If you want the time to do good stuff, stop doing stuff you’ll never do well.

Partly attitude and partly system, here’s a plan for doing good stuff:

Push back

Don’t just say Yes every time something crosses your mind, your desk or your In-box. Giving yourself an easy time when accepting requests (especially from yourself) guarantees a hard and frustrating time under a big ticking clock as you try to deliver.

Avoid arm length to-do lists, missed deadlines and low quality by being honest about schedules, commitments and priorities.

Prioritise your list

I remember an executive saying, seemingly without irony, he had seven number one priorities, (no surprise at the end of the year then). Rank everything that you put on your list.

If you’re working for others or in a team, prioritising is team-work. This is important for skippiness!

Finish what you start

This can mean getting to the finish line (yay!) but sometimes it means stopping what you started before the end because you (and your team) realise it’s a waste of time or it’s just not coming together.

It’s often a close call; there’s a fine line between pushing through adversity and bloody mindedness. Seth Godin wrote a whole (little) book, The Dip, on deciding if or when to quit. There’s a Change This version here.

What about you?

How do you make sure you’re working on the good stuff? How do you push back and help out at the same time?

Neatly filed under Managing
Tags: doing, planning

Image copyright: geishaboy500 via Flickr

No. Na. Nope. Nya. Ummm … no. No siree. Not me. Oh, maybe, hang on a second, er, sorry, no.

I have no idea what should be in your budget and it’s a simple truth that no one else does either. They may have a first clue about what they want to be in there and what it should all add up to, but beyond that … they know nothing.

You do.

A play in three acts

In theory, budget setting is a simple play of three acts.

Act 1 — Setting — What happened last time, in words and numbers?

Act 2 — Thinking — What will change next time? Including anything that’s different inside the company, like targets and constraints, or outside the company, such as market conditions, competitor movements and new technologies making headway.

If you aren’t given objectives, set them yourself. If you don’t know what’s happening in the market, go find out.

The better you understand the variables the easier the planning will be (and the more robustly you can justify your choices during review meetings).

Act 3 — Planning — What do you plan to do, in words and numbers?

After discussion, comes decision. What will you spend in order to achieve the objectives? How is that different from last time? Why have you made those choices?

Give yourself a budget and a target. The budget is a promise, so don’t make promises you can’t keep. The target is a stretch motivator, something to shoot for, to achieve if … if … if, but not a fantasy. Pinning everything to a fantasy is the surest way to demotivate everyone and guarantee failure.

That’s the theory. What’s the reality?

Budget meetings can be bloody. Turn up with a low ball, last year +/- 10%, no thinking, generous pay rise, doubled marketing spend, steady state budget and you probably deserve to get juiced.

Budgets are all about numbers but like so much else, they’re really all about preparation. Get set, have a strong and reasoned argument for every change, be ready to walk through every penny — you’ll skip out of the meeting with a firm budget, a warm glow and a polished reputation.

Sadly, some review meetings are an ego trip for the finance team; they think it’s their job to beat you up. You owe it to your team to deal with them like any other bully — look ‘em in the eye and stand firm.

Ruined by game playing and phoney smiles, managing in the pursuit of skippiness means taking budget sessions as a brilliant opportunity to align your whole team behind a coherent plan.

Neatly filed under Keeping Promises,Making Promises
Tags: budgets, finance, meetings, motivation, planning

You see that picture of an atom with electrons flying around the nucleus on little monorails? Atoms don’t really look like that. Nor do they look like billiard balls, cherry buns or a tiny solar system. They may not look like any of those images but, in certain circumstances, each is a useful model of how atoms behave.

Models don’t capture the beautiful complexity of real life. That’s not their job. We use them – whether of atoms, Spitfires, organisations or anything else – to help us imagine, help us picture, help us think.

Two models in particular dominate go-to-market thinking: business and financial. Confusingly, different people use these terms to mean different things.

I use business model to mean a simple block diagram that shows the flow of goods and services in to and out of an organisation. Picture a whiteboard drawing – all boxes, labels and arrows – that explains to every new recruit, in two minutes flat, exactly where this business fits into the world and what it offers.

Show me the money

A financial model shows the flow of money inside an organisation. It shows the making and spending of money. It’s all numbers. It lives in a spreadsheet.

But just because everything is neat and tidy and all the columns add up doesn’t mean a financial model is any more real than the atom pictures or a plastic Airfix kit. Like all models, it’s a thinking tool.

Like most plans, the benefit of a financial model is in the modelling. A collective understanding of how your business works is vital to good management and a short cut to a cohesive strategy. But there are other benefits too. A good model builds confidence, shows everyone what you’re talking about, and makes it easier to raise funding – whether you’re inside a company, looking to external funders, or trying to win over a sceptical spouse, when it comes to crunch time, numbers are much more powerful than Powerpoint.

How to build a financial model

The process of building a financial model starts with defining your assumptions and I’m going to start with laying out a few of mine for this post: you know that a financial model is necessary; that it’s a tool to help you think about, experiment with, and understand what might happen in your company; and that you want to avoid tying yourself in knots trying to come up with an exact map of real life with as many special cases as there are stars in your salesman’s eye.

Ok. Although models live in spreadsheets, they get born on paper. The first thing to do is close your laptop, take out a pen and settle down with a few colleagues to answer three questions:

1. How do we make money?
This is a prompt to get complete clarity within the team about all the types of revenue you have and when they’ll come on line? This can be more difficult than it seems, especially if you have a complex proposition. There’s often a range of views on what the product actually is, when it will launch, how long it will take to hit its stride and how much to charge. Don’t try to kill differences of opinion, but use them to mine for every assumption and get the ranges down on paper.

2. How do we spend money?
This should be easy. The major categories to consider are usually people, things, marketing, running expenses, and all the extra things you have to do to complete a sale.

3. How are the two related?
The real magic in a model is in the relationship between the answers to question one and two. The weakest models I’ve seen are all lacking on this point with no explicit link between marketing activity and sales, for instance, or with an increase in subscribers to an online service having no impact on hosting costs. Almost everything is related – dig for the links and work them into the model.

Avoid “top down thinking” – the market is worth $500 million, we aim to get 2% share in three years. It may catch headlines but it’s no way to plan for success. Instead, build from the “bottom up” – we’ll have three sales people (assumption) who will each make four calls a day (assumption) with a 15% conversion rate (assumption) and an average order value of £12,000 (assumption).

Take out your spreadsheets

When you’ve got a good grasp of how the business works, close the meeting and open your spreadsheet. Get some help on the cleverness of Excel if you need it, but do as much of the work as you can yourself. The more you’re involved, the more ownership you’ll feel.

Design

When building the model itself take the trouble to come up with a decent design. This isn’t just about making it look pretty – don’t underestimate this point though; you’d be surprised how people are more willing to get interactive with a reasonable looking spreadsheet – but good design will make it easy to use too.

Easy to use means easy to read and easy to flex. To do this:

Make it clear what you’re looking at. In particular, separate as much as possible the three main kinds of worksheet:

• Inputs/assumptions – everything you found during the discussion should be identified clearly as an assumption by colour coding them, I like to highlight these cells in yellow.
• Calculations – avoid “programming”, use human readable cell and range names, colour code whenever it helps, show your workings out (most people will never look at them but those that do should be able easily to follow what you’ve done).
• Outputs – make sure the output sheets are easy to print or copy to other documents. For example, a minus sign is easy to miss on a printed sheet so use brackets around red negative numbers which are much easier to see on a page.

Group things together – it may seem a bit basic but make sure to put everything about staff on one sheet. For example, if your assumptions tell you that you’ll spend £500 on equipment per new member of staff, don’t calculate the new number of staff on the equipment sheet, calculate ‘new staff’ on the people sheet and then use the result on the equipment sheet.

Work it

Use real numbers wherever you can but don’t be afraid to put dummy numbers in as talking points. The cost of office space should be pretty easy to work out, for example, but many assumptions are difficult to pin down in a low-data environment like a new product or new company startup – use extreme numbers to start the discussion. And discuss you must. Is this how our business works? What about that 15% conversion rate? Can we really collect our payment in the second month after shipping?

Iron it out with the team – it’s likely to be an iterative process, and it’s likely to need quite a bit of metal bashing. Don’t expect to get any useful feedback if you send drafts by email; pull the team back together as often as necessary, walk them through the model, hammer it out.

Eventually, you’ll have a model that reflects the collective view of how this business works. Still full of assumptions, but they’ll be shared assumptions, something to manage.

Now what?

A robust model is not an end point. Use it to play scenarios, agree a plan and build your budgets. But don’t abandon it.

Keep an eye on those assumptions, they’re likely to be wrong, and in a startup of any kind, they can whip around and bite you.

Every time you get new data, check back. Try to eliminate them as quickly as possible, or at least set yourself a schedule to review and adjust them. For example, that 15% conversion rate, now you’ve been in business three months, does it still look good or should we adjust it down to 10%? Does that mean we need more salespeople? Better salespeople? More funding? Or is it our lead time that’s out? Does it come back to 15% after five months, not three?

A financial model lives on a spreadsheet – don’t bury it in an archive, keep it fresh.

All financial models are more complex than you’d like and too simple to reflect reality, but they’re a primary source of strategic thinking and make for good general management. They may not be as tasty as a cherry bun, but if they’re good, all human life is there: your own private solar system.

The picture of the atom comes from Wikipaedia.

Neatly filed under Models
Tags: build, finance, planning

Image copyright: The Gut via Flickr

In the beginning there are no data points. Everything is a guess.

The problem, the customer, the idea, the product, the market, the technology, the structure, the people, the everything.

Most attention falls on the product

Anyone with a bias for action can find it extremely tempting to focus on all the things that have to be done, especially building the product. The “we have to have something to sell” people who put their heads down and build. But how many products get to market only to find there is no market. In a large company, this is probably where people start to blame Marketing. In a small company, this is probably where people start to find new employers.

More attention should fall on the customer

Too many product teams focus solely on the product and forget the customer. And you can never forget the customer. In start-up mode, customers aren’t a source of cash, they’re a source of clarity. Ask them for help, and by the time you get to market you’ll have turned almost all your guesses into data points – ignore them, and you’ll turn up with a shiny new toy but no real idea whether anyone wants it or how to sell it.

Find out about customers

Assuming for a moment that you believe learning about customers is a good idea, and that you intend to really open up your ears, how do you do it and what are you looking for?

1. Get out of the building - Inside, all is mystery, assumption and guesswork. Outside, it’s a bit foggy but hunt around with any kind of determination and you should come across some hard edges. If you don’t find any, your vision is likely to be more dream than reality – the earlier you find that out, the better. Where you do find edges, sharpen your focus.

2. Ask questions – Talk to people, especially potential customers. Get as much data as possible. Act like a funnel, don’t filter, bring everything in. I’ve found that the most productive and insightful conversations are those based on an honest description of the situation, something like, “we’re part way through developing a product and we need some help. We’re trying to learn about …” Here are some of the questions I like to answer:

Who are they? What do they do? What’s their agenda? What is their pain? Where do they gather? How many of them are there? Who influences them? How can I reach them? How do they buy? How often? What’s the decision making process? How do they talk? What do they want? Why now?

3. Fill out the data points - punch through the black-out until you see a clear picture of the product AND the customer. When you see patterns emerge, shift course if you have to.

Nothing about this means you have to do everything customers say. Develop your own compass, don’t swing left then right then left again based on the who-I-spoke-to-last or he-who-shouts-loudest principles. “No” is not a dirty word. Listen to everything about customers you can, then make up your own mind.

This isn’t the same as making up your own mind first then listening until someone, anyone, tells you what you want to hear (the unwritten brief of much market research). We all suffer from confirmation bias, (the propensity to notice things that confirm what we already believe and ignore or discount anything that doesn’t), but I’ve found that being aware, and sometimes naming them out loud in a group can put both bias for action and confirmation bias where they belong; along side all the other risks being managed.

In the beginning there are no data points. Everything is a guess.

However clear your vision, however smart your idea, don’t rely on guesses.

Neatly filed under Innovating
Tags: customers, planning, product

Bringing a new product to market involves the product, the market and the bringing.

At some point on the journey, someone – that would be you then – decides it’s time to write a business plan. Time to crank open Word and Excel? Not yet.

Whether for a new product, a new business or a new period of the calendar, business planning has three distinct disciplines:

1. Data – what can we know?

There’s a lot of data points out there, the idea is to track down everything you can about the market and the competition. Don’t filter. Collect as much intelligence as possible, including: size, share, financials, products, new products, trends, lists, processes, names.

Next look inside. What can you know about your own organisation? Capacity, capability, financials, attention, focus. What are the strengths to build on and the risks to manage?

2. Discussion – what do we understand?

Time to crunch the data and get into detail about why things happen, what might happen and how they’re related. It’s critical to involve the people who will have to do the work. Getting the benefit from all the data demands a full and frank debate – this is no time for happy talk or leaving things unsaid. A robust plan is always based on robust thinking.

3. Decisions – what will we do?

Make decisions and, finally, commit the plan to writing. Words and numbers. Slides and spreadsheets. Powerpoint and Excel.

Anyone raising money (internally or externally) will probably need a longer piece of writing so allow a few more days for that long awaited appointment with Word. Whether you’re writing long or short, the process is identical.

Bringing a product to market actually involves bringing a company along too. A clear, well thought out plan puts the wheels on the bus.

Neatly filed under Leading,Managing
Tags: planning