Monday, June 26, 2006

Networking Exemplars: Bill Gates and Warren Buffett

Announcements of Warren Buffett pledging to donate over $30 billion to the Gates Foundation proliferated overnight.

What savvy business people know is that this event has been in the making for 15 years.

That's how long Bill Gates and Warren Buffett have known each other and developed both a business and personal relationship.

When Mr. Buffett reached the point where he needed to decide where his wealth could do the most good, he had options, of course.

When you have important decisions to make, you turn to people you know, like, and trust.

Buffett has four family foundations that could have been the beneficiary of his generosity -- one named for his late wife, and three run by his children.

Rather than expand one of his family foundations, however, he saw the infrastructure and results that the Gates Foundation, run by his friend Bill Gates, was achieving.

Three important lessons that will help you build a stronger business:

  1. Expand your network with highly competent people who have integrity. Are there some people who you deal with who do not ascribe to the same ethical or performance standards that you do?
  2. Your closest business relationships aren't necessarily your best customers/clients. Warren doesn't buy the most Microsoft software titles, and Bill isn't Hathaway's biggest shareholder.
  3. Avoid urgency in your business relationships. 15, 10, or even 2 years ago, this wasn't the right thing to do for Warren Buffett. When the time became right, he acted swiftly and significantly.

Thursday, June 15, 2006

Monitor Your E-Mail before The Company Does

Companies are monitoring employees’ e-mail to guard company secrets and enforce rule violations, according to a survey by Forrester Consulting.

In a study with 294 participating companies, 37.8% said they employed e-mail monitoring staff. Nearly half of the surveyed companies audit outbound e-mail. Perhaps not surprisingly their suspicions are well-founded. Approximately 21% revealed that they had arranged for their employees e-mail to be subpoenaed in the past year, a figure that has doubled since 2005.

Inevitably, when companies make such a decision, they risk violating employee privacy, says Keith Crosley, Proofpoint director of market development. He emphasized that the use of mobile phones for e-mails blurs the line between personal and work settings and that people will inevitably send personal e-mails from work e-mail accounts.

If you encourage your staff to create a clear line between their personal and professional lives and encourage them to use a non-work e-mail for their personal correspondence, you will take the fear of privacy violation out of the equation and you will build a stronger business.

If You Want to Know How to Build a Stronger Business, Ask Your Staff and Don’t Take Yes for an Answer

When Ken Thiry, chief executive of a dialysis business, DaVita, gave all of his employees the opportunity to offer feedback for the business, he was initially surprised by what he heard; passive acceptance.

Surely, with all the changes he made since taking over at the company, there would be more mixed reviews. Frankly he just didn’t buy that all the staff could be pleased with everything he did. He demanded the staff’s frank responses to specific questions addressed in an initiative designed to return the company to profitability and improve the company’s steep staff turnover.

A recent company takeover had managers of the newly acquired business furious with new guidelines such as having greeters at dialysis centers and having them wait with clients until they received their treatment. With the freedom of frank feedback, the management was able to bluntly explain that such behavior would be rejected by patients.

He included “frontline” employees in the decision-making process, from equipment maintenance to inventory management. Management was made to work in the dialysis centers for one week so they could fully appreciate the demands of the employees who staff them.

Executives revise programs staff say aren’t working and collect data to highlight problems. Additional training and a more simplified approval process number among the improvements.

When Thiry took over the business, staff turnover was 45%, and it had defaulted on bank loans. But by encouraging his staff to tell him the truth about the realities on the ground of his business, he was able to turn around the 27,000 staff, 1200 dialysis center business into a firm. Six years after he arrived, DaVita has $5bn in sales and staff turnover has been cut by 50%.

If you want to get frank staff feedback it’s not enough to simply ask for it; you need to ensure the right systems are in place so they can comment freely and honestly. By getting feedback from staff and using it to solve problems you can improve the confidence of your staff as well as efficiencies in the company and you will build a stronger business.

Thursday, June 08, 2006

What to Look for in a Financial Advisor

At a time when baby boomers are approaching retirement age, finding the right financial adviser is a hot topic.

But the pitfalls are many and the consequences for picking the wrong adviser can be costly. Jonathan Clements offers some advice on how to choose wisely in his article “Due Diligence: The Five Key Rules to Heed Before Hiring a Financial Advisor,” in The Wall Street Journal.

  • Know this going in: financial advisers are paid by commissions based on the investments they sell. It is in their interest to sell products that yield them the highest commissions. To avoid being lured into buying a product that’s not best for you, Clements suggests using fee-only advisers who will charge an hourly fee or a percentage of your portfolio’s value or a fixed annual retainer.

  • Pick an adviser who is a Certified Financial Planner; only 5% of financial advisers possess this qualification because U.S. financial planners are not required to be certified.

  • Avoid advisers who won’t commit to acting as a fiduciary.

  • Although many advisers limit themselves to choosing stocks you may have additional priorities such as getting help with your mortgage, college tuition expenses, insurance, taxes and estate planning. Make sure your financial advisor is willing to advise you on these issues.

Financial advisers often charge too much. You may wind up paying them 1% of your portfolio value each year. If you add on fees charged by mutual funds and other investment items you may only have an annual total of 2% or 3%. Consider investing in treasury bonds. They are less risk and hassle and will earn 5% a year.

Have a look at some of these websites for additional information:

  • : search for a certified financial planner
  • <>
  • : find a fee-only financial adviser in your region

If you do your research and plan well, you can continue to build a stronger business with the added confidence that you’ve invested well.

Monday, June 05, 2006

Trade Tricks

Developing contacts is essential to growing your business, but remembering them on sight is crucial to establishing a solid rapport.

Scott Hagwood, former USA National Memory Champion winner, shared his secret in The Wall Street Journal article, “The Tricks of The Trade”.

To ensure that he can remember the name of a new acquaintance, he repeats the name out loud, because hearing a name a second time greatly improves the chances of recall. When introduced to a large group, he pauses and reviews the names between introductions. He then attempts to make a personal remark to each new person so he can form a connection that will stick in his head.

Time permitting, he will chat with the new acquaintances and search for ways to compare them to people he knows well. He’ll examine bodily traits, personality traits, body language, eyes, and job titles.

Taking an interest in someone, says Hagwood, is the best way for people to remember each other

You can build a solid network of contacts if you make the effort to commit the people you meet to memory. It will help you expand your contacts and to build a stronger business.

Entrepreneurs Channel Rejection into Creative Forms

When you lose a bid for a project you really wanted, it hurts. When a client chooses a new provider rather than renewing a contract with your firm, that's painful. When you get a rejection letter from a publisher, that really cuts close to the bone.

So what's a creative entrepreneur to do with rejection pain?

You've got a lot of options, of course, but here's one that struck a symbolic chord: turn your rejection letter into toilet paper.

Yes, that's right, tp.

Without burning bridges or breaking laws, you can show the editor what you thought of his/her prose.

The self-publishing house offers this service for $90. Check it out and have a laugh. Let the healing begin!

Friday, June 02, 2006

U.S. Tech Talent Grows Scarce

The shortage of technical talent in the U.S. has driven companies to develop desperate measures. While firms have worked to shore up the positions they have already filled with attractive benefits, the search for more staff is taking these companies overseas to countries such as China and India as highlighted in The Wall Street Journal article, “U.S. Firms Search for Technical Talent”.

According to the Bureau of Labor Statistics the U.S. needs to fill 135,000 new computer jobs each year, but American universities are only generating 49,000 computer science graduates annually. The bureau also predicts that there will be a 26% increase in the need for science and engineering graduates to 1.25 million by 2012. China, by comparison, produces significantly more science, engineering and computer technology students; in 2004, Chinese universities generated 351,000 graduates in these fields. India was second, though significantly behind, with 112,000 graduates.

One of the fields that will be among the hardest hit by a lack of interest is the mining industry. The lack of technical ability and the retirement of 2,600 of the 5,200 practicing mining engineers in the next 12 years hangs like an ominous storm cloud over the sector.

The oil sector also looks vulnerable. According to the Society of Petroleum Engineers 1,732 students were enrolled in petroleum-engineering university programs in the U.S. in 2004 compared with 11,014 in students in 1983.

The problem with sourcing staff from overseas is that the federal government restricts short-term visas for foreign workers in the U.S. – H-1B visas -- to 65,000 a year. However, there was a temporary suspension of that figure in 2001 to 2003 when H-1B visas were raised to 195,000. Another 20,000 visas are open to foreign-born workers who received a masters or doctorate from an American university.

If the course of staff shortages in the tech industry is to be reversed, young people need to be given more incentives to enter these fields. If you provide the right balance between offering a rewarding job and providing the right incentives for employees to stay, you’ll build a stronger business.

Thursday, June 01, 2006

Search for Scarce Resources Drives Innovation

When we see ingenious inventions that make our lives easier, little thought goes into pondering how they came into being. It may be surprising to learn how often innovations are developed not by choice, but because of a distinct lack of them. Stephen L Sass calls attention to our innovative ancestors in his article, “Scarcity, Mother of Invention,” from The New York Times.

Iron may have been the stuff of kings’ weaponry and bronze the raw material of choice for the masses, but it wasn’t until tin resources, essential to making bronze, dried up that artisans developed smelting and were able to provide iron to a majority of 12th century BC consumers.

In 17th century Britain, there was such a hunger for wood for energy, as a raw material for ships, and smelting that the country produced a timber famine. Coal was a natural alternative, but ran into problems when it was used for smelting because sulfur would make iron weapons brittle. A process was developed to extract the harmful ingredients from coal in 1709 and the end result was called coke.

Coke became cheap enough for mass market use and people began to acquire cast iron pots and pans.
But coal mine shafts are very deep and were vulnerable to flooding. The steam engine was developed to pump water out of coal mines, a device that would become the driving source of power for the Industrial Revolution.

When your business runs into obstacles, take the time to research new ways of overcoming these challenges. You’ll build a stronger business by taking a pioneering approach.