Author: johnhooley

A More Valuable Business

How do you make a business more valuable?

It seems like a simple question, with a simple answer: make it more profitable. Profit is a core measure of business health the same way your blood pressure is a core measure of your physical health.

However, profit is an objective measure and value is not objective, it’s subjective. The fancy coffee I buy from a friend of mine is valuable to me, but you might be happy drinking tea (heathen). What we value differs.

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Do Less & Be More

There’s a yin and yang aspect of running a  business. If your only experience of yin and yang is seeing the symbol on a poster on a dorm room wall, a simplified explanation is that yin is a passive force and yang is an active force.

In the context of business:

  • Yang might be setting and pursuing goals, hustling for sales, and building marketing campaigns.
  • Yin might be noticing changes in the market, feeling tension from a particular member of your team, or working on a side project with no planned value.

Entrepreneurs tend to play heavy into the yang side of the balance. We’re driven, type-A, make things happen kinds of people. This is why the Yin side of business is an opportunity.

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Sensitive to Anomalies

Last Tuesday, at my Rotary Club, we had a speaker, Doug Garnett, who presented on complexity in business. He said that there is a common perspective in business that deconstructs the business system into parts and pieces (sales, marketing, ops, etc). The underlying assumption is that if you can get the parts healthy, the business will do well.

Doug disagreed with this approach because businesses are complex systems. One of the ramifications of being a complex system is that businesses produce synergistic effects (positive and negative). The whole is greater than the sum of the parts. Innocuous changes to the parts, like moving a weekly meeting to a different day, can have odd effects on how the entire system performs.

It’s an interesting perspective. What could it mean for your business though?

He said that you should still manage the parts of your business, but you should focus more on how the business operates as a whole. In particular, what you’re looking for is anomalies in profit (profit being the primary measure of the whole system.)

Changes may not have a clear rationale, like moving a meeting to a different day, but as long as your sensitive to the whole business system, you can still profit from them.

Revealing Sophistication

I’ve discovered something odd. If you have a meeting with four or more peers, you have to implement some form of discussion regulation. People need to raise their hands on Zoom or a talking stick needs to be passed around. If you don’t, a few people will take over the conversation and drive it off topic.

This tiny insight was gleaned from chairing my local Rotary membership committee the past nine months. Every two weeks we’ve met to discuss a membership related challenge. After having many of these meetings hijacked and trying a variety of solutions to keep them on track, I eventually landed on the hand raising method.

Leading a meeting is pretty simple. However, it’s interesting that there are deeper levels of sophistication in this simple task.

I’ve noticed the same hidden sophistication in many of the tactics that I employ in business. For example, I’ve used thought leadership and referral marketing this past year as our strategy to develop new business. Several times I’ve paused and intentionally iterated on improving these two marketing tactics. Each time I’ve done so, I’ve unearthed a deeper level of sophistication.

Focusing on just one area to improve and iterating on it, again and again, has a certain magic to it.

But the big question is what is deserving of that focus? And are you staying with that focus long enough to unlock its secrets?

Are Agencies Good Businesses?

“Are agencies good businesses,” I asked a small group of agency owners at an event recently.

“No,” one of them immediately replied, “They’re terrible.”

After a thoughtful pause, another owner said, “They can be.”

I’ve asked this question of most agency owners I encounter. It’s a question I’ve pondered for a long time. My general feeling is that agencies aren’t that good of a business model.

That evening, I spoke with someone with no agency experience who bought an agency. He told me that he purchased it based on its objective attributes. From his perspective a business is just a business. Whether you’re McDonalds or a small agency, your model can be reduced to financial documents and some attributes around how you create value (services vs products, inventory, recurring revenue, etc.) Any business can be exposed and evaluated apples-to-apples on a spreadsheet.

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The Three Amigos Compete

I know a guy who has returned to school to get certified in medical billing. He used to be a transcriptionist and software ate his job. I know another guy who dropped out to wander around the country in a van. He was an adult caregiver and is trying to support his van-life as a virtual assistant. More recently, I met another guy who runs a content marketing agency that’s been battered by ChatGPT, Claude, and the other AI’s.

What do these three guys all have in common?

They’re all trying to work at the bottom of the value spectrum, the area where value has the characteristics of a commodity or is one.

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Shooting Through Windows

There’s a software product in the association market called Prop Fuel. It delivers one question surveys via email. It’s doing well and I can tell that it’s growing from the regular referrals I hear for it. What’s interesting to me is that I built it eleven years ago.

Back in 2013, I coded my first software product. It was a plugin for Joomla that I called “Mail in Vote.” I developed it for people that needed an easy mechanism to get consensus from a group and it did what Prop Fuel does now. I worked nights and evenings for nine months and made a few sales, but mostly I learned was that I had a lot to learn about building and marketing software products. Mail in Vote actually killed my career as a developer, because in the process of grinding away on it, I developed serious repetitive-stress injuries which forced me to build a team to do the work instead.

Eleven years ago Mail in Vote was a failure, today Prop Fuel is a success. The market context is different, a platform market versus a vertical market, but as big of a difference is that the time hadn’t come for the concept. Prop Fuel does well because associations have over-used survey tools in the past ten years and need a survey “lite” method to get information. Even if Mail in Vote was tightly tied to the association market eleven years ago, it would have had a similar ho-hum reception because there wasn’t the same “survey fatigue” then as there is now. Eventually, things will change enough in the market that even the one question survey won’t be desirable.

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Focus & Iterate

Last week, in a weekly meeting, my team discussed how we could improve projects with clients to avoid what we call “zombie” projects where the client’s behavior kills project momentum.

We looked at a specific project that is in motion with a client who has frequently disengaged in the past. My team listed off all the trouble behavior that they’re sure that the client will do that will result in the project being difficult to work on and hamper momentum in the coming weeks:

– Fail to deliver assets
– Continually change the scope
– Stop communicating
– And etc.

They held up their collective Zoom hands in frustration, as if to say, “We’re powerless in this situation.”

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Renewing Your Franchise

This weekend I read a 1978 Harvard Business Review article on strategy for service firms, “Strategy is Different in Service Businesses.” (Thomas)

It was an interesting read for a variety of reasons, but one of the lines that stuck out to me was, “Every company depends on an ability to renew its franchise in the marketplace.”

When I think back over my career, I remember many businesses that were the darlings of our conversations and that either no longer exist or have faded into shadows of their former selves.

That this is the natural state of the market fills me with both wariness and inspiration.

Wariness, because I have to be vigilant about creating new value to maintain our existing business. Inspiration, because there’s another opportunity emerging to build something great.

What Is Better?

I’m a “big” with Big Brothers Big Sisters. The kid that I spend time with is similar to me in many ways:

– He likes board and video games
– He likes to cook
– He enjoys adventures

But, he’s also very different from me in other ways. I workout most days, meditate twice a day, and relentlessly pursue personal growth. My “little” is instead very comfort oriented: he wants to eat rich food, watch TV, and sit by the fire. I doubt he’ll ever embrace challenge or regimen like I have.

And that’s okay- he’s not me. I have no interest in mentoring him onto my path. Instead, I see my role as creating opportunities for him to discover his own path.

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