Bad News Bears

Uh-oh. Jack just learned that he did not win a contract that was supposedly all but certain. He was counting on this deal to make his quota and had been bragging to the vice-president of sales and his co-workers that it was in the bag. What’s more troubling is the fact that he’s been under the gun by upper management over the past few months to improve his production. Now what?

Jack has to deliver the bad news. The first thought running through his head is that he’s going to be fired on the spot. He’s deep in debt and has a wife and two small kids at home. What does he do? Unfortunately, Jack chooses to do what so often happens in situations like this. He fudges the truth. He tells his boss that he hasn’t yet “heard the final word” from the client. Jack holds onto a thread of hope that he might be able to salvage the deal.

It’s obvious that delivering bad news is never fun. It actually starts with an organization’s culture. What is the reaction to bad news by the leadership? Is there screaming, yelling and threats? How about chaos and recriminations? If so, this sets the tone for anyone on the wrong side of having to report unfavorable results. It’s human nature to try and avoid painful encounters of this sort. Thus, some people may have a tendency to stretch the truth, fudge the facts or outright lie about the situation, rather than endure the wrath of the boss.

In a healthy organization, delivering bad news is just another routine task to be performed. The enlightened leader will encourage team members to openly talk about what isn’t working including setbacks that have recently occurred or are anticipated. He or she will work with the team to understand what went wrong and how to avoid a similar result in the future. There’s no negative emotion or drama associated with this analysis. In so doing, team members feel safe in bringing news of any sort – good or bad.

A leader who operates in a fair and even-handed manner is entitled to expect full and total integrity from the team. The team member in a healthy organization who fudges the facts like Jack did should be dealt with in a severe manner. Here’s the calculus. I won’t blow up and make you feel lower than whale poop, and you owe me complete transparency. It’s as simple as that.

If you are part of an organization that struggles with bad news, first look inward and remember that it’s a two-way street. If the organization is unwilling to react in a calm and measured way, then it cannot expect team members to want to deliver bad tidings.

There’s another element to delivering bad news. It may be that the leader does not have an angry tantrum at all. This individual may always be very upbeat and optimistic. But members of his or her team may still not want to tell it like it is. Why? Because they don’t want to disappoint him. In many situations feeling like one has let down a co-worker or a leader is a powerful motive to duck or delay the inevitable. It’s circumstances like this where the leader must take care not to send any signals that he/she may be disappointed. In fact, this leader should go out of his way to encourage members of his team not to equate bad news with a disappointed boss.

One way to solve this dilemma is to embrace failure as simply a step in a process. A forward-thinking entrepreneur will model this attitude by sharing his or her failures with the team. Being vulnerable in this manner may encourage others to be more comfortable doing the same without fear of disappointing the leader.

Let’s replay Jack’s scenario with a different twist. Jack learns that he did not win the contract. He immediately goes to his boss and explains the facts of the situation. His boss says, “Jack, this reminds me of a situation a few years ago where I was positive I was going to win the brass ring only to be left holding the bag. But I scrambled together a radical new approach and took a long-shot by asking to see the client one last time. Believe it or not he changed his mind and I won the deal after all. You might try the same approach.” Maybe Jack went on to win the deal and maybe not. Regardless, there was no hesitation when it came time to deliver the bad news initially.

Delivering bad news can be done in a matter-of-fact fashion if an organization’s culture encourages it. If not, we can expect that people will take extreme measures to avoid this unpleasant task.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

Entrepreneurial Snakes

Here’s a set-up question. What do you think of companies that aren’t honest with their customers? The answers range from, “That’s terrible” to “It happens every day.” Unfortunately, both answers are correct. What’s particularly irritating is when those companies beat their chests about how much they care about their customers. There’s a disconnect between words and actions which is pretty disturbing and serves as an excellent lesson for entrepreneurs.

Allow me to tell you a personal story. Each summer we look forward to spending a couple of weeks at a beautiful destination spot in the mountains with enormous trees, blue skies and a fabulous lake. We fly into a nearby airport, collect our bags and head to the car rental counter where we’ve previously made a reservation. After checking in we venture to the car pick-up area – and every single year, bar none, our vehicle is never ready. We’ve waited anywhere from 20 minutes to as long as 45 minutes. The attendants smile and promise that “They are just cleaning up the car as we speak – it will only be a few more minutes.” Fifteen or twenty minutes later they smile again and disappear to go “check” and see where things stand. Sometimes we go through the same drill with two or three more attendants – they seem to work in a tag team sort of manner. Finally, someone tells us that “They’re bringing around the car right now.” Any reasonable person would conclude that would mean the car would arrive in two or three minutes. But it never happens. Eventually we may get the car we ordered. More often than not, we end up with a different vehicle – sometimes better and sometimes worse. Adjustments are made to the price and we’re finally on our way. 

Here’s what’s so bothersome about this experience. We are never told the truth. The attendants are friendly enough. They explain that they’ve been slammed with returns and pickups. But the string-a-long routine is always the same. Yes, I know. I should probably use a different car rental company – though I’ve encountered similar issues elsewhere with other firms. With this particular car rental company, on their website they make a big deal about how they focus on the customer. Part of their mission statement extolls their desire “To exceed our customers’ expectations for service, quality and value.” Elsewhere we’re told that, “Take care of your customers and employees first, and the profits will follow.”

This situation is emblematic of a pervasive problem in the business and entrepreneurial world today. Sometimes we’re so afraid of disappointing a customer that we’d rather try to give them hope while we juggle difficult circumstances. We say things that aren’t quite true and eventually we’re in worse shape than if we would have just been totally honest. Lying doesn’t usually end well. I learned this as a kid and have watched others suffer the consequences as an adult. What should the car rental company have done? For starters, they have a very sophisticated IT operation and could easily have collected data from every hour of every day at every location. Then they would know from my stated pick-up time that there usually is a 30-minute wait and set my expectation accordingly. But we all know that sometimes things unexpectedly go wrong. Training their employees to have empathy in such situations and be totally honest would go a long way.

In a circumstance like this, here’s what I would rather have someone say to me. “We had 50 cars returned within a 30-minute timeframe. Normally we never have more than 20 cars returned in such a short period of time. We’re running at least 45 minutes behind. I’m going to give you a 15% discount for the delay and recommend that you come back at 3:30. In the meantime, here are some drink coupons for the bar inside the airport terminal. Please accept our most sincere apologies.” This statement is pro-active and wrapped with empathy, honesty and realistic expectations. The customer may not be pleased, but at least the company can’t be criticized for not doing everything possible to atone for a bad situation.

We need to ask ourselves whether we set honest and realistic expectations for our customers. When we do, we’ll have a much greater chance of solidifying customer loyalty – even when things don’t go as planned.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

What I Learned From a Non-Entrepreneur

Over the course of our careers, we entrepreneurs spend a lot of time studying other successful entrepreneurs. We try and emulate their good qualities and avoid those traits that are less flattering. This is a smart strategy and can serve us well. However, there is also much we can learn from non-entrepreneurs as well. While this may sound somewhat paradoxical, stick with me here. There is much wisdom that can be gained in our entrepreneurial world by modeling non-entrepreneurs.

My father was a college professor – a scientist who loved research and teaching. As I think back over the course of my short life with him (he died when I was 34), I realize how much I learned from him that has helped me in my entrepreneurial endeavors. My sister and I were both adopted (and we came from different biological parents), so I was not the recipient of any of Dad’s genetics and who knows what was lurking in my biological gene pool. So, I was destined to “learned behaviors” at my father’s knee.

Dad was the most patient person I’ve ever known. As a young boy, I asked him a million questions, and never once did he ever seem exasperated about my constant grilling. Instead, he would smile and remain patient as he explained things for the 40th time. For several years, he performed extensive cancer research, injecting mice with tumor materials and then experimenting with different dosages of a formula that was designed to shrink the tumors. He even drafted my mom into returning to the lab after dinner to help him with this project. He was incredibly dedicated to iteration after iteration, always staying positive and all the while, juggling his other research and teaching assignments. My sense of urgency is extremely high. I certainly don’t have Dad’s level of patience. But by watching him, I’ve learned to be more patient over the long term – it’s patience over the short-term stuff that needs more work on my part.

Unflappable is another word for calm, and my dad was its walking definition. I’ll never forget his best demonstration of his unflappability. Way back in the day, people in my hometown would sometimes burn the grass in their yards in the springtime. The theory was that it helped kill the weeds and promoted a healthier stand of grass in a few weeks. On this particular day, the plan was to create a controlled burn to accomplish this objective. Dad asked Mom to wait for him to change his clothes and they would do this together. Unfortunately, Mom didn’t have Dad’s patience and decided to start the fire without him. A sudden gust of wind caught the flame and a cedar tree on the corner of the house ignited. If you’ve never seen a cedar tree catch fire, it’s a sight to behold. The Biblical image of the burning bush comes to mind. Mom was frantic and raced into the house looking for a fire extinguisher. She passed my dad in the basement but was babbling incoherently, and so he had no idea what was happening. Meanwhile, the next-door neighbor put out the fire with a garden hose; a fire truck showed up; a crowd had gathered, and Dad finally ambled out oblivious to what was happening. I’ll never forget how he reacted at that point. Rather than read my mother the riot act, he grinned and was amused at the commotion that had ensued. Now, some 58 years later, I always remember how I never saw my dad as anything but calm. And I try and mirror his demeanor whenever possible.

Dad was an honest man. Every fiber of his being was honest. We were traveling as a family on a vacation and stopped for fuel. It was a full-service gas station – there was no such thing as self-serve gas in the 1950s and early 1960s. After the gas was pumped, there was the normal scramble of getting kids back in the car from a restroom break; taking the dog to relieve itself and making certain the trailer was still hitched properly. A few miles down the road Dad asked my mom, “Did you pay for the gas?” It was quickly apparent that the we had driven off without paying at which point Dad turned the car around and drove back to the service station and made payment. Interestingly, the station attendant hadn’t even realized that we had left without paying. No one would have ever known that we hadn’t paid for the gas, but Dad’s integrity wouldn’t let this get in the way of doing the right thing.

My father – the non-entrepreneur – modeled many other traits that have been critical to me finding my way as an entrepreneur. His perseverance, his problem-solving abilities, his work ethic, his sense of humor and his passion were all on full display throughout the 72 years of his life. I am blessed to have been loved by him and learned valuable and enduring life lessons from him. Which non-entrepreneur in your life has made a similar difference for you?

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Podcast 132 – How to Be a Great Entrepreneur. 

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

What Could Possibly Go Wrong?

It seems like I’m on a roll these days with rants about customer service. And this one is a doozy. A few weeks ago my wife and I were flying to Las Vegas where I was to speak at a conference. We were supposed to fly from Kansas City to Phoenix and then to Vegas. It was a Sunday morning and when we arrived at Sky Harbor International Airport in Phoenix, the trouble began. Apparently some joker decided to leave a locked vehicle unattended at the curb outside one of the terminals. It wouldn’t surprise me if someone was late for a flight and didn’t have time to take the car to the off-site rental car return and simply dropped it at the curb and figured he’d deal with the flak later. Well flak there was.

As we got off the plane, we were told that the terminal was closed due to a “security issue.” Passengers were not allowed to move down the concourse with TSA and the Phoenix Police Department enforcing this edict. Shortly thereafter, we were quickly herded to an adjoining section of the terminal where even more passengers were gathered. The line of demarcation was just short of the restrooms and very quickly the scene turned ugly. People were chanting and a full-scale riot was minutes away. Fortunately, someone in authority decided that letting people go to the bathroom might be a good idea, so they began creating bathroom lines and allowed ten people at a time to step under the tape and head single-file to the restrooms – all the while under the watchful eye of those in “authority.” Finally, they allowed the mob to move deeper into the concourse where everyone had access to the restrooms.

This situation persisted for somewhere between three and four hours. And not once did law enforcement provide any information whatsoever. I was able to watch some video on my phone from a local television station that enabled me to understand what was happening. Eventually (I was told), the bomb squad decided they needed to blow something up, so they blew the trunk of the car and the passenger doors to find . . . nothing. I guess I can understand how cautious we need to be in this day and age. But it was absolutely inexcusable that everyone was kept in the dark through the entire ordeal. A public affairs representative for law enforcement should have provided updates every 15 minutes on the overhead PA system as well as on social media along with an estimated time for resolution. Phoenix PD and the TSA did nothing to help their image with this display of arrogance. It was equally inexcusable that the decision was made to cordon off the terminal at a point where the restrooms weren’t accessible. From a practical standpoint, we’re talking 30 or 40 feet – and eventually the decision was made to move the cordon anyway.

Of course a number of flights were cancelled including ours. I received a text message from the airline (I’d “love” to say which one but I won’t) informing me that our flight was cancelled and to click on a link to re-book . . . except the link didn’t work. So, shame on the airline. Eventually we made a standby flight to Los Angeles that took us on to Las Vegas. But of course our luggage was MIA. The one bright spot in all of this was a very delightful lady named Lori at the airline’s lost baggage department in Las Vegas who really cared about our situation and said she’d do everything she could to see that we got our bag ASAP. And later that evening our bag did arrive. Kudos to Lori! Unfortunately, this airline – which is supposedly known for its technological prowess – has still not deployed a bar coding system for baggage. Another major airline we fly sticks a bar code on our luggage and we can look at a phone app and know exactly where it is in the country at all times. So another pox on the airline we used that Sunday for not getting with the bar coding program.

Things can really go wrong for us as entrepreneurs and sometimes they do. We can learn from experiences like this and avoid the mistakes that others are making. Above all, continual, clear and honest communications is paramount as long as the train is off the rails. And it’s also important to make sure all systems and processes are working and that common sense prevails. If we do it right, we can actually score points with our customers as they weather the storm with us.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 119 – Good or Bad Signals?

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

The Entrepreneur Who Cried Wolf

Harkening back to my childhood days, I remember a wonderful Aesop’s Fable called The Boy Who Cried Wolf. As the story goes, a little boy had a tendency to sound a false alarm that a wolf was attacking a flock of sheep. After doing this repeatedly, the villagers eventually stopped taking him seriously. Then when the wolf actually did eat the sheep, the little boy’s cries fell on deaf ears. In some versions of this story, the wolf also eats the boy. I believe that this fable is more apropos for our society today than perhaps at any time in recent memory. The current state of political affairs comes to mind as a perfect example of how over-the-top proclamations about how our country is doomed are being bandied about on a daily basis.

We can expand a modern-day Aesop’s Fable to include entrepreneurs – more specifically, entrepreneurs who engage in lying and distortion. There’s a distinction between puffery and lying. Puffery involves hyperbole which by definition is “obvious and intentional exaggeration not intended to be taken literally.” For example, if we say that our widgets are the “best,” there’s no objective way to measure this claim and the public generally understands the context to contain a degree of hyperbole. On the other hand, if we say that 99% of all our customers agree that our widgets are the “best,” then this is a factual claim that can be verified. And it becomes a lie if this fact is manufactured or we can’t prove that 99% of all our customers agree with our statement.

Where this gets really dicey for entrepreneurs is when the integrity line is crossed. Alex is the CEO of a start-up company and is pitching a group of investors for funding. During an interview with the investor group, he says, “Our firm has 35 customers and we’ve generated $500,000 in revenue.” What he doesn’t reveal is that he doesn’t really have 35 paying customers. He actually has 25 prospective customers that are using a beta version of his product for free; five current customers that are currently paying for his product, and five former customers that quit because they had issues with the product. What he also neglected to say is that his company has been in business for three years and $500,000 is the cumulative revenue generated during that time period. Did Alex lie about his company’s progress or did he engage in a form of puffery? While it’s not quite the false cry that a wolf is eating the sheep, Alex has definitely crossed the line through omission of key facts. Any savvy investor will drill down and quickly learn that Alex has misrepresented his situation – which will probably cost him the investment.

As entrepreneurs our integrity is our most valuable currency. When we go to the bank for a loan, it’s important that we put our best foot forward, but in an honest manner. We should be fact-based with our approach and present a true picture of our operations. At the same time, there is nothing wrong with sharing data trends that portray our company in a growth-mode. When we are reporting to our investors, we share the true, unvarnished facts. If things aren’t as rosy as we’d like, we provide an explanation about the issues we are experiencing. We have a real estate fund and write a quarterly report for our investors. Periodically I like to include a section called, “What’s Not Working.” In it, we discuss some of the challenges we are facing and what we are doing to overcome them. We’ve had feedback from investors who appreciate the fact that we’re not always trying to sell them on unicorns and rainbows.

Another problem area for entrepreneurs is that of overpromising and under-delivering. In fact, we would be much better off doing the opposite. We would do well to find one of the most skeptical members of our team and have him or her help set expectations. It’s likely that our optimism would be dialed back to a more realistic degree. Overpromising once may be forgivable. But if it happens over and over then we’re probably moving past the realm of hyperbole and into the arena of deception.

We all want to win which is a critical element of entrepreneurship. Doing so in an honest and forthright manner may not be the easiest path to take, but it will likely keep us from being eaten by the wolf.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 106 – A Boomer’s Advice to Millennials.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

Liars

Here’s a set-up question. What do you think of companies that aren’t honest with their customers? The answers range from, “That’s terrible” to “It happens every day.” Unfortunately both answers are correct. What’s particularly irritating is when those companies beat their chests about how much they care about their customers. There’s a disconnect between words and actions which is pretty disturbing and serves as an excellent lesson for entrepreneurs.

Allow me to tell you a personal story. Each summer we look forward to spending a couple of weeks at a beautiful destination spot in the mountains with enormous trees, blue skies and a fabulous lake. We fly into a nearby airport, collect our bags and head to the car rental counter where we’ve previously made a reservation. After checking in we venture to the car pick-up area – and every single year, bar none, our vehicle is never ready. We’ve waited anywhere from 20 minutes to as long as 45 minutes. The attendants smile and promise that “They are just cleaning up the car as we speak – it will only be a few more minutes.” Fifteen or twenty minutes later they smile again and disappear to go “check” and see where things stand. Sometimes we go through the same drill with two or three more attendants – they seem to work in a tag team sort of manner. Finally, someone tells us that “They’re bringing around the car right now.” Any reasonable person would conclude that would mean the car would arrive in two or three minutes. But it never happens. Eventually we may get the car we ordered. More often than not, we end up with a different vehicle – sometimes better and sometimes worse. Adjustments are made to the price and we’re finally on our way.                                                                                                                                                                                Here’s what’s so bothersome about this experience. We are never told the truth. The attendants are friendly enough. They explain that they’ve been slammed with returns and pickups. But the string-a-long routine is always the same. Yes, I know. I should probably use a different car rental company – though I’ve encountered similar issues elsewhere with other firms. With this particular car rental company, on their website they make a big deal about how they focus on the customer. Part of their mission statement extolls their desire “To exceed our customers’ expectations for service, quality and value.” Elsewhere we’re told that, “Take care of your customers and employees first, and the profits will follow.”

This situation is emblematic of a pervasive problem in the business and entrepreneurial world today. Sometimes we’re so afraid of disappointing a customer that we’d rather try to give them hope while we juggle difficult circumstances. We say things that aren’t quite true and eventually we’re in worse shape than if we would have just been totally honest. Lying doesn’t usually end well. I learned this as a kid and have watched others suffer the consequences as an adult. What should the car rental company have done? For starters, they have a very sophisticated IT operation and could easily have collected data from every hour of every day at every location. Then they would know from my stated pick-up time that there usually is a 30-minute wait and set my expectation accordingly. But we all know that sometimes things unexpectedly go wrong. Training their employees to have empathy in such situations and be totally honest would go a long way.

In a circumstance like this, here’s what I would rather have someone say to me. “We had 50 cars returned within a 30-minute timeframe. Normally we never have more than 20 cars returned in such a short period of time. We’re running at least 45 minutes behind. I’m going to give you a 15% discount for the delay and recommend that you come back at 3:30. In the meantime, here are some drink coupons for the bar inside the airport terminal. Please accept our most sincere apologies.” This statement is pro-active and wrapped with empathy, honesty and realistic expectations. The customer may not be pleased, but at least the company can’t be criticized for not doing everything possible to atone for a bad situation.

We need to ask ourselves whether or not we set honest and realistic expectations for our customers. When we do, we’ll have a much greater chance of solidifying customer loyalty – even when things don’t go as planned.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 8 – The E Factor.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

Pinnochio

Tasty Crow

Crows are remarkably intelligent and can live as long as 20 years. They typically have a wingspan of more than three feet and weigh nearly three pounds. A crow can fly up to 60 miles per hour and have been found as high as 14,000 feet in mountain ranges. Being smart, fast and able to fly to great heights make them particularly hard to catch. Recently I had to catch one so I could eat it . . . metaphorically speaking of course.

To be a successful entrepreneur we must have an acquired taste for crow. We’ve all heard the saying “to eat crow” which connotes humiliation and having to admit the making of a mistake. Sometimes our ego gets in the way and we do everything we can to avoid admitting that we made a mistake. We may point the finger at others. Or we may try and cover up the mistake hoping that its results will somehow vanish into thin air. I can tell you that all of these tendencies are mistakes.

One of our companies is involved in acquiring apartment properties across the country. We sold two such assets within a much shorter holding period than we had initially projected because of an opportunity to generate substantial profits. Members of our team prepared a detailed spreadsheet that showed how the sale proceeds would be distributed. These were large and complicated transactions with several tranches of equity provided by different investors. I was pleased to call two such investors to deliver the good news that they would be receiving a significant multiple of their original investment. Needless to say they were thrilled.

Within days, I received a call from my partner who oversees our apartment acquisition business unit. Apparently there was a bust in the calculations and these two investors would be receiving less than what I had told them. They were still receiving a substantial gain on the sale, but not quite as much as the expectation I had set. The mistake was honest and unfortunate but it still had to be acknowledged. Thus, I went about the task of eating crow.

I called both investors and said the following, “I’m sorry to tell you that the distribution figure I provided the other day was erroneous. We made a mistake in calculating the sale proceeds and your new amount is $X. Happily your profit is still much greater than we projected when you made your investment three-and-a-half years ago. I wanted to get back to you as soon as I learned of the error and I hope that you will still be interested in looking at future investments with us.”

Because we are a team I did not point a finger at the person who was responsible for the calculation. Instead I said that “we” made a mistake. I did not make up an excuse for what had happened. Simple but painful. The result was an expression of understanding on the part of both investors. I’m sure they were disappointed but there were no angry words and in both cases, an indication of interest in looking at the next deal.

Relationships are built on trust and can be strengthened in situations where things don’t go as planned. But this happens only when honesty and transparency are the top priority.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

crow