Deviating From Your Core Competency

Related to Mondays post on core competences, it's worth mentioning that there are instances where deviating from your core competency can be a good idea. In fact, some businesses are able to leverage their initial core competency to enter entirely new businesses. And in some cases those businesses have become the major driver of profits. One example of this was General Motors. Everybody knows that General Motors' core competency was making and marketing automobiles. What many people don't know is that back in the early 2000s, most of their profit was generated by their financing arm, GMAC.  So in reality, their core competency wasn't making cars, it was lending people money to buy cars. GMAC was eventually spun off; likely to allow GM to put their focus back on making and marketing cars, and because the car business was dragging down the value of the financing business.

Lots of other businesses find that financing can be more profitable than their core business. Every time I go to a clothing store like Banana Republic they practically beg me to sign up for their store credit card. They're willing to give consumers huge discounts on their clothes (their core product) just to get them to sign up for their credit card. Sure, they probably have found that their credit card carrying customers are more loyal and buy more clothing when they shop, but I guarantee a large portion (in some cases, a majority) of these stores' profits comes from their credit card businesses.

Another example of an industry that has deviated from its core competency is higher education. Large schools like Harvard have found that they make a lot more money managing their endowments than they do selling tuition. Depending on the year, Harvard’s endowment has made 5, 10 or even 20 times more than they've made in total annual tuition. Further, in 2004, Harvard’s top five endowment managers made $78 million in annual compensation – that's 100 times more than the school's president made in the same year.

So, arguably, Harvard's core competency – and frankly, core business – isn't delivering a great education, its real core competency is managing its assets.

Of course there's nothing wrong with using your core competency to create a second, more profitable business. It reduces business risk and contributes to growth. Shareholders love it. But it can reduce focus.

As I wrote on Monday, trying to be good at too many things is dangerous.  And when you get too big, putting your focus in too many places puts the thing that you do really well at risk. And losing focus on that thing is even scarier when that thing is propping up an even more profitable business.

Sticking to Your Core Competency

I've been thinking a lot recently about companies and their core competencies. The idea that a company with a few employees and only a little bit of capital that focuses on only one thing can do that thing more effectively than a billion dollar company with tens of thousands of employees is hard for many people to comprehend. Bijan Sabet wrote about this a while back when he pointed out that so many of the embedded iOS apps have been replaced by applications from tiny startups. From his post:

The default notes app has been replaced by Simplenote

The default messenger app has been replaced by Kik

The default calendar app has been replaced by Calvetica

The default music app has been replaced by exfm, soundcloud and rdio

The default mail client has been replaced by Sparrow

Granted, Apple wasn't necessarily competing aggressively in all of these areas.  But the reality remains that a small group of people that focuses on one thing will always outperform a large group that focuses on lots of things.

With some of this in mind, I came across a blog post by Paul Levy last week on the increasing trend of large health systems getting into the payer space. Due to the growing pressure on reimbursement rates and the increasing prevalence of population health, it only makes sense for health systems to be inclined to cut out a middleman (the private insurers) and become more horizontally integrated. Health systems are finding that they can organize and work directly with large pools of patients (employers, trade groups, unions, etc.) and, potentially, insure and care for them more cost effectively.

While on the surface this may seem like a great idea, Levy points out in his post that many large hospitals have enough problems improving their existing businesses in this complex and rapidly changing healthcare environment:

Here's what I think, based on unscientific site visits, surveys, and discussions with hospital leaders. The vast majority of hospitals--and especially academic medical centers--have barely begun to crack the operational problems that exist in their facilities. The quality and safety of patient care are substandard, compared to what they might be and what has been demonstrated in comparable facilities. The degree of patient-centeredness, likewise, needs major work. Finally, the engagement of front-line staff in process improvement efforts is scattered.

Despite this, 1 in 5 health systems intend to become payers by 2018. And this is where the notion of core competency comes in. Given the massive transition that healthcare is going through -- from managing sickness to managing health -- might some health systems be wise to focus on improving and creating a competitive advantage on what they already do well? As opposed to entering a complicated and risky new industry (health insurance company profit margins generally hover around a very low 4% and the industry is subject to paralyzing state and federal regulation).

Just like Apple has wisely decided to focus their best energy on building great tablets and smartphones and to allow someone else to build great mail and calendar apps (on top of their platform), it might make sense for health systems to continue to focus on improving the quality and efficiency of care and cutting the costs of their existing operations, and to let someone else be great at the underwriting and actuarial work.

Being Wrong

Last week Penelope Trunk had a good post on 5 things she was wrong about. I've found over and over again that people that are alright with being wrong are far more successful (and pleasant to work with) than people that have to be right.  People that can be wrong have the right mix of confidence and humility -- two of my favorite qualities in a colleague. I recommend reading Penelope's full post, but in the excerpt below she captures why being able to be wrong makes people more successful. I liked it so much that I thought I'd post it here.

The real reason I don’t mind being wrong is that you can’t ever be right in a way that matters if you’re never wrong. Think about it: if you are right on something where everyone knows you’re right then it doesn’t matter that you’re right. If you are right about something where people think it’s surprising, then you take a risk of being wrong but you also open yourself up to the joy of surprising yourself with your own insight. It’s a risk high performers are willing to take.

Yahoo! & Working From Home

Much has been made of Marrisa Mayer’s controversial decision to stop allowing Yahoo! employees to work from home. I've heard pretty convincing arguments for it and against it. I feel pretty strongly about allowing employees to work when and where they’re most productive. Personally, I’ve often found that I can be incredibly productive working from home on Saturday mornings. And not so productive when in the office on a Friday afternoon. And often it can be vice versa. But having the flexibility to manage my own productivity makes me a better employee. Having that kind of control is really important.

But none of this takes into account collaboration with my company and team. There are things that I can’t do on my own time. I have to collaborate with my colleagues, and when and where we do that is not always up to me. So I need to balance optimizing my own productivity with finding time to collaborate and learn and innovate with my colleagues. Ideally, a CEO should allow individuals to manage that balance on their own. But when a company is going through a massive change in management and structure and mission (like Yahoo! is right now) it absolutely makes sense for the CEO to mandate that balance.

Right now, according to Mayer, it appears that Yahoo! is in transition. And in need of better collaboration and teamwork and that’s why she made the decision to bring employees back to the office.

In short, I guess my opinion is to not have an opinion. Those of us that are not on the executive team at Yahoo! can’t really know the circumstances at Yahoo! and, given those circumstances, can't really make an intelligent judgement about the most appropriate work from home policy.


People of Groupon, After four and a half intense and wonderful years as CEO of Groupon, I've decided that I’d like to spend more time with my family. Just kidding — I was fired today. If you’re wondering why … you haven’t been paying attention.

These were the first two sentences of Andrew Mason's letter to employees announcing that he had been fired as CEO of Groupon following a disappointing fourth-quarter earnings report. The letter goes on to explain some of his failures, as well as express his hope for the future of the company.

It was really refreshing to see Mason take this approach. This guy built an amazing company (I wrote about their growth a while back). And I give him a ton of credit for talking about his failures so publicly. This is so rare in public and private life.

When I interview job candidates I always ask them about the biggest mistakes and failures in their career. Candidates are so reluctant to talk about this topic. They often don't answer the question or talk about a failure where they didn't really fail. They're afraid that I'm going to view their failures as a bad thing.

But failure is a good thing, a great thing actually. Because it shows that you've tried things that are hard and have been through difficult times and persevered. And I want to work with people that have tried hard things and been through difficult times and persevered.

When you try to do great things you're going to fail. A lot. And failing is the best chance to learn. Personally, I learn much more when I fail than when I succeed.

When I interview someone and they can't think of a failure, there are three possible takeaways: 1.) the candidate isn't self aware 2.) the candidate is lying 3.) the candidate has never tried anything difficult. All of these are bad.

I hope we see more business leaders (and interviewees) become more open about their failures like Andrew Mason was last week.

The Photocopier Effect

I've written in the past that one of the secrets to negotiating with partners or potential partners is to always communicate the reasons behind your position. It's critical. The partner doesn't have to agree with your position, but you must explain the business logic behind it. People don't like things that don't make sense. With this in mind, I came across an interesting phenomenon called the "Photocopier Effect" in a Malcolm Gladwell New Yorker article from a while back. The Photocopier Effect proves, scientifically, why it's so important to emphasize the reasons behind your position. From the column:

...Harvard social scientist Ellen Langer. Langer examined the apparently common-sense idea that if you are trying to persuade someone to do something for you, you are always better off if you provide a reason.

She went up to a group of people waiting in line to use a library copying machine and said, "Excuse me, I have five pages. May I use the Xerox machine?" Sixty per cent said yes.

Then she repeated the experiment on another group, except that she changed her request to "Excuse me, I have five pages. May I use the Xerox machine, because I'm in a rush?" Ninety-four per cent said yes.

This much sounds like common sense: if you say, "because I'm in a rush"--if you explain your need--people are willing to step aside.

But here's where the study gets interesting. Langer then did the experiment a third time, in this case replacing the specific reason with a statement of the obvious: "Excuse me, I have five pages. May I use the Xerox machine, because I have to make some copies?" The percentage who let her do so this time was almost exactly the same as the one in the previous round--ninety-three per cent.

The key to getting people to say yes, in other words, wasn't the explanation "because I'm in a rush" but merely the use of the word "because." What mattered wasn't the substance of the explanation but merely the rhetorical form--the conjunctional footprint--of an explanation.

Ecosystems Create More Jobs Than Companies

60 Minutes had a story last week on the increasing impact of robots in corporate America. Because of the technical innovation that continued during the recession, as companies begin to grow again they're finding that they can replace many of the lost jobs with robots instead of people. One of the researchers in the piece points out that Apple, Amazon, Facebook and Google are all public companies and have a combined market capitalization of nearly a trillion dollars. But together, they only have  around 150,000 employees. Which is about half of the size of GE and less than the number of new entrants into the American workforce each month. Sounds like a bad thing, huh?

Not really. What this comment ignores is the ecosystem that these companies have built.  Each one of the companies listed above creates far, far more jobs than the number of employees that work for them directly.

Some examples:

  • Apple's app store now has more than one million apps that are built and sold by entrepreneurs that don't work for Apple.
  • Thousands of independent merchants sell their goods through the Amazon Seller Program. Amazon gives these sellers access to 200 million+ shoppers each month. Amazon also enables authors to self-publish and sell their work through the platform.
  • There are more than 10 million revenue generating apps that plug into Facebook.
  • Google's Android app store has more than one million apps built and sold by entrepreneurs that aren't employees.

So when you dig a bit deeper you find that the combined market cap of these four companies is incredibly dependent on the work of an enormous number of entrepreneurs that are making a living through these platforms. So while GE may have more employees than these companies, the number of individual livelihoods that are supported by their platforms dwarf the employee headcount of any American company.

Blocking Out The Competition

Over the last few months, Twitter has removed the auto-preview feature for Instagram Tweets. So now you have to click through the link in the Tweet to see the photo. Presumably Twitter did this to encourage their users to use their native photo sharing application. When LinkedIn redesigned their profile page about a month ago, they dramatically decreased the exposure of a user's Twitter account. In fact, it's not even on the main profile page, you have to click "contact info" to see a user's Twitter account. This is a drastic change given the LinkedIn/Twitter integration that used to exist.

So LinkedIn is blocking out Twitter and Twitter is blocking out Instagram.

I think this is dangerous for LinkedIn and Twitter. I've written in the past about how difficult it is to build a successful B2C business. Your product has to be so great and so valuable if you want to win. You don't have the luxury of a salesperson whispering in the user's ear giving them context on your decisions or information about what's coming soon and how the product will improve. The product has to be great, right now.

Of course, I don't know all of the facts behind these decisions. But I do know that the effect of blocking out applications that users like is bad. And in a B2C business, what's bad for the "C" very quickly becomes bad for the "B".

Individual Employee Budgets

The other day I wrote about the fast growing b2e2b business model where enterprise software companies make their product available (often for free) to individual employees. Then – after those employees love the product – they put pressure on their employers to buy the premium version or to buy the product for the entire enterprise. While I believe that this model is going to continue to grow at an extremely fast pace in 2013, there is no doubt that it’s inefficient – i.e. the employee has to go through a bureaucratic purchasing department to buy a tool that will make them better at their jobs.

That’s why I believe that, as we see b2e2b grow, I think we’ll also see this inefficiency addressed. That is, we’ll start to see more budgetary control put in the hands of the individual employee. Many companies – even large companies – already give their employees a cell phone budget. I think we’ll see this kind of control flow down to other productivity tools as well to the point that budgets won't be bucketed by division or group or team -- we'll see more and more money flowing into individual employee budgets.

Of course there are internal compatibility, security and scalability concerns that will slow down this trend, but I think this it's something for enterprise focused companies to watch out for in the coming years.

Enterprise Software & The Network

Fred Wilson posted a talk he did the other day on enterprises and networks. Including Q&A, the talk is nearly an hour. For me there is one incredibly important takeaway for software companies that are focused on the enterprise. And that is that in today's environment, in the long term, you must remember that your business model is a commodity, your software is a commodity, your customer service is a commodity and your sales team is a commodity. The thing that will provide you with sustainable, incremental value over the long term is your network of users. That is the one thing that is extremely difficult to copy in the long term. Enterprise focused companies that have large networks of engaged users that are adding value to the product simply because they use the product are the products that will win over the long term. Here are five good examples of enterprise software products that are successfully using their network to increase engagement and product value.

  • Yammer (users are an extension of the sales force)
  • LinkedIn (users -- i.e. job candidates -- are the product for recruiters)
  • Mongo DB (users improve the code by using the product)
  • DropBox (users are an extension of the sales force)
  • Disqus (user discussion drives increased traffic and engagement to participating blogs)

B2E2B (Business to Employee to Business)

We all know b2b and b2c, and even b2b2c. I'd propose that an emerging software business model is b2e2b (business to employee to business). While it hasn't been called out clearly like this (trust me, I've 'Googled' it) there are many companies that are already using this approach (Yammer, Dropbox, Xobni and others). The way it works is that a company builds a product that can be accessed directly by a single employee of an organization. As the number of users within a company grows and reaches a critical mass, the company then has a salesperson contact the organization to make the upsell -- e.g. business to employee to business.

Of course, this model is interesting in its own right. But there are much larger implications for enterprise software. Chris Dixon and others have talked a lot about the fact that enterprise technology is far behind consumer technology. As I've written before, I believe that the reason for this is that enterprise technology can get away with being bad. For example, if you're a payroll provider and you provide a lousy interface for employees you can get away with it because you only have to sell one person in HR on your product (and then they force ten thousand people to use it). But if you're a consumer site like you can't get away with being lousy because you have to sell 10,000 people, one by one. You have to be great or you'll fail.

And this is why the b2e2b approach is so important. It’s radically changing the way enterprise software is built and sold. And as a result, we should see the quality of enterprise technology begin to catch up with consumer technology. And when it does, those big b2b companies that continue to rely on their brand or their sales force to drive sales will begin to collapse.

Facebook's 15%

You may have noticed that there are fewer posts in your Facebook feed these days. The reason? Facebook is now selling its ‘sponsored posts’ feature to individual accounts in addition to business accounts. So now, when you post an update to Facebook telling your friends that you’re going to the gym or looking forward to watching your favorite television show that post only appears in approximately 15% of your friends’ news feeds. But, if you pay a small fee (I hear around $5 to $10) Facebook will show that post to a much larger group of friends. This change has caused quite a bit of frustration for Facebook users. And rightfully so.  Many businesses and individuals have spent massive resources acquiring Facebook followers and have been using Facebook as a way to engage their customers for years. You can understand the frustration among businesses and individuals that suddenly have to pay to speak to their own network.

For Facebook, though, the move makes a lot of sense. They’re a public company now, and the market wants to know how they’re going to continue to add shareholder value.  And given that there are reasons to believe that their user growth is beginning to top off, there’s lots of pressure on them to monetize their user base.  Offering a paid product to their entire base of users – which, by the way, equates to about one seventh of the world’s population – is arguably a step in the right direction.

Of course, what’s good for Facebook’s stock price in the short term may not be good for its users. Beyond the anecdotal frustration, Mark Cuban and others are advising their companies to pull back from using Facebook as a primary marketing channel. And some of the bands I follow on Facebook have asked their users to begin following them on Twitter instead.

Facebook has to walk the thin tightrope of providing an accessible and valuable platform to the masses while it tries to monetize more and more of their user base. In the past, shareholders could argue that Facebook may have leaned too far towards providing the free platform. With this change, they’re now leaning in the opposite direction. They'll have to adapt their product and communication strategy to figure out how they can continue to thrive using this new model – and they better hope their users stick around while they do.

Results From My Super Bowl Commercial Experiment

5 years ago when I started this blog, I had a theory. The theory was that participating in big, broadcast marketing was a bad strategy. And that companies that continued to participate in it would likely see their stock prices fall over time. To test this theory, I selected a group of 6 companies that ran television commercials during that year's Super Bowl and noted their stock prices with the intention of measuring their performance against the S&P 500 index. The 6 companies were Pepsi Co., E-Trade, Anheuser Busch, Coca Cola, Bridgestone and FedEx.

Anheuser Busch was of course acquired by InBev back in 2008 so 5 years later that leaves me with 5 companies to test my theory. Here are the results:

  • The S&P 500 outperformed the mean of the Super Bowl stocks by just over 13%.
  • The S&P 500 dropped 2.2% during this period and the 5 Super Bowl stocks dropped 15.3%.
  • The S&P 500 outperformed 3 of the 5 Super Bowl stocks.
  • Only one stock price increased during the period (Coca Cola by 22%)
  • E-Trade's stock price ell by 83%.

Given the small sample size, I'm not sure the data is all that conclusive. But it certainly doesn't conflict with my theory. So I'll stand by it for now...

Conscious Capitalism Talk

Here's a great talk that my former marketing professor, Dr. Raj Sisodia, gave at TEDxNewEngland about a month ago. The talk addresses how the world has changed dramatically in recent years and encourages our large corporate institutions to change too. Dr. Sisodia was without a doubt my favorite professor in business school and this talk reminds me of one of his great lectures. I hope you enjoy it.


How I Interview Job Candidates

I think a lot about the best way to interview job candidates.  I’m always trying to determine how effective they’ll be at my company but also how much they’ll actually want to be at my company.   I want to be sure that we’re going to like them long after they’re hired and, just as importantly, that they’re going to like us long after they’re hired. Here’s the framework I’m currently using when I interview a job prospect:

  1. Resume Walkthrough.  First, I walk through their resume to get to know them.  I try to understand why they chose their schools, companies and industries and I always ask why they left each job.  Walking through their resume gives me a really good sense of who they are.  It can be somewhat of an intense conversation so it helps me get to know them right away.  On the surface, I don’t care about gaps in resumes or sabbaticals but I like to understand the choices that the candidate made and why they made them.   At the end I always ask them my favorite interview question.  I ask them to tell me what they want to do without naming a company or an industry.  Specifically I want to know how they want to add value to an organization.
  2. Analysis of Strengths.  Next I dig in on their strengths.  I assume that they’re really good at what they do but I like to understand exactly why they believe they are so good.  Often I’ll ask something like, “if you’re the top performer on your team and I asked the average performer on your team what makes you so good, what would they say?”  This gives some insight into how analytical they are about their success.  I don’t really care that much about hearing about their success, I want to hear about why they’re successful so I can assess whether or not that’ll be transferrable to my company.  Candidates that can’t intelligently tell you why they’re successful are risky.
  3. Hesitations.  At this point I’m in a good position to assess my hesitations.  In a nice way I tell them exactly what I think of them so far and what I’m hesitant about.  And I give them a chance to respond.
  4. Tension Breaker.  Then I lighten things up and ask what they do for fun.
  5. Questions.  Lastly I ask if they have questions for me.   I can usually get a good sense of how much they’ll like working at my company by the questions they ask.

This approach has been working well for me lately so feel free to borrow it.  I’ll try to document how this changes over time.

Is There A Shortage Of Sales Talent?

An article on the Harvard Business Review blog today talked about the shortage of good sales talent and the need for more formal sales training programs. My theory is that there's actually a lot of sales talent out there but those people simply don't want sales jobs. Here's the comment I posted.

Great post and an important topic.  I believe that in today's business environment you need a variety of skills to be a good salesperson -- it's not about back slapping on the golf course anymore.  Sales is much more complex now.  You need to have a strong understanding of finance, economics, accounting, marketing, strategy, technology, product and management to understand what makes a good prospect, what problems your prospects have, where markets are going and how your company's products can fit in.  These skills are not easy to acquire.  In my experience, they come from getting an MBA or working in a client-facing role in a very early stage company where you're forced to wear a lot of hats and figure out how to make your product work or, in a rare case, you've gained these skills on your own by educating yourself.  And I've found that people that have that kind of experience under their belt are, for the most part, uninterested in filling a typical "sales" job.  They're interested in getting into finance or consulting or strategy.  This is because sales has a stigma to it.  People with that kind of ambition and experience often don't want to tell their friends and family that they're a "salesperson".  Not because sales isn't an admirable job -- it is -- but because there's a stigma attached to it.  People that don't understand the complexity of today's sales environment think of the used car salesperson trying to sell them a lemon.

As a result, I believe we need to begin to stop using the word "salesperson" to describe the roles we're trying to fill.  And not just for recruiting reasons.  Because the word no longer describes what these people are being asked to do.  These people aren't selling knives door to door to every house in town.  They're not pitching and responding to objections.  They're seeking out and understanding business opportunities, carefully selecting the appropriate individuals to connect with, having open, informal business conversations, validating assumptions, iterating those assumptions, refining products and services, participating in internal and external strategic planning, creating mutually beneficial partnerships, negotiating legal & business terms, setting goals for the partnerships and seeing that those goals are met.

I believe that the sooner that companies create roles and job titles around this new skill-set, the sooner we'll see more professionals signing up to fill these jobs.

Retaining Your Employees

Fred Wilson had a good post a while back on employee retention. I posted some of my thoughts in a comment there and thought I'd post them here as well. One trend that I’ve seen is that employees leave companies, for the most part, for one of three reasons:

1. They don’t think they’re great at what they’re doing

2. They don’t feel like what they’re doing is important

3. They don’t feel appreciated for what they’re doing

Smart, ambitious people want to be winners. They want to be awesome at what they do, they want to be doing work that is meaningful and impactful and they want to feel appreciated for it. If an employee feels this way, it’s very unlikely that they’ll leave. But with so much going on, busy managers often forget about these things. It’s critical for managers to stop and recognize when an employee is good at something. Verbalize it, don’t just think it. Tell them they’re awesome. Say thank you. Show appreciation.

Everybody gets insecure at some point, even top performers. I remember Mike Krzyzewski, Duke’s basketball coach, explaining that once or twice a year he calls his best player into his office to tell him how much he’s appreciated. This kid is in Sports Illustrated and on ESPN and is the most popular kid on campus, but as Coach K says, everybody gets insecure. And when they do, results suffer.

It’s management’s job to create an environment where people feel awesome. They feel like they’re good at what they do, they’re doing important work and they’re appreciated by their company. When you have these three things in place,you’ll see your retention numbers soar.

As Jack Welch used to say, self-esteem is the fuel that powers great companies.

Do Your Employees Know How To Work The Projector?

I've seen a few blog posts over the last few days about the lack of innovation that exists in large companies. One of the fundamental lessons I recall from business school was this: success leads to arrogance and arrogance leads to failure. The notion was that companies that get successful and big will inevitably become comfortable with their own success.  This comfort will encourage them to stop innovating and start putting bureaucracy in place that will protect what they have -- and that will eventually cause them to fail.  It’s a natural cycle that always exists. So my professor was encouraging us to be conscious of it so our companies might avoid that fate.

Over the years, I've met with companies big and small -- from startups with fewer than 10 employees all the way up to Fortune 50 companies with hundreds of thousands of employees. A small thing that I’ve noticed is that if the company has more than about 1,000 employees you can guarantee that something will go wrong with the presentation tools in their office. You can’t get online. The projector is broken. Nobody knows how to turn the videos screens on.  The cabinet storing the CPU is locked.  Literally, 95% of the time, something will go wrong when you're presenting to a big company.

This never happens when I meet with startups. Everyone knows how things work, there’s less security and bureaucracy and even the most senior people in the room know how to work the projector.

Obviously, on the surface, this observation seems meaningless. But I do believe it’s symbolic of the arrogance that exists naturally in a large company. Employees at big, successful companies either don't believe they need to know how to do simple things like this or the company has put so much bureaucracy in place that they're unable to learn.

If you're an executive at a big, successful company ask around and see if your employees are able to work the projector. If they're not, I wonder what else they can't do.

Firing An Employee

A while back Chris Dixon had a good post on firing people. I shared a couple of my thoughts on the topic in a comment. I thought I'd post those thoughts here as well and add on a couple more. These are a few things I like to keep in mind when parting ways with an employee:

  1. With very, very few exceptions the person is better off being fired. If you're considering firing someone, and you decide not to, they have very little chance of being successful at your company in the long term. And the situation is bound to get worse. It's better to get them off to another organization where they can shine. While it can be very painful in the short term, I've never seen someone get fired that didn't end up in a better situation within a year.
  2. In another role, in another company, in another culture, the person you're firing could perform better than you or anyone else in your company. You're not better than the person you're firing. They're in a place where they aren't performing at their best. It could be the role, the industry, the company, even the management that's keeping them from performing at the highest level. Regardless, I believe it's always best to push that person to find a place where they can rise to the top.
  3. With good management, a firing should never come as a surprise. I believe strongly in a culture of candor. If an employee is performing well they should know it. If they're not performing they should know it as well and they should know exactly what they need to do to perform better. They may be unable to perform better (either because they don't want to or they're not capable) but managers should lay out clear expectations for employees and clear consequences when expectations aren't met. So that when it comes time to make a change, it's not you telling them they're fired, it's an agreement that expectations aren't being met and it's best to move on.
  4. Never, ever, ever speak ill of a terminated employee to customers, employees or anyone for that matter. For whatever reason, it wasn't a good fit. It's that simple. Leave it at that.
  5. Even though I've broken this rule in this blog post, don't use the word "fire". Say "part ways" or "moved on" or "made a change".  It's a small thing but these phrases are far more elegant and professional.

Dethroning The King

Dethroning the King

I recently finished reading, Dethroning the King: The Hostile Takeover Of Anheuser-Busch, An American Icon.

The book, written by Financial Times columnist Julie Macintosh, gives the reader an astonishingly detailed look inside the takeover of Anheuser-Busch by InBev, a Belgian company run by Brazilians. Because the transaction occurred smack dab in the middle of the housing crisis in 2008, many didn't pay attention at the time.

If you like business history and have an interest in the mechanics of enormous organizations and enormous transactions, you'll love Dethroning the King.