DMI Entegral Solutions Group

Pressure, Stress, and Raising the Bar

2012-02-22T04:55:00.001-08:00

It is 4th and Goal on the 3 yard line. The Offense is in “I” formation with two tight ends. They are lined up to run it off tackle, “straight up the gut.” The defense is stacked “in the box” to prevent the run. The play clock is ticking, “5…4…3…” The game clock is at 47 seconds. This is the last play of the game; three yards delivers a win, but two and a half yards hands you a loss.

You are down by one stroke walking to the 18th green. You have stormed back from being down by as much as 5 shots, and you now have a putt for birdie to force a playoff. You walk around the hole to line up your putt, which looks to be just inside the right lip. It is a makeable 5 footer, uphill and against the grain. Everybody is watching. You slowly approach the ball and take three practice strokes, just like you do every single time. Then you place the putter behind the ball, set your feet, and take one last look at the hole, imagining the ball traveling the imaginary line to the right side of the cup.

To you or me, both of these situations are not merely pressure situations, they are “stress” situations. Unless you are an NFL quarterback or a seasoned pro golfer that has “been there before”, the outside pressure of two ticking clocks, 11 men averaging 6’ 3” and 250 pounds, and an entire town (or nation) watching, or the internal pressure to keep your muscles loose and your mind from taking your putter off line would be too much to handle. We don’t have the training and tools to cope with those situations.

To the quarterback who is about to execute a naked bootleg, or the golfer that has made 4,000 five-foot putts under various amounts of pressure since he was a junior golfer, these situations are what they live for. So why is a pressure situation stressful for one person, but exhilarating for another? Understanding the difference in pressure and stress, and how each person copes with pressure is a fascinating, and I believe very useful pursuit for a leader.

Pressure is good. It may be external, internal, or both. It takes pressure to pump blood through the body. It takes pressure to fill a tire. Too much pressure can cause the heart to fail, or the tire to blow. Pressure is good; stress is bad.

The relevant question that we need to ask ourselves as business leaders is, “how do we apply the right amount of pressure, and at the same time minimize stress in order to get the best performance?” But why apply pressure at all? According to August Turak at Forbes,

“Maximum pressure combined with minimum stress produces passion, and passionate organizations full of passionate people will accomplish well-nigh anything.”

That is an interesting position, and one that can be easily debated. But think about it another way – think about what happens with a lack of pressure. Other than the obvious flat tire, a lack of pressure can create as much or more stress than too much pressure.

Consider again the football analogy; how many times have you heard it discussed by the analysts that a team is floundering because there is no “vocal leader” in the huddle? They say the team is undisciplined and there is strife in the locker room. They show clips of individual players blaming others for their own lack of production. They show repetitive “false start” penalties, and guys with sour looks on their faces moping back to the huddle. What the analysts are suggesting is that the quarterback isn’t demanding perfection from his offensive line, his receivers, or his running backs. They are suggesting that some of the best athletes in the world will not perform their best unless they have a leader getting in their face and telling them to bring their “A” game. Moreover, they are claiming that pressure can actually mold the individuals into a team and prevent chaos and discord.

But not everybody needs a “vocal leader”. Some guys perform their best whether a quarterback grabs their face mask and jerks their head around or not. In fact, some guys may respond negatively to that style of pressure.

The key is in knowing your team, and what drives each of your players to perform at peak level. Pressure becomes stress when your team member doesn’t have the freedom, authority, or tools to deal effectively with the pressure, or when expectations of performance are unreasonable.

But we need to be careful not to remove pressure as we are attempting to eliminate stress. When we try to avoid pressure or putting pressure on others, we can inadvertently lower the bar and make it OK to be mediocre.

Remember, “A” players are “A” players because they have performed under pressure time and again. If you are worried about putting pressure on your team because they may not be "A" players, then that is another problem entirely and will require many other blog posts to deal with. However, if you know you have "A" players, and you want the best out of your team, consider the following:

Know the capabilities of your team members. Remember that pressure becomes stress when the expectations are too high.
Clearly define expectations. Unstated expectations can be just as stress inducing as unreachable ones.
Know what motivates your team. Some guys need a “vocal leader”, while others need to be left alone.
Minimize stress. Make sure your team has the authority, tools, and freedom to manage the pressure situation.
Give grace. Everyone makes mistakes and even “A” players jump off-sides from time to time.
Encourage and reward. Everyone works for something, whether it be praise or prize. Know what your team members need and don’t be stingy.

So what happened? Did the quarterback successfully execute the naked bootleg and take his team to victory? Did the golfer drain the 5 foot putt to force the playoff? The more important question is how will you lead in your version of the NFL or the PGA? Harness the pressure, remove the stress, and raise the bar.

Zero-Sum Game?

2011-12-27T09:50:00.000-08:00

I absolutely LOVE Christmas. Not just the day, but the month leading up to it and the few days after it. I have wondered why I am the way I am, and why other people may be different. Some decorate their houses; some don't. Some put up fake trees; some ONLY buy live trees. Some put up white lights; others put up blinking green and red lights and blow up Santa figures in the front yard. The differences go on and on. I am certain my traditions have something to do with how I grew up, and how my mother decorated the house, the smell of cinnamon, and the lights around town. As a kid, I learned to love it... as an adult, I demand it!

So what does Christmas have to do with the concept of the "Zero-Sum Game", you may ask? Nothing really. But since it is the Christmas season, indulge me for a minute and I will cram the two topics together to make it work.

Christmas is the easiest illustration I can point to of a belief system that manifests itself in all sorts of action, carries on for generations, and then over time the participants lose track (or forget, or never learned) of the belief. Why the tree? What does the star on top mean? What is the significance of a candy cane? What do the colors red and green represent? Who is Santa? The questions go on and on, with very few people knowing the answers (not to mention the point of Christmas in the first place!) But that is what humans do. They do because they always have and because their parents did, and so forth. I wonder how many would still carry on the traditions if they knew what the meanings were. I would like to think most everyone, but you never know.

Now for the s t r e t c h comparison. Today, we see a similar dislocation of actions and their origins. We see the evidence of a belief, but the actual belief is out of sight and out of most everyone's consciences. The "decorations" for this belief are things like political speeches about the "Income gap", articles about the unfair "transfer of wealth", pitting "Wall Street" against "Main Street", a broad brush condemnation of "capitalism", and so on. Most people see these "traditions" and carry them on because they look good, smell good, and sound good. Their parents or their favorite actor or their favorite TV show host has parroted them, so they do too. And because it is Christmas, and many people are indulging while others are doing without, the rhetoric has ratcheted up a few notches.

But what do you get when you boil it all down to the core belief that spawns all of the holly and tinsel? Unlike Christmas, we don't get to truth, we get myths such as the "Zero-Sum Game."

The Zero-Sum Game concept is the idea that in our economy (and in any transaction), there are always economic winners and losers, and that in total, the losses equal the winnings so that there is no net gain - i.e. a "zero sum". It has as its theoretical end the concept of the "Fixed Pie"; that is, that wealth is not created, it is only transferred.

As an example, take the "unfair" income gap that is the outcry of the media today. The data shows that the difference in income between the rich and the poor is widening, and has been for years. Sounds terrible, right? It may be. Are the wealthy getting wealthier and the poor getting poorer? That is what we are led to believe. What is implied is that the wealthy got there at the expense of the poor; that the poor would be better off if the wealthy weren't so wealthy. What if that weren't true? What if the two had nothing to do with one another? Or worse, what if the wealthy getting wealthier actually helped the poor?

Let's dig into it a little bit. Say an entrepreneur invented a new widget and makes $50k, and another guy on the other side of the world making $50k loses his job? If you believe in Zero-Sum, the consequences of the entrepreneur's success starts a chain reaction of money transferring hands that ends up creating a shortage somewhere else, causing a lack of funds to pay that guy's wage and resulting in him being let go. Seems plausible. That is fixed pie thinking.

The other view is that the entrepreneur invents a new widget, employs people, and creates "new wealth". He gets wealthier at the expense of no other person. The guy on the other side of the world loses his job because his employer is paying a higher tax bill and can't make payroll. How plausible does that sound? That is not fixed pie thinking.

Which do you believe, and which one is true? If you aren't sure, think about what the economy was like in the years 1800, 1900, and today and ask yourself one simple question: Did wealth increase? The clear answer is yes. Population increased, and wealth increased per capita. Don't believe it? Click here and press "play".

The natural follow up questions is "How?" More on that in a future post, but suffice it to say that mankind has found ways to add value to everything from trees to old tires to transistors. Mankind discovers, harvests, creates, and transacts in a way that creates wealth and gives people jobs, income, and hope.

So what is the point of all this? Seems like a strange subject to blog about and link to Christmas, doesn't it? Actually, it isn't as much of a stretch as it sounds. Christmas is a time when everyone is thinking about finances. Many are doing well, but many aren't and can't afford to give their kids much of anything. And when we see people struggling and the media blames the so called "wealthy", it is a tragedy.

As entrepreneurs, we are trying to help the economy, create jobs, and give families a hope and a future. My hope this holiday is that you would be encouraged to not accept the mush that is being fed to you from the media. Then, go hug an entrepreneur and thank him or her for taking a risk to create wealth and jobs. After that, go and be generous and share with those less fortunate. That is what makes this country (and Christmas) great!

Merry Christmas and Happy New Year!

The Wheelhouse

2011-10-17T14:09:00.000-07:00

You can call it a “sweet spot”, a “wheelhouse”, or even your “happy place”. Many simply refer to it as a “comfort zone”, but we all have them. It is that activity, job, or situation that we are best suited for and where we feel most confident in our ability. Recently, two of us here at Entegral experienced the opposite of our wheelhouse… maybe you would call it our “fetal position” or our “shock and awe place”. That is a place that you don’t quite feel like you measure up, and more importantly, you begin to recognize how much you appreciate other people.

I am referring to, of course, the “wife getaway”, where the husband / father is left home alone to be Mr. Mom for the weekend. How hard could it be, right? You get the kids out of bed, shove some donuts in ‘em, make sure they have oxygen while you watch college football all day, and keep one ear out for the sound of broken bones, right? Not exactly. Though this wasn’t the first time for either of us, and we have learned many lessons before, here are a few takeaways that we won’t soon forget.

Don’t walk barefoot in the house. Little Barbie shoes really hurt when you step on them.
Throw your diet out of the window. Kids don’t react well when you pull up to “Souper Salad” for the evening meal.
Beware of silence. Something really bad is going on, like eating Vaseline or coloring on walls.
Kids don’t know best. If you let them, they would eat Gummie Bears all day and run down the center of the street blindfolded.

In all seriousness, there are some real insights that we gain when we are pulled outside of our comfort zone into someone else’s. Primarily, we are reminded to appreciate other people. Everyone that is important in our lives deserves to know that we consider what they do to be of vital importance. Secondly, we are reminded to appreciate our differences. Where I am weak, my wife is strong and vice versa. Lastly, we are reminded to work hard. When we are put in a position where we are stretched, it clarifies how hard everyone has to work to keep the operation humming.

In all walks of life, these lessons apply – whether it be at home, church, with work relationships, or even business to business interactions. Learning to recognize what we are not good at and appreciating those that complement our skills can sometimes be difficult, especially for those of us that think we can do it all. But the learning is key if we want the best for our family, church, work relationships, and our companies.

Those of us that learn these lessons need to remember them. Those that haven’t yet – well, watch out for the little Barbie shoes on the kitchen floor, because they hurt!

Looking Glass Land - Part 3

2011-08-02T12:42:00.000-07:00

The following is the final (Part 3) of a three part article by Perry Been, Public Sector Services Director.

In Lewis Carroll’s (Charles Lutwidge Dodgson) sequel to Alice’s Adventures in Wonderland (1865), Through the looking Glass, and What Alice Found There (1871), we find young Alice pondering what the world is like on the other side of a mirror's reflection. Climbing up on the fireplace mantel, she pokes at the wall-hung mirror behind the fireplace and discovers, to her surprise, that she is able to step through it to an alternative world, the Looking-Glass Land.

After spending 18 ½ years in the public service arena, with the last 9 ½ of those years serving as the Deputy Director of the State Energy Conservation Office (SECO), I now find myself in Looking-Glass Land working in the private sector for DMI Entegral Solutions. I enjoy telling folks that I am doing the same thing I did for the State: I’m dealing with the same end-users, but now I can tell them what I really think. While said tongue-in-cheek, there is a lot of truth in that statement and I would like to share just a few things that I have learned and observed during the past 24 months of my life in Looking-Glass land.

Click here for Looking Glass Land - Part 1
Click here for Looking Glass Land - Part 2

Lesson 3 – Customer service is hard work, but it is the best part.
It will be difficult to write this without coming across as “prideful in my humility”, but I am going to give it a shot. Those who read this just have to trust that there isn’t a prideful bone in my body. I try every day to be the best that I can be, given the limited abilities that God has chosen to bless me with, (Oops… now I suppose I am portraying “false humility”…), but I am never satisfied with my performance. I suppose the lessons I learn about my industry, career, and myself are enough of a reward. I am digging a hole; I better shut up and write.

When I was at SECO, I watched people that I knew in customer service roles with a critical eye. Some did a very good job, while I can think of a few examples of really poor customer service. I remember thinking about how important it was, but I honestly didn’t know what good service actually involved, how hard it would be, or how easy it could be to end up accidentally giving the poor service that I had self-righteously judged. In the Looking Glass Land, I have come to appreciate the people I observed give good customer service, much like an amateur golfer appreciates how easy the pros make it look. I know how hard it really is, and the fact that they make it look so effortless is very impressive.

So what is good customer service to Perry Been? Unfortunately, I don’t have a fancy definition; but I think I know what the ingredients are, at least for me, to cause good service to come out of the other end. I believe those key ingredients to be the following:

A genuine caring for the person you are serving;
An understanding of what is required as a servant; and,
A willingness to do what is required.

While each of the ingredients seems simple, I contend that they are indeed very difficult. The proof is all around us. If it was easy, we would never have occasion to get mad when we are on the phone with the satellite TV provider, or when the flight attendant snaps at us, or when we are trying to get an answer to a computer problem. Furthermore, I think there is more to each ingredient than meets the eye. Here is a taste of how I look at it:

Ingredient 1: A genuine caring for the person you are serving

Notice that this ingredient wasn’t worded “caring about the account” or “caring about the relationship.” I believe that is where a lot of mistakes are made. Many subscribe to the “enlightened self interest” thought process that hypothesizes that if we do what is best for others, it will be best for ourselves; therefore we should do what is best for others. While I find it hard to argue with, I would rather think of it as doing what is best for a person because it is the right thing to do. If we always view other people as human beings, and not accounts or some form of nebulous “relationship” that we have to protect, the outcome is noticeably different. I can tell when someone cares more about my wallet, or being tied to me in some way than simply caring about me.

Ingredient 2: An understanding of what is required as a servant

There is a big difference between what is required as a servant and what many people think is required of a servant. It isn’t good enough to be cordial, check in every now and then, and offer lunch once a month. A servant understands the emotional needs of his Client, as well as the physical needs. He understands that sometimes they “don’t know what they don’t know” and he will have to help. He understands that there is always a tinge of “buyer’s remorse” when the Client second guesses his decision, and he will have to be there. He understands that his Client will sometimes get conflicting information from random sources, and he will have to hold his hand through it. He understands that a Client will have internal battles within his own organization that cause anxiety, and he will need to help him through. He understands that the Client will need constant reassurance, even when the decision is logical and based on sound information. In short, he simply understands.

Ingredient 3: A willingness to do what is required

Lastly, and most importantly, a servant serves. That requires a setting aside of yourself and putting others first. I believe that most people that fail at customer service fail because of a lack of will. The path of least resistance is to self-serve. It is easy to feed yourself; it is humbling to feed someone else.

So there it is. The best part of all is that I actually enjoy it. I get more out of serving and making people feel taken care of than I do any other part of my job. I know the definition is homemade, and overly simplified, but it works for me. In reality, the three ingredients are tied together in such a way that you can’t have one without the others. It starts and ends with a decision to be humble. What a great quality; what a great challenge. How will you put this into practice?

Philanthropy

2011-07-05T05:34:00.000-07:00

"Giving back" is one of those things one probably never considers when evaluating a company to go to work for, but makes one of the best qualities of an employer. Before I pledged a sorority I don’t think I had ever heard the word philanthropy. Little did I know my entire four years as a member that I would be participating in dozens of service events, charities, and so on. If everyone were being honest, giving back to the community wouldn't rank at the top of the wish list of ways to spend your time as a college student. Nevertheless, raising money for good causes and serving the community has a way of growing on people. For me, the enjoyment of giving back became a habit of service that has carried on into my career. That is one reason why I am proud to be where I am today. DMI Entegral Solutions has made a commitment to serving and giving back in areas that are important to its employees.

One such charity is the Fort Worth Teen Challenge. For the past several years, DMI has been involved in raising funds for the Fort Worth Teen Challenge and over that period the DMI Golf Tournament has raised over $500,000 to help fund this phenomenal organization. Teen Challenge is a Christian drug and alcohol rehabilitation ministry for women ages eighteen and older. Those deciding that they are serious about change in their lives make a personal commitment to come and live in the residential program for a period of twelve to eighteen months, in which time the girls live in a structured, safe environment conducive to huge personal growth. They get jobs to pay their own way, they maintain the grounds, cook for each other, participate in team building activities, and so on. Most importantly, they are taught the Bible and how to strengthen their own will so that they will remain sober after they leave. The statistics show that 86% of the women that leave FW Teen Challenge remain drug free. For more information, click here.

The final note on philanthropy is that old Biblical principle that "it is better to give than receive." I have never met anyone that said they didn't personally get more out of giving than the group they gave to. Remember that the next time you get the opportunity to volunteer or help a cause that is important to you or your organization.

Kristin Comer
Marketing Manager
DMI Entegral Solutions

Simple Message

2011-05-16T05:34:00.000-07:00

I was reminded last week by a dear friend (the kind of friend that will be honest with you when no one else will) about a lesson that I learned a few years back. A painful lesson. A humbling lesson. The kind of lesson that cuts to the core of a "good" business man or a "top" salesman, or any other person that interfaces with clients, because it tears down the very attribute that makes you who you are. This lesson, of course, is KEEP IT SIMPLE STUPID!

Yes, I am a complicated thinker. Everybody that knows me knows that. But at times, I have learned to hold back the web of intertwining thoughts and distill my message down to what truly matters. Other times, like recently, I have tended to live in that web and communicate as though I was the one on the other end of the communication - as though I, personally, was the audience, communicating to myself in the complicated way that I think. Anyone care to guess rule number one in business communication? That's right... communicate in the language of your audience - the real audience - in the way they listen and learn.

An old Greek quote goes something like, "Never say a little in many words, but a great deal in a few." That is the challenge, but one we shouldn't forget or abandon. The simpler the message, the more powerful. In fact, one of the central truths of the book Good to Great, by Jim Collins, is that the leaders that can make a simple message out of the complicated array of information around them become the best leaders. The companies that they lead become the best companies.

I am up for the challenge. Are you?

Looking Glass Land - Part 2

2011-03-16T11:55:00.000-07:00

The following is Part 2 of a three part article by Perry Been, Public Sector Services Director.

In Lewis Carroll’s (Charles Lutwidge Dodgson) sequel to Alice’s Adventures in Wonderland (1865), Through the looking Glass, and What Alice Found There (1871), we find young Alice pondering what the world is like on the other side of a mirror's reflection. Climbing up on the fireplace mantel, she pokes at the wall-hung mirror behind the fireplace and discovers, to her surprise, that she is able to step through it to an alternative world, the Looking-Glass Land.

After spending 18 ½ years in the public service arena, with the last 9 ½ of those years serving as the Deputy Director of the State Energy Conservation Office (SECO), I now find myself in Looking-Glass Land working in the private sector for DMI Entegral Solutions. I enjoy telling folks that I am doing the same thing I did for the State: I’m dealing with the same end-users, but now I can tell them what I really think. While said tongue-in-cheek, there is a lot of truth in that statement and I would like to share just a few things that I have learned and observed during the past 18 months of my life in Looking-Glass land.

Click here for Looking Glass Land - Part 1

Lesson 2 – The best decisions are based on adequate information.
While on the surface this is merely stating the obvious, I am constantly surprised by the decisions I see being made without all of the facts. I suppose I shouldn't be surprised anymore, but nonetheless I am. It happens every time a home buyer selects a title company based on the recommendation of their Realtor, or a consumer walks into Best Buy and purchases a TV without looking up the ratings online.

And, sadly enough, it has been happening with various forms of construction and renovation contracting since the dawn of time. During my years at SECO, we had the opportunity to review dozens of project proposals by Energy Service Companies (ESCOs), engineers, and other types of firms to State Agencies in Texas. As a taxpayer and employee of the State, it was my duty to try to help my clients (the Agencies) gather all of the right information before making a decision. Most of the time, our efforts were successful in terms of helping our clients make solid decisions. One major exception, however, was our lack of ability to help in any significant way with Performance Contracts. Unfortunately, there wasn't anything we could do about it.

For those not familiar with the term "Performance Contract", it is a contract with one entity to provide energy savings renovations with some sort of guarantee of energy savings tied to it. Performance Contracting law in Texas requires that selection of a contractor be based solely on qualifications, just as an owner would select an architect or engineer. In fact, it is the only construction method available that must be procured as a professional service. Using this methodology, owners are prohibited from asking or talking about costs, profits, overhead, or any other pricing methodologies until after a company has been formally selected and notified. (If this sounds odd to you, imagine how odd it is to those of us tasked with making sense out of it...)

What all of this means is that by the time a project made it to SECO for review, all we could do is advise our clients what to do in the (invariably tough) situation they were in. Many times, we were seeing prices at roughly the same time our clients were - 9 to 12 months after their contractor was selected. By that point, our clients negotiating position was very weak.

Our approach with those situations was to push the contractors to "open their books" and give detailed information on the prices in lieu of the "lump sum" price that often was provided. At that point in the process, all we could hope for was that a litany of questions (and the anticipation of them) would force the contractors to be honest and reasonable. This was not a perfect solution, but it was necessary.

If I had known then what I know now, I could have been much more effective at helping my clients with their information gathering and decision making. The first way I would help is in the interpretation and navigation of the Performance Contracting law. Even though a contractor is selected based on qualifications, negotiations on pricing for engineering, overhead and profit, and project management can and should be conducted prior to any work being done. Though this is possible, most owners do not realize it and do not know the correct variables to negotiate. I would have kept an eye on the RFQs published by my clients, and advised them not to sign anything (including a detailed audit contract) until they had negotiated all of the construction markups and fees.

The second way I would have helped is by encouraging the use of the Design Build statute as their procurement model, as it is much more apropos for energy conservation type of work. Like Performance Contracting, an RFQ is issued requesting contractors to submit their qualifications. Unlike Performance Contracting, however, the end-user may then short-list up to five (5) companies and ask additional questions about pricing, schedule, bandwidth, and anything else relevant to the specific project.

There are other differences, such as the lack of a guarantee mandate in the Design Build law, and no limits on the type of scope (energy savings only) that are in the PC law. But fundamentally, the Design Build statute is more flexible and gives the owner more of the right kind of information to make a decision based on the economic value that each contractor is offering.

One final thought: Since joining DMI Entegral, we have given all of our clients their options on procurement in a straightforward manner, describing the pros and cons of PC and DB methods in an unbiased manner. Without exception, our clients have selected the Design Build method because it provides them the ability to make the most informed selection. What does that tell you?

"They Love Cash. We Love Customers!"

2011-01-14T11:24:00.000-08:00

There are a lot of TV and radio ads out there that we all laugh at and remember. Like the Superbowl FedEx commercial where the pterodactyl attempting to deliver the stick gets eaten by the T-Rex... should have used FedEx. Or the Geico "woodchucks chucking wood", or Maxwell the little piggy going "Wee Wee Wee" all the way home in the back of Mrs. A's car.

Laughing at an ad, however, is different from an ad being truly effective. Southwest Airlines has some of the best ads going, in my opinion, not just because they are funny, but because at the end of the ad you know something about their company. You feel like you have learned something about them that may be beneficial to you at some point.

One recent ad on the radio caught my attention for a couple of reasons. The ad is condemning the practice by other airlines of charging "change fees" of $100-$150 in addition to fare difference. At the end of the ad, an incredulous lady asks, "How do they get away with that?", and the man answers in a somewhat triumphant voice, "They love cash. We love customers!".

Southwest doesn't charge a change fee, and those that frequently fly Southwest know this already (and it is a key reason for their loyalty). For anybody that is a student of successful businesses, this ad tells us two key things. First, there is a reason they don't have to charge fees for things that other airlines are charging fees for. No fees for extra bags, and no fees for changing a ticket -- the question you should be asking is how and why? While other airlines are struggling to make a profit, Southwest has weathered the bad economy because they have an extremely efficient business. They don't charge extra because it doesn't cost them extra. To put it simply, they run a better business.

Even so, just because they don't have to charge extra they still could. That would be gravy, right? That leads to the second key point: they have made a strategic decision based on the belief that they will benefit more by not following the crowd. Let's be real; they aren't purely benevolent. If they believed they were giving away cash, they wouldn't be doing it. What they are doing is bringing in more cash by gobbling up market share. Their belief is that customers will flock to them because their efficient business allows them to provide better value. More customers means more profit dollars, even though they make less gravy off of each customer. All signs point to their strategy as working.

So what? The point is that every company has to make a choice between two seemingly opposite ends of the spectrum. On one end is cash; on the other end is more customers. Charge more because you have a valid reason and because your costs are higher, knowing that you will lose some customers... or because you anticipate many more customers, keep the charges low. Those that run an efficient business realize that cash and customers aren't opposite after all.

The Weakest Link

2010-12-09T13:11:00.000-08:00

To some businesses, client loyalty is everything. After making significant investments in sales, marketing and other client acquisition endeavors, keeping the client is supposed to pay the investment back with profit. It is a simple model that has worked for years in every type of industry, from insurance to iPods. But as can be seen by the following story, client loyalty can be a fragile thing. The story is one that demonstrates that no matter how good pieces of your organization may be, sometimes the one weak link can be the difference in keeping your clients and sinking your ship.

The story starts on a ranch in South Texas, with a friend of mine (we will call him John), and a large Ford diesel truck. For those who drive the big F350's, you will know that there is a simple little gasket that tends to wear out every 3 or 4 years. For John - on a hunting weekend with his buddies - this little $20 fuel gasket wore out at precisely the wrong time. With no shop for miles and a truck leaking diesel, he luckily found an off duty mechanic that knew just what to do, and had the time and energy to help him. For about $150, John was treated like royalty, and his weekend was salvaged.

Fast forward a few years to this past May. Same guy, different problem. This time, John walks to his truck in the parking lot at Love Field, only to find that his water pump had busted and he was stranded. This time, he made a call to a company referred to him by another friend, and things went great. A well spoken, helpful guy took his call, sent a tow truck, and took care of everything at a reasonable price (considering the bind he was in.) This company earned a client that day.

Now for the final piece of the story. A few weeks ago John walked out to his truck in his driveway, when, much to his displeasure, he encountered the old "gasket leaking diesel" problem again. This time, he knew just where to go, and just about how much it would cost him. He dropped the truck off and waited to get the call with the diagnosis. When the technician called him, John got a surprise. The gasket was indeed the problem, but the price would be almost $400. $70 for the gasket, and $330 for the labor.

The price wasn't necessarily the problem; it was what happened after the initial news. John asked a simple question: "What would Dave say about that quote?" Dave, of course, was the owner of the garage and the friendly guy that took the call that day in May. The technician then had two options. First, he could have defended his price and logically explained why $400 was the right price. Or, he could have suggested that he put a call in to Dave to ask for permission to give a discount. Instead, he chose the third option. The one that lost them a client. He told my friend that, "maybe he could get that part a little cheaper, so he would call around and call him back." A couple of hours later, John got a call with a new quote of $275.

No doubt, it was a better deal, but the damage was done. John felt like he couldn't trust the company any more. He had one bad experience with one weak link in an organization, but sometimes that is all it takes.

The lesson here is simple. When anyone in our organization interacts with a Client or a potential Client, we have to know that they are honest, credible, and experienced. We cannot afford one, single instance where someone representing our organization is anything less than all of those things. How does that translate in your organization? How hard is that to manage? Hard or not, don't let a weak link kill your Client loyalty.

Looking Glass Land - Part 1

2010-11-09T11:58:00.000-08:00

The following is Part 1 of a three part article by Perry Been, Public Sector Services Director.

In Lewis Carroll’s (Charles Lutwidge Dodgson) sequel to Alice’s Adventures in Wonderland (1865), Through the looking Glass, and What Alice Found There (1871), we find young Alice pondering what the world is like on the other side of a mirror's reflection. Climbing up on the fireplace mantel, she pokes at the wall-hung mirror behind the fireplace and discovers, to her surprise, that she is able to step through it to an alternative world, the Looking-Glass Land.

After spending 18 ½ years in the public service arena, with the last 9 ½ of those years serving as the Deputy Director of the State Energy Conservation Office (SECO), I now find myself in Looking-Glass Land working in the private sector for DMI Entegral Solutions. I enjoy telling folks that I am doing the same thing I did for the State: I’m dealing with the same end-users, but now I can tell them what I really think. While said tongue-in-cheek, there is a lot of truth in that statement and I would like to share just a few things that I have learned and observed during the past 14 months of my life in Looking-Glass land.

Lesson 1- Bigger doesn’t necessarily mean better.
On the State side of the looking glass I used to believe that in order for the end user to be adequately protected in their renovation projects, they needed to deal with large companies with mega-millions in cash reserves and a staff of thousands. My perception was that it takes a giant with a giant balance sheet to stand behind a "guarantee" of energy savings and to avoid bankruptcy. Even before I stepped through the looking glass, I began to see the error in that thinking.

Over time, the reality that I observed about energy projects with guarantees is the rarity of guarantees ever being enforced. I saw a few in my days in SECO, but mostly for very small percentages of the guaranteed savings. I never observed a guarantee providing a tangible, financial return on investment. That is not to say that guarantees do not have value, only that I've watched some pay more for the guarantee than the value delivered. Furthermore, saving money through energy efficiency has had a proven track record for over a decade. In my experience, the successes I have seen have not been because of a large staff or a lot of money, but a result of sound engineering practices, attention to detail, and a commitment to excellence.

Another thing I started learning while at SECO (and now understand more fully) is the cost of dealing with a large company. There are two categories: 1) financial, and 2) emotional.

1) Despite the notion that bigger companies run more efficiently, I have observed just the opposite. Large, publicly traded companies have shareholders that demand growth and dividends. Usually, one comes at the expense of the other: if you want to grow, you reinvest and have fewer dividends; if you want to hand out dividends, you sacrifice reinvestment and growth. To have both growth and dividends, the profit margins must be very, very healthy. In this industry specifically, the "value premium" that has existed and has been priced into the market norms has allowed this type of profitable growth. To be clear, I am not against either profit or growth. What I have learned, however, is that smaller, private companies do not have the same profit demands on them, and can provide a substantial cost benefit to their clients with no drop off in quality.

2) Dealing with a multi-layered mega company can take its toll on a person. While I have enjoyed my relationships with many of the individuals within those types of companies, I can't say that the organizations have provided the same warm fuzzies. The primary issue is the time and effort it takes to get a decision, a change, a concession, or a signature. Most large companies do not endow their salespeople or engineers with the authority to act in the field. They have well defined processes and procedures, with multiple levels of authority that tend to engage in lengthy debates before any definitive answers can be relayed back to a client on even the most insignificant of topics. The most frustrating aspect of this in my experience has been when the "decision maker" high enough on the food chain finally comes in with the authority to solve the problem, and we realized that we wasted months leading up to that. With smaller companies, there is typically easy access to decision makers, and the delays associated with multi-layered management are non-existent.

To conclude lesson #1, I'll borrow an old phrase from an unknown author, "It really isn’t the size of the dog in the fight, but rather the size of the fight in the dog that matters." As long as the company is big enough, I say pick the smallest company that is big enough to do your job.

The Speed of Trust

2010-10-04T13:07:00.000-07:00

There is an old business axiom that goes something like this: “Quality. Speed. Cost. Pick 2.” The conventional wisdom has been that if you want something fast and good quality, you will pay a premium. If you want something cheap and fast, you will sacrifice quality. And if you want something high quality at a good price, you will have to wait. Most of the time, this is probably true.

Stephen M. R. Covey authored a book that touches on this topic, and attempts to reveal a loophole in this universally accepted logic. The book, “The Speed of Trust”, is really a reflection of the way things used to be. There was a day that business got done on a handshake, and you could take a man’s word to the bank. Somewhere along the way, that reality has succumbed to the new reality of dotting every “I” and crossing every “t” in a complicated world of red tape and multiple tiers of authority.

Of course, Mr. Covey gives us no magic formula for returning to the good old days at a macro level, but he does offer insight into creating one-off business relationships that break the current mold. The key, he writes, is creating and maintaining unusually high trust.

Covey states that, at a minimum, trust is built on two things: 1) Clear and transparent communication, and 2) Accountability for results. The first should be a commitment from the first handshake in the first meeting. The second: a demonstrated and proven philosophy of your business. Obviously, there are many more aspects of building trust embedded in the 322 pages of the book.

For all who aspire to transform your business relationships, your companies, or your industry, “The Speed of Trust” is worth the read. If nothing else, it is a reminder of what once was, and gives us a little hope that those who embrace the principles inside are on the right track.

Lessons from the Auto Industry

2010-09-14T08:02:00.000-07:00

It may not be intuitive how something as nebulous as “transparency” can be the cornerstone of a company.

Consider the transformation of the auto industry. Once, dealerships employed skilled, highly compensated sales professionals adept at negotiating the best margins on each car. Buyers had little information to help them understand the true value of their purchase, other than what their neighbor paid or an outdated “Blue Book”. Though many dealerships haven’t strayed from this model, others have taken a different course over the past 10 years. Some have chosen to utilize the accessibility of information to buyers, and the trend of buyers becoming educated before they walk in the door as an advantage. They have basically said, “OK, no more games… we’ll open up our books, show you the invoice, and win your business through a building of trust.” Replacing high priced sales professionals are younger associates that respond to emails and internet inquiries. With that comes lower overhead, and lower requirements on margin to make the same after tax profit.

The more significant thing that happens is a transformation of the industry. Those that refuse to adopt a transparent model look like they are trying to hide something. Trust is diminished quickly, and buyers flock to where they can see clearly the value of the merchandise. Soon, the industry as a whole is held accountable. Margins are squeezed. Companies that were inefficient start to struggle. The well run companies pick up market share, because they can make money with the transparent, low overhead model.

This transformation is about to happen in the energy efficiency industry. Gone are the days when the promise of energy savings was enough to mask the true value of a conservation measure. If an efficient light bulb costs $1, a buyer won’t pay $2 just because it will save energy. They used to, but they are smarter and more sophisticated now. Companies that continue to sell rolled up solutions and refuse to clearly demonstrate the economic value of each component will be faced with a new type of competition. Like the auto industry, some will step out and say, “Ok, no more games…we’ll open our books, show you the costs, and win your business on trust.” And that will transform the entire industry for the better. It’s about time.