future.”

Trust an old pro on this one — you can’t buy that for 50 times the cost of a chamber membership. And remember the key phrase “if potential buyers know.” Put the decal in your window, put the plastic sign next to the register, put the logo on your homepage and stationery, put the chamber directory and newsletter in your waiting room, add a tagline to your radio ads. If you have a flagpole, let’s get you a 4×8 chamber flag.

Pulling Together: A Radical Proposal for the Space Coast Community

By Jack Harris

“None of us is as smart as all of us.” This Japanese proverb expresses the secret of success behind millions of projects, thousands of companies, and more than a few business communities.

Equally true, none of us is as strong as all of us. Once we understand a problem and its solution, if we all grab the same rope and pull in the same direction, we can rip any problem out by the roots. We’re facing a few today. Grab the rope and dig in your heels; we have work to do.

How many Space Coast problems could we solve, without divine or federal  intervention, by simply working together?

One is unemployment, currently spread among all types of businesses and professions, and soon to soar among aerospace, IT and other technical career fields. Another is our community’s sagging prosperity, which is killing retailers and inflicting pain on all of us. With a sense of common purpose, and a bit of good leadership, we could yank both those weeds out of the Space Coast garden this year.

Consider another looming problem that will soon hurt every employer on the Space Coast: labor is about to become much more expensive.

As an employer, you are about to encounter mandates for upscale health benefits and generous family leave, and a bill higher Social Security contributions. Your last opportunity to stop these changes was November 4, 2008. Now the problem is how to avoid or offset them and keep the business intact.

Each business owner may choose from several obvious courses of action. Among them:

• Get rid of unnecessary employees—especially low-pay-low-productivity employees, whose costs will rise proportionally more than the cost of high-end employees.
• Invest in technology either to replace employees or to boost their productivity.
• Outsource non-core functions like bookkeeping, computer and network O&M, and benefits administration.
• Move employees to a professional employer organization (PEO) to save on fringe benefits and HR administration, and to reduce the company’s exposure to litigation and administrative penalties.

Of course, even if every employer did these things, the Space Coast community would still have problems, not the least of which would be increased unemployment and a further decrease in our community prosperity.

But what if we all acted in concert to solve the bigger problems that keep so many local businesses on the brink of failure? What if we generated so much demand that our businesses had to operate at peak efficiency? What if we had so many good jobs that our workforce was stretched to its limits?

A marginal increase in the cost of labor—like other vicissitudes of the economy—would be little more than an annoyance if our businesses were booming and our people were employed at the upper limits of their abilities. But that hardly describes the Space Coast, where we have a chronic oversupply of manufacturing capacity, vendors, professional services and retailers, and a chronic underutilization of our human resources.

Let’s get the rope around our larger problems and pull together. How much would our situation change:

• If government waived taxes on locally owned businesses and startups that provide the same high-quality employment as the relocating companies we incentivize with abatements? We’ve confirmed that abatements repay themselves several fold; let’s get greedy and do lots of abatements.
• If government abolished the tangled web of permitting, licensing, fees and other barriers that currently deter businesses from investing or remaining in Brevard? For a builder planning one building, for example, why not one permit, one signature, one week of internal review, and one fee equal to the true cost of permitting?
• If our Economic Development Commission raised its standards and productivity, bringing in lots of high-quality jobs and companies who are natural customers for our locally owned businesses?
• If our Chambers of Commerce were maniacally focused on promoting the Space Coast as a home for businesses and a rich source of business partners? And equally passionate about promoting the buy-local concept throughout the county?
• If all of us, as the employees of Space Coast businesses, took the initiative to increase our productivity and our value to our employers? What if we turned down benefits we don’t need, and spent benefit dollars as carefully as our own money?

Would you recognize this place we call home if everyone spent 2009 pulling hard in the same direction? Would anyone care if the cost of labor were rising? Don’t answer, just grab the rope.

It’s Hard Out Here For A Bank

A Few Lessons On Banking In Paradise

Article first published in Spacecoast Business Magazine, November 2008

Welcome, Melissa! You just got your MBA? From a prestigious B-school that taught you everything there is to know about banking? Congratulations! No wonder New Bank chose you to lead their penetration into the Space Coast market.

You say the only thing your board of directors requires is that you be wildly successful by 2015 and break even between now and then? No problem!

First, take a moment to savor the knowledge that all your competitors are hurting. They just emerged (they hope) from Financial Market Hell. They’re beat up. They’re locked into what they own, where they’re located, the loans they’ve made and the reputations they’ve earned. They did everything wrong; all you have to do to succeed is to do everything right.

To get you started, let’s review the special features of our market. Everything you know about banking will do you little good until you know a lot about the Space Coast. Consider some of the facts of life here in Paradise that will temper the practice of banking as you know it.

I’m sure you studied the differences between rural banking and urban banking. Out in the country, it’s all about people and personal relationships. Branch managers are former mayors and high school principals, because people bank with people they’ve known all their lives.

In the big city it’s all about brand and convenience. A customer uses the bank in the lobby of her office tower, assuming its brand is also prominent in every city she visits on business.

We’re all of that. We are 500,000 people spread over 1,000 square miles of land divided by 70 miles of wide river. We value both convenience and personal relationships. (Although, we tend not to venerate our former elected officials enough to bank with them.)

How many branches will you need in order to get convenient and personal with everyone? Whatever the number, it’s more than you can afford. You can’t carpet 1000 square miles with New Bank branches, so you’ll have to make some tough choices to win and keep the customers you really want.

You say online banking is central to your strategy? Sure, the more hip your customers, the more banking activities you can push to the Internet, the leaner and meaner your staffing can be, and the greater your returns on assets and investment. Hold that thought.

Late in your final semester, turmoil in the mortgage and financial markets changed the eternal truths of banking, at least temporarily. When you started grad school, retail bankers relied on a smart mix of depositors and creditors, the industry’s two pillars of profit. Then everything changed while you were writing your master’s thesis.

Now borrowers are a nuisance and depositors are kings, especially retirees who fear the stock market and keep hundreds of thousands on deposit in banks. For the next few years, your bank will need those deposits, and more deposits, not stacks of loan portfolios. Of course, by 2015, all that will change; you’ll be aggressively writing mortgages, trying to put those deposits to work.

Here it is, late 2008, and you’ve got six years to succeed. Where will you locate your branches? Convenient to retirees’ homes, so you can break even for the next couple of years? Close to working couples’ workplaces, so you can catch the wave when homebuyers become important again? It’s not that simple here in Paradise. We let our old folks live all over the county, like so many mustangs that have never been rounded up. The concept of “close to the retirees” has no meaning here. Same deal with us working types: we work all over these 1,000 square miles; there is no Downtown Brevard.

About your strategy for pushing routine activities to the Internet and staffing the branches with a few highly skilled professionals—save it for later. Our mustangs don’t use computers—not much anyway—and they enjoy visiting the branch twice a week to ask what their balance is. Let’s draft your first help wanted ad:  Needed ASAP: 200 clerks; HS diploma a plus; apply at any New Bank facility.

Come on, Melissa, be a good sport. Don’t go back to Charlotte. Give us a try. Everyone says it’s easy to get rich in banking here. Did they teach you that banks are licensed to create their own money? We have Road Runner.

Calibrate Your Pipeline

Article first published in Spacecoast Business Magazine, December 2008

 “Top line, bottom line, pipeline, cash.” That’s the meaning of life for Space Coast business owners. Simple as that. We all know that a fat top line, robust bottom line and lots of cash mean the business is doing well. But how many understand the pipeline, the font of all new customers? Is yours a precisely measured feature of the business, or just an abstract concept? If you cannot estimate the value of your pipeline within about 5% of actual outcome, you’re flying blind and you have some work to do.

For the moment, you own a professional services business. If you knew exactly how many prospects in your pipeline would turn into paying customers, when they would write the checks, and for how much, then you could accurately plan, schedule and allocate resources with little risk of error.

Without that information you plan poorly, because hunches are no basis for commitments. You’re doomed to poor—and poorly timed—hiring, borrowing, leasing and countless other decisions.

How do you measure the pipeline? Begin by recognizing that prospects don’t simply flow through the pipeline. You move them through, or out of, the pipeline by your actions. The pipeline is a process, and each step eliminates some prospects and moves the others forward to the next step.

Most likely, there are six steps in your pipeline process. Think about the data you will need in order to accurately model your own pipeline.

Step 1: Collecting Prospects. It begins with that big batch of people with whom you’ve exchanged cards at a networking event, and who agreed with you that “we should get together and talk business.” That first batch also includes people who have visited your website and said “tell me more.”

How many will turn into customers? Once you’ve collected data for a few months, you’ll be able to predict with confidence how many will become your customers, beginning when, lasting for how long, and spending how much. For this discussion, we’ll use some common values. Assume you have 100 potential prospects at Step 1, two of them will become customers six months hence, and the average engagement lasts six months at $10,000 per month.

Step 2: Culling Them. In this step you whittle 100 prospects down to 30 by means of follow-up phone conversations and other research that eliminates the 70 people who can’t afford you, don’t need your help, or don’t have the authority to engage you.(That’s what you get for networking with salesmen instead of decision makers.) You’ll get the same results from this batch of 30: two paying customers, $10,000 per month for six months, beginning perhaps 90 days from today.

Step 3: Interviewing Them. You eliminate all but 10 prospects by sitting down face-to-face and seriously exploring their needs, your ability to meet them, how you would work together, and roughly how much it might cost. Now you’re down to the live ones; 20% of these ten people are going to write checks, say, 60 days from now.

Step 4: Defining the Job. Now it’s time for the discussion that provides you everything you need to know in order to write the perfect proposal, and ensures that the prospect will not be surprised by anything in your proposal. Frequently, things come up in these heart-to-heart discussions that kill the deal. Better now than after you’ve slaved over a formal proposal. Your 10 prospects are down to six, and 33% of them will become paying customers in 45 days.

Step 5: Formal Proposal. At this point, six prospects are reading your no-surprises proposals. Only four will say yes. What happened to the other two? Maybe their circumstances changed. Maybe they didn’t understand the deal until they saw it on paper. Maybe they just played along to be nice, never intending to do business. In any case, you’ve gotten to “yes” with four companies, and half will become paying customers in 30 days.

Step 6: Starting Work. Anyone who has been down this road knows that accepting a proposal does not make one a paying customer. In our case only two of the four yeses turn into revenue in a reasonable time: about 15 days.

That’s the model and some suggested numbers to get you started. Keep the pipeline populated, keep the process moving, collect and apply your own data, and you’ll be predicting monthly revenue within 5% of reality.

Now, More Than Ever

By Jack Harris

Think piece for Melbourne Palm Bay Area Chamber of Commerce, August 5, 2008

Have you noticed, the days are getting shorter? It will be sometime in May 2009 before you see as much daylight as you saw yesterday. Nothing but shorter, darker days till then.

Have you noticed, the national economy is getting worse? If you trust the research departments at Merrill Lynch and UBS — I do — it will be sometime in May 2009 before the economy is once again as good as it was yesterday. And it’s going to be nothing but worse from now until then.

Wouldn’t this be a good time to pump up the Space Coast economy? Will there ever be a better time to increase sales, increase employment, increase wages, increase profits and expand our businesses? If we could do it at no cost, wouldn’t that be a good investment?

For your consideration, The 2008 Space Coast Economic Recovery and Expansion Plan: buy from each other. As simple as that. Four words. No cost.

No outside influence pressing on us today — not gas prices, the subprime crisis, or national employment declines — can drive us down as forcefully as keeping our money circulating in our economy can drive us up.

If ours were a large robust economy, with countless billions pouring in from the outside and fewer billions pouring out, the buy-from-each-other strategy might not have much effect. Lucky for us, I guess, we don’t have a big strong economy. Ours is subject to major improvement by simple measures.

Every time a dollar is re-spent in our economy, our prosperity ratchets up by another dollar. If United Space Alliance spends $1000 at Pelican Sales, and Pelican Sales spends $1000 on my services, and I spend $1000 at Indian River Networks, and Eric Smith spends that $1000 at Indian River Printing, and Russ Kittel spends that $1000 at Meg O’Malley’s, that original $1000 has pumped up our economy by $5000, and it’s still in circulation here. Had USA spent the original $1000 at MSC Industrial Supply in Melville, NY, there would have been no contribution to our economy. If Eric Smith had used a lowest-bidder printer in Citrus County, we’d be only $3000 richer.

By buying from each other, by keeping Brevard money circulating in Brevard, we can increase the revenues, profits, wages and benefits at every business in this county. By buying outside the county, we can drive down revenues, profits, wages and benefits at every business in this county.

Let’s adopt a new habit: buy from each other. Let’s hold each other’s feet to the fire. Let’s celebrate every time one of us does a big deal with another one of us. Let’s keep our money moving inside our economy. Let’s get rich together.

Doing Business in the Shadow of the Beast: Can a Small Business Succeed in a Market Monopolized by a Giant?

By Jack Harris

First published in Spacecoast Business Magazine August 2008

Retail on the Space Coast is absolutely dominated by national chains. We ignore our local merchants in order to wear what they’re wearing in Kansas City, eat from the same menus they use in Indianapolis, and drink the same coffee they drink in Nyack. And every time we make those choices, our money moves to towns like Bentonville, Minneapolis, Lakeland, New York and Mooresville, never to circulate in our local economy, never to lift our community’s prosperity. Ours would be a prosperous community if we had lots of local merchants, and if we loyally patronized them, but we don’t. Is the battle lost, or is there still room in our economy, and in our spending habits, for locally owned retailers to compete against the alien giants?

Laurie Behr is one entrepreneur who isn’t intimidated by Big Retail. In October 2007 she opened her new coffee house, Java Surf, along Indialantic’s boardwalk about 80 feet from Starbuck’s. Not the best way to sneak into the market, right? Now it’s the summer of ’08, and Java Surf is probably the best little coffee house in South County, with the kind of loyal clientele most retailers would kill for.

What is Behr’s secret formula for retail success? Could a hardware store next to Lowes, or a clothing store next to Target, succeed by the same formula? What can she teach the rest of us owners who have to wrestle our top lines from the jaws of monster competitors?

No surprise, Behr’s lessons are all about product value and customer experience. Behr juggles a hundred other balls, as every owner must, but she knows that a prospective customer standing at the entrance to Nance Park can see both Starbuck’s and Java Surf with one eye closed. Whether the prospect walks a few steps south, or a few steps southwest, depends upon the difference in value and experience the two stores offer. Everything else is details.

Compete on Product Value. Starbuck’s coffee is expensive, with a markup of 400-900% depending upon whom you believe. The textbook strategy would be to serve equivalent coffee and undercut Starbuck’s prices, especially since Starbuck’s stores don’t have the authority to wage price wars. Behr went the other direction. She buys coffee much finer than Starbuck’s and delivers it at prices only slightly higher. Higher product value without price competition.

Win Away the Competition’s Best Customers. Starbuck’s has invested billions to raise the consciousness and spending habits of a nation of coffee drinkers. Their clientele are people with plenty of money in their pockets who like to drink, and be seen drinking, high-priced coffee. Java Surf’s strategy is to attract away the top layer of that ready-made market: people with plenty of money who appreciate even better coffee and don’t care that Java Surf cups don’t sport a logo.

Stay Fresh and Agile. A Starbuck’s weakness, and Java Surf advantage, lie in their product-development cycles. When a brilliant new product idea arises in Seattle, it takes months to roll it out to the stores. Behr’s new-product-development cycle ranges from ten minutes to ten hours. Ditto, her timeline for withdrawing a product that isn’t as good as she thought it would be. The result is that Java Surf always has new things to try, but no old stuff to push.

Turn Their Afterthought Into Your Goldmine. Starbuck’s sells tea and kiddie treats, but primarily as a convenience to the tea drinkers and children who accompany their core clientele, the coffee drinkers. Behr elevated the status of the tag-alongs by offering fine leaf-tea drinks that upstage Starbuck’s teabags, and shaved ice in as many varieties as the coffee. As a result, kids and tea lovers head for Java Surf with coffee-drinkers in tow.

Deliver a Clearly Different Customer Experience. No one can outdo Starbuck’s in delivering the Starbuck’s experience—the jargon, the process, the uniformity, the lighting, the seating and the decor. Behr doesn’t try. Again, she went the other way. Most of her staff are simply nice local kids who have not had that quality trained out of them. They know their business and turn out excellent products, but they are otherwise unrehearsed. Starbuck’s delivers uniformity, Java Surf counters with spontaneity. And, the most spontaneous member of the team is Behr herself—every day a different outrageous look and a wardrobe that never disappoints.

What’s In It For The Rest Of Us? With Behr’s inspiration, can Margaret to take on Target by selling far better clothes at slightly higher prices? Can Joe’s wrest market share from Lowe’s with salt-resistant products that beachsiders can’t find at Lowes? Does anyone have an excuse for not trying, after watching Laurie Behr take on Starbuck’s?

Jack Harris is the Managing Principal of Head First Consulting in Melbourne Beach, Florida. He specializes in leading small and medium businesses through the changes that will make them great. During his 33-year consulting career, he has completed 600 projects for 100 government organizations and 200 companies, ranging from Fortune 50s to startups. Contact him at Jack@HeadFirstConsulting.com or (321) 729-9955.

© 2008 Jack H. Harris

Two Keys to Space Coast Prosperity

By Jack Harris

First published by the Melbourne-Palm Bay Area Chamber of Commerce July 5, 2008
Buy local and buy from each other. For hundreds of thousands on the Space Coast, our prosperity is a function of our neighbors’ prosperity. The more money that people spend in our economy, the more prosperous our local businesses become, and the more jobs they create, and the better they pay their employees and owners—our neighbors—and the more those neighbors spend in our local economy—and on and on it goes.

There’s a catch, of course. The only spending that really matters is the money we spend at local businesses, especially locally owned businesses and national businesses that re-spend heavily in our local economy. Eat at a local restaurant, and your money gets re-spent on local suppliers, local accounts, local printers, local designers, and scores of other locals, all of whom re-spend what they get on local lawyers, local drivers, local uniform makers and scores more locals. Spend $1000 at a local restaurant, and you easily generate $4000-5000 in local economic activity through re-spending. Spend $1000 in Orlando, and you simply deplete our local economy by $1000.

Buying local should be a no-brainer for Chamber members and other business people, but some need constant reminders. Do yourself, your fellow business people, and everyone in the community a favor: spread the word that buying local lifts everyone in the Space Coast economy to a higher level of prosperity.

Sell everywhere you can. The other key is to bring money from other communities into ours. One reason we put Harris, DRS, Symetrics, Authentec, local hotels and Shuttle contractors on pedestals is because they do exactly that, and on a big scale. But they can’t make up for the dollar volume that streams out of here through misdirected consumer and B2B spending. Even at the micro end of the scale, we’re all better off when a local seamstress sells her beach cover-ups to tourists, or sells them online to people we’ll never see, than when she sells them to locals. New money in our economy is even better than re-spent money. Of course, the best thing we can do is to attract national businesses to headquarter here and haul in billions from all over the world. When other communities are sending more money to us than we are sending to other communities, we will be on our way to prosperity.

One Company’s Growth Strategy: Love Your Customers, and Your Customers Will Love You Back

By Jack Harris

What do your customers say about your customer care? Are they “tickled” to converse with the machine that answers your phone? Do they “treasure” the discount coupons you give them to make up for serving their dinners cold? How far would you have to raise your customer care standard before customers tossed the word love into their descriptions of doing business with you?

A few of us can skate on product superiority alone, but the rest of us have competitors with products as good as ours. At some point, customers no longer understand or care about the technical differences between our offering and our competitor’s. How shall we compete when prospects turn to other criteria to make their choices?

We can take a lesson from Don McKenna, who became Administrator of Wuesthoff’s Melbourne hospital in March 2003, shortly after the new facility opened its doors. Consider the business environment he faced. The south-county market was already monopolized by a giant five times larger than Wuesthoff-Melbourne. Every medical procedure that Wuesthoff offered, from spinal fusions to appendectomies, was also available at Holmes just four miles away. The market for most procedures was fixed. In other words, neither the availability of a new facility, nor any amount of advertising, could change the number of patients in need of spinal fusions or appendectomies. The only way to grow the new hospital was to take market share away from the established monopoly.

How does a new hospital seize market share? Ideally, by delivering superior patient outcomes, and watching the market flow in through the front door. Nice goal, but even if you deliver better outcomes, it takes years to collect convincing data, and years more to educate the market on what the subtle differences mean. That’s not a strategy for quickly seizing market share from a monopoly.

What if you pour your soul into customer care, the thing that matters most to customers after the technical quality of medical treatment? What if you give every customer an experience unique among her lifetime of experiences with hospitals and clinics? Can a hospital create raving fans?

Wuesthoff’s strategy for growing their market share, and for building their brand, called for exactly that: pour the hospital’s soul into the whole lifecycle of customer care. Make sure every touch, from the first telephone conversation to the very last interaction, is a satisfying experience for the customer. Wuesthoff called their strategy Loving Care, a term borrowed from Erie Chapman, author of the healthcare book Radical Loving Care.

Wuesthoff’s implementation of Loving Care begins with seizing control of the relationship at the first moment of contact and repeatedly proving to the patient that the entire relationship is going to be marked by courtesy, compassion, honesty and scores of little touches that prove they care. They follow through on their brand promise—everyone from top to bottom on the org chart, at every touch point.

Wuesthoff enjoys one natural advantage: a 21^st Century building that has modern technology built in, instead of crammed in. The difference in patient comfort and medical care in new vs. old buildings is substantial. For example, Wuesthoff’s quiet private rooms automatically eliminate many of the irritants that make hospital stays elsewhere so unpleasant.

Buildings matter, but the greatest difference between Loving Care and typical hospital care comes from people. The key to raving fans is to staff the hospital with people whose work is not only technically excellent, but also delivered with courtesy, compassion and integrity. How do you turn a typical hospital employee into that kind of employee? You don’t, you can’t. You have to start with people who are already that kind of people, which makes hiring for extreme customer care very difficult.

McKenna requires that candidates pass two screens. The first screen is for complete technical knowledge, skills and credentials. Nothing else can make up for shortcomings in technical qualifications, and Wuesthoff is not in the business of remedial training. If a candidate passes that screen, his attitudes and values are explored to see if they measure up to the hospital’s Loving Care standard and the culture in which he would work. McKenna refuses to put anyone who doesn’t pass this screen under the same roof as patients.

Is McKenna’s approach just overkill? What can a business reap from all this heart and soul? Hold McKenna’s numbers up to yours, and see how your business compares.

After a solid first year, his customer totals grew 123% by the fifth year. During those five years, in a market that many argued was already fully served by existing hospitals, the newcomer served 271,000 non-unique customers.

Wuesthoff sets a high standard. Few of us invest enough in customer care to earn words like love, bless and wow in our customer’s referrals, but Wuesthoff’s performance shows that putting money, time, heart and soul into customer care is a sound business strategy.

Jack Harris is the Managing Principal of Head First Consulting in Melbourne Beach, Florida. He specializes in leading small and medium businesses through the changes that will make them great. During his 33-year consulting career, he has completed 600 projects for 100 government organizations and 200 companies, ranging from Fortune 50s to startups. Contact him at Jack@HeadFirstConsulting.com or (321) 729-9955.

What If Our Government Simply Governed?

By Jack Harris

First published as op-ed by Florida Today Newspaper June 2, 2008

A panel of local business experts recently reviewed Brevard County’s planning, budgeting, buying and spending, and delivered a 92-page report summarizing its findings and advice for improving effectiveness and efficiency in the County’s financial operations. The panel did an excellent job in a very short time and earned the applause of every Space Coast taxpayer.

A Florida Today editorial said the report’s limited list of suggestions confirms the county is performing rather well, a statement backed up by some of the business leaders who did the review. That interpretation fails to recognize that the County’s question, the one addressed by the panel, was essentially “How can we do everything we’re doing, and spend every dollar available to us, more efficiently, so as to avoid reductions in government programs and employment?”

In fact, the County is already doing almost everything it can to spend every available dollar and avoid job reductions. If our government has one highly developed skill, that is it.

The question that should have been asked is the first question any good business asks of itself, ”What things are we doing that we shouldn’t be doing at all?” I don’t pretend to speak for everyone who voted with me on Amendment 1, but my reason for supporting that amendment and the next 50 tax-reduction proposals is to force government to confine itself to governmental functions and shed the non-governmental lines of business it has taken upon itself.

Our interests are not served by making the county board more efficient at competing with the private sector, for example by using tax dollars to provide stalls and equestrian facilities for horse people, undercutting local stable owners. Our interests are not served by efficiently converting our tax dollars to charitable donations, for example by purchasing sand for beachfront property owners, and by taking care of Yuppies’ parents so the Yuppies can drive newer BMWs. Our interests are not served by policing our sexual behavior in our own homes, or by policing the wardrobes of sunbathers at Playa Linda. These egregious examples represent hundreds of programs, projects and activities that our government should simply not be doing, efficiently or inefficiently.

By following the panel’s advice, the county government may be able to survive a 5% budget cut and continue doing all the things it has taken upon itself. By eliminating the things it shouldn’t be doing in the first place, it could easily reduce its own budget, and our tax burden, 25-30%. It’s time for a Blue Ribbon Panel to answer the big question, instead of the little one — “What should our government NOT be doing?” instead of “How can government continue doing the wrong things more efficiently?”

The Rule of 150: Will You Change, Or Be Changed?

By Jack Harris

First published in Spacecoast Business Magazine June 2008

For a good small business on its way to bigness and greatness, one of the toughest hurdles to clear stands at the 150-employee mark. Passing through 150 means shedding the amateur status of a small business and acquiring the professional standing of a big business. It also means losing the advantages of a small business, replacing them with the necessary evils of a big business. That one big happy family turns into a hierarchical, bureaucratic organization that often leaves owners, executives and employees alike wondering what happened to their company.

Symetrics Industries, an aerospace manufacturer and arguably the best small business on the Space Coast, is rapidly approaching the 150 mark. Every owner whose day is coming would be wise to watch Symetrics for the next couple of years for hints on how to pass the 150 test.

The Rule

The Rule of 150 has been a fact of life for two thousand years or longer; although only recently did Robin Dunbar and Malcolm Gladwell raise our awareness of the phenomenon. Simply stated, 150 is the upper limit of a person’s ability to maintain stable, productive relationships with other members of a group. At levels below 150, we can know everyone else, know what they know and don’t know, know how they think and work, know what makes them tick, and understand their relationships with the other individuals in the group. At levels above 150, we can’t, so the group inevitably splits into two or more smaller groups, and the members settle into smaller networks of relationships.

The Rule of 150 applies to combat units, church congregations, and every other organization whose performance depends upon social cohesion among all its members. The Rule is encountered by every business that grows beyond the 150 mark. There is no immunity. The question is, do you sit back and let your company change in whatever way it will, or do you take direct action to change your company the way you want it to change.

Take the Road Less Traveled

Suppose you let Nature take its course. Your happy family subdivides into factions based on seniority, function, status, or worse—age, race, or gender. Sometimes the family just disintegrates into a spiritless labor pool that no longer cares enough to manage itself. Nature has a knack for taking you where you don’t want to go.

But you’re the proactive type, right? What can you do to ensure your company is even better after it clears the 150 hurdle? Companies that fare well seem to favor four solutions.

Implement your future structure. Well before the big milestone, install management structures, systems and an organization optimized for the future company, the company you envision two or three years after passing the 150 mark. Give it a light touch at first, and let employee demand on the system grow it to maturity.

This is the Symetrics solution. For two years, the company has been designing and implementing the systems and structures it will need to run a big business. The management structure is in place, and its supporting systems are being installed—for example, stricter Configuration Management, a new Enterprise Resource Planning system, and a significantly better business metrics analysis process.

Use IPTs ( Integrated Project Teams) instead of departments as your primary organizational element. IPTs bring together people with several different specialties to focus on a specific mission. This creates new families aligned with the company’s most important work. As each mission is completed, people move on to new IPTs with different colleagues. The closest working relationships that co-workers develop are always based on cooperating to accomplish the company’s mission, not on waging war against other departments.

Use the Gor-Tex solution. At Gore, no building can accommodate more than 150 people. As the company grows, Gore simply adds more 150-person buildings.

Make your employees owners. Nothing fuels self-management, cooperation and the spirit of company-first like universal ownership.

Who Suffers Most During the Transition?

In even the best cases, the transition from small to big disheartens people. A few may benefit from increased upward mobility, but most will continue doing what they do, and earning what they earn, but in a more regulated atmosphere.

Yet, the person hit hardest by the transition is the CEO. Look into the future of Mitch Garner, CEO of Symetrics. Today he knows everyone in the company—all 140 of them—and he knows what makes each person tick. One factor that makes Symetrics a benchmark company is widespread loyalty to the top, based on 139 personal relationships with the CEO. The same relationships help to make Garner a first-class CEO, because he gets near-real-time, unedited information about everything going on under his roof. He enjoys an incomparable advantage over the CEO with a dozen direct-reports, each with a dozen direct-reports, all of them in the business of filtering information before it reaches the boss.

What Got You Here Won’t Get You There

What will Garner’s life be like going forward from 150? Will he still be showered with information, bright ideas and personal insights from everyone in the company when Symetrics has 250 employees? Not likely. When they have 500 employees? No way. Nobody can sustain productive relationships with 500 people. His new challenge will be to lead an enterprise substantially different from what it used to be, using methods, systems, and channels that he never had to rely upon before. We’ll all be watching to see how a great CEO and a great company make the transition.

 

Jack Harris is the Managing Principal of Head First Consulting in Melbourne Beach, Florida. He specializes in leading small and medium businesses through the changes that will make them great. During his 33-year consulting career, he has completed 600 projects for 100 government organizations and 200 companies, ranging from Fortune 50s to startups. Contact him at Jack@HeadFirstConsulting.com or (321) 729-9955.

© 2008 Jack Harris