Welcome back.

Have you thought about subscribing? It's free.

What’s the right size? The quantum mechanics of growth…

How come there are no ants as big as Buicks (except in the movies)? Why not have a college with a million students (or ten)?

The physics and economics of a business determine whether it's the right size or not, whether it ought to get bigger or smaller. Starbucks, for example, was not the right size when it had 11 stores. That's too many stores for just one senior manager to handle, but not enough stores for centralized purchasing and marketing and organization. The cash flow from an eleven-store chain just doesn't easily connect to the staff requirements necessary to make it efficient.

A web company might do really well with thirty people and a few million dollars in revenue. To get to a thousand people (big enough for an IPO, say), it will need to transform both the product and the way it's sold. And in between the size it is now (which is working) and the size necessary for the public offering, there's a dead zone. This is a leap, not a stroll.

When I was growing my first successful business, I kept saying that one day I'd hire enough people that the people I was hiring could manage themselves. I went from having four direct reports to eleven before I realized that I wasn't going to be able to make the leap in scale that was going to be necessary to reach a comfortable size.

The same rule applies to independent musicians and comedians. At the solo level, you might be very happy making a living gigging at certain kinds of venues and being supported by a given audience. On the other hand, to support a manager, a band and a label, you can't just add a few more fans. You need different venues, different gigs, different revenue streams. If you can't (or don't want to) get to that new level, the new team isn't going to help, and it might destroy everything you've built.

It's worth charting both profit per employee and owner satisfaction against the number of people in the organization. Perhaps getting a little bigger isn't what you want, and it might not even be possible.

Low prices

It might be that low prices are the final refuge of the marketer who has run out of ideas and is left with nothing but a commodity.

Or it might be that organizing your business around lowering prices through efficiency, mass scale and smart choices is a powerful way to grow.

My guess is that both are true, but you better be really sure about which one you're choosing. Hint: doing the second one successfully is really quite difficult, so if all you're doing is writing a lower number on the pricetags, you're probably playing the first game.

Your dent

Are you making a dent in the universe?

Hint: lots of random pokes in many different spots are unlikely to leave much of an impact. And hiding out is surely not going to work at all.

The story of money is not a straight line


Everyone tells themself a different story about money, but there's no doubt at all that the story we tell ourselves changes our behavior.

Consider this curve of how people react in situations that cost money.

A musician is standing on a street corner playing real good for free. Most people walk on by (3). That same musician playing at a bar with a $5 cover gets a bit more attention. Put him into a concert hall at $40 and suddenly it's an event.

Pay someone minimum wage or a low intern stipend (4) and they treat the work like a job. Don't expect that worker to put in extra effort or conquer her fear–the message is that her effort was bought and paid for and wasn't worth very much to the boss… and so she reciprocates in kind. The same sort of thing can happen in a class that's easy to get into and that doesn't cost much–a Learning Annex sort of thing. Easy to start, cheap to try–not much effort as a result.

It's interesting to me to see what happens to people who pay a lot or get paid well (2,5). The kids at Harvard Law School, for example, or a third-year associate at a law firm. Here, we see all nighters, heroic, career-risking efforts and all sorts of personal investment. And yet as we extend the curve to situations where the rules of rational money are suspended, something happens–people get fearful again. Don't look to Oprah or JK Rowling or the Donald to bet it all–the huge amount of money they could earn (or could pay) to play at the next level (1 & 6) isn't enough to get them out of their comfort zone. Money ceases to be a motivator for everyone at some point.

Most interesting of all is the long black line at zero (3). The curve goes wild here, like dividing by zero. At zero, at the place where no money changes hands, we see volunteer labor and free exchange. In these situations, sometimes we see extraordinary effort, the stuff that wins Nobel prizes. Just about every great, brave or beautiful thing in our culture was created by someone who didn't do it for money. We see the local volunteer putting in insane hours even though no one is watching. We hear the magical song or read the amazing poem that no one got paid to write. And sometimes, though, we see very little, just a trolling comment or a half-hearted bit of commentary. Remove money from the story and we're in a whole new category. The most vivid way to think about this is the difference between a mutually-agreed upon romantic date and one in which money changes hands.

All worth thinking about when you consider how much to charge for a gig, what tuition ought to be, what motivates job creators or whether or not a form of art disappears when the business model for that art goes away.

Some reading without charge (worth way more than it costs)

The Valve company handbook (download), about the post-industrial method of management.

Bassam Tarazi on accountability (part 1). This is brand new. (Download here)

The on-purpose person, free ebook until the 28th.

And some recent posts on The Domino Project blog (though we're not publishing any new books, the blog continues).

Bonus: a new (short) TED talk from Nancy Lublin. Does changing the medium change the message?

(Plus, a new one from Hugh, not free, but still a bargain…)

Do you have a people strategy?

Hard to imagine a consultant or investor asking the CMO, "so, what's your telephone strategy?"

We don't have a telephone strategy. The telephone is a tool, a simple medium, and it's only purpose is to connect us to interested human beings.

And then the internet comes along and it's mysterious and suddenly we need an email strategy and a social media strategy and a web strategy and a mobile strategy.

No, we don't.

It's still people. We still have one and only one thing that matters, and it's people.

All of these media are conduits, they are tools that human beings use to waste time or communicate or calculate or engage or learn. Behind each of the tools is a person. Do you have a story to tell that person? An engagement or a benefit to offer them?

Figure out the people part and the technology gets a whole lot simpler.

Don’t expect applause

Accept applause, sure, please do.

But when you expect applause, when you do your work in order (and because of) applause, you have sold yourself short. That's because your work is depending on something out of your control. You have given away part of your art. If your work is filled with the hope and longing for applause, it's no longer your work–the dependence on approval has corrupted it, turned it into a process where you are striving for ever more approval.

Who decides if your work is good? When you are at your best, you do. If the work doesn't deliver on its purpose, if the pot you made leaks or the hammer you forged breaks, then you should learn to make a better one. But we don't blame the nail for breaking the hammer or the water for leaking from the pot. They are part of the system, just as the market embracing your product is part of marketing.

"Here, here it is, it's finished."

If it's finished, the applause, the thanks, the gratitude are something else. Something extra and not part of what you created. To play a beautiful song for two people or a thousand is the same song, and the amount of thanks you receive isn't part of that song.

Needs and wants are often confused

When people have their basic needs met, it's not uncommon for wants to magically become needs. It's our hardwired instinct to seek to fill unmet needs.

That pays off for any marketer that has persuaded his market that they need what he sells. It backfires when those 'needs' are seen for what they actually are–luxuries.

When you sell a want, you have to work harder, you must seduce the market, because wants are fickle, picky and not easily bullied.

When smart people work for big companies

A good employee says, "I know that this is a serious problem, it's hurting our customers and we can do better, but I can't do a thing about it because it's run by a different department."

A version of this might conclude with, "And I don't even know the name of the person who's responsible."

This is a sure sign of systemic failure as well as a CEO who is not doing the job she should be. When smart people who care get frustrated, something is wrong.

This lack of responsibility/communication is not a feature or a benefit that helps customers or shareholders. This is a flaw in the system of the big company, a cost of having a larger organization. The very same system that allowed the organization to become big and powerful is showing serious cracks.

It doesn't have to be this way. But it will unless senior management hires, trains and organizes to avoid it. Is there a more important issue to be worked on?

If you think that’s what we want, why don’t you give it to us?

The sign in front of the breakfast bar at the hotel says, "from garden to table."

Really? Virtually every item I see has been processed four times, steamed, stored and steamed again.

Marketing pitches are finely tuned to resonate with the audience in mind. Too often, though, the marketer is only in charge of the pitch, and someone else in the organization has to make the thing.

So the marketer brags about how tasty the food on the airplane is, or how reliable the cell phone service is or how magically transporting the aromatherapy of the soap is–and then someone else, someone under different pressures and constraints–has to deliver. And they rarely do.

They rarely do because the paying customer isn't their customer. Their customer is the quality control department, the accounting department and the "don't-rock-the-boat" department.

Marketers need to spend less time making promises and more time keeping them.

Sea Monkey AD

This site uses cookies.

Learn more