Systems

Body Found in Landing Gear of JFK to Tokyo Flight

As a headline in yesterday’s news this falls somewhere between tragic and absurd.

On a human scale the tragedy is immense. For few of us can imagine the kind of desperation required to climb inside the undercarriage of a plane embarking on a 14 second flight, never mind one of 14 hours.

On every other level, it is absurd.

This is the industry that is so security conscious it insists that mothers drink their infants’ formula to ensure it is not explosive, requires we pull laptops out of bags by the millions, demands we place shoes separately on conveyor belts, and arrests anyone using language they deem threatening. Which they leave open to broad subjective interpretation.

As a country we have spent billions on increased security, considered racial profiling, and are now debating the morality versus security issues of full body scanners. We put two year old children on the no-fly list. Question anyone buying one-way tickets. And question them again if they buy them with cash. We are entitled to ask for private pat downs, but may not refuse them; a presumption of guilt over innocence.

All of this in order to prevent the desperate from getting on board.

Defeated by a single man, desperate enough to find another way.

A stark and tragic reminder that any system is only as good as its weakest link.

Which is usually much closer than we think.

Going Horizontal

Adding new offices to an existing business is almost inevitable if you’ve been around long enough.

In part this is a practical result of looking for new ways to expand once local markets have been maximized.

In part it’s anthropological. A nod to the explorer that exists within every entrepreneur.

Adding new offices is rarely done well. And often in such a way that the potential benefits are reduced by more than fifty percent and the costs increased by a third. A quantifiable piece of analysis based on comparative studies.

Most businesses succumb to these results because they fail to identify the characteristics that made them successful locally.



  1. They understood what they were selling

  2. They understood why that was valuable to the local market

  3. They were trusted by local customers

  4. They learned from their mistakes and applied the knowledge to make themselves better

  5. Their systems were designed to support their business and improve their customers’ experience

  6. The employees believed in the owners’ vision and were motivated to help the entire business grow

  7. Employees were rewarded for creating value

  8. Investment decisions were made that benefitted the whole company


When you add a second or third location, each of these characteristics is immediately put under threat. And many are eliminated entirely.

They need not be. But getting geographic expansion right requires the following:



  • A clear strategy

  • The ability to identify your company’s core DNA and to find someone who can plant it and nurture it in new locations

  •  The elimination of the ‘not invented here’ pathology that most human beings instinctively bring to the table

  • Systems and practices that don’t just connect each location, but inter-twine them

  • A financial management and compensation philosophy that aligns everyone's interests

  • A willingness to defend the whole while supporting the parts


These are not easy to come by. But they are critical to any successful expansion.


And to making sure that ‘going horizontal’ is a growth strategy.

Not an analysis of your P&L.

Five Things Entrepreneurs Would Like To Change About Their Business

1. They don’t know where they are financially today. Either because their system (people and software) can’t tell them. Or because they have no one to find the story inside the numbers. 
The solution: simpler systems and a short education.

2. Their partnership agreement doesn’t reflect the value each partner is providing. But to raise the issue seems like opening Pandora’s box. With a big bill to follow. Financially and emotionally. 
The solution: courageous conversations, historic vs future value and fast action.

3. Their staff doesn’t do what they want, how they want. Usually because they haven’t been told. Or have been told excessively.
The solution: company purpose, personal ambition, responsibility and accountability

4. Their potential is greater than their success. Because they don’t understand their value. Or can’t articulate it.
The solution: a walk in the customer’s shoes and a single line without the use of the word ‘and’.

5. They keep having the same conversations. Proving that the first sign of insanity is repeating the same behavior and expecting a different outcome.
The solution: Plan The Last Day First®. A practice that focuses on where you want to end up. Analyzes where you are. And connects the two points.

Dance and Yodel. Why Books Aren’t In Trouble. But The People Who Sell Them Are.

I went to Barnes and Noble this morning. I was one of 35 people standing outside waiting for them to open.

Where else in Manhattan, I wonder, did a retailer draw a crowd today without a free giveaway involved?

No one went to the cafe. No one went to music and video. Two people headed to the magazine sections. And the rest of us went looking for books.

45 minutes later, I walked out with four. Thanks to no-one and nothing. Except my perseverance and determination.

In the business section, an employee stood at his counter drumming his fingers on the counter-top. Loudly. I think it was loudly. It was hard to hear above the noise of the phone ringing beside him.

I turned to the computer help centers. Helpful. Provided you know the precise spelling of author. Or book. Luckily my iPhone Google search interpreted my attempt, and corrected me. No inter-device cut and paste, however. Dutifully I tried again. The book was in stock, one aisle over.

Except it wasn’t. I tried to decode the cataloguing system. An explanation somewhere would have been helpful. Even if I can’t re-sort by clicking a column header, understanding how you’re trying to do it would save me the trouble of figuring it out for myself. Alphabetical by title? Ah, by author. Except here and here and here. And in any event, my title and author exist in neither.

Another staff member walked by. I looked up plaintively. Without breaking stride she asked me if I needed any help. “I’m looking for the Art of Seduction,” I said, more loudly than I cared to. Based on her response, I’m fairly sure she hasn’t read it. Though I sensed she knew where it was. Her gesture had a number of interpretations, one of which was to duck. But as she disappeared round the corner I gave one last hopeful glance in the general vicinity of her final indication. There, a single copy, lay forlornly and ironically by itself. Clearly, sympathetic presentation of the merchandise hadn’t been on that morning’s staff meeting agenda either.

If you’re going to sell something, sell it. Use technology intelligently, find people who care, train them properly and worry about the details.

Demand is out there for all kinds of things. But if it matters more to your customer than it does to you, their standards will eventually decide if you’re in business.


Google just announced the launch of their online book store.


How much is a Kindle?

5 Things The Airline Industry Has Taught Us About Better Business

The airline business is pointless.

If there was any kind of alternative to traveling further than 250 miles, we’d all take it. And celebrate.

Instead, we game the system to get the lowest fare possible, hope our upgrade clears, and try to make sure there’s internet access on board to help us forget that as an indicator of man’s achievements, air travel is our only major innovation that’s going backwards. Having experienced Concorde, that’s a realization that hits me every time I fly.

Fifty years after the Boeing 707 was heralded as the first jet airliner, we still fly at exactly the same speed that modern miracle achieved on its maiden voyage. 591 MPH. Imagine where things would be if technological achievement had remained frozen in 1959. Today, New York to London is still 6 hours, give or take, depending on the jet stream.

Maybe that’s the real strategy behind global warming. Heat the planet, create violent weather conditions, jump on board the jet stream. It would make more sense than anything else those that run the airline industry have offered as business rationale.

Let’s look at just this decade. Since 9/11 the industry has:



  • Gone through five Chapter 11 reorganizations

  • Supported two mergers

  • Eliminated about 250,000 jobs

  • Been responsible for a mountain of debt and pension defaults.


If over that same period you ignore the tens of billions of dollars written off to goodwill write-downs, and the hundreds of millions of dollars of reorganization costs, then the airline industry only lost around $40 billion.

$40 billion. In an industry trying to make money.

With no competition.

That every one of us will have to use multiple times this year.

And yet. The most recently published quarterly reports have been met by airline executives with rejoicing over the increases they have generated in ancillary revenues. Things like baggage fees and on-board meals. United earns about $14 a passenger in those fees. They also lost $137 million in the 3rd quarter.

What they don’t know is the cause and effect of either number on the other.

In other words, they don’t know if charging for bags increases revenue or drives people to other airlines.

Seems like a fairly rudimentary piece of analysis. If we do this, will be better or worse off?

United don’t know. (No news there for the airline that came up with the profound brand positioning, Rising.  As opposed to the alternative, one presumes.)

Neither do any of its competitors. One of the many reasons why the airline industry has lost more money than it has ever made.

But the airline industry does have value. As a business model. Of what not to do.



  1. Don’t sell your services for less than it costs you to provide them. Unless you know you can raise them tomorrow. Not think. Know.

  2. Don’t build a business that is entirely dependent on any single resource, especially when controlled by a limited number of suppliers who are ambivalent whether you succeed or fail.

  3. Don’t build a business around a small group of people with highly specific, and hard to replace skills. And if you must, align their interests with yours. So that the success of the business is their business - as well as yours.

  4. Don't restrict innovation. If your business can't offer a significantly more valuable experience every three years, your customers will find someone who can. Unless you can corner the entire industry. In which case, you don't need anyone's help.

  5. Don’t focus on narrow metrics that support what a great job you’re doing while the business is falling down around you.


The truth is out there.


Just don’t expect to find it by looking up.

5 Steps To An Information System

You can’t build a better business without better information.

With rare exception, the information management systems of most companies do little to contribute to their success.

At best they are not getting in the way. Most of the time, they are considerably more destructive than that.

A better business is one that knows where it’s going. And is built to get there.


In that outlook it is not surprised by its success. A trait that becomes self fulfilling.

Here are five foundations to creating durable information systems that will outlive their founders:



  1. Strategy. Well designed systems are built to fulfill their company’s purpose. Only when you have defined that can you establish the architecture that will support the journey.

  2. Scalability. Start with a numbering protocol that supports enough digits. Re-engineering platforms in response to success is expensive, distracting and sometimes impossible. Companies as sophisticated as American Express have made this mistake.

  3. Sensitivity. Particularly to the daily needs of the staff that use it. Systems that demand consistent data input but provide no immediate return to the people responsible for its entry, fail prior to installation. Any system must benefit every user.

  4. Flexibility. We absorb information individually. Systems that treat us as two dimensional limit the long-term growth of a business by minimizing the involvement of those who see the business on three planes.

  5. Clarity. Users have little time for and less interest in training. A system built on consistent interface protocols shortens adoption timelines and increases exploration and ultimately use.


Information is the compass that guides a company. Without it your final destination is a guess.

Which makes the journey more exciting.

But more prone to icebergs.
 

Nantucket - Part 2

Owning your own business is a journey. One that requires two pieces of navigation.

Knowing where you’re going. And knowing where you are.

In that order.

In between, the trick is keeping one eye on the road ahead and one eye on the horizon. Avoiding potholes while seeing all the possibilities makes for powerful businesses that make people’s dreams come true.

Standing at the bow of the Nantucket ferry on Sunday night, Chris was absorbed by the lights that emerged from the mist at regular intervals. Depth perception at sea is difficult at the best of times. On a fog shrouded evening, with only a narrow moon-lit path to guide you, it’s impossible.

Several times we were convinced that a particularly bright light was Sankaty Head Lighthouse on the island’s eastern tip, only to discover as we passed it ten minutes later that it was in fact a buoy, set to mark the shipping lanes on this busy stretch of water.

Finally I pulled out my iPhone and Google mapped our location. The power of hand-held, battery powered, GPS technology. Three hundred years ago, men drowned because there was no way to tell the time at sea. Time being a key determinant of position. Today, the risk is falling overboard while texting.

The answer, in case you’re wondering, is 6.7 miles. The distance at which Nantucket’s lights emerged from the fog on this particular evening.

At 6.8 miles, there was nothing. Thirty seconds later the entire island lay before us. We knew it was there. We could see it on the map on my phone. We were looking for it. And yet, it still caught us by surprise.

Which is how the future works. Here before we know it. A problem for most business owners, who spend today acting as though they control tomorrow. Too late, they find they don’t. The best we can do for what comes next is prepare. There are no guarantees. Only the inevitability of change.


For today’s success to mean something tomorrow, we need to build platforms and develop strategies that maximize the possibilities that we will reach where we’re headed.

On a fog-filled evening in the Atlantic, the Nantucket ferry provides a reassuring platform. And the lady captain had clearly done this before. As an alternative strategy to rowing ourselves across, it had one obvious downside. Expense. $446 round trip with a car. We thought three benefits more than compensated for the cost. Speed, quality of life and probability of outcome.

As we got closer to the harbour, the captain turned on a massively powerful spotlight and swept the water immediately in front of us. As the outer wall came into view she kept the light fixed to a point at its base. The opening was narrower than I expected. Nantucket’s dimensions have changed little since its days as the home of the world’s whaling industry, and both its nautical and land based infrastructure struggle to accommodate the modern trend of bigger modes of transport. At some point one or the other will have to change.


Building infrastructure that can support unforeseeable growth is a long-term view that requires short-term investment. And commitment. It's easier to just keep going. It's also, inevitably wrong.


Safely into the harbour, there was one last manoeuver to undertake, and she turned the ferry on its considerable axis before lining up the bow of the ship exactly in line with the disembarking ramp.

With the gentlest of thuds we came to rest. 27.8 miles from where we had started. Precisely where we had intended. And fifteen minutes early. A snip at $223.

As we left the ferry and headed into town to find some dinner, we were greeted by streets filled with people busy with their own lives. Which for many meant getting ice cream at the juice bar - the crowd outside the door spilling into the road as we drove by.

Building a busines well, is a microcosm of a life well lived. A clear sense of where you’re going, fueled by a personal journey of self-discovery to which we remain ever open.

We ate leisurely, and wandered the shops for a while, eating our own ice cream. Chris radiated contentment - a sense that has come more easily in the past few years as we exchange years for perspective.

Life lessons are hard earned. As I turned the car into the quiet country road that led to The Wauwinet, I had no way of knowing that tomorrow was going to provide me with one of the most meaningful of my own. 

51.9

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.

5 Ways To Count Your Money

Imagine going into your bank - the bricks and mortar or online version - and asking for your current balance

‘At the end of the 1st quarter your balance was $5,238.93. We expect to close the current quarter within the next couple of weeks. Though one of our bookkeepers is on holiday so it might be a bit longer. By Labor Day we’ll have a pretty good idea what your balance was on June 30th.

If this sounds in any way familiar, you need to change how your business is tracking its financial performance.

Here are five things every business needs regardless of its size. It takes between 3 hours and 2 days to put this package together the first time, depending on the size of your company and the skill of your financial staff. Thereafter, it takes a few minutes a week. It's due on the 10th of every month.

1. A revenue and cost projection for the current fiscal year. Updated to the end of the previous month with a comparison of forecast versus actual numbers.

2. A profit and loss statement accurate to the end of the previous month.

3. A list of receivables more than 90 days old. Doing business with people who aren’t paying should generate a conversation, at least internally.

4. A list of your 5 largest creditors and the amounts you owe. In this economy, loyalty and quantity is a platform for better terms.

5. A cash flow projection for the next 90 days. Knowing where you're planning to spend money, makes sure that's where you should spend it.

Managing a business is about getting ahead of the curve. And seeing it coming.

Otherwise, you’re just Wile E. Coyote.

Planning The Last Day First / STEP 4: INTEGRATION

On 9/11, Chris and I were in a hotel room in Scotland. She was on the phone with our accountant in Chicago about the upcoming deal with the Whitehouse. Suddenly, he told her to turn on CNN. A plane had crashed into the World Trade Center.As soon as the picture resolved I knew it was terrorism. A clear blue sky. The tallest building within several thousand miles. And growing up in London in the Seventies where bombs were part of our daily life. I knew it was possible. It took four days to get back to the States. We were the first plane allowed in to US airspace from Europe. We landed to applause and sobbing. And a new way of life.

Planning The Last Day First / STEP 2: EXPANSION

The first year went by in a blur. A few signs of optimism. A lot of anxiety. But through it all we really did act locally and think globally.We had hired David Brixton, a very talented editor from London and convinced him and his wife Jemma of our dream. They moved to Chicago and brought European flair, creative credibility, a work ethic that matched ours and extraordinary social sensibility.

5 Ways To Tell Your Business is Turning Around

There’s a growing sense that perhaps the economy is stabilizing. But for most company owners, it will be a long time before revenue figures can give any kind of insight into whether their business is still shrinking or on its way back.A client asked me about this last week. Over the last five or six years he had developed a ‘feel’ for whether things were going well or badly based purely on sales numbers. But after the upheaval of the last three quarters, not only have his sales fallen dramatically but the overhead changes he has made are still taking hold.The net result is that the business he used to understand blindfold has now become blurry to him.

7,6#5$4@3*2f1 Reasons Why Your Systems Are Critical

Fred Wilson blogged yesterday about his recent problems with American Express.

Last I checked there were 133 comments on his post. Fred is apparently not alone in his experiences with AmEx’s declining customer service standards. Things have fallen a long way since the days of Karl Malden.

The issues at American Express can be attributed to many well discussed macro-economic factors, none of which, as entrepreneurs, we can do much about.

But one particular comment on Fred’s post stood out to me as indicative of a deeper issue at AmEx. It’s an issue that I see most business owners fail to address until the problems are so deep rooted that there’s no viable solution.

Their information management systems.

Most entrepreneurs are in a hurry to put some foundations in place and get into business. If they hire great lawyers and accountants they get great operating agreements and financial reporting. If they don’t, they don’t. The rest they learn as they go.

But when it comes to managing the information around which their company operates, they often focus only on their current business needs. And almost not at all on what they might need five years later. As though thinking about it will jinx it. This happens all the time. Even among people paid to think ahead.

Remember the Millennium bug when the world's computers were supposed to come to a halt because most of their operating code had been written with two digit calendar years? After all, who could envision the world reaching the year 2000 all the way back in the uh, 1950s.

A version of this has affected American Express. In their case the issue is the account number structure they used in the 1970s. I’ve reprinted the comment added to Fred’s post this morning:

“I'd had an AmEx Platinum card for nearly 30 years, never missed a payment. Last year I wanted to arrange for the card account to be paid automatically from a bank account. AmEx said sorry, the auto-payment feature wasn't available for my card, even though the feature was offered on their website. I escalated through SEVEN layers of managers, being stone-walled at every level, until the highest VP finally told me that AmEx cards with older numbers were handled on a different computer system which couldn't be upgraded. My only option was to cancel my Platinum AmEx and open a new account, which would have a new number and be hosted on a newer computer system where auto-payment was available. This was so incredibly incompetent that he convinced me that it must be true.”

The issue, of course, is not that American Express physically can’t transfer the data. It’s that they feel that the cost of translating and transferring it to the new systems is cost prohibitive to them.

Even if we forgive them the limitations of their early account numbering system as a result of unforeseeable technological evolution, they’ve compounded the mistake at least twice more - each time exponentially.

The first, by deciding not to perform a comprehensive system upgrade of all their customers when the new system was implemented. The second, by deciding to then highlight the inadequacy of their original planning by offering their new customers better service than the original card members.


Offering your oldest customers less service than your newest is a quick way to making sure your newest become your oldest really fast.

Ultimately, the random, volatile behavior of their customer service department is more indicative of the lack of trust they have in their own philosophy, their systems and ultimately themselves.

If you want your business to last you have to build it to last. If you design a spectacular house and then run the plumbing through cardboard tubes, eventually the Fed Ex guy is going to find water coming through the front door.

Companies work the same way. The outward face of a company is always a reflection of its inner workings. And no amount of customer service training can hide a badly built business.

So take a look at your information systems and think hard about whether they’re built to support your company’s best case scenario ten years from now.

If they’re not, you’re just planning for failure.

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.

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.

Head in the Cloud. Feet on the Ground.

Whether you’re a single-owner, home-based business or a multi-office, multi-national, you don’t need me to tell you that you need technology.

An email address and a website for sure. And if you have a web 2.0 perspective, you’re on Facebook, Twitter, Digg, StumbleUpon, LinkedIn, Disqus and possibly Valium.

Today, technology is evolving in real time. We’re literally watching it happen. Last November, the UK press included 40 articles that referenced Twitter. In the month ending today, there will be more than 700. And to coin Winston Churchill, we’re not even at the end of the beginning.

But while all this has been going on right under our very noses, an even more important technological revolution has been taking place in the back-rooms of some of our largest technology corporations.

It’s called the cloud. And in this exact moment, you’re in it.

The desktop revolution that Apple launched in 1984 has powered the PC revolution for a quarter of a century, putting a computer into the hands of virtually everyone we know. Indeed, the growth of the internet has been made possible by the advent of the desktop which gave us all web access - on our terms.

But in the last two years a subtle, and now increasingly significant shift towards a ‘cloud’ of massive, web-based, centralized servers is creating an entirely new set of possibilities.

This blog, like virtually every other blog, was created on a piece of software that exists only in this ‘cloud’ of central servers. The only point of access to it is through the internet.

No longer do I need a state-of-the-art laptop. Or three or four separate applications to create and manage the site. All I now need is a device with internet access. And nothing else. (This particular post was written and added to the site on my iPhone.) Software updates are a thing of the past, because they’re done automatically at the other end of the connection. And no more downloading, rebooting, reinstalling either. Just sign in, and you’re working on the latest version - though as Facebook users recently discovered, this-all-for-one, one-for-all approach can have its drawbacks. (Isn’t it time Facebook provided customized interfaces. Haven’t they heard we’ve individuated?)

The intensity with which some of the major technology companies are expanding the computing cloud, http://bit.ly/QoSGg means we’re going to see a lot more examples of services like Google Docs, SalesForce.com and WordPress. We’re also going to see stuff we haven’t yet imagined. How about multi-player, real-time video games that don’t need a $400 console or a $24.95 disc.

Of course, the cloud has enormous implications for every business owner. Big and small. A one-person company on a distant mountain top will now be able to have the same technological support as a Fortune 500 behemoth. Not close. Not like. The same.


When size no longer creates automatic marketplace domination that’s good for everyone because then innovative solutions to problems can come from anywhere, not just the giants. For anyone grounded in their business, that’s an incredible asset because now you can leverage the thing that sets you apart from your competition like never before.

Imagine if this concept could be applied to manufacturing. If the cloud could build and distribute cars - meaning anyone’s ideas about fuel, safety and aesthetic could be realized - does anyone believe we’d be sixty days away from the Big Three becoming the Big One?

That’s because the things that allow economies of scale to take hold - standardization, homogeneity, conformity - kill innovation. By definition. Instead, the cloud takes economies of scale and gives them to the individual, releasing the capacity for originality in all of us.

Now, overnight, we can all became Microsoft or Warner Brothers or Penguin. That’s a lot of responsibility. Let’s make sure we use it.