Seeing The Way

Companies are fearful of change. Which drives them to places they would never willingly go if they could see where they were headed. 

This week’s fiasco on Lakeshore Drive in Chicago is a pretty good example of what happens when fear of change makes you do the same thing you always do, even in the face of growing evidence that this will not turn out well. 

On Tuesday night, the people who ended up trapped in their cars were those who believed that so wide a road and so many companions would provide safe passage. 

In fact, it took only one gently sliding bus to block the way and create a situation in which many people became convinced that they would die where they sat. Frozen and alone. Fifty yards from one of the most affluent neighborhoods in the world. On a piece of road that has provided a reliable and predictable way home to hundreds of millions of travelers over the last 100 years.

From habit to hell in three hours. It rarely happens that fast. But it can.

Those that took the side streets found the roads difficult, but passable. It took longer than usual, but they made it safely to their destinations.

Taking the less traveled path requires two steps:

  • Recognizing that external forces are creating the need for change
  • Working knowledge of possible alternatives

As a business this requires combining a strategic view of where you’re headed, and constant exploration of the best way to get there. 

Which is not always the most direct. Or the most familiar.

Playing The Percentages

“The dumbest decision I’ve ever seen.”

This was one of the kinder epithets thrown at Bill Belichik over the last two days. Bill is the head coach of the New England Patriots. He’s won three Super Bowls already, and is generally regarded as having already earned a place in the Hall of Fame as a coach. Everyone who has an opinion regards him as the best coach in the NFL. Everyone. By some distance.

On Sunday night, in the biggest game of the year so far, he made a decision. 4th down. His team’s 28 yard line. 2 yards to go. 2 and a half minutes to go. His team leading by 6.
He decided to go for it.

In the moment that it happened, there was a gasp. From the crowd. The announcers on tv. And from every person watching around the world. All of us were stunned.

The play gained 1 yard. And the Patriots turned the ball over on their own 29 yard line to arguably the greatest quarterback in the game. Peyton Manning of the Indianapolis Colts.

1 minute 47 seconds later the Colts scored. And 13 seconds after that, the Patriots had lost.

For 24 hours, the airwaves were filled with commentators berating Belichik. Include me in that group. ‘You don’t do that,’ was our collective consideration. Ever. Period.

Bill Belichik made mistakes that night. But that decision, I have come to realize, was not one of them.

People judge decisions by the results all the time.

Which is categorically and absolutely wrong.

Decisions should be judged by the quality of the thinking and information that went into them.

Not by what happened afterwards. The results of which are affected too much by chance and external forces.

When a decision creates a bad outcome, the predilection to focus on the result means we learn almost nothing from the outcome. And a bad result and no learning is the ultimate lose-lose.

Worse, it convinces us that the alternative option was correct. Which is the case far less often than we believe. A lose, lose, lose.

In Bill Belichik’s case, the decision was derided because it didn’t work. And yet, the logic behind it was absolutely sound.

If the Patriots had gained two yards on the play, not one, they would have won the game. They could run the clock out and prevent the Colts from getting the ball back. One play, win the game. 100%

If they punt the ball, they give away the 100% option. Most pundits believe the Colts had a 33% chance to drive 70 yards in two minutes and score the winning touchdown. Better, they said to make them go 70 yards than 29.

Which ignores the fact there was a 100% option on the table. Which beats 66% every time.

Bell Belichik is a thick-skinned guy. But even he appeared rattled by the aftermath. I suspect if a similar situation comes up, even he won’t try it again.

Which would itself be a mistake. Because the real question he should analyze is why the play he called gained one yard not two. And whether there was a play more likely to create the outcome he wanted.

To win.

Learning from our mistakes is critical. In business and life. It’s how we evolve as a species.

Which means first recognizing what is a mistake.


I mentioned in a blog last week that we have hired a consultant.

His name is Alan Weiss. I call him the Consultant’s Consultant.

We met last Friday in New York. We talked for an hour.

But one thirty second exchange justified the entire expense. And it was entirely obvious.

When working with a customer, talk about their problems. Not your solutions. How else will you know if the former requires the latter.

Simple. Obvious. And guilty as charged.

Building a better business is based on knowing what you’re talking about.

And knowing enough not to talk about it until you’ve discovered if or how it’s relevant.

Enough said.

The Non-Denial Denial

In the darkest moments of Watergate, with the White House engaged in full frontal attack, Ben Bradlee of the Washington Post kept Woodward and Bernstein’s investigation moving forward by focusing on the substance of the administration’s response.

Loud. Confident. Assertive.

Filled with reasons about why the accusations couldn’t be true.

But absent any evidence that they weren’t.

Bradlee came to describe them as non-denial denials.

Politics has used Watergate as a new benchmark. Anything above breaking-in is acceptable. Anything below, we can talk about.

Which is fine, because we’ve become more cynical consumers of politics. And why when a politician gives even a reasonably straightforward answer we greet them as champions of change.

But in our own lives, personally and professionally, the non-denial denial has become a destructive impulse to which we all succumb.

In the last few months I have been increasingly aware of the determination with which we paint reality to suit our own narrative.

We don’t deny that things are tough. We simply tell ourselves that somehow it will all come right. That the future will take care of it. That we’ll worry about it later. The current benchmark is after Christmas.

I have had five conversations recently with smart, self-aware, successful people whom I admire greatly. Some work for companies. Some own them.

In every case I have come away stunned by the paper-thin reality to which they are clinging. And their artful articulation of why the evidence they themselves present does not in fact draw the conclusion I suggest.

The do not deny the evidence. They do not say I am missing something in my analysis. They just say it isn’t that way.

A non-denial denial.

The truth is hard. But denying it is ultimately much more costly. And finding it is free.

It requires three things.

Someone you trust.
A willingness to ask hard questions
A willingness to answer them honestly

It doesn’t matter what title they go by. Friend. Relative. Consultant. Coach.

But there is no one I know who doesn’t need to go through this process.

Including us.

Which is why we just hired a consultant.

Because the future is coming and I for one want to meet it on my terms.

The facts. The truth.

Powerful platforms on which to build a better business.

Outside Help

Entrepreneurs, by nature, are independent spirits. And figuring it out ourselves has often been part of the joy of the journey.

But in the last year, almost every small business has lost its margin for error. And most business owners that I’ve met recently have told me that they’re worried their next mistake will be their last.

It has always struck me as odd that so few small businesses take advantage of outside help. Since outside help is my business, it’s a statement that reeks of self-servitude.

But, while I obviously believe there is no substitute for specific and specialized help at certain points in your company’s evolution, not enough small businesses take advantage of that inexpensive yet powerful development tool called The Board.

The Board is typically comprised of a small group of experienced, diverse professionals with expertise in specific areas that are relevant to your business. The best Boards are objective, transparent, skeptically supportive ( a rare and healthy combination ), and dedicated.

It takes time and commitment to put a great Board together. There are some costs. Typically travel reimbursement and a fee for attending Board meetings. But the best ones pay for themselves a hundred fold. And sometimes several thousand times more than that.

I have yet to find a small business that would not be significantly improved by having a formal group of advisors.

And yet, though I’ve seen no figures, my experience tells me that the vast majority do not. My guess would be only one in four.

Business today is harder than at any time since 1929. Combine that with the fact that we’re living through an epoch, and it becomes clear that, by ourselves, none of us have the experience to navigate every situation we face today.

In my own business, we’re currently working with no fewer than four different companies or individuals who help us make better decisions about building The Lookinglass Consultancy. They have effectively become an informal Board of Directors.

As a society, and as a species we’re living through history.

As small business owners, the choice before us is whether to shape it or become it.

A no brainer, right?

In Their Own Words

Having a guiding philosophy by which to run your business every day is a powerful homing device in a forest full of distractions.

For Chris and I, it has long been the Terence Conran quote, "Stay Humble and Nervous."

In the choking economic climate we are living in today, an excess of either can be disastrous.

Humility is a valuable attribute in times of excess. But when the world is inwardly focused, it takes much more effort to attract someone's attention.

And at a time when everyone is hesitant, waiting for something to happen will ensure that at best you're part of the crowd.

Neither is a platform for creating the future you want.

In our case, we have long since accepted that we are skilled in what we do. But inept in communicating that fact. We would much rather talk about someone else's potential.

We have also come to realize that until we face the problem, we are the biggest obstacle we face.

Cometh the need, cometh the Mother of Invention.

In this case, Justin Spooner and Simon Hopkins of Double Shot Consulting. (Even doctors need doctors.) As I've mentioned before, no one understands the possibilities of digital strategies like they do.

In this case, they turned the problem simply and elegantly on its head. If you don't talk effectively about your work, they said. Ask the people that do. Your clients.

So we did. And they have. The first pieces are on our website. Or on Youtube. In the process we put ourselves on camera and found a part of ourselves we didn't know existed.

As a lesson in looking at a problem from a different perspective it's powerful.

As a reminder that we're fortunate to work with amazing clients, it's unbeatable.



Last Saturday woke dry and warm. Noteworthy itself this summer. But particularly important that day.

We moved to Millbrook, New York eleven months ago but it has started to feel like home only in the last one. The sale of our house in Chicago had allowed us to finally burn our boats, and the fact we are once again living with our own furniture has had an immediate and reassuring impact. Many of us would like to be less affected by material things. But their impact on the psyche is palpable.

As a species, once we have security we turn quickly to exploration. A powerful formula for building a life and a business.

On this particular Saturday, exploration meant the Go-Kart sitting in the garage. The left-overs of a bygone age when a grandfather could spend $1,500 on a Christmas present for the kids and grandkids without first checking Bank of America’s closing share price.

I’d been ambivalent about the Kart. I’m not mechanical. I have a convertible Audi that continues to satisfy any remnants of a mid-life crisis. And a lot of country roads nearby. The prospect of driving a metal cage with an outboard engine, as my brother-in-law described it, was not compelling.

Until competition entered the frame.

Jon Collins has become a good friend over the last couple of years. We’re from the same generation of Englishmen with all the historical fabric that brings. Shared experiences provide long-term glue. Add common reference points to that, and you’ve got the makings of an important relationship.

Jon and his partner Sarah - as smart and wise as they come - had accepted a second invitation to come and stay for the weekend. And suddenly the Go-Kart took on an entirely different aura.

Go-Karts mean racing. Which means against something. And when that something becomes someone, what had once seemed unnecessary suddenly becomes essential. To compete. To learn. To strive. To share. Perhaps even to win. All get us up in the morning.

By the time of Jon and Sarah’s arrival, I had become intrigued, fascinated even by the mechanics of the thing. I had cleaned the air filter, checked the oil level, topped off the gas tank, tightened the bearings and greased the drive chain.

I dutifully waited until after lunch to suggest we take it for a spin. Jon needed no encouragement. I suspect, like me, he would have been happy if it had been item one on the agenda. And we spent the next hour in happy competition, time trialling our way round the bridle path in the bottom field.

My initial attempt of 00:01:03 displayed a cautious, uncertain approach. Jon’s of 00:58.09 upped the ante. Three or four attempts later, we both hovered in the 00:53:00 range and the goal became a sub 50 second lap.

As human beings we gravitate quickly to goals. We need to measure progress.

As a business owner, having a clear definition of success for yourself and your staff separates companies that excel from those that splash noisily to disguise the fact they’re treading water.

It’s also important to know your own limits. Sometimes you only learn those through trial and error. But make sure you have systems in place to minimize the damage.

Our limit at the moment is 00:51.09.

Jon is certain he was on his way to better that when he flipped over on the tightest turn, causing him and the Kart to end up on their sides with a blown tire and bruised arms and shoulders respectively to show for it. Fortunately, both are now fine.

In the process we learned two important lessons.

  1. Listening to cautionary words of wisdom before the event can be life saving. In this case Chris’s rule that we all wear a helmet regardless of our vanity or confidence prevented a very different outcome.

  2. Systems are only as good as how you use them. So from now on, everyone wears a seatbelt.

But we also learned there a sub 00:50:00 lap out there.

We’ll be back. Better and faster.

Goal. Trial. Learn. Improve.

A formula for progress in any weather.


My experience with Verizon last week was brought into even sharper relief by a forray later that same evening into the world of computer memory.

Buying a new computer quickly comes down to a question of how much memory for how much?

I like to work with a lot of windows open on my laptop. It mirrors the way my brain works. Overlapping possibilities. One idea feeding another. At this precise moment, I have 36 different windows open. A preference my two and a half year old Mac Book is having a hard time keeping up with. Though if I flipped it over, I’m sure I could fry an egg on the underside.

I came across a site that analyzed in extraordinary detail the pros and cons of the various configurations of laptops Apple sells today. One of the links was to a site sponsor. OWC.

I’m leery of buying third party memory for a brand new Mac. Partly for quality reasons. Partly because I once killed a hard drive adding new memory. Some things you only have to do once to leave an indelible scar. Like adding sulfuric acid to a go-cart battery. Another story. For another day.

I followed the link to the OWC website, and quickly realized here were two questions I needed answered if this was to be an option. Still feeling the after-effects of my Verizon customer service representative text chat, I hovered tentatively over the ‘Live Support? Request Help Now.’ button.

A couple of clients have asked me recently to explain our fees. Generally, I conclude with a variation of ‘We’ve paid, so you don’t have to.’

We’ve learned a lot in the last fifteen years about owning a business. And that knowledge took a significant amount of time and money to acquire. One of our skills is to extract from all of the pieces that are crucial to a specific situation.

When it comes to bad customer service, I was pretty convinced after my Verizon experience that I knew all I needed to know. Another bad tech chat was not how I wanted to end my evening.

In the end, curiosity, my insatiable friend, won again and I clicked the button. Firmly. If one can interact firmly with a piece of binary code.

What followed lasted ninety seconds. It will take you ten. And if you have another minute to spare after that, follow the link. As a lesson in customer service, it will take some beating.

But I hope you’ll try.


Charles: I'm interested in buying RAM for a new MacBook Pro

You are now speaking with Morgan Gray of Technical Support 7AM-10PM CST.
Morgan Gray: Hi Charles
Charles: Hi Morgan. If I buy the MBP with 4GB Ram and buy the 8GB upgrade kit from you, do I invalidate my Apple warranty?
Morgan Gray: No, upgrading the ram with 3rd party memory that matches all of Apple's specifications does not void the AppleCare warranty
Charles: And yours does match their specs, right?
Charles: Is it hard to install?
Morgan Gray: It meets all of Apple's specs.
Morgan Gray: It's relatively easy
Morgan Gray: We have installation videos available here: http://eshop.macsales.com/installvideos/
Charles: Ok. Great. Thanks. One last question. If you were not using it for big media files, or rendering etc: but wanted a really fast computer, would you buy it with this 500GB Serial ATA Drive @ 7200 rpm or the SSD drive for $700 more?
Morgan Gray: I would buy it with the most basic hard drive Apple offers and then upgrade it to something larger myself
Morgan Gray: Also a relatively easy install
Charles: Ok. Thank you. You've been incredibly helpful. I'll buy the Mac and then come back to you and buy the memory.

Alfie Fyles

Tom Watson was a legendary golfer long before he arrived in Scotland last week. His life defined regardless of whether he played or not. One of the all-time greats.

But had he won at Turnberry on Sunday, he would have stood alone. Forever.

At the critical moment he relied on experience.

What he needed was Alfie Fyles.

In 1977, Tom Watson defeated Jack Nicklaus on the same golf course to win the British Open. It is arguably the greatest head to head battle in the history of Championship Golf. Hubert Green came third. He was ten shots back.

Standing in the middle of the 18th fairway that day, Watson led by one. The shot was 180 yards. He pulled a six iron from his bag.

Tom Watson has always understood the value of partnership on the golf course. For twenty seven years a man called Bruce Edwards was his caddie. Everywhere except in the U.K.

Links golf is a different art. It’s played as much along the ground as in the air. So when he played the British Open, Tom Watson hired a British caddie. Alfie Fyles.

As Tom pulled the six iron, Alfie shook his head and handed him a seven. “I can’t hit this that far,” Tom protested.

“The way your adrenaline’s pumping, you can,” Alfie grinned.

Watson hit the shot with Alfie’s seven. It finished two feet from the hole. Even when Nicklaus holed a forty foot miracle for birdie, Watson was left with a tap in-to win. I saw it on tape the other day. As a moment in history it’s utterly anti-climatic.

The inevitable result is what all business owners strive for. Success, reward, and legacy that comes down to a two-foot tap in.

Tom Watson’s partnerships with Bruce Edwards and Alfie Fyles won him eight major championships.

But the moment that would have set him apart forever he tried to meet alone.

He failed, not because he was afraid to try.

But because he was capable of more than he knew.

Alfie Fyles knew.

Who’s your Alfie Fyles?


Tom Watson came within one decision of writing the greatest sports story of all time yesterday.

That is not hyperbole. He is two months short of sixty. He has an artificial hip. And for four days he beat the best in the world. Walking.

Put it this way. The year he was born Harry Truman announced his Fair Deal program. One of his competitors was born during Bill Clinton’s Presidency.

He came within one foot of rewriting every sporting record book there is. He did so because he has extraordinary talent. Because he believed he could. Because he had a plan. Because he had done so before.

He did not, because in the heat of the moment the perspective that experience provides was not enough.

In the 18th fairway, a 4 needed to win the 'World’s Open' as Watson himself calls it, he selected an 8 iron.  The wind. The hardness of the ground. All of these are variables he could only sense. There were no absolute measurements. Just experience.

As history will forever show, it was a 9 iron.

The perfectly struck 8 carried on the wind further then he intended, bounced hard and rolled over the back of the green. For a moment it looked as though the ball would stop on the fringe, but with one last agonizing roll it slipped down the slope and came to rest.

There were two shots left to be played, but a sense of the inevitable suddenly descended.

Looking back, it was easy to see the mistake. Adrenaline is a powerful chemical. And golfers the world over have seen its effect at critical moments when it suddenly provides super-human strength.

In the middle of the most demanding moment in his life, the most experienced golfer in the tournament failed to see it.

He will never forget its consequence.

Many businesses are faced with life changing situations at the moment. All or nothing decisions.

But no matter how much of it you have, experience alone will not be enough.

You must combine it with context. And perspective.

So that when everything says hit the 8, you know that what you need is a 9. The difference might be only a foot. But as Tom Watson will tell you, a foot can be a very long way.

Of Learning, Teaching and Fishing

I just got home from a week in England. A number of things strike me as I look back on a wonderful few days.* There is nothing like true friends. And my friends Tim and Liz are the living embodiment of both ‘True’ and ‘Friend’.* If there’s anything I like more than watching cricket in high definition with any one of the five dogs in my life (my four plus Tim and Liz's dog Becks) curled up beside me on a couch, I haven’t experienced it yet.* Somebody needs to invent a better way to negotiate a house sale. The current system takes too long, creates too little and costs too much.* Negotiation means getting inside the other person’s head and seeing it from their perspective. When you’re certain you’re being dispassionate, and you still have no idea what they’re looking at, it’s time to move on.You’ll never get a deal done you can live with.* Success takes four elements:1. The desire to achieve2. The knowledge to achieve3. The humility to acquire said knowledge4. The perseverance to work at it for long enough that 1, 2 and 3 matter

Five Steps to a David

I’m a big believer in expansive thinking.

If you know me at all, either in person or through this blog, it’s as someone who likes to imagine the broadest possibilities. If you don’t start out there, I find you almost always end up very close to where you began.

But once you’ve defined the vision, then you’ve got to deliver it.

In an interesting post yesterday, Fred Wilson - the venture capitalist - wrote about managing expectations to those you report to as a business owner. Investors, a board, your partners. He stressed the need for consistency and delivering what you promise, even if that means significantly reducing your forecasts to make sure you can hit them.

Fred’s a brilliant guy and a hugely successful investor. But I think there's a better answer than. Because if you set low projections someone’s going to expect you to reduce your overhead to match. In a lot of businesses that usually means people, and the good ones take a long time to replace.

I think there are five things you should do instead of going straight to forecasting the worst case scenario:

  1. Have systems in place that are reliable and consistent. Make sure you know what you’re getting in the way of reporting and when you’re going to get it. As the CEO of a company I drove the managers of each of our offices crazy with my constant scrutiny of our monthly billings. I made a lot of decisions based on those billing projections which impacted people’s lives, and if you said you were going to bill that invoice this month, there needed to be a really good reason if you later decided you couldn’t.

  2. Hire smart people. Then let them help you be smarter about what the numbers say. It took longer than I wanted to instill the monthly invoicing discipline in some of those local managers. That was my fault. Until I stopped to explain the broader context of how we used those billing projections, they didn’t see that it really made that much difference. Individually, a single invoice rarely did. Cumulatively it was enormous. But I was the only who could see that. Once they understood, they gave me powerful insight each month into trends they were seeing locally. Those early warning signs let me adjust in other places.

  3. Have someone you trust search out the bad news in the monthly numbers and highlight them. Good news is easy to deliver. Bad news takes research. But once you can give bad news a proper context, you can provide better alternatives. Have someone who’s not afraid to give you the bad information.

  4. Always, always keep one eye fixed firmly on where you’re trying to take the business. You need to know whether you’re moving closer or further away with every set of financial reports. If things are going south you need to know before not after the fact and act accordingly. Once you do decide to act, it will be based on the broadest and deepest view.

  5. Partner with your partners, investors or board members each step of the way. If you’re working with the right people, they’ll help you preserve the core of the business as long as possible.

The trick to carving a statue, Michelangelo once said, “is to remove everything that isn’t the statue.”

The skill is making sure what you're left with is not just a piece of rock.

There Are Two Sides to Every Harry

We have five dogs. Which I realize make us crazy dog people. We’re fine with that. In fact I can’t think of a description that would mean more.

Yesterday afternoon we found out that soon we’ll only have four. Our eldest dog, Harry, is 16 and has bone cancer. Depending on how fast it spreads he has somewhere between a couple of weeks and a few months.

We adopted Harry from a rescue organization in Chicago one year after we got together as a couple, and one day after we moved into our house. Now we can’t remember what it was like when he wasn't around.

He came to work with us every day and took us through all the highs and lows of owning our own business. He calmed us when we were anxious, and barked a lot when we we got loud, which always brought us back to earth - a good place to run a business from we realized.

He saved us from a guy who broke into our house one morning while we were asleep, literally chasing him down the stairs and out the door. We made some changes to the locks at home, and then changed all of our network passwords at work. Neither made us feel as safe as Harry’s bark.

He isn’t a perfect dog. The day we brought him home he bit me. Two days later he bit Chris. We found out that he’d been picked up on the South Side of Chicago as an eight month old stray. Someone had tried to turn him into a guard dog and then dumped him on the street when they realized he didn’t have the heart for it.

But their work left an indelible scar on his psyche, and to this day, he fights with his fear that no one is to be trusted - even after fifteen years. Early scars run deep. But the remorse in his eyes whenever that fear gets the better of him is that of a soul who wants only to love and be loved.

I have loved Harry, night and day. Even when he has snapped at me and I’ve been infuriated by his apparent ingratitude for having saved his life.

But I have come to realize that the greatest lesson he has taught me is that how he acts is not always who he wants to be.

I’ve tried to remember that in business and in life. That sometimes fear makes us say and do things that are the exact opposite of what we feel in our heart.

It’s a thought worth remembering the next time something infuriates you.

Because, as I've been shown, there are always two sides to every story.

To A Frog, Feeling Fine Is Not Necessarily A Good Sign

I have a friend who, back in the mid 90s, started his own business. He got some angel investment, found space, built it out, hired a small staff, took out an ad and opened the doors.

He got a customer, then another, and by the end of the second month things were going better than he could have dreamed. So well, that his young office manager couldn’t keep up with all the paperwork. He found her late one night, overwhelmed, and realized he needed to offer some advice. “Don’t do any invoicing for a couple of weeks,” he suggested. “So you can catch up on the other stuff.”

So she didn’t. For a month. And sixty days later, busier than they had ever been, she came to him with the news that they had $174.95 in their bank account and payroll was due.

The problem, of course, was that he had never run a business before. And while he understood profit and loss, he didn’t know about cash flow, or AR, or 90 days past due, or uncollectables.

Worse. He didn’t know that he didn’t know.

I got a call from a company owner last September who thought he needed to re-brand his business. We had a meeting, the economy crashed, and he decided to wait until things got easier.

They closed last week. Not, I hasten to add, because he didn’t hire us. But because he was looking at a symptom - not a cause. He didn’t know what he didn’t know. (As an aside, I find re-branding about as effective as treating a heart attack with a capful of Tums. It’s not where it hurts. It’s why.)

Back when there was an economy, not knowing what you didn’t know was part of the journey of discovery that came with owning your own business. Over time you figured it out, and learned from your mistakes.

Today, that cushion is gone. If you’re going to make a mistake - and we all do - it can not be one of ignorance.

In that respect, running a business is a lot like being a frog. If you don’t know you’re in a pot of hot water, by the time the water’s boiling it’s too late.

By the way, the invoicing story turned out alright in the end. I never But he never made that mistake again.

Hope is Not a Strategy

Remember when buying a home was a guaranteed return on investment?

Until some time early last year, the rule was that you bought a home as soon as you could, and as long as you kept it at least three years, you would sell it for more than you paid. In London, you only had to hold it for three months - and in some parts of town three days would do it. The possibility that a house or an apartment might one day be less than the loan we took out to pay for it was literally inconceivable. It just never occurred to us

When the real estate market headed south, we reacted too late because it couldn’t be happening. We had no tools to deal with it. So we waited for the ‘bounce’ and hoped. I think we all know now it’s going to be a long wait.

In this economy, owning a business has a lot of similarities. Most business owners have stock answers to dealing with downturns. And if you owned your own business in the post 9-11 trauma, you learned something about getting through tough times.

But these days the question is not how did you deal with the post 9-11 economy? The better question is what did you do in the aftermath of ’29. As in 1929. The only historical reference we have. These are once in a lifetime conditions and a lot of people are unprepared for that. Like the value of their home, they’re still trying to use an emotional model to deal with it.

Hope. Supported by luck.

But hope is not enough. Nor is it a strategy. To survive in an economy where breaking-even is the new win, you have to get past the emotional barrier that this can’t be happening. For many businesses, that means going back to the days when our first focus was on how to cover payroll. And if you’re not at that point, then here’s what you’re hoping.

That you get work. That it’s profitable. That you get paid on time. That you get paid at all. That you get paid often enough to cover your overhead. That your bank will lend you money if things get tight. That the job you’ve been waiting 6 weeks to come through will come through. That the check is in the mail. That things aren’t as bad as they seem. That things will be fine.

You might be okay with one of those. But beyond that, you need a plan that deals with bad and worst-case scenarios. And does so before you get to that point. Because a plan made calmly is always a better plan.

As Andy Dufresne said, “Hope is a good thing. Perhaps even the best of things.”

But even he didn’t think it was a strategy.