Knight Errant

Time on the Frontier

December 3, 2023 / johnhooley

Yesterday, after a Toastmaster’s meeting, I had brunch with a few other club members. One of them, Mario, shared a story about the second business he operated.

In the early 2000’s, the market was in a recession and Mario needed funding for his first business but he couldn’t get it because banks weren’t lending. He sought out alternatives and discovered an association of non-traditional lenders. He was able to find a company in that group who gave him a loan and resolved his cash flow crunch.

As he navigated around his funding obstacle though, he realized that lots of other businesses were facing the same problem. He formed a partnership with one of the lenders in that association and became a capital broker. His role was to “sell” the loans, but it was little more than lead generation. Because of the demand and limited alternatives, he and his partner quickly developed revenue without much work. In 2007, he sold his share of the business just ahead of the next financial recession.

Because Mario explored beyond his own networks, he was able to discover a solution to his problem. Rather than just stopping there though, he was able to envision what could be possible if he used his discovery to help others.

This is a classic entrepreneurship story: opportunity emerging from problem solving on the frontier and realized by leading others to better outcomes.

Are you spending time on the frontier? Are you leading others to the solutions you discover?

The Two Approaches

November 28, 2023 / johnhooley

There’s a way of running a business that is entirely system based. Every challenge is resolved through structure.

If you’re not making enough profit, you apply a financial framework. If you have interpersonal conflict between team members, you apply a six-step algorithm. If a team is under-performing, you apply an improvement plan.

This systematic approach to business is highly effective.

However, there’s another way of running a business where the solution to every challenge isn’t a system. It’s a way of operating where people solve some of the problems. It encourages initiative and innovation and is risk tolerant.

The first approach is management. The second is leadership.

To grow to any level of scale, management is required. To realize the highest potential of your business, leadership is required.

You don’t have to be a leader to be successful. It’s not the key ingredient. But it is the secret sauce to making things easier and having a greater impact.

Getting Lucky

November 26, 2023 / johnhooley

There’s a lot of luck in business. One of the practical ideas concerning how to work with luck is Jason Roberts’, “luck surface area.” His idea is that your luck increases by pursuing a passion, developing an expertise, and talking about it with lots of people. The key being that you talk with lots of people.

Another perspective on luck aligns with the quote by Thomas Jefferson, “I’m a greater believer in luck, and I find the harder I work the more I have of it.”

Hard work doesn’t create luck, but hard work that results in many different work products, especially in different domains, can create opportunity.

Western philosophy originated in harbor cities of the Aegean. Merchants traded all around the Meditarranean and came into contact with art, science, and ideas from more isolated societies. They acted as connectors and filling that role created the ground for insight and innovation.

Diversity of networks and experience is a practical strategy to create “lucky” opportunities.

As a simple example, this weekend, I worked on a project. During the course of the work, I realized that I was applying a tactic that I learned at a software developer conference four years ago. A little bit later, I realized that I was applying an idea I learned from a lifestyle business conference last year. In the moments when I learned those tactics, I had no expectation that I would actually use them because I had other goals that I was focused on.

As entrepreneurs, we often make decisions through the lens of efficiency. You could make an argument that I shouldn’t have spent time at a software conference when I wasn’t actively developing a software product and shouldn’t have been at a lifestyle business conference because I don’t operate a lifestyle business.

However, there’s an extremely valuable place in business for inefficiency. In big businesses, they call it research and development, for investors it’s venture capital, and for your small business it might mean “wasting” a weekend in an adjacent network.

A More Useful Perspective on the Peter Principle

November 21, 2023 / johnhooley

There’s a concept called, “The Peter Principle,” that is often used to describe the reason for someone’s lack of success. From Wikipedia:

“The Peter principle is a concept in management developed by Laurence J. Peter which observes that people in a hierarchy tend to rise to ‘a level of respective incompetence’: employees are promoted based on their success in previous jobs until they reach a level at which they are no longer competent, as skills in one job do not necessarily translate to another.”
Wikipedia

The shorthand is that people rise to the level of their incompetence. It’s used to ascribe reason to the limit of someone’s accomplishment.

A less cynical way to think about it though, is that people rise to the level with which they have the opportunity to grow. Or that people navigate their course until they meet an obstacle which requires growth.

Last week, I asked our team to take on a project that they had never done before, but that I know we have the capability to do. They hemmed and hawed, expressed doubt, and confusion, and looked to me to provide the path forward. They wanted a leader to layout a plan for them.

But I didn’t take on that role. Instead, I gave them space and a little coaching so that they could develop the plan themselves. On Monday, they were stuck. A week later, they’re making progress.

Initially, they hit that Peter Principle limit. Then they started to develop the skills needed to form their own plan. Eventually, they’ll become adept enough that this sort of situation will no longer be an obstacle and then we’ll discover what the next opportunity for growth is.

Pride

November 19, 2023 / johnhooley

Larry Wall, the originator of the Perl programming language, famously proclaimed that the three virtues of a great programmer where laziness, impatience, and hubris.

Lazy programmers write code to make things easier, impatience causes them to anticipate problems, and hubris makes them create programs of such quality that they’re difficult to criticize.

You can’t control fortune. Sometimes the market smiles upon you, sometimes everything breaks at the exact same time.

But a useful goal to pursue is to be able to be proud of your work.

For a developer, that might be an elegantly coded solution. For an entrepreneur, it’s a series of smart decisions. For a business manager, it’s a system that is squared away and a cohesive team to run it.

As an owner-operator, you’re part entrepreneur and part manager and it’s worth striving to be proud of your work in both dimensions.

Warning Orders

November 14, 2023 / johnhooley

Yesterday, I participated in a leadership meeting for my local Rotary Club. The club has faced several challenges post Covid and the meeting’s scope concerned how to navigate those challenges. One of the key issues identified was the cost of AV for the weekly lunches. It’s not clear why, but AV costs have escalated in the past year (a broad industry trend beyond our club).

One of the ideas to address this high fixed cost was to purchase AV equipment and have Rotary members run it each week. This would be fairly quick to implement and cost under $1000. The drawbacks were that we had to find a group within the club to learn and manage the equipment and we had to be able to store the equipment somewhere.

An alternative idea was to offer sponsorship to a local AV company, bring them on as members, and have them run the meeting at cost. The drawbacks to this were that the market dynamics make it so that AV companies probably don’t need marketing (pricing is up, their services are in demand) and it sets a precedent that some “volunteers” are paid.

The purpose of the meeting was to develop a plan to address issues, but it wasn’t clear which of these solutions we should pursue. This is a crossroads which is probably familiar to you. You have a clear goal, but not a route to achieve it, just a few ideas.

For example, you might want more leads so that you can grow your business. You have some ideas about how you might get more leads, but you don’t really know which one to execute on.

The Endless Race

November 12, 2023 / johnhooley

“Things seem to be getting harder. After ten years of experience things should be getting easier.”

This was a comment of an employee of mine when our team spent a weekly meeting discussing the problems in our business. I had been thinking the same thing just a few days prior.

As time passes, competition increases. Simultaneously, innovation erodes your competitive advantages.

The result of this is that your business is in a state of continual evolution. You’re always adapting to new challenges in the market and an ever-shifting environment.

How you manage this is through focus.

You concentrate focus to make it easier to get ahead in one important dimension or broaden it to create more options to navigate around dead ends.

If you look at the challenges you’ll face in the next three years, will narrower or wider focus serve you better?

Gaming the Process

November 8, 2023 / johnhooley

I’ve been doing transcendental mediation (TM) for the past month and a half. My mom bought the TM training for me as a birthday gift to help improve my sleep. I didn’t think that I would stick with it because meditating isn’t a personal goal and it’s a big ask of my time. I meditate forty minutes everyday- twenty minutes in the morning, twenty minutes in the afternoon. Because it was a gift I decided to give it a sincere effort and evaluate whether to continue it at some future point.

It has surprised me that I’ve kept with it. I have personal discipline in spades, but any ongoing activity has to be really rewarding for me to be willing to add it to the other time-intensive tasks I do on a daily basis (lifting and writing). TM varies a little in its effects, but in general, it has improved my energy level. Beyond this benefit, what has made it easy to maintain is the training provided as part of TM. Specifically, the way you’re taught to self-evaluate meditation.

When you’re taught TM, they teach you to evaluate your meditation not on how you feel during meditation or whether you have thoughts or not, but on certain signals to watch for:

Did the mantra change?
Did you lose track of time?
Did your breathing get soft and slow?

This meta-evaluation directs attention towards the process instead of the outcome. It’s a winnable, controllable game because if you follow the TM instruction these signals will occur.

Similarly, I’m studying business operating systems and EOS has a similar mechanism. In EOS, they give you six categories of the operating system and ask you to self-evaluate your implementation of those categories on a regular basis. Rather than focusing on whether EOS is impacting profit, instead you’re attention is directed to how much of the system you have implemented with a goal of 80% criteria being met.

Tracking KPI’s in your business has a similar effect. The right KPI’s should create a game that focuses you and your team on activities that lead to good outcomes rather than on the current outcomes.

What are the signals that you’re engaging with the market in a way that supports your goals?

Playing Games

November 6, 2023 / johnhooley

I remember sitting in a tiny cold studio apartment ten years ago in Nagoya, Japan as the autumn made its transition to winter. I had cleared off a narrow space on the desk in front of my computer monitor and had a small blue Japanese notebook open in front of me. With a pen, I wrote the week down and then I set several objectives beneath it. This was the beginning of a deliberate and ongoing approach to work that I carry through to this day.

Since then, I’ve iterated, tweaked, and optimized how I approach achieving goals. Somewhere on this path, I worked with a business coach. When we ended the engagement, I asked him a few questions to improve my self-knowledge. One of them was, “What do I do well?” He told me that out of everyone he worked with, I was in the top 1% of being able to set and achieve objectives.

Self-knowledge is important when setting and working towards goals. The better you understand yourself, the smarter you are about framing objectives in a way that makes it more likely that they’ll be accomplished. In particular, I seek out how to apply my strengths to achieving goals. Leveraging strengths makes challenging objectives less challenging and enables you to raise the bar with what you seek to accomplish.

Building Tempo

November 3, 2023 / johnhooley

When I was in my early twenties, my roommates and I entertained ourselves by playing an old Nintendo. We stumbled across a game titled, “Caveman Olympics,” which had an event where you and a competitor would race to start a fire. Two cavemen set next to each other on the screen and the players’ cavemen would blow on their piles of kindling as fast as the players hit the “A” button. In order to start your fire first, you had to build up a rapid tempo of hitting the button and maintain it.

Your business has a tempo too. There are a series of tasks that take place for you to produce value. E.g. for a service business, they would start with marketing tasks, continue to sales, and then dive into operations before delivering an outcome to a customer. Like in Caveman Olympics, a certain tempo is needed to develop the momentum to scale up to the next level and start the fire.