Some Thoughts On Sandy

I wanted to take a moment to thank my family, friends, employer, colleagues and staff in my building for their concern and offers of support in the aftermath of Hurricane Sandy. I was very lucky in that I live in the Flatiron neighborhood of Manhattan and was far away from the flooding; though I lost power, running water and sanitation in my apartment and office. I was able to get out of the city on one of the few buses leaving town yesterday afternoon and am now safe and sound in Boston.

Having no power and being forced to conserve my cell phone battery gave me lots of time to reflect on the events of the last few days. I thought I’d post some of my thoughts here:

1. Serious weather events really are local. You don’t truly appreciate the carnage and impact on those affected until you see it up close.
2. It really, really troubled me that NYC’s 911 system was receiving 10,000 calls every 30 minutes following the power outage: 1.) because there are so many morons calling 911 for non-emergencies and 2.) because there isn't any effective way to triage those 911 calls so people with life and death emergencies had to wait on hold. I've been thinking about ways that those calls could be triaged and I think there’s a good startup opportunity here – given the vast amount of information that our cell phone and email providers have on us there should be some intelligent (and profitable) ways to solve this problem.
3. Just after the power went out in New York, police cars turned on their blue flashing lights and slowly circled around the impacted streets. I saw a police car go by my apartment literally every three or four minutes. This was a smart move to give people a safe feeling and I’m sure it reduced any potential looting or other crime.
4. Twitter is incredibly useful during a crisis.
5. For the most part, people don’t need to evacuate their homes to avoid the hurricane itself, they need to evacuate to avoid the miserable days following the hurricane when they’re stuck in their wet home with no power, running water, sanitation or cell phone coverage. I think a lot of people miss that point.
6. Mayor Bloomberg did the right thing by asking President Obama not to come into New York City. The police resources that would've been required to facilitate his visit had much more important things to do.
7. Mayor Bloomberg sent the wrong message by ringing the opening bell at the NYSE that the city was up and running and open for business. People from all over the New York, New Jersey and Connecticut areas hopped in their cars and drove into a city that was just at the beginning stages of a recovery and caused massive gridlock.  New York City should not be open for business when the entire subway system is down.
8. Walking around Manhattan at night when the lights are out is really surreal.
9. It’ll be interesting to see the impact Sandy has on the Presidential election. If people see the federal government making a positive impact it should help President Obama but if things still look bad on Tuesday it might help Governor Romney.
10. Weather events like this are likely going to be much more commonplace going forward. I’ll save the climate change discussion and the role of government for another post. But citizens should use Sandy as an example of the importance of being ready when a disaster hits. Having an escape plan and an ample supply of non-perishable food, water, rain gear, flashlights, battery-powered radios and back up cell phone batteries is critical for everyone. Because even in a city of eight million people with all the conveniences that could be imagined, you just might find yourself on your own.

Finally, here are some helpful tips from FEMA on how to help the victims of the storm.

Image via Nameen.

Employment Sectors

Albert Wenger had a good post the other day noting some of the changes in employment in the U.S. over the last couple hundred years.  He uses the chart below to illustrate the massive losses in agriculture and manufacturing jobs. Some might argue that this chart indicates that our economy has weakened as a result of these losses. But Albert also notes that while these sectors have seen massive decreases in employment, overall employment as a percentage of the population has actually increased during this time (from 32% to about 45%).  There is no doubt that this kind of change causes of lots of pain in the short term, but it's also clear that the creation of new companies and entire industries is critical to the long term health of the economy.

Healthcare: Big Government Vs. Small Government

James Suroweicki has a great column in the New Yorker this week laying out why he believes Romney’s healthcare plan won’t work. Regardless of your opinion on the matter, he calls out some important and unique qualities of the healthcare industry that should be considered when weighing both candidates’ plans; that is, weighing how much we should rely on the free market versus the government to solve the healthcare cost crisis.

I recommend reading the entire article but here are a few of the most notable things to consider:

1. Unlike most consumer goods, healthcare consumers don’t have the expertise to properly value one treatment, hospital, or doctor versus another.
2. Most major healthcare purchases are made by insurers, not consumers, so they lack a direct say on the price of a treatment.
3. One way for a buyer to get a seller to reduce their price is to walk away and not buy the product at all.  In healthcare, consumers can’t just walk away from treatments like they can a new car or a new cell phone -- they have to buy the treatment to survive.

These fundamental realities of the healthcare industry make this issue far more complex than the simple big government/small government ideologies that many of us use to guide our political and economic beliefs.

The Healthcare Mandate's Impact On Healthcare Costs

I read Goldman Sachs’ recent report on Election Outcomes and Potential Impact to Healthcare Stocks earlier this week.  Basically the report outlines what’s likely to happen to the different healthcare verticals in the event of a Romney win or an Obama reelection.  The vertical that will be most impacted by the election seems to be hospitals and health systems.  The reason is that the universal healthcare component of Obama’s Affordable Care Act will dramatically change the payer mix for most hospitals.  Suddenly 30 million people will have insurance on one day that didn't have insurance the day before.  That means that people who weren't inclined to get care are more likely to get care (more hospital revenue) and, perhaps more significantly, hospitals will get paid for the care that they give to patients that don’t have insurance (more hospital revenue). In addition to helping hospital stocks, the conventional thinking seems to the be that the healthcare mandate will also lower overall healthcare costs.  To illustrate that point, here’s a vicious cycle that’s currently driving up the cost of care that may be disrupted significantly with the roll-out of the mandate. Let’s use an imaginary uninsured patient named John:

1. John doesn't have insurance.
2. John gets sick.
3. John doesn't want to pay for care out-of-pocket so he delays seeing a doctor.
4. His condition gets worse.
5. His condition eventually gets so bad that he shows up at the emergency room and gets lots of acute (and expensive) care.
6. He doesn't have the money to pay the hospital so the hospital loses lots of money.
7. To make up for this lost money, the hospital charges its insured patients more for their care.
8. To make up for these price increases, the insurers raise their premiums.
9. Because of the high premiums, people drop their insurance.
10. Repeat.

By requiring John to get insurance, he’s more likely to seek care earlier, thus reducing the costs and losses to treat him, thus allowing hospitals to lower costs, thus allowing  insurance companies to reduce their premiums, thus allowing more people to afford insurance.

Of course what sounds good in theory may not work in practice. But it’ll be interesting to see how the mandate will impact healthcare costs should Obama win in November.

How I Interview Job Candidates

I think a lot about the best way to interview job candidates.  I’m always trying to determine how effective they’ll be at my company but also how much they’ll actually want to be at my company.   I want to be sure that we’re going to like them long after they’re hired and, just as importantly, that they’re going to like us long after they’re hired. Here’s the framework I’m currently using when I interview a job prospect:

1. Resume Walkthrough.  First, I walk through their resume to get to know them.  I try to understand why they chose their schools, companies and industries and I always ask why they left each job.  Walking through their resume gives me a really good sense of who they are.  It can be somewhat of an intense conversation so it helps me get to know them right away.  On the surface, I don’t care about gaps in resumes or sabbaticals but I like to understand the choices that the candidate made and why they made them.   At the end I always ask them my favorite interview question.  I ask them to tell me what they want to do without naming a company or an industry.  Specifically I want to know how they want to add value to an organization.
2. Analysis of Strengths.  Next I dig in on their strengths.  I assume that they’re really good at what they do but I like to understand exactly why they believe they are so good.  Often I’ll ask something like, “if you’re the top performer on your team and I asked the average performer on your team what makes you so good, what would they say?”  This gives some insight into how analytical they are about their success.  I don’t really care that much about hearing about their success, I want to hear about why they’re successful so I can assess whether or not that’ll be transferrable to my company.  Candidates that can’t intelligently tell you why they’re successful are risky.
3. Hesitations.  At this point I’m in a good position to assess my hesitations.  In a nice way I tell them exactly what I think of them so far and what I’m hesitant about.  And I give them a chance to respond.
4. Tension Breaker.  Then I lighten things up and ask what they do for fun.
5. Questions.  Lastly I ask if they have questions for me.   I can usually get a good sense of how much they’ll like working at my company by the questions they ask.

This approach has been working well for me lately so feel free to borrow it.  I’ll try to document how this changes over time.

The Elevator Pitch is Dead

A while back there was a post on the Harvard Business Review blog titled, Win the Business with the Elevator Pitch.  The post started with this scenario:

Pretend that you are in an elevator at one of your industry's trade shows. You're heading down to the lobby when the doors open on the thirtieth floor. You instantly recognize the executive who walks in and quickly glance at his name badge to confirm he is the CEO of the most important account you would like to start working with. You have never met him before nor have you been able to generate any interest from his organization. You have forty-five seconds to introduce yourself, explain what your company does in a way the CEO would find interesting and applicable, and motivate him to take the action you suggest. Ready? Go!

The post went on to give advice on the best way to structure your elevator pitch and even gave a script.  I wrote the following comment on the post:

Great post, Steve. Though I have to tell you that if I ever found myself in the position you describe in the first paragraph, the last thing I would do would be to try to pitch.  Business people, particularly CEOs, hate being sold to -- especially in person, in an enclosed area, by someone they don't know.  A better approach might be to introduce yourself casually, talk about the event or the weather or sports -- basically show that you're a nice guy.  Then if you happen to bump into the CEO later on, you can start to talk more about what you do and -- if appropriate -- have a conversation about how you might work together.

Of course it may be unlikely that you'll get this CEO alone again -- but I'd argue that it's just as likely as converting a 45 second elevator ride with someone you've never met into a material sale.

That said, if you do decide to make the pitch on the elevator the framework you've described above is a great one.

The elevator pitch is dead. Yes, you need to be able to quickly and concisely explain your product's value. And having an elevator pitch in your mind is a great way to do that. But in today's complex sales environment, battering CEO's with your sales pitch is not going to work.

It's not about top-down pushy sales or bottoms-up deference to your prospect where you simply "learn about their business", it's about doing the work to build synergistic partnerships that scale way beyond the sum of the two parts.

So if you find yourself in the elevator with your dream prospect, don't pitch them -- get to know them. And if you're able to keep the conversation going outside of the elevator learn about what they do and tell them about what you do.  And get their implicit permission to keep in contact with them. And when it's appropriate to talk to them about how a partnership could help both of your businesses, send them your ideas and setup a time to talk (preferably, not in an elevator).

B2B E-Commerce

Erin Griffith had a good post on PandoDaily titled, Whatever Happened To The Promise of B2B E-commerce. I find this to be a super interesting topic. In short, Erin argued that "the trillion-dollar promise of B2B commerce may finally be on its way."

Personally, I'm not so sure. I posted the following comment -- though for some reason it never got posted to the post, so I thought I'd post it here.

Great post, Erin.

Though I’m not sure I agree that b2b e-commerce is finally on its way.  There are multiple, inherent transactional differences between b2b and b2c that, I believe, make a transition to b2b e-commerce nearly impossible in the short to medium term. There are so many steps in a large enterprise’s buying process that cannot be replicated in a scalable manner online (customized legal agreements, reference checks, price negotiation, unique purchase approval structures, payment terms and the individual emotions that drive big purchases). Just look at the legal side for a moment. Most e-commerce sites have their own “terms of use” section that dictates the legal terms associated with the use of their site. Large enterprises will want to review and customize these terms of use based on their own policies, procedures and appetite for risk.  It’s very difficult for e-commerce sites to allow for this in a scalable way across hundreds or thousands of clients.

Now you may argue that e-commerce has come such a long way that technology should be able to replace much of this bureaucracy. But in a large enterprise each of these steps represent a task that is completed by someone with a job. So you can either eliminate those jobs or assign those individuals to work on something else. But just like purchasing, reorganizing non-strategic job roles for an unclear upside will take a long, long time. And in my view, real growth in b2b e-commerce is simply going to have to wait.

MVP in B2B

Minimum Viable Product (MVP) has become an enormously popular way of releasing web applications. The idea is to get a product that works in front of users quickly and cheaply, watch them interact with it and constantly iterate and improve.  In some cases developers will release changes to the product every day, if not multiple times a day. This is also often referred to as an "agile" development environment. This approach is distinct from the old fashioned, "waterfall" approach where changes to the product are planned and implemented less frequently in well planned batches.

In a b2c environment, MVP works extremely well because a developer can release features and iterate based on data/learnings that they capture by watching thousands of users interacting with their code.

In a b2b environment, though, often this isn't so easy.  At the outset, there may only be one or two individuals using the product so good data and learnings may not be as easy to capture.  As a result, it's critical that when b2b organizations use an MVP approach they be super disciplined about setting up formal feedback loops where feedback is filtered quickly and regularly back to their product team. Most clients should support this as they’ll get to see much of what they recommend being built into products rapidly.  But it’s important to get buy-in on participation in the feedback loop from the early adopters.  This may be a new concept for them as most of their current software vendors are more than likely using the ‘waterfall’ approach.

Also, given the pace of change in an agile development process, it's important that the client-facing team is aware of the more significant product changes that are being made.  Often, an agile, MVP driven environment can lead to such fast paced change that b2b salespeople aren’t aware of the significant features or changes being released.  And an awareness of the substance and timing of product changes can be an excellent way to speed up deal movement and client adoption.

Social Selling: 3 Questions & Answers

There’s been quite a bit written recently about social selling – that is, using social media to help companies and salespeople drive revenue. Much of the advice is targeted at companies -- with tips on how to have conversations with prospects/clients through social media. I’m much more interested in how individual reps can use social media to their advantage.

A few thoughts:

1.  Which social networks should I be posting on?

I've written in the past about social graphs. You need to decide on the audience that you'll interact with in each social network. For me, at a high level, I interact with people I know professionally on LinkedIn, pretty much anyone on Twitter, friends and acquaintances on Facebook and only very close friends on Foursquare. You can view a list of my social networks on my About page.

It seems to me that the best social network to talk to your prospects and clients is LinkedIn and possibly Twitter. Your prospects/clients, for the most part, don't need to see your Facebook photos.

2.  What is the point of social selling?

So often I hear salespeople talking about how their clients/prospects just “don’t get it”. They have an awesome solution to their problem but their contact just doesn’t see it. It’s not that the contact is stupid, it’s that they’re looking at the problem through a much different lens. As a result, they don’t see your solution as the clear answer. Using social media intelligently is a great way to slowly and steadily begin to get your clients/prospects to see their problems through your lens. That isn’t to say you should be posting things to try to sell or to teach people something they don’t know.  Instead, the approach is to show your audience how you see things and let them come on board with your way of thinking at their own pace. Social sales is a very passive form of "drip marketing". I've written a few posts on drip marketing -- check them out to get some more context on this -- you can find them here, here and here.

3.  What kinds of things should I be posting?

Knowing that the goal is to attempt to get your clients/prospects to see the problem the way you see the problem, you should post links to intelligent articles, blog posts, white papers, etc. related to the problem that your product addresses. Don't be afraid to widen your problem into other areas -- you don't want to appear to focused on your own small world. The critical thing here though is to never just post a link. Post a short note about the topic with your take on it or a quick introduction as to why people should find it interesting. The point is that it's interesting to you and something you're passionate about so you want to share it with your network. Finally, if your company gets some good press, I'd advocate posting links to those articles and videos on your social networks. Don't overdo it and post it in a humble way, but allowing your clients/prospects to see what others are saying about you and your company is another effective and passive way to help clients/prospect see you in a better light.

In short, social sales is not going to close deals. But if done well it's a great way to get your clients/prospects to change the perception of their problem, your solutions, your company and you in a favorable way.

Is There A Shortage Of Sales Talent?

An article on the Harvard Business Review blog today talked about the shortage of good sales talent and the need for more formal sales training programs. My theory is that there's actually a lot of sales talent out there but those people simply don't want sales jobs. Here's the comment I posted.

Great post and an important topic.  I believe that in today's business environment you need a variety of skills to be a good salesperson -- it's not about back slapping on the golf course anymore.  Sales is much more complex now.  You need to have a strong understanding of finance, economics, accounting, marketing, strategy, technology, product and management to understand what makes a good prospect, what problems your prospects have, where markets are going and how your company's products can fit in.  These skills are not easy to acquire.  In my experience, they come from getting an MBA or working in a client-facing role in a very early stage company where you're forced to wear a lot of hats and figure out how to make your product work or, in a rare case, you've gained these skills on your own by educating yourself.  And I've found that people that have that kind of experience under their belt are, for the most part, uninterested in filling a typical "sales" job.  They're interested in getting into finance or consulting or strategy.  This is because sales has a stigma to it.  People with that kind of ambition and experience often don't want to tell their friends and family that they're a "salesperson".  Not because sales isn't an admirable job -- it is -- but because there's a stigma attached to it.  People that don't understand the complexity of today's sales environment think of the used car salesperson trying to sell them a lemon.

As a result, I believe we need to begin to stop using the word "salesperson" to describe the roles we're trying to fill.  And not just for recruiting reasons.  Because the word no longer describes what these people are being asked to do.  These people aren't selling knives door to door to every house in town.  They're not pitching and responding to objections.  They're seeking out and understanding business opportunities, carefully selecting the appropriate individuals to connect with, having open, informal business conversations, validating assumptions, iterating those assumptions, refining products and services, participating in internal and external strategic planning, creating mutually beneficial partnerships, negotiating legal & business terms, setting goals for the partnerships and seeing that those goals are met.

I believe that the sooner that companies create roles and job titles around this new skill-set, the sooner we'll see more professionals signing up to fill these jobs.

Hard Work Isn't Enough Anymore

There was a good op-ed from Thomas Friedman in yesterday's New York Times titled, Average Is Over, Part II.  The key line for me is:

Thanks to the merger of, and advances in, globalization and the information technology revolution, every boss now has cheaper, easier access to more above-average software, automation, robotics, cheap labor and cheap genius than ever before. So just doing a job in an average way will not return an average lifestyle any longer.

I've written in the past that hard work isn't enough anymore and as Friedman points out this is becoming more and more true. If a person or a machine anywhere in the world can do your job as effectively as you can at a cheaper cost it is simply a matter of time before you're unemployed. You have to find a way to add irreplaceable value.

In some ways, I think the key to thriving in this new environment is just to simply be aware that doing a "good enough" job isn't enough anymore.

I'm glad Friedman is giving people that awareness.

An Expensive Knee Surgery

I counted sixty-three different people involved in her care. Nineteen were doctors, including the surgeon and chief resident who assisted him, the anesthesiologists, the radiologists who reviewed her imaging scans, and the junior residents who examined her twice a day and adjusted her fluids and medications. Twenty-three were nurses, including her operating-room nurses, her recovery-room nurse, and the many ward nurses on their eight-to-twelve-hour shifts. There were also at least five physical therapists; sixteen patient-care assistants, helping check her vital signs, bathe her, and get her to the bathroom; plus X-ray and EKG technologists, transport workers, nurse practitioners, and physician assistants. I didn’t even count the bioengineers who serviced the equipment used, the pharmacists who dispensed her medications, or the kitchen staff preparing her food while taking into account her dietary limitations.

Atul Gawande, writing about the resources required to complete his mother's knee surgery in this week's New Yorker article Big Med.