5 Lessons From Baseball for Business Owners

On my 50th birthday, I thought about calling it 50 Baseball Lessons for Business Owners, but let’s just stick with 5 shall we?

5  Lessons From Baseball For Business Owners

I love baseball. You may have heard the cliché, “Baseball is life.”  Well, I believe that Baseball is Business.  And, according to Dr. Art Markman in his book Smart Thinking, analogies are powerful tools we can use to reveal new insights into old problems.  With that in mind, I want to share my thoughts on Baseball and Business.  Your mileage may vary.

  1. Baseball Has No Clock

Despite the addition of Pace Of Play Rules to the sport, professional baseball does not have a clock.   A baseball game ends when all twenty-seven outs have been recorded and there is a clear winner. No winner? Play another six outs.  No clear winner?  Keep going until someone wins. No matter how long it takes.

Baseball players don’t go home until the work is done!

Running a business is the same.  Sure we have deadlines, but most of the time these are arbitrary and self-imposed.  The real deadline is more like baseball.  You can not quit until the work is done (and sometimes not even then). Erroneously, many people focus on time-management strategies, but in reality, the “Get-Things-Done” strategies have the greatest impact.  It is easy to be “busy,” but unless you finish, the game never ends.

Business, like baseball, doesn’t end until the work is done.

  1. You Strike Out A Lot

Man, I hate to fail because failing sucks.  More than that failure is shameful!  Remember how your parents reacted when you flunked a test or failed to turn in a homework assignment?  (If you’ve never had that pleasant experience please switch to another blog – I don’t know you.)  I remember and I never wanted to fail again.  Of course, that didn’t stop me from screwing up, but holy cow, for a long time I avoided failure like the plague, which ironically only seemed to make it harder to succeed.

Then I observed how baseball players step up in front of thousands of fans… every night… and strike out.  Over, and over again.   I am quite sure they don’t want to fail, but it happens and they never stop trying!  

The best hitters fail 7 out of 10 times.  I’m in awe of the kind of internal fortitude that it take to face that kind of humiliation and keep coming back for more.  With this high-level of failure, it is difficult to imagine that these guys are the best, but they are and I believe it’s because they never stop trying.

It turns out business is more like baseball than school.  Maybe that’s why no one calls school “the real world” but people call baseball “life.”  Zig Ziggler famously said most sales happen after the 7th “no.”  Think about that.  Seven failures in a row before you get to success.  Sound familiar?

In Business, like in  Baseball, you will strike out a lot, but the success comes to those who keep going until they get a hit.

  1. Winners Face the Toughest Hitters First

Competitive baseball teams put their best hitters at the front of the order.  Pitchers don’t get to ease their way into the game, they start off facing their biggest challenges.  To be a winning pitcher, they must figure out how to get those guys out.

In my business, I have learned to tackle the hard problems first.  Avoiding them, is a lot like pitching around tough batters.  And the results are usually the same.  Pitchers who walk a lot of batters don’t stay in the game very long.  Entrepreneurs who don’t face their toughest problems early often wind up working for someone else.

If you want to stay in the game, face your most difficult problems first.

  1. Your Last Hitter May Be Your MVP

One thing I have observed about playoff baseball is how often Most Valuable Players come from the bottom of the lineup.  On my son’s team, we won our first little league championship when the last batter in our lineup hit a game winning homerun.  

Why does this happen?  Because when the competition is fierce, the strengths balance each other.  This means small changes loom large and it is your weaknesses, not your strengths, that make the difference.  This is how great teams distinguish themselves: by building upon their strengths, but also working on their weaknesses.

Too many teams do one or the other.  Either they ride their best players, putting everything on them.  Or they try to shore up their weaknesses while losing sight of their strengths.  To build a winning team you have to do both.  

In Baseball and business, good teams have great players. Exceptional teams improve all of their players. Build on strengths; work on weaknesses.

  1. Success Is A Chain Made Of Execution.

There are tons of sports analogies with business, but in my experience, no competitor ever comes crashing through my front door to tackle a developer.  No one blankets my sales team so they can’t receive a lead.  In short, no one is allowed to interfere directly with my team.  My team’s success depends almost wholly upon their ability to execute, effectively and efficiently,  in a way that allows the next team member to do their job when it is their turn.

That’s the number one reason I like baseball.  While it is extremely competitive, opposing teams are not allowed to interfere with each other.  If they do, it’s a penalty (yes there are a few exceptions).  Not only can opposing players not interfere with each other, players on the same team really can’t even help each other either.  There are no double teams in baseball, no pick-and-rolls.

Success in baseball comes from talented, well-trained players doing their job then passing the ball to the next player who does the same.  A successful play is a chain of well executed individual efforts.

What a beautiful metaphor for business.   Do your job.  Do it well.  Do it to the best of your ability.  And then, most importantly, finish so the next guy can do the same.  Set your teammates up for success.  We call this execution.

Teams are only successful if each person does his job.  Success is a chain built of execution.

 

I love baseball for a myriad of reasons and I hope my simple comparisons give you a new way of looking at your business.  

Do you have a different way of mapping a sport to your company? Tell me about it in the comments. I’d love to hear from you.

5 Hard Lessons For Employees-Turned-Entrepreneurs

 

img cred: Critter for opensource.com

5 Hard Lessons For Employees-Turned-Entrepreneurs

The popularity of entrepreneurial books, podcasts, and television shows like “Shark Tank,” give the impression that everyone is starting a business. The truth is that while many people are, not everyone who does is successful.  If you are making the jump from corporate America into full-time entrepreneurship, you are likely to find that there are some hard lessons that you must learn.

The following five lessons are some of the most difficult for many business owners to master and are surely at the forefront of the reasons why employees-turned-entrepreneurs are unsuccessful in their new ventures.

Lesson One: Become a Real Negotiator

In the book Getting to Yes by Roger Fisher, William L. Ury,  and Bruce Patton, the authors clearly explain how a “hard negotiation” style will destroy a “soft negotiation” style every time.

If you have spent any time in corporate America, the chances are that you learned how to get along well with others. You use phrases and words like, “Win-Win” and “Partnership” when you think of negotiation. You want to reach a mutually beneficial agreement and you yield quickly to the demands of others to keep the peace. You are a “soft negotiator”. While this is valuable in a corporate context, most likely you were shielded from the myriad of aggressive negotiation tactics, “hard negotiations,” used externally, and in some cases internally, by your company.

The reality is that when you are first starting out as a business owner, you are playing a game whose rules are vaguely familiar. Furthermore, you are probably unaware that the game even exists in first place. Your opponents are well-equipped, and they are looking for fresh meat.  My intention is not to frighten you, but not everyone in the free-for-all that is the modern global economy is thinking about creating “win-win” situation. “Hard negotiators” are not as easily swayed and will stop at almost nothing to get what they want.

The most important (and possibly expensive) lessons you can learn are:

  • How to effectively negotiate when you no longer have the resources of a large corporation to give you leverage by understanding the various negotiation tactics.  
  • If you think you are a good negotiator and are not an attorney, you need help.

Lesson Two: Make Your Accounting Useful For YOU

I admit upfront that I hate accounting because it makes me feel unintelligent. Many of the small business owners to whom I speak say the same. There are many reasons for this but here’s what you need to know:

  • Develop a system for tracking your real cash (not just profits) that you can manage daily. Learn enough so that you can design your accounting system to be useful to you in the way that you will use it.
  • Tracking your cash must become a habit. You will be shocked at the number of people who will confidently do their job with absolutely zero understanding of your financials even when they have access to them. They are counting on you to know what is going on.

You cannot delegate having a firm grasp on your financials to anyone else. If you do, then you will not be running a business, you will be working for someone else wondering where all the money went.

Lesson Three: Create a Culture

What would your front yard look like if you never paid attention to it, never watered it, never mowed it, in short never cared about it? Can you imagine that? Can you picture it?

Now know this: Your company culture will look worse if you treat it the same way.

Any system composed of living organisms will grow and evolve, constantly. Moreover, it will do so with or without your permission. That is what they do.

Your business is a living organism. It is a system made up of people who are very different. The behaviors of those people will define its culture. Now you might get lucky, and that group of people may produce an incredible culture without much effort.  However, and this is common, they could produce a cancerous growth that kills their host. There are two lessons here:

  • Recognize that it is your responsibility to create the culture you want. When you become an employee of a company, chances are the owners or employees previously established the office culture. However, now you have to create it yourself.
  • Learn the skills necessary to establish a culture on purpose.What happens if you do not? Remember the image of your untended front yard? You will get a culture, but it will happen by default. In my experience, very few business owners are happy with the culture they get by default.

There are tools and techniques to build the culture you want. Look for them. Learn them. Use them. It is hard, but it can be the difference between feeling like you cannot wait to get to the office every morning and dreading what awaits you when you get in. Learn how to cultivate the culture you want.

Lesson Four: Master Your Marketing

Unless you are starting a marketing company, chances are you have no idea what marketing entails. Moreover, you are probably unfamiliar with what the word means. You might think you know, but you probably don’t. Why? Because the word is so overused and abused, it is hard to understand what marketing is, why it is necessary, and what to do to create an effective marketing strategy. Further, so many people want to sell you “marketing” that the real purpose and nature of it gets lost in the weeds. For example, we have deeply fixed terms like “sales and marketing” as if sales can precede marketing.

Here is the hard lesson: Marketing is lead generation.

That is it!

Those who will profit from confusing you (and many people do),  will disagree with me. I do not care!

A marketing plan is a plan to generate leads on a budget, in a given time frame.

If you do not generate leads, you will not get sales. It is that simple.

So no matter how fun it is to buy beautiful pictures or sexy ads, the hard lesson is to stay focused on what will grow your business. Leads. Leads. Leads.

Sounds too simple? OK, go ahead and try it.

Here’s a bonus lesson: Simple does not always mean easy. I had personally witnessed people waste tens-of-thousands of dollars before they learned this lesson.

Lesson Five: Making Money is Not The Same As Earning Money

This last one is the craziest lesson of all. Most employees have years of conditioning which reinforce the entrenched belief that it takes personal effort and application of skill to earn money.

It is not an unreasonable perspective for someone collecting a paycheck, but it can be a serious handicap for an entrepreneur. You will work hard. By the measure of income, the most successful business owners I know work very long hours. However, there is an enormous difference between owners who believe they are earning money and those who are working to manage systems that make money. Here’s the difference:

  • If you think you are making money, you  will focus on your business as a way to collect a paycheck. You are working x-amount of hours to earn x-amount of dollars.
  • If you are managing a system that makes money, you focus on creating a system of generating cash-flow. You become the leader those that operate the systems that run your business.

To explain further, working for a paycheck will hold you back because it constricts you in two dimensions. Focusing on the all mighty paycheck will drain precious cash that your business needs to fuel its growth. Of course, you should get paid, but you will have to determine what is the BEST use of that cash- saving or reinvesting in your business. Moreover, most detrimental to your company’s growth is that you cannot imagine working hard enough to be worth what people are willing to pay.

It sounds crazy, I know, but the salary/earning mindset can interfere with your business growth because it leads you to sell your cost instead of your value.

The truth is that most salaried employees people do not personally experience the kind of exponential income growth that a business can produce when it is marketing, sales, and operating systems are well-tuned and working together to reach a concrete goal. Typically most people can only grow their income incrementally over the course of many years. A business, on the other hand, can leap forward and double or even triple if the conditions are right. Most former employees do not have the experience to recognize that kind of jump is even possible even when they see it first hand!

The hard lesson here:  

  • Understand that your job is not to earn a paycheck
  • Know how your effort improves a scalable business model which makes money

Conclusion

Most of these lessons are not complex, but they do fly in the face of our working experience.

  • We learn to play nicely, which gives us a false sense of our negotiation prowess.
  • We rely on accounting departments, so we never learn about setting up effective financial systems.
  • We join companies whose cultures are already in place, so  we do not learn how to create a beneficial one of our own.
  • Our personal experience with the biggest brands hides the exact function of marketing, so we do not learn its real purpose.
  • The most important skill, the one that drove our career – earning a paycheck – can ironically hold us back. The career that made it possible for us to start our company can make it difficult for us to imagine systems that can generate income out of proportion to our personal effort.

Business owners can master all of these lessons of course, but they require a new perspective and a new context. To build a business, you have to transcend being an employee. You have to become something more. You need to become an Entrepreneur.

The ABC’s And Some Times D’s of Success

When I was in college my Dad told me this story. Now just because I site my source does not mean this story is not apocryphal. Apocryphal in this context means anonymous, legendary, and slightly mythical. So does that mean it is not true? Like all good stories this one bears enough truth to be worth retelling.

The real question is this, “Is the story true for you?”

Only you will know the answer to that.

abcd_of_success

My father was the first child in his family, possibly his gene pool even, to get a college degree. Growing up in Detroit in the 60’s, my father attended the one school which would not only admit him, but pay for his tuition to become an engineer; General Motor’s Institute in Flint Michigan.

Now named Kettering University, GMI was founded in 1919 as the School of Automobile Trades. It was renamed to GMI in 1926. General Motors allegedly hired 80 to 90 percent of GMI’s graduates for decades. As my father relayed the story, it was this prolonged hiring from one institution that inspired someone at GMI to ask the question, “Was there any correlation between grades and performance on the job?”

In other words, did success at school predict career success? In the book Emotional Intelligence, Daniel Goleman conveyed that “success in education only predicted success in education”. There was very little correlation between grades and life. In his book Outliers, Malcolm Gladwell discussed a similar study done by the University of Michigan Business School. The Michigan study revealed that selection criteria (high school results) did not predict B-School graduate life success. Most people took away from Outliers that you need 10,000 hours to master any skill, but I took away that the opportunity to achieve 10,000 hours of mastery is more important than the skill or the time spent getting it. If we use grades to determine who gets an opportunity to succeed, we might be missing some of our most valuable and talented people. What’s more, if you are disqualifying yourself from trying something hard because you don’t have the grades or the qualifications, you might doing yourself an enormous disservice.

Predicting human future performance is always tricky. The GMI situation however study was unique because so many people from the same school went into the same company and stayed there for so long. What’s more, they performed mostly the same job. That is an unusually high number of variables to remain constant for such a long period of time.

GMI also had one other unusual distinction, at least as far as modern day college graduates are concerned. GMI awarded degrees not only to A, B, and C students. It was also possible to receive a degree if you earned a D. That’s right, they gave degrees to people who were below average. Apparently, below average was still not failing, and therefore worthy of a degree.

It is hard to even conceive of such a thing today, and technically speaking they did not use letter grades. My father translated the old GMI point system into letter grades to make it more understandable for my sister and I. However, they definitely had four clear demarkations which could result in your earning a degree; A-Excellent, B- Above Average, C-Average, and D-Below Average.

So what did the study discover? Did grades accurately predict career success? The short answer was yes, but not the way most people would expect. Convention says the A students would be top executives, the B students would end up in middle management, and the C students would be in the rank and file, and the D’s, well surely they must be sweeping the floor or no longer employed right?

The actual results were somewhat surprising. The top performing group (by career success) did not come from the A students. The A’s were good employees, but did not prove to be exceptional in the work place. The C students proved average was average. No the top leaders came from the B’s and the D’s. What? How could that be? It seemed the A students excelled at applying proven solutions but could not seem to develop them while the B students tended to be the most socially active and therefore possessed valuable skills that were not easily captured by grades.

But what of those D’s? How could they be successful?

The answer comes from two ungraded traits they demonstrated. First, they were so creative they barely fit the constraints of a rigidly formed education. They were non-conformists. They chaffed at the rigors of school. But they did not flunk out thanks to trait number two. They were so stubborn they wouldn’t quit. Imagine someone intelligent, creative, and relentless. What kind of person barely gets by but refuses to quit? That kind of stubborn determination in the face of incredible odds proved to be exactly the ingredients GM needed to solve the kind of problems no one had ever solved before.

When you had a problem with no answer in the back of the book, you needed a problem solver who was creative, and unwilling to quit until they worked it out. Enter your ’D’s.

But is it true?

I never tried to find the study or any evidence of it, but in my own experience, the story rang true. Some of the most brilliant and successful people I have had the privilege of working with in the video game industry fit this template. Many had a GED, but never graduated from college. They are creative, intelligent, unconventional, and easily bored. But more than anything they were tenacious. They created technologies other people could barely comprehend. Perhaps most important of all they were not too proud to learn from anyone or anything. They were driven by their vision for what must be done, tirelessley committed to making it happen.

My father once told me that he got a C in high school, a B in college, and an A in life.

I would add, “the grade you give yourself is far more important than any grade handed to you by someone else”.

How to Nuke Your Career in 3 Easy Steps

CareerBondFire

How to Nuke Your Career in 3 Easy Steps

I asked a good friend of mine Jay Feitlinger about how I should handle my social media. He gave me some great advice. Thus begins this series of posts about my journey from individual contributor to industry founder. One of my all time favorite book titles was by Colin Powell titled, “It worked for me.”.

My take on this phrase is somewhat different. Call it, “This was my journey.” I hope that sharing my path helps you find your path to a future you find fulfilling.

Before you begin: Know great change comes from great pain

One of the worst pains you can feel is the pain of rejection. Perhaps it’s the rejection of your ideas, or simply the rejection of yourself personally. For most people professionally that comes in the form of being told “you can’t work here any more.” Being payed off is one lesser form of that pain. It’s not personal. It’s the company that has the problem. Sometimes this generates enough pain to motivate change, but not always. A higher form is when it’s personal. No, the company is fine, “You’re the problem.” That takes on a particularly acute flavor when you believe you were the one holding everything together. Everyone else gets to stay, but not you. You have been voted off the island.

How do you make such a thing happen? Honestly there are lots of ways, but in my experience here is a surefire 3-step formula that can set you on the path to having your future freed by the people that pay you.

Career Step 1: Get so good at what you do, you stop seeking feedback

When you work really, really hard at getting good at your professional craft, people will start to come to you for advice. This feels great. And it’s natural you want to share what you have worked so hard to learn. But somewhere along the way that advice sharing can trickle into advice giving. Especially if your experience and hard work are rewarded with managerial responsibility. You can drift from guiding people to critiquing them almost without notice. But even if you haven’t been given a managerial title with direct reports it is not hard to sail into the isolating sea of self-importance.

When you have immersed yourself in brilliantly self righteous judgment of the work that goes on around you, above you, and below you, you have mastered step one. You can proceed to step two.

Career Step 2: Believe that apologizing works all the time

I think most of us as rational human beings realize there are two major modes of communication, rational and emotional. The problem is that most of us give them equal weight. If your hard-won expertise and organizational authority have elevated your decision and judgmental skills to the point where you put an extraordinary weight on your own rational thoughts you will no doubt have experienced the feeling of surprise that comes when other people (shockingly) do not agree with you.

Inspired by the need to do “what is right” you no doubt tried to set those poor misguided souls straight (for their own benefit and the benefit of the company). Of course, occasionally some people got their feelings hurt, which you do feel bad about, so you apologize. That fixed it right?

As my father once wisely told me, you can put too many nails in a tree. Even if you pull them out, the scar tissue over time will still kill the tree. Pulling out the nail does not alleviate you of the responsibility for having pounded it in with your ego hammer in the first place.

When your apologizing starts matching your advice giving in quantity and quality, you have mastered step 2. You are prepared for step 3.

Career Step 3: Forget who you are really working for

I once told a friend, you have to know your constituents. We’ve all heard, “you can’t please everyone” but strangely they don’t tell you who you are supposed to please. Without a clear answer most people elect to try and please the group they are standing in front of at any particular moment.

A brilliant, cutthroat, and ruthless manager I once worked for told me, “you can be the kind of manager who the team despises but if you deliver the results you are okay. Or you will be okay if you are the kind of manager people love but struggles to deliver. But you can’t be a manager the team despises and can’t deliver the results.”

In my experience all three of those “ideals” are somewhat flawed (that guy got fired and that company is now bankrupt) but within that really strange advice was a key idea.  I learned that different groups inevitably drift into conflict. Remember the phrase is, “if you are not with us, you are against us.” This seems to be the rule for groups, not the exception.  Please note that the phrase “if you are not for me, you are against me” has a very different connotation.  It is either a great presidential slogan or paranoia. Or both.  The lesson?  Individuals can be crazy but groups always think they are rational.

Conclusion

I am a fairly sarcastic person by nature, but all of those blogs with formulas to success often overlook the reality that the worst mistakes you can make often arise out of your best efforts. You work really hard to get good at something, people recognize that, and you unwittingly drift into becoming an annoying know it all.

Powered by your great confidence, you start upsetting people as you try to help them. Apologizing – which worked so well as a kid – has little or no effect in the corporate work place.

Finally, in your effort to juggle complex requirements and competing interests – you repeatedly compromise to meet the constraints – something engineers and gamers do all the time to achieve their goals. Only in company politics this makes you look disloyal, flaky, or at best wishy-washy.

How can hard work and good intentions go so wrong? The good news is that the result of your hard work is often a “freed future” and some highly charged emotional energy that maybe, just maybe, might be enough to fuel the change you have been seeking all along.

Because in my experience, people that follow this formula are rarely happy and satisfied. It’s frustrating when hard work and best efforts are rewarded with emotional conflict and negative feedback. At the end of this road lies change and quite possibly fulfillment.

Follow the above 3 steps and you are almost certainly guaranteed a chance to find out what a new career will feel like. It worked for me. Share with me what has worked for you and any comments or questions you have below.

You can follow me on Twitter @scottnovis.  I also recommend following Jay at @JayFeitlinger as he always has good advice and something interesting to say.

An E3 Story

We are in Los Angeles for E3. E3 is always exciting and fun, but it has had a strange history.

Here’s what I experienced as a video game studio executive.

When I first got to Rainbow we were the kids at the back of the pack. Jumping up and down, we were outsiders. People knew who Rainbow was, but no one really wanted to see us. Then, Rainbow Shipped Motocross Madness and things changed. People wanted to speak to us. So we were invited to go to E3.

People started bringing us into closed door meetings. That we were working on Motocross 2 didn’t hurt. Microsoft treated us well and showed the game off for the press. E3 was a gas because you always needed to produce a working version to impress people. In some ways, in many ways, E3 was more stressful than launch. You had to take all of this stuff months before it was ready and make it look gorgeous and fun. The playable part was the hardest.

Somewhere along the way, we went from the back of the pack kids to the front of the pack. Publishers wanted to see us before we got to E3. They would fly out to meet us. Yes we would still have closed door meetings at E3, invited to every party at E3, but now people were talking about buying the studio. Eventually the studio was sold to THQ and then we became insiders in a different way. We watched as THQ would setup their million dollar booths. They would create these elaborate stages and platforms to show games. It was all exciting, it was all cool, but what was it all for? As developers we never really asked that question. We were just excited to be there. We wanted to show off our game, win some awards (hopefully), impress the press and win some fans. But most of all we wanted to have a big party, geek out on our favorite games (the ones we weren’t making) and check out what everyone else was going.

E3 was nothing if not electric.

Then a funny thing happened. Right about the time I left development to start my own company, E3 STOPPED. Cold. They just stopped doing it. I have heard a lot of rumors as to what happened, from too many fan boys were coming, to the show got too big. On the day of E3 I will now add my own speculation to the mix.

By 2006 a couple of interesting things were happening in the industry. First you have to ask yourself, what is E3 for? What purpose did it serve? E3’s primary purpose was to sell games to retailers. It’s secondary purpose was to build demand via the journalists attending the event.

If you have ever been to Toy Fair in New York, you know what I am talking about. It is a massive exhibition to help the many thousands of retailers know what to buy in the coming months. Much like video games, the toy industry is an industry that makes the lionshare of its revenue in the 4th quater.

Even today Toy Fair caters to many many retailers. Even my company, GameTruck qualifies as a specialty retailer. We have meetings with toy companies. But in the video game industry Walmart changed everything. While E3 was getting bigger and bigger, the retail industry was consolidating.

When Walmart entered the video game industry, they told a friend of mine, “We will be 30% of the video game industry revenue in three years.” He laughed. Who would go to Walmart to buy video games. The answer? America. Within three years Walmart represented 40% of video game industry sales. And Walmart buyers rarely leave Bentonville. In short, they don’t go to E3.

In a very short amount of time, nearly half the buying capacity of the industry did not travel West to Las Angeles for a video game show. Those buyers expected you to pay them a visit. The story I mentioned about how Publishers started to come visit us ahead of E3, played out with all the major retailers, and the journalists as well.

If your sales team was going to make a trip to Bentonville, then they had better hit Minneapolis the homeland of Target to pay them a visit as well. In the mid 2000’s 80% of video game retail counted on just 10 accounts. Woa be to the major publisher who did not lavish attention on those accounts before E3.

But there was more. The rise of the successful movie video game meant that the really large licensors had to bring more properties to bear to get shelf space for their video games. DreamWorks would make custom videos featuring Shrek for the Walmart Channel. Those efforts were not cheap or easy.

And they did the same thing with the Press. For the making of ATV OffRoad Fury 2, Sony flew out journalists from every major magazine, we rented race quads (not an easy task) and fitted everyone out in custom uniforms from our gear sponsors that went into the games. This was not a cheap day, but it was an absolutely blast riding quads in the desert.

If you are spending time at the retailers office, and you take the press out on fancy junkets with the developers to get early playable looks at the video games… what exactly are you doing at E3? And who exactly are you talking to?

That became the core problem with E3. Companies were spending millions, and I mean, Milllions of dollars on booths, and demos, and space to show their games… to fans? To the smallest possible buyers and the press not important enough to visit?

I heard that EA was the one who pulled out first. Followed by Microsoft, Sony and Nintendo. With the anchor booths gone the whole show evaporated nearly overnight. That lead to the year of no E3.

I think most people realized pretty quickly that was a mistake, but the reasons were not so obvious. So the show organizers went to the big dogs and said, what do you need? On the one hand, they felt they needed to return the show to a true industry event. It was becoming like comicon, but the costs had also grown way out of control.

So they arranged the event at Santa Monica. That addressed some of the problems, but from what I could tell – it did not address the real problem created by the absense of a big E3. Excitement. The video game industry as an entertainment industry thrives on excitement. E3 was the one time a year when the entire industry came together and companies like Sony, Nintendo, Microsoft could throw their corporate muscle behind having fun.

Having one place where virtually every developer, every executive, every staff member of every level shows up to look at everyone elses games – was valuable, but perhaps the single most valuable thing? Auditoriums full of cheering video game fans to announce your products to. There is an energy around a large audience anticipating a major announcement. You just can’t get that kind of energy from a conference room with 30 people or an auditorum full of staff told they have to be there.

E3 has become a cultural platform, a stage where the industry tries to convince themselves they have created something that will entertain the world. While expensive, the feedback they get from this process is invaluable. No in store demo, no card board merchandising rack can generate the level of excitement a well constructed booth can create at E3.

In many ways, E3 is where video games are really born to the world. They come out of hiding, they are dressed up to be as beautiful as possible and they tell us the future is bright. And I don’t know anyone who travels to E3 not expecting to buy that bright future.

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Baseball and Management

Baseball and Management

I have had this dream for a long time about writing about baseball and management. During one of the most trying periods of my life, baseball saved me, kept me sane, kept me focused, and helped me build some unforgettable memories with my family.

Baseball

According to David McRaney and his clever website You Are Not So Smart, we live two concurrent lives: The current self, and the remembering self. A happy life is achieved when both of our selves are in balance, we enjoy the moment, and we build new memories.

You are Not So Smart

David also wrote the book, You Are Not So Smart, a very entertaining read or listen, if you like audible. His website and book are very entertaining essays on psychology, but very little on “management”. Baseball helped me achieve both goals – enjoying the moment, and building memories.

But what does that have to do with management?

Why A Manager?

From an early age, I wanted to be a “good” manager. I suppose it dated back to when I was very young. My grandmother would watch me while my mom worked. I have this vivid memory of being at Heinz Park in Detroit (it’s a nice place when the drug addicts and thugs are not around). I remember it as a sylvan summer paradise with shallow creek, green lawns and massive trees that stretched to the sky providing the perfect amount of shade.

My grandmother and her sisters were sitting around exchanging horror stories of ex-husbands and terrible bosses. I think I said something like, “I am not going to be like that grandma!” She patted me on the head kindly and said, “I know sweetie.” Perhaps that memory is a bit too idyllic. I do recall that I wanted to be the kind of person my Grandmother would be proud of. Later, after reading Harvey McKay’s Swim with the Sharks, I co-opted his 3 goals: 1. Be a good husband 2. Be a good father 3. Be a good businessman

For me, the operative word here is “good”. What did that mean? What does it mean?

A Good Manager

I find it interesting that the head coach in baseball is called a manager. In his autobiography The Red Sox Years, Terry Francona wrote that it bothered him when sports writers called him “Coach”. He was the Manager of the Red Sox. Not a coach. So a manager is more than a coach.

But what is a coach?

Some have called a coach a teacher…

A Coach Is Different Than a Teacher

In my experience however, while coaching involves some elements of teaching, a coach is different from a teacher in this important aspect. Teachers are expected to train individuals to meet certain prescribed standards of competence, knowledge or skill. We run tests to find out how well students have learned. These tests are often standardized.

Coaches however, need to find a way to get the most out of the players have have, using a variety of techniques and skills that work best for the player. Teachers, at least in todays education system, rarely have that much latitude or freedom. A good coach teaches. A great coach finds out what works for you and helps you get the most out of what you have.

If you don’t believe me, check out Sir Ken Robins Ted Talk. I was fortunate enough to spend a day with Mr. Robins when I was with the Walt Disney company. Creativity and individuality are crucial components of Disney’s extensive and protracted success.

So if a coach gets the most out of a player? What does a manager do?

A Manager is Different Than a Coach

And here we are at the crux of this whole article. A good manager gets the most out of his team. One of the most profound quotes I ever read about management came from Peter Drucker. I paraphase, but he wrote, “A good manager makes the individual team members strengths overlap so their weaknesses are irrelevant.”

That, for me, was the best definition of a manager I had ever see, and it nicely fit with what I had seen in baseball. Coaches improved individual performance. Coaches taugh skills, and worked with players to improve at their craft. But a Manager worked with the whole team. The manager was the one who put the pieces together. The manager was the one who tried to make those strengths overlap so that the weaknesses did not matter.

Good managers, then in short, build winning teams.

But how? I think baseball has a lot to teach us in that regard, which is one of the reasons I love it so.

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Franchise Concepts – Pizza 585

Clever Concepts – Pizza 585

I have no idea if this is going to work, but that is beside the point. When I first started GameTruck one of the first things someone asked me when we started to talk about franchising was, “Is it Pizza?” I was taken aback. “No,” I replied quickly. “Good,” The advisor replied. “I never want to hear another Pizza Pitch.”

That question reminded me of a time when I was sitting in a meeting with a very young vice president of Autodesk in England. At the time I thought the guy was ancient as I was only 24 and he was… like 30 or something. One foot in the grave.

We were peddling a software add on to AutoCAD called GTXRasterCAD. It let you scan your drawings and convert them into editable blue prints. At the time that was like magic. But the Vice President demanded, “It’s not a tablet is it?” He had seen a thousand tablet pitches. There was zero chance of standing out.

Every day entreprenuers face the impossible challenge of creating something new and familiar. If you make something that is too far outside peoples everyday experience, you have built yourself a problem. It’s called “Concept awareness.” Tivo suffered from this. People loved the device – the digital video recorder – but they could not evangalize it. Customers would say things like, “It lets you watch more TV!” Who the hell wants to watch more TV? The people who would most benefit from a Tivo did not understand what it was. They were not familiar with the concept. Today we take it for granted that you can pause live TV and rewind it, or skip the commercials, or record a thousand shows, but when Tivo came out, concept awareness was a major hurdle.

And then you go to the other extreme. We all know what Pizza is. How do you create innovation in Pizza? Or sandwhiches for that matter? This is one of the reasons I admire Jimmy John’s so much. They demonstrated there is still room for innovation in sandwhich shops. They demonstrated there is tremendous room to innovate if you can be new and familiar at the same time.

Pizza585

That brings me back to Pizza 585. A few weeks back I wrote about the Fractured Prune, a donut shop built upon the Cold Stone Cremery model. Well, welcome to Pizza 585 (much better name by the way). It is a pizza, pasta, salad joint built on the Subway model.

It is a clever innovation on two familiar principles. First, that people want choice, and secondly, that they need to move people fast. Here’s the concept. You walk up to the counter, order your pizza and you have unlimited toppings (sound fammiliar?). They take your personal 10 inch pizza and cook it in 5 minutes.

That is not a type-o. Five Minutes

How?

Because the crusts are thing, the toppings are precooked. They essentially figured out that a pizza can be little more than toast with melted cheese on top. Their oven is designed to toast and broil simultaneously. Have you ever seen toast that takes longer than 5 minutes to make? Or cheese that takes longer than 5 minutes to melt in a broiler?

But the real magic is what I could call the YC Mongolian effect after my good friend and owner of YC’s. He talked about one of the best things is how people love to share their meals. They are proud of what they make. Pizza 585 plays on that idea. By having a wide range of base ingredients, Pizza 585 makes your pizza interesting, something you want to share. “here try a bite of mine!” the kids all said after their pies came out. Everyone was different. Every pizza delicious. It was more than eating, it was sharing.

The addition of Pasta and Salads were in hind-sight obvious. All the things we love on a Pizza also taste great on a Salad, or a pasta for that matter. What is Pizza sauce? It’s Pasta sauce on flat bread!

The pricing is spot on with what you would pay for a sub sandwhich.

Does this mean they will be successful?

I have no idea. Jimmy Johns has become a national phenomena as stores explode all over the United States. Jimmy Johns “So fast you’ll freak” gives them another amazing advantage. They have unbelievable throughput. They can move people through their lines. Consequently their revenue per square foot is unbelievable. What’s more, they have conditioned their clientel to keep moving. They won’t kick out out, but the vibe is get it, eat it, go. This churn gives them a fantastic revenue model. According to their latest FDD the average store can do $100,000 a month in revenue. That’s the average.

So will 5 minute pizzas make 585 a hit?

I am sure the owners will settle for just being profitable. But it’s too early to tell. What I do know is that it is the first new concept in Pizza I have seen in a long time, and that alone makes it worth checking out.

Smart Move

Today I had a pleasant surprise at Phoenix Sky Harbor Airport. Instead of the usual generic national brands I found a familiar face. The Cartel Coffee Lab sat where Burger / Pizza / King / Hut used to be.

The Cartel Coffee Lab is one of those small businesses that makes no sense in an internet world where ideas can be cloned at the speed of light and familiar trumps quality.

Don’t get me wrong – Franchising is an amazing way for many people to get into their own business and find success fast. However mavericks like the coffee labs are more likely to find their way to the business actuary tables than the airport.

Yet there they were. Fresh, shiny and magically ready to deliver an amazing cup of joe.

What makes the Cartel so special? Aside from a plywood and iPad ambiance – (it reeks of college creativity born of limited funds) they roast their own coffee beans. I remember a friend waxing on about the magic of freshly roasted coffee. At the Cartel Coffee Labs they bring it to you steaming hot in every cup.

And… it… is… AWESOME.

From a business perspective I am truly impressed with Sky Harbor management. Rather than another me too airport they elected to (quite literally) promote the local flavor of Phoenix. It makes me proud to live in a place where other entrepreneurs can live their success and we can all participate and benefit.

Way to go Cartel Coffee Labs and way to go Phoenix. Doing something different always takes courage. And encouragement.

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You are My Partner, Not My Customer

CustomerGraphic
When I am talking to someone about purchasing a GameTruck franchise, one important point I try to share with them is how we view our franchisees.  “You will never be my customer,” I explain to them.  “You will be my partner.”  This usually stops them in their tracks, but it is an important point, and crucial to understanding how we work together at GameTruck.

Why can’t a franchisee be a customer?  Because it is not healthy for either of us.

Let me explain.

Three key experiences shape my view here.  First, I grew up in Michigan. Second, I worked at Motorola during my college years. Finally, I worked at THQ when they acquired the rights to make Pixar games.  Those experiences taught me the difference between partners and customers.

Partners have obligations to each other.  

Customers only have obligations to themselves.

Why not treat your partners like customers?

Because people are motivated to act in their own self interest first.  It’s not really selfishness.  In one of my favorite books, Freaknomics by Steven D. Levitt, Mr. Levitt clearly explains that people respond to incentives. Humans simply focus on the things that bring them the best immediate return. And as we all know, short term thinking often leads to…

Unintended Consequences…

In the 1970’s Detroit auto manufacturers treated car dealers as customers. After all, the big three did not sell cars directly to consumers. They sold cars to dealers. Dealers dealt with people. It was a great model, until… the car dealers ordered only the cars that had the highest profit margin for them. Big gas guzzling sedans. It worked out great for everyone until the Japanese started selling the real customers, average American’s, cars they actually wanted to buy.

Everyone suffered as demand shifted radically toward products more tuned to real customer demands. Losing track of the real customers cost the auto industry and my home town dearly.

Surely we can learn from the past…

I was at Motorola when Nokia and Motorola repeated the story all over again.  I witnessed the train wreck first hand.  Motorola practically invented the modern cellular phone industry. Then they lost it.

How? How could that happen?

First, Motorola treated cell phone companies like customers, when in fact they were partners.  Since cell phone companies gave the phones away, Motorola’s “customers” kept asking for cheaper, and cheaper phones. For them a phone was a necessary cost of doing business, it had no value to them.  Motorola’s “customers” drove them to sell the cheapest phone they knew how to build.

They were not stupid people. They were very smart, creative, hard working people that responded to the incentives available to them. Their customers were asking them to build free phones. They tried to fill that request with all of their talent, passion, and energy.  They even built a $2 billion dollar fab to manufacture outmoded technology to meet that demand.  A demand which never materialized, because a new company started selling people phones they actually wanted to buy.

Motorola didn’t know who their real customers were.  And when Nokia showed the cell phone companies could make more money by selling consumers products they actually wanted, Motorola was caught flat footed.  Almost the exact reverse of the Detroit problem. Detroit nearly road the luxury car market into the grave, Motorola was riding the Model-T mentality to their own doom.

Nokia entered the business of building the cheapest phone they could sell, Motorola choked trying to sell the cheapest phone they could build.

Does one hundred million dollars make you a customer?

For Disney the answer was “No”. Years later while I ran Rainbow Studios, as part of THQ’s studio system, I saw THQ write a check (figuratively) to Disney for the rights to make Pixar games. The amount? $100,000,000. But here’s the key, neither Disney, nor Pixar treated THQ like a customer. They treated us like a partner. Their attitude was that they wanted to bring in partners to help them build the value of the franchises they were creating.

They were absolutely fantastic to work with, creative, passionate, everything you could hope for in a partner, but it was very clear they were responsible for the brand, we were responsible for the video games made within that brand.  They required approval for everything.

This arrangement freed Pixar up to focus on the real customers, the people sitting in the movie theater. They understood our needs and concerns, but they never let partnership needs interfere with customer needs. If the customers didn’t “buy” their story, we would all suffer. So they were polite, passionate, and absolutely pig-headed about who made the decisions.

The result? The Cars video game grossed nearly one billion dollars in revenue. Disney later bought Pixar for $7 billion dollars, and they are still going strong.

What is a Franchise?

Franchising is business systems licensing. People who buy a franchise, actually license a system to make money. That’s it. Now the system can include really fantastic equipment, such as a mobile video game theater, or something as mundane as a box of sand and some cement. But the way I look at it, our job, as the Licensor, is to never take our eyes off the real customer, the people who fill the theater. We need to relentlessly serve their needs, and along the way if we work with our partners to deliver those needs we will all come out ahead.

Boss Level:  Know the difference between your partners and your customers.

— Scott