Alexandra Levit's Water Cooler Wisdom

What Goals Should Your Team Embrace?

The second part of my goal setting series at the QuickBase Fast Track blog looked at Key Performance Indicators (KPIs), as well as the modern business hurdles none of the current approaches seem to be able to solve.

The Rise of Key Performance Indicators

An outgrowth of MBO and S.M.A.R.T. goals was the Key Performance Indicator (KPI), or a key factor in monitoring the performance of strategic objectives integral to an organization’s success. Like S.M.A.R.T. goals, KPIs make objectives quantifiable, providing visibility into the performance of teams and individuals and helping leaders take action in achieving the desired outcomes. KPIs are usually monitored and distributed in dashboards, scorecards and other performance-related documents.

Although KPIs made their debut on the world business stage in the 1980s, the KPI Institute suggests that they’ve actually been used for centuries. In 1494, for instance, Italian mathematician Luca Pacioli detailed a practice the Venetian sailors had in place to evaluate the performance of their sailing expeditions. This primitive KPI became the basis of the double-entry accounting system many companies still use today. Examples of common KPIs are:

• Percentage of net profit
• Revenue dollars
• Percentage of profitable customers
• Net promoter score (customers are not only satisfied, but endorsing a company, product, or service)
• Percentage of on-time delivery
• Percentage of projects on time, budget, and spec
• Percentage of processes optimized
• Percentage of employees engaged

British Airways: How 1 KPI Transformed a Business

U.K.-based performance expert David Parmenter shared his favorite KPI story. It’s about how Lord King, CEO of British Airlines in the 1980s, turned the downward-spiraling airline around by focusing on one KPI.

King apparently hired some consultants to investigate and report on the key measures he should concentrate on to save the airline. They came back and told King that he needed to focus on one critical success factor (CSF) – the timely arrival and departure of planes.

When the consultants proposed that King focus on late plane measures, he was unimpressed but took action anyway. From that point on, King was notified, wherever he was in the world, if a BA plane was delayed over a certain time. The BA airport manager at the relevant airport knew that if a plane was delayed beyond a certain “threshold,” they would receive a personal call from Lord King. It was not long before BA planes had a reputation for leaving on time.

Turns out, the late planes KPI was linked to most of the critical success factors for the airline. The importance the critical success factor “timely arrival and departure of planes” can be seen by its impact on all the six perspectives of a balanced scorecard. A balanced scorecard, by the way, is a framework combining strategic non-financial performance measures and traditional financial metrics so managers and executives can get a balanced view of organizational performance. In any case, late planes:

• Increased costs including additional airport surcharges, and the cost of accommodating passengers overnight as a result of late planes being “curfewed” due to noise restrictions late at night (financial perspective).

• Meant unhappy customers and alienated those people affected by the late arrival of the passengers – possible future customers (customer perspective).

• Created a negative impact in the wider community and thus reduced the potential pool of future employees (community perspective).

• Incurred food waste – hot food has a short serving window – and fuel waste as planes endeavored to make up for lost time and operated outside their most economical flight speed (environmental perspective).

• Had a negative impact on staff development as employees would repeat the bad habits that had created late planes (learning and growth perspective).

• Adversely affected supplier relationships and servicing schedules resulting in poor service quality (internal process perspective).

• Led to employee dissatisfaction as they had to deal both with frustrated customers and the extra stress each late plane created (employee satisfaction perspective).

Head on over to the Fast Track for the rest of the post!

ACA Surprise: No Increase in Part-Time Employment

When the Affordable Care Act, also known as Obamacare, first passed, many speculated that there would be an increase in part-time employment. By reducing the work hours of existing full-time employees, or by increasing the number of part-time employees hired, employers could avoid ACA’s mandate that they must offer health insurance to all full-time employees.

To briefly recap, the Affordable Care Act provision for employer shared responsibility required that starting January 1, 2015, large firms (those with 100 or more full-time equivalent or FTE employees) must offer affordable health insurance to their full-time workers (people working 30 or more hours per week) or pay a penalty.

Implementation of the mandate was postponed until 2016 for midsize companies (those with 50–99 FTE employees). Small firms (those with 49 or fewer FTE employees) are exempt from the mandate.

Some experts were certain that within a few years of ACA passing, we’d find increases in employment just below the 30 hour threshold. They also guessed that the ACA, by expanding access to means-tested public and publicly subsidized coverage, would create work disincentives. Changes in incentives for part-time employment might be particularly strong in jobs where full-time employment confers eligibility for employer-sponsored insurance, given that this eligibility generally makes workers ineligible for subsidized Marketplace coverage.

For the rest of the piece, check out the SilkRoad blog.

Do New Paid Sick Time Laws Affect You?

This year is shaping up to be an interesting one for HR compliance. The most buzz, it seems, is occurring around paid sick leave. In his 2015 State of the Union address, President Obama asked the U.S. Congress to pass national legislation granting American workers the right to paid sick days when they or their family members get sick, or to deal with sexual assault and domestic abuse.

Paid sick leave is another benefit that most develop countries provide to workers but the U.S. has up to this point resisted. Instead, most employers have what is known as a single-bucket system for any and all paid time off.

Since nothing goes through Congress quickly, Obama also recommended that state and local governments pass legislation. Now, in 2016, this is where most of the action is. Since Obama’s call, four states and 23 cities have already passed sick leave laws, and as a result, nearly 10 million Americans are now covered by a guarantee to earn paid sick leave.

In cities like Spokane, WA, the new legislation requires businesses with 10 or fewer employees to allow them to earn up to three paid days off a year, and larger ones to give workers five days. Spokane’s sick leave bill exempts construction workers, those doing work-study jobs, and seasonal and temporary employees. 

For more on this issue, head over to the SilkRoad blog.

Where Do You Learn Business Acumen?

You’ve probably heard that most businesses fail, but the reasons why are not always clear. Lack of managerial expertise may be one factor. After all, most inexperienced people who get jobs in large corporations aren’t put in charge right away. Rather, they may be given small responsibilities until they have sufficient business acumen to be trusted with larger ones. On the other hand, small-business owners are often overconfident that they’ll be great at everything at launch.

I recently asked three successful small-business owners how they acquired the right mix of entrepreneurial skills to guide their companies effectively: Michael Bremmer, CEO ofTelecomquotes.com in California; Clarence Bethea, CEO of Upsie.com in Minnesota; and Holly Epstein Ojalvo, founder of Kicker in New York.

What are the most essential skills a new business owner should have?

 

Clarence Bethea: [Small businesses] are always changing. Having the ability to listen to your users/customers and adapt to their needs is important from the start.

Michael Bremmer: The ability to listen to a customer and ask intelligent questions based on their concerns is a critical skill. And even more importantly, you need to have the willingness to walk away from opportunities that don't make sense morally or financially.

Holly Epstein Ojalvo: I’d say that you need a combination of flexibility and resilience. That's because you need to stay strong and focused, yet be responsive and adapt to changing circumstances and challenges. You also have to be resourceful. Few new business owners have ample resources, so you have to make a little go a long way. You definitely need to be a strategic thinker and mostly fearless, with a healthy appreciation of potential threats.

How did you acquire these skills?

Bremmer: I dedicate myself to improving my skills constantly, which means I've probably read a thousand books and studied 50 to 100 of them like college courses. 

Epstein Ojalvo: One key thing is to see yourself not just as an expert, but as a learner. I work really hard at learning things I don't know. I also stay focused on my mission and keep reminding myself of the sage advice to feel the fear and do it anyway. 

Bethea: I got thrown in the fire early and learned on the job. I also had great mentors around who I saw as great examples.

How can small-business owners supplement skills they don’t have?

Epstein Ojalvo: Two ways. First, surround yourself with colleagues and advisors who have complementary skill sets and knowledge bases. Second, make it a point to learn by reading articles and books, participating in webinars, taking courses and so on. We all have gaps. It's only a problem if you stay stuck in those gaps.

Bethea: Hire smarter! The faster you become self-aware, the faster you figure out that you don't know everything. Hire your weaknesses and get out of their way.

Bremmer: Today, we hold the world's knowledge in the palm of our hands. Go on YouTube, iTunes University, Skillshare or just Google to learn what you need. If you're watching something, learn something. 

For the rest of the article, check out the AMEX Open Forum.

Creating a Memorable Brand

When we think of brands, we tend to picture the big ones. We forget that a powerful brand can be important to every company and especially small businesses that hang their hats on customer loyalty.

According to a recent survey by Rosetta Consulting, engaged customers (those who are strongly attached to a brand) buy 90 percent more frequently, spend 60 percent more per transaction and are five times more likely to indicate it's the only brand they would purchase in the future. All these factors can lead to engaged customers delivering three times the value to the brand over the course of a year.

I talked with three small-business owners with experience in creating a memorable brand: Deborah Peters, founder of the Neuro Engineering Institute in California; Aalap Shah, co-founder of SoMe in Chicago; and Jason Zickerman, president of The Alternative Board (TAB) in Colorado.

How would you describe your brand?

Aalap Shah: The SoMe Connect brand is open and honest with clients and infuses a mix of heart and soul into our creative and copywriting, delivering online community engagements that matter.

Deborah Peters: Our brand is unique, evoking feelings of stability, groundedness and timeless wisdom.

Jason Zickerman: Our brand promise is that joining a TAB Board will help a business owner achieve their personal vision of success and run a better business.

What was your process for developing this brand?

Zickerman: A brand is defined by customer experiences. Our brand image was developed by gaining an understanding of what our members felt, what they believed and what they had to say about us.

Peters: There was a great deal of introspection. I bought several feet of art paper and colored sharpies and pastels. I designed a flow chart for my business, including who we would reach/teach/coach, what media we would use and how it would all eventually have an impact.

Shah: We started with internal brainstorms on our core values and offering to see what our internal stakeholders thought and felt about our brand. We asked our clients how they'd describe it. We then developed a brand description to inspire our team and clients.

What activities did you undertake to promote the brand?

Peters: Thanks to social media, the brand is everywhere now, and we continue to up-level our avenues to ramp up awareness. We are finding that joint ventures in which we cross promote and cross leverage our offerings is extremely powerful. It’s a win for everyone.

Zickerman: In our industry, 50 percent of business comes from word of mouth, and our brand expansion strategy takes that into account. We encourage our corporate team and franchisees to promote our brand through personal interactions and relationships, providing business advice and insights, and consistently delivering value to their TAB members and referral networks. We also take an exclusivity approach to our membership. Not every business owner is a right fit for a board, so we direct our brand promotion to business owners who are.

Shah: Our largest efforts are around our SoMe Insight series—a monthly lunch and learn series that promotes both our brand and also open communication. We bring in industry leaders to lead a conversation for 30 to 45 minutes around topics like “building online communities,” “creating an offline/online brand,” and “how to find your golden purpose.” The discussion and content that flows afterward is invaluable for both the attendees and the community and helps us convey what we do and how we can execute on these ideas.

For the rest of the interview, check out the AMEX Open Forum.

Friends Versus Clients: Where Do You Draw the Line?

By 2020, customer experience will overtake price and product as the key brand differentiator, according to a recent Customers 2020 Report. Increasingly, customers of small businesses may be expecting owners to know their individual needs in detail and go out of their way to personalize offerings and the shopping experience. When this is done properly, repeat business can be the result.

But what happens when you please the customer so much that your relationship becomes personal? Claudia Mora, owner of The Beauty Vault salon in Fairview, New Jersey; Jeanne Nohalty, founder of design boutique Alley Cat Décor in Oak Park, Illinois; and Jason Sherman, CEO of dating appInstamour in Philadelphia reveal how they manage this situation.

Briefly tell us about an experience where a friend became a customer, or a customer became a friend.

Claudia Mora: Owning a beauty salon is a tough job. You have to be a best friend, a therapist, a stylist and so much more. You see the same clients at least once a week and they become friends, almost family. You talk to them about life, business and, of course, love. I go out for drinks with customers, and they often text me to make appointments instead of calling the salon.

Jeanne Nohalty: We’ve for sure had customers who have turned into friends. It’s wonderful and validates that you are doing your job well. Our key business focus is outstanding customer relations. We treat our customers exactly like friends and therefore see no difference in terms of how we provide service to a friend or a customer who walks in off the street.

Jason Sherman: Often, when my friends need help with their businesses, they turn to me. I tend to be careful, as one wrong move could end the business relationship as well as the friendship. In one case, I agreed to help a friend work on a new product website. 

What were the challenges associated with this situation, and how did you cope with them?

Sherman: It was challenging because she wanted a great deal of customization. The situation became very difficult. During this process, we became less friendly and more like business acquaintances. I even tried to reinforce our friendship by building a custom site for her anyway to show her how it would look, but she ended our contract anyway.

Mora: When I first opened up shop, I offered all my friends the "friends and family" discount, and sometimes I'd comp their services. One day, one of my best friends, who was a customer, said, "I don't need money off. Charge me as a regular client. I should pay the same price I’d pay anywhere else.” That was the last day I offered the “friends and family” discount.

For the rest of the interview, head over to the AMEX Open Forum.

How SMBs Set Financial Direction

A recent study, The Principal Financial Well-Being Index, found that business owners generally have positive vibes about where they stand financially. Almost half are optimistic about the 2016 economy—and with good reason. Sixty-four percent feel their financials have improved significantly or somewhat from last year, and 74 percent have built a surplus of cash.

I asked three small-business owners—Sarah Jacoby, owner of dance center Studio 9 in Poughkeepsie, New York; Jenne Myers, CEO of nonprofit Chicago Cares in Chicago; and Vick Vaishnavi, CEO of software firm Yottaa in Boston—about their financial preparation for this year, as well as their anticipated results.

In terms of your business, what does financial success mean to you?

Sarah Jacoby: As business owners, we all have our ups and downs throughout the year, but I feel I am successful because, overall, I have maintained a flourishing atmosphere as far as cash flow, employees and financial growth. The studio is debt-free and is solidly in the black.

Jenne Myers: Although we are a nonprofit, it’s important at the end of the day that we’re in the black, not in the red. Our donors want to have confidence in our financial status, which means that we want to have a surplus. We also place a really high importance on having an engaged volunteer and donor base. The more invested they are in our work, the more they feel responsible for our success, and the more willing they are to contribute and advocate to their networks on our behalf.

Vick Vaishnavi: Since Yottaa is in a very high growth market, we measure financial success strictly in terms of maximizing revenue performance. In order for us to do so, we must execute at a very high level across all functional areas of the company.

What are one or two financial goals you’ve set for your business this year?

Myers: Our main goal is to diversify our funding. Unlike most nonprofits, we get about 75 percent of our funding from corporate sponsors. In 2016, we want to continue to diversify our revenue streams, including events, individual giving and grants. While our corporate partners will continue to be key to our success, we want to make sure that we’re more stable and sustainable by having a wide range of funding sources.

Vaishnavi: Our financial goals for 2016 are to grow revenue by 100 percent, significantly increase the annual contract values of our deals and double the headcount for the company.

Jacoby: I would like to open a fourth location to better serve the large Hudson Valley area. Financially, this expansion will include startup costs, daily operations for the first six months and any unforeseeable expenses. I also want to increase my staff and instructor pay and compensation packages.

For the rest of the interview, check out the full article on the AMEX Open Forum.

What Are Your Business Goals?

Small-business activity is on the rise, according to the National Federation of Independent Business’s chief economist William Dunkelberg. Not counting seasonal variations, 55 percent of owners have recently hired or are planning to hire new staff, 23 percent are raising worker compensation, and 11 percent plan to create new jobs.

I asked four small-business owners how they are taking their enterprises to the next level this year. Jeffrey Bowman, founder of business accelerator REFRAME: in New York; Shirish Phatak, CEO of Talon Software in Mount Laurel, New Jersey; Alejandra Pikulski, president of accessories company Allie & Orietta in Jacksonville, Florida; and Andrew Vines, co-founder of the law firm Johnson Vines in Little Rock, Arkansas, let us in on their plans.

What would you like your business to achieve next year?

Alejandra Pikulski: A new goal is to launch a new product, fee-for-service, that will create a steady cash flow into the company. We are a new company that makes fashion accessories, so our sales fluctuate depending on the season. We want to create a service that will provide monthly income.

Andrew Vines: Our main goal this year is to better manage our cash flow and increase operational efficiencies. We have been experiencing high growth over the past few years, which has required us to increase our overhead expenses in terms of space, human resources, equipment and vendor services. In order to keep up our capacity, our spending has been more reactive than strategic.

Shirish Phatak: Talon provides companies with centralized file collaboration. In 2016, we would like to double our revenue and global staff footprint. Since Talon’s inception, we have maintained a very aggressive growth trajectory driven by cloud adoption.

How did you choose this goal?

Jeffrey Bowman: Our overall mission is to educate about and enforce total market disruption for the marketing and communications industries, and to be a major voice of change. With that in mind, a main focus and goal for 2016 is to scale our U.S. business.

Pikulski: We realized that new designs alone will not help with cash flow and the bottom line, so we decided to focus on creating a service that will complement our seasonal sales. 

Vines: We see our growth leveling out next year, so while doing our year-end planning, my partner and I decided to scrutinize expenses in all areas of our operation. We hope to eliminate any inefficiencies and redundancies that could impact cash flow. We feel that taking a more proactive approach to overhead in anticipation of slower growth is the way that we best serve the firm next year.

For the rest of the interview, head over to the AMEX Open Forum.

Hadoop Is Not a Star Wars Planet

According to a recent survey from TDWI, overall Hadoop adoption by enterprises is on the rise, with 60 percent of respondents planning on having Hadoop clusters in production by the first quarter of 2016. But what exactly is Hadoop and what can it do for us?

Forrester analyst Mike Gualtieri offered a “Hadoop for Dummies” (otherwise known as regular business people) tutorial on the firm’s blog last summer. Here’s how he explained the technology:

Hadoop is an open source project that offers a platform to store and manage big data. There are two important things to understand about it. The first is how Hadoop stores files, and the second is how it processes data.

Hadoop’s storage capabilities are extremely powerful. Using it, an organization can store very large files and a great number of files. No longer are companies encumbered by the storage limits of a particular node or server.

Hadoop also has a cool framework for processing data called MapReduce. Moving data over a network can be painfully slow because files are so large, so MapReduce splits the data sets into smaller, independent chunks that are processed in a parallel manner – thus speeding up processing time.

How Hadoop is Conquering the Enterprise

As an open source technology that got its start in digital organizations, Hadoop’s challenge now is to scale to a variety of industries and types of companies, and to successfully integrate with more traditional IT platforms. As it expands across the enterprise and its ownership moves back and forth from citizen developers to central IT, run of the mill IT professionals have to become data architects, analysts, and scientists.

If the TDWI survey is any indication, Hadoop is not only meeting this challenge, but proving essential. “Hadoop for the enterprise is driven by several rising needs,” said Philip Russom in a 2015 TDWI white paper. “On a technology level, organizations need data platforms to handle exploding data volumes. They also need a scalable extension for existing IT systems in warehousing, archiving, and content management. On a business level, everyone wants to get business value and other organizational advantages out of big data instead of merely managing it as a cost center.”

And Hadoop has another trick up its sleeve – analytics. “Hadoop is not just a storage platform for big data: it’s also a computational platform for business analytics,” said Russom. “This makes Hadoop ideal for firms that wish to compete on analytics, as well as retain customers, grow accounts, and improve operational excellence.”

Then there’s companies like Cloudera that have built a data management and analytics platform on Apache Hadoop and the latest open source technologies. Operations departments are using it to create an enterprise data “hub” to deploy a single analytic data management platform that handles a variety of data to ensure optimal service and product delivery.

For more on Hadoop and what it does, head over to the QuickBase Fast Track blog.