Bottom Line Business Insights : Maryland Business Lawyer & Attorney : Wagonheim Law Firm : Mergers & Acquisitions & Contractual Negotiation

Eliot Wagonheim focuses on three business lessons from the life of Steve Jobs that every entrepreneur should adopt as their mantra.

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My father died on April 1, 2007. He was a lawyer and ran his one-man law firm in the town of Gambrills, MD for forty some-odd years. We spoke many times of his wish to retire, travel some, and relax with his wife.

In going through his papers soon after his death, I ran across an engagement letter dated March 1, 2007. It seemed that my father signed up a new client exactly one month before he died, and some six months after having been diagnosed with leukemia. He had requested and received a retainer of $750.

Other than the very fact of my father’s passing, nothing made me sadder than that one piece of paper. He was dying. And all those who weren’t in the most active of active denial knew it. I’m certain he did, even if he didn’t want to acknowledge it. But there he was, still making the sale one month before he died.

I don’t want to do that. My wife doesn’t want me to do that.

And I know a lot of business owners who don’t want to do that either.

The question – which my father struggled to answer literally to his dying day – is “How can I avoid that fate?”

I think the answer lies in the advice given to trial lawyers.

When I started out as a trial lawyer, I was taught by some of the masters in the field to write my closing argument first. Decide what I wanted to be able to tell the jury at the end of the case, and then work backwards to ensure that the facts and law I presented would support the story I wanted to tell at the end.

The same goes with avoiding my father’s fate. My father wished to retire, but he never made it a priority. 

Now, I sit down with clients every day and start writing their closing argument. When do they want to retire? Do they envision selling their companies to a third party, to their employees, or just winding it down? Will they stay involved or leave to run a flip flop shack on the beach? How much money will they need?

Then, we work backwards. For example, in my business, if I figure that I have to build the law firm to a $5MM enterprise in 5 years, I’ll need 20 lawyers to do it.   That means adding the infrastructure (administrative staff, office space, equipment and the like) to support them. And I better get moving. 

For a long time, I was content to watch for opportunities and even grab one or two as they came along. Now, I know what I need to achieve and I’ve come to grips with the fact that I not only have to look actively, but I also have to broadcast my goals to other people … in the hope that they’ll help me find the missing pieces. More importantly, I have to get specific as to what pieces I need to add, as opposed to hoping that what catches my eye happens to be a missing piece.

In other words I have to plan.

For too many enterprises, a business plan is something they prepare for a bank or because they think they should have it. Once finished, it is marveled over for a week or two and then shoved in a drawer – never to see the light of day against. 

The right business plan, however, is a GPS system. Constantly on. Constantly with you. Reminding you when to turn and how far you have to go.

Next year will mark my firm’s 10^th year in business and my 25^th year engaged in the practice of law. I’m not close to my father’s 40, but I have something he never developed…I have a GPS.

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Newt Gingrich has been a fixture in the news cycle for a while now.  It seems he’s doing that “will-he-or-won’t-he” run for President dance. One the news shows recently, he had to confront the issue of infidelity. The former Georgia Congressman has been married three times and has often been criticized for the less-than-clean transitions between those marriages.

The former Speaker’s latest round of Sunday morning interviews got me thinking about the cost of infidelity – not just in a presidential run, or even in divorce court, but rather as seen every day in my business practice.

You see, when a person commits to a company – as an officer, director, or even sometimes as an employee under contract, the law and various contracts impose duties; the higher the post in the company, the greater the duty. Chief among those duties is the duty of loyalty. Called different things in different states, the result is the same – you breach it at your own peril. 

In life, there are always temptations. In business, that temptation takes the form of the desire to take more (or all) of a good deal for oneself rather than sharing the proceeds with others. Sometimes, the thought occurs with the possibility of landing a large, new contract or upon hearing of a tremendous sales opportunity.

“Maybe,” the thought goes, “I could set this one up outside the company and triple what I would otherwise get in commission or draw.”

Possibly.

Sometimes, to be sure.

But what of those left on the outside looking in?

Simply put, they can sue. They can go after, and often take, those appealing, better-than-expected profits.  In Maryland, one of the causes of action is known as a “breach of corporate opportunity.” This means, in effect, that one may be held liable for the improper taking (some would say “theft”) of a business opportunity that rightfully belonged to the company. 

Let’s assume that Susan Smith was a shareholder and vice president of ABC Janitorial Corporation.  Upon seeing an opportunity for a large contract on the horizon, Susan set up a new company with her husband called DEF Cleaning.  DEF then snared the contract for itself.  In so doing, it wrongfully claimed one of ABC’s opportunities for itself.  In other words, it took money that ABC could have earned.  It is a safe bet that Susan’s former employer is not going to go quietly into that good night.  They will hold Susan accountable. 

In so doing, the law (as is not always the case) tracks ethics.

The long and short of it is that Susan, as a co-owner and officer of ABC, owed ABC something better than just her full-time, physical presence.  She owed ABC her loyalty.  When she decided to deprive ABC of an opportunity that rightfully belonged to it, she committed the corporate equivalent of adultery.

And in business, just like in marriage, there is usually a price to pay.

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Not long ago, I found myself sitting in our conference room across from a very interesting gentleman. He was in his upper fifties, maybe 60, and carried himself as a professional. He explained that he had been in business for upwards of 40 years – that he had made some big mistakes, learned from them, moved on, and built a fairly successful business. 

He told me that the business that he had started had run its course and he wanted to start a new one, having learned from the mistakes of the old. In order to start the company, he decided to bring in 3 additional people. These people were friends of his, experienced in his industry, and possessed of the skill sets necessary to make the new venture run. My visitor had decided to divide 40% of the stock among them, retaining 60% for himself – enough, he felt, to keep control of the company.

He was convinced that giving out shares of the company was the only way to keep the group motivated, absent money to pay each person’s going rate. My visitor was wrong.

Recently, I wrote a piece in our e-mail series discussing the mistake of offering partnership at the outset of a business relationship. And whether the discussion concerns true partnership or co-ownership of a corporation or LLC, the fact of the matter is that co-ownership is a business marriage. And make no mistake, just like the real thing, a business divorce can be expensive and emotionally draining. 

For his part, my prospective client was asking his friends to invest their time and skill in a new business for little or no compensation. What he wanted was a way to show his friends that they would reap the benefits of their investment.   We explored a number of possible solutions, but what we decided upon was offering stock options.

People, you see, are unpredictable. Some may be highly skilled and great friends, but start working together and it’s a train wreck. Different business philosophies, work ethic, or personalities can destroy a team that could not possibly look better on paper. Stock options and a vesting schedule are two ways to put together an arrangement now which takes effect later. 

In this case, we could commit to an option to purchase stock in the company beginning in 3 years, discounted for each year the person had been with the company. Moreover, as incentives, other discounts to the purchase price could also apply, provided we took care not to trigger any unwanted tax consequences.

In other words, my prospective client could date before he got married. And in my experience, that’s a pretty good plan.

This podcast is brought to you by WYPR and Eliot Wagonheim.

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In Have a Little Faith, Mitch Albom quotes a sermon so important to business owners that I decided to make it the focus of this podcast. 

As Albom tells it…

A man seeks employment on a farm.  He hands his letter of recommendation to his new employer.  It reads simply, 'He sleeps in a storm.'

Several weeks pass and suddenly, in the middle of the night, a powerful storm rips through the valley. 

Awakened by the swirlining rain and howling wind, the owner leaps out of bed.  He calls for his new hired hand, but the man is sleeping soundly. 

So he dashes off to the barn.  He sees, to his amazement, that the animals are secure with plenty of feed.

He runs out to the field.  He sees the bales of wheat have been bound and are wrapped in tarpaulins.

He races to the silo.  The doors are latched, and the grain is dry. 

And then he understands.  'He sleeps in a storm.'

Running your own business is an exercise in steering to safe harbors through strong and unexpected storms.  And as business owners, the storms rage all around us. The bankruptcy of a major customer is a storm.  So too, the loss of a major salesperson, along with the customers who elected to follow her.  A job gone south, the loss of key support personnel, and one's own unexpected absence from work -- all are gales of sudden and untold destructive force. 

To many, the state of our economy this past two years has been an extended hurricane of epic proportions. 

The question then becomes:  "Can you sleep in a storm?"

Have you:

• Secured lines of credit with terms and limit appropriate to your business?
• Protected your streams of revenue by locking down key salespeople with restrictive covenants? 
• Limited your risk by negotiating manageable damages and indemnification provisions -- particularly in those contracts governing your largest projects?
• Trained your replacement?
• Documented key procedures so that a new person could step into a job knowing key passwords, resources, and procedures?

Too often, these types of preparations are like flowers at a funeral -- they arrive all at once, and too late. 

Prudent business owners prepare.  They schedule regular meetings with their management team and key advisors, whether quarterly, every 6 months, or even annually, to consider and prepare for what storms may come. 

And when those storms arrive, as they most certainly will, the prudent business owner sleeps soundly.

This podcast has been brought to you by WYPR and Eliot Wagonheim. Please click here to listen to this podcast. Click here to subscribe to our free podcast on iTunes.

Before turning out the lights and walking out of the office for the last time in 2010, The priority for many management teams and business owners all across the country, was the completion of their annual plan for 2011. As both a lawyer and a business consultant, I’ve read hundreds.

• Sales quotas
• Quarterly returns
• Proficiency test scores

And my personal favorite…billable hours.

The problem with this type of goal setting, however, is that, over time, the goal becomes all that matters. When an organization announces to its people that reaching the goal is the only destination that matters, people will tend to focus on finding the quickest way there. 

We hear it in the news time and time again. The focus on reaching short term goals has frustrated long-term objectives. 

• The company’s objective is to maintain long-term relationships with the customer, but the employees’ incentive is to get the most money out of the customer…TODAY.
  
  
• The company’s objective is overall quality, but the employees’ incentive is to produce the most product…RIGHT NOW.
  
  
• The law firm’s announced priority is the production of excellent work product in line with the client’s overall interests, but each attorney’s bonus is based upon spending the most amount of time he or she can get away with on each and every task.

On this last one – which I’ve seen up close and personal as I’m in the industry – the separation between desired outcome and internal goals is especially glaring. The firm (at least says) it wants quality. The only incentive that matters to its people, is quantity.

In fact, there is a significant argument that it was exactly this kind of goal setting that brought about the financial collapse we’re still digging our way out of. The need for immediate (and exorbitant) profits in the short term diverted everyone’s focus from the long-term health of the system.

As Daniel Pink states in his book, Drive, there is a tremendous gap between what science knows and business does. Psychological testing has proven consistently that, in the long term, the only motivation that matters is internal motivation. He lists the three best motivators as:

1. Autonomy
2. Mastery
3. Purpose

Fill a company with talented people and create an environment that offers a measure of autonomy, the opportunity for each to pursue mastery of a given field, craft or endeavor, and a clearly defined, shared purpose and you will accomplish more than you ever could by dangling those carrots in front of an otherwise plodding workforce. 

In the end…that’s the only goal that matters.

This podcast has been brought to you by WYPR and Eliot Wagonheim. Please click here to listen to this podcast. Click here to subscribe to our free podcast on iTunes.

If you are from or have any ties to Baltimore, you almost surely hold the word "hon" near and dear to your heart.  It has become a part of charm city's history and culture.  By now you've most likely heard that the owner of Cafe Hon, a landmark restaurant Hampden, has trademarked the word "hon".  What began as a strategy to protect a brand she claims to have built has turned into a scandalous "hontroversy" that has rocked Baltimoreans to their core.  Eliot Wagonheim gave Fox news his take on the matter December 10, 2010.  Almost a month later, "hongate" is still a hot topic. Eliot served as a guest on Midday with Dan Rodricks today to discuss whether or not the Hon trademark would survive the legal test.

Click here to listen a podcast of today's show.  Click here to join the discussion on twitter.

My uncle happens to be one of the most successful businessmen, not just in Maryland, but in the entire region. He runs a multi-million dollar company that spans the northeast and found a way to expand in the most challenging economy of our time.

He rarely tried to teach, but I found that if I listened, and occasionally thought to ask the right question, I could learn something.

When I was in high school I once asked him how he could supervise hundreds of people when small business owners such as my father would sometimes seem overwhelmed keeping 2 or 3 employees on task. 

He told me it was because he employed what he called “the Gorilla System.” He explained that the Gorilla System was a system constructed in such a way that it would even work with a gorilla. 

At the time his comment rubbed me the wrong way. I didn’t understand why he could look so far down on the people who worked for him. Why he would be so insulting…or demeaning. 

It was only much later that I came to understand what he meant. He meant that he had worked to create a system so precise that even a gorilla, plugged into just about any job in his organization, would understand exactly what he needed to do, how he needed to do it, and would have all the tools he needed to succeed. My uncle wasn’t insulting his people, he was explaining how he made his business scalable. 

In his E-Myth series, Michael Gerber, also talked about the challenge of making a business scalable. He pointed out that what marks the difference between a successful entrepreneur (the “e” in “e-myth”) and someone who worked in servitude to his own business, is whether that person is working in the business, or working on the business.

And the only way to find real, block time for an entrepreneur to work on the business is if that person has people who understand the entrepreneur’s vision, his methods, and can generate his work product. In other words … in the words of my uncle … the entrepreneur needs a gorilla system.

This podcast has been brought to you by WYPR and Eliot Wagonheim. Please click here to listen to this podcast. Click here to subscribe to our free podcast on iTunes.

George W. Bush is on a book tour. Like most ex-Presidents, he probably began the task of writing his memoirs in the limousine ride to the airport following his successor’s inauguration. Unlike most of his fellow ex-Presidents, however, he elected to focus not on the passage of years, but instead on what he called the crucial “decision points” in his administration. 

It occurred to me, in listening to his interviews…and the sneak previews of his interviews…and the teasers about the sneak previews to his interviews…that whether you’re President of the United States or President of your own small business, your tenure is marked by a series of decision points. 

But when you’re the President of your own business, with whom do you consult and how? How do you go about making your decisions?

In the space of about 90 more seconds, I want to discuss the 2 concepts at play here:

The first is emotional isolation. You’ve heard the stories. A couple, married 50+ years. One passes away. The other succumbs just months later. Why? Emotional isolation. In fact, experts cite emotional isolation, not physical abuse, different religions, monetary problems, or “growing apart” as the #1 predictor of divorce. 

But emotional isolation is not just a concept left to our personal lives. Emotional isolation is the burden of every President – whether President of the United States or President of ABC Landscaping. Who do you talk to about the things that keep you up at night? Your spouse? Maybe, but there are many reason why that doesn’t work unless he or she is in the business…and that leads to other issues. You can’t talk to your employees – they’re part of your everyday challenge. 

So emotional isolation is the first concept. The second is communication. 

Don Rheem, one of the nation’s foremost experts in corporate communication pointed out in a recent talk that the whole purpose of communication – the whole reason it was developed – was to connect with people. And there are 3 things…and only three things that people are hardwired on an emotional level to seek out in communication: Validation; Understanding; and Empathy. The absence of these three things leads to…you guessed it…emotional isolation.

My point is this:

As a business owner, just as important as hiring the right people, figuring out an effective marketing campaign, and putting a great product or service out there, is the avoidance of emotional isolation. The identification of people, whether they are paid advisors, peers, or a board of directors, who can provide insight into the key decision points you face month in and month out.

The shame is, that this is exactly the kind of thing that often gets lost in the shuffle. And at the end of the day, it is the isolation that, often more than anything else, results in poor decisions.

This podcast is brought to you by WYPR and Eliot Wagonheim. Please click here to listen to this podcast.  Click here to subscribe to our free podcast on iTunes.

I can hear my mother’s voice, as one of my earliest memories, reciting one of those non-sense rhymes we all hear when we’re kids:

I never saw a purple cow;

I never hope to see one;

But if I had a choice, somehow

I’d rather see than be one.

You know it’s funny, but I hadn’t thought of that rhyme for 40 years or more. But two weeks ago, it began running through my head as I read Seth Godin’s book of the same name.

When he wrote “The Purple Cow,” Godin recalled driving through the countryside in France, and, as a city kid, marveling at the sight of cows in the roadside pastures. They were unique in his world – something seen only in books, rarely in person. But after 20 minutes, they became part of the background. Not remarkable at all. Boring. Commonplace.

But a purple cow, he thought. A purple cow would make me stop in my tracks. 

Studies show that each day, the average adult is subjected to over 150 advertisements and product placements. Television, radio, print media, the sides of buses, on billboards, websites, social media, trucks on the highway, possibly even on the coffee mug you use every day or on your pen. Everywhere companies are scrambling to make an impression.

But like those cows, they fade into the background. Even the funny commercials that get people talking on Superbowl Monday – the ones that cost millions of dollars for 30 seconds – often fall short. Sure, you might remember Betty White, but do you really recall what she was pitching?

And that’s where the purple cow comes in.

As Seth Godin wrote, the goal of a company today is not to spend millions touting the same boring product or service. It’s to become a purple cow. To create something remarkable. Not as a jingle, but through the very product or service itself to figure out something worthy of breaking through the clutter to cause the viewer to stop in his tracks and stare.

In "The Tipping Point", Malcolm Gladwell wrote about influencers – people who by dint of personality and persistence, simply are driven to tell EVERYBODY about something remarkable they found. Because of social media and internet, iReporting, and millions of blogs – it is the influencers that matter. And it is the purple cow that gets them talking.

My question, then, is whether your business, in one facet or another, has the ability to create, let alone become a purple cow.   Because in all deference to my mother, I would much rather be than see one.

This podcast is brought to you by WYPR and Eliot Wagonheim. Please click here to listen to this podcast.  Click here to subscribe to our free podcast on iTunes.

Recently, a client called to give me an update on the status of his contract negotiations for a large project. He had sent me the contract earlier to review and we went over quite a few sections that would not leave him well served. 

Rather than get the lawyers directly involved in the negotiations, the principals decided to work through the issues directly. 

Now, don’t get me wrong. That’s often a fine decision. It is no secret that lawyers kill more deals than they save. That’s because lawyers are all about eliminating risks – and business is all about taking them. The compromise– managed risks– are really the best that any business can ask for. 

So when my client told me he understood the risks I had explained and was going to negotiate the contract directly, I thought “more power to him.”

So that brings me to yesterday’s status update.

The client advised that he had made a number of concessions. That’s not surprising – that’s what negotiation is about. What was noteworthy – the thing that rang in my ears and compelled me to record this podcast – was his rationale for some of the larger concessions.

“This clause only causes us a problem if things don’t go as planned. And we’re hoping for and really foresee a smooth project, so I didn’t mind giving in on that point.”

That’s what he said. Now my client is a smart guy. He’s successfully grown and guided his company through many challenges– not the least of which has been the last three years’ economy.   That’s what interested me, though – his mindset.

You see, the contract only means something if there are problems. The whole point of the document is to deal with unforeseen issues, misunderstandings, or confusion. If everyone were one the same page all the time… there would really be no need for the page in the first place. 

There’s an old saying (I’ve even seen it attributed to Mikhail Gorbechev, but I’m not sure I believe that part) But the saying goes: “Trust in God, but lock your car.” It’s one of my favorites.

I agree with my client – you have to plan for…actually foresee…a seamless project. But when a contract is being negotiated, you have to put the marketer’s hat aside and put down your cheerleader’s pom poms. What you have to do is become a pessimist. You have to imagine the worst case scenario – if that indemnification clause kicks in and you have to become the other side’s insurance company. Is your risk managed then? Is the result fair? That’s how the contract should be crafted.

Faith is powerful – in all walks of life and in all endeavors. It can move mountains. But the indemnification clause is powerful, too. And in my experience, it is best to respect both.

This podcast is brought to you by WYPR and Eliot Wagonheim. Please click here to listen to this podcast.  Click here to subscribe to our free podcast on iTunes.

The other day, I found myself at a traffic light behind a company truck.  The truck belonged to and advertised a dog waste removal company. I pondered this. For a while, I wondered what the job interview was like. But as the light turned green and traffic started to move, I noticed something else. The truck was sporting a bumper sticker that read:

Your Life is not My Problem

I turned my pondering up a notch. "How is it," I wondered, "that in this one moment, frozen in time, the dog poop guy seems to be looking down on my life?" Now, don't get me wrong. This guy, perhaps even the owner, had a company, did honest work, and maybe even made a killing performing a service that hordes of people would pay to avoid having to do. But why was his employee insulting me? And did the company's owner know it?

And this led me to my question:

How many owners realize the hidden (and not-so-hidden) messages their employees are sending?

Several years ago, Walgreens faced a lawsuit over just this issue- only in more extreme form.  It seems that Walgreens pharmacy employees entered their thoughts on various customers in the comments field of the company's prescription software.  There, stapled right to a prescription for a customer's anti-anxiety medication, was a print out featuring some anonymous employee's assessment "She's CRAZY."

Now maybe she is, and maybe she isn't. But one thing we know for sure. Walgreens has spent millions of dollars on a campaign to convince the public that it is a friendly neighborhood pharmacy. How much money, then, did this one errant employee flush down the drain with one careless, or in this case, incredibly stupid example of personal expression?

Appearances matter. If your employees have customer contact, check every aspect of the interaction.

• What do the outgoing voice mail messages say?
• Look for bumper stickers on vehicles used for delivery-- political, religious, or even humorous. What's funny to one is insulting to another.
• Listen to how your employees express themselves. Do they have a penchant for telling ethnic jokes or making sexist comments in an attempt to be funny? Some people do these things so often they don't even notice them anymore.

Can you see your company through your prospective customer's eyes? If the dog waste company could, they might have taken the time to ponder that bumper sticker.

This podcast is brought to you by WYPR and Eliot Wagonheim. Please click here to listen to this podcast.

Measurement informs decisions - in business anyway.  At least, that's the way it's supposed to be.  Business decisions are supposed to be divorced from the emotional, relying instead on rational analysis and careful calculation.

Except for when they're not.

In my practice, I have had innumerable discussions with business executives in the midst of important (and expensive) initiatives that they don't have the slightest idea how to measure.  When pressed, even accomplished executives will tell you that some things are just "intangibles" that "can't be measured."

After all, how can you tell if an employee empowerment initiative is working? What are the metrics (or measurement points) to see if the new training program is kicking in?

Douglas Hubbard, in How to Measure Anything, advised us to look to ancient Greece for inspiration.  In approximately 200 B.C., a Greek philosopher made the first recorded measurement of the circumference of the Earth.  No lasers.  No satellites. No advanced surveying equipment. And this was centuries before Magellan circumnavigated the globe.

Instead, he measured the angle of shadows. The greater the distance separating the objects casting them, the greater the angle.  The angle, he figured, was the same small percentage of your everyday 360 degree circle as the distance between the objects was the circumference of the earth.

Using modern instruments, typical results put his answer within 3% of the actual value.

What does this have to do with business? It shows us that making logical conclusions after measuring what we can actually get our hands around, allows us to measure the immeasurable.

First, we state the obvious: If something matters, the result must be detectable in some way. In other words, if that employee empowerment initiative or new training program does not have an EFFECT on something important, why do it in the first place? Once managers figure out why something matters, the result must be detectable in some way.

Second, if this thing is detectable, then it must be detectable in some amount. Meaning, if you can observe a thing at all, you can observe more of it or less of it. That's the stuff of measurement.

My point... and I know I've gotten pretty far into the weeds here... is that too many of my clients waste far too much money going on gut feel alone.  And they proceed on gut feel because they accept the proposition that something can't be measured.  But instead, the issue is that they haven't stated the problem clearly enough to set out the detectable thing they're hoping to observe if the initiative is successful.

As the famous inventor, Charles Kettering, once said: "A problem well stated is a problem half solved."

Give some thought to that, and some of your larger, seemingly intangible business decisions, will seem a lot less impulsive and a lot more... measured.

This podcast is brought to you by WYPR and Eliot Wagonheim. Please click here to listen to this podcast.

Last night, basketball fans finally got their answer to the question that has been tormenting them and clogging sports radio airwaves since Cleveland bowed out of the NBA playoffs: “Where is LeBron going?”

But I have a different question: “Should you have hired him?”

Not in the literal sense, certainly, as he may not have been willing to work as an accountant or landscaper or dental assistant…and you may not have been willing to offer your next hire a “max contract” for $100,000,000 over 5 years. But figuratively…

Whatever your industry…whatever your business, you are one day bound to run into a prospective hire that looks to you like a superstar. All the talent in the world. Incredibly highly regarded. And while it might stretch the budget to acquire them, the temptation to put your company on the map with just one hire can’t simply be ignored. 

But here’s the thing, and it remains what puzzles me about the LeBron sweepstakes. LeBron’s teams in Cleveland have always fallen short. And when it comes down to crunch time – 1 down with under 10 seconds left – it looks to me like LeBron trusts his teammates less and less. 

His teams haven’t won a championship. And because basketball is a team sport, he can’t win one alone.

Bill Olson, one of the nation’s leading experts in recruiting and staffing recently observed that compatibility with an organizations culture is one of the most overlooked keys to determining success of an impact player. 

Mark Hamdan, author and founder of HRsmart recommends making your most valuable employees – people who understand your mission and culture – part of the hiring and recruitment process. 

Talent, integrity, passion and work ethic are individual traits. Vital, to be sure, but more determinative of whether the individual can succeed.

Fit is organizational. Is the new hire in synch with YOUR vision, YOUR culture, YOUR way forward? 

Equally important, have you made a serious effort to develop a method for finding out? Recruitment and assessment is so much more than placing a classified ad and holding an interview day. Those 45 minute stilted conversations preceded by a 5 minute skimming of the resume tell you next to nothing. Whether the new hire will join 4 people or 400, how will you know from Day 1 that he or she is the right fit? 

OK, granted, that was a trick question. You can’t know. But you can make sure that you’ve taken your best shot at knowing. 

And that’s what gets me about the LeBron sweepstakes. There was a 1 hour special on ESPN in which LeBron announced where he chose to go.  It was called “The Decision”.

I didn’t watch, because to me, it wasn’t solely his decision in the first place…or it shouldn’t have been. His decision was where to set up the interview. The special I’d be much more interested in seeing, is how an organization decided to choose him. 

This podcast is brought to you by WYPR and Eliot Wagonheim.  Please click here to listen to this podcast.

Is there anyone in the Western Hemisphere above the age of 3 who does not know that Cinderella’s slipper was made of glass? I’m betting you’ve known that fact since you were a kid. 

But did you ever ask yourself why? 

Why in the world would anyone – even a fictional person – wear a glass shoe? It would be slippery and uncomfortable, cold, unforgiving and fragile. Why would anyone even write that into a story?

Well, the truth is…they didn’t.

In Charles Perrault’s original text in ancient French, the slipper was made of ‘vair’, pronounced the same as ‘verre,’ which indeed means glass. ‘Vair’, however, means squirrel fur …  a far more sensible choice when it comes to fine ancient French footwear. Because of the error in translation, generations of children have had to try to visualize poor Cinderella negotiating the dance floor in glass.

With thanks to Rob Millard for his explanation originally posted in his exceptional blog Adventure of Strategy, the Cinderella story is, to me, a classic example of the old game telephone.

Words, inartfully chosen and thoughtlessly repeated, can kill. They can kill initiatives, careers and companies.

And all this brings me to e-mail. 

It is said that over 90% of communication is non-verbal – not what we say, but how we say it – tone, facial expression, body language, emphasis and demeanor. E-mail contains none of that.

The words: “we should talk” can convey a multitude of meanings – a breakup, a scolding, an earnest request for a meeting, a plea for advice, or a recognition of value in what the other person may have to share. Those words in e-mail, however, are construed however the reader is pre-disposed to construe them. They can be seen as hostile, forboding, threatening, or condescending. 

And that’s how misunderstandings are created. It’s how dialogue is killed in favor of company-wide drama. 

Think about how e-mail is used in your business. As a company leader, think about the use of e-mail as a way to shortcut conversations that, in person, may take more of your valuable time.

John Wooden once said: “If you don’t have time to do it right, where are you going to find the time to do it over?”

Nowhere is this more true that with communication.  As e-mail becomes more prevalent, the need to limit its power, curb its unintended consequences, and emphasize face-to-face becomes even more important. 

Unless…like Cinderella…you like drama.

It has been well over a month since the Deepwater Horizon oil rig exploded in the Gulf of Mexico, unleashing one of history’s great environmental calamities. We’ve heard of plans like a containment dome, deep sea robotic drones , and the latest – top kill. But for all the plans and for all the briefings, for all projections, and for all the muddled plans, one thing remains clear:

BP had no back-up plan. In simplistic terms, they flipped a switch to start oil flowing and had absolutely no way to flip it back off. And that’s fine if they were dealing with their own business risk and nothing else, but as everyone knows, something much bigger was at stake. 

The point you should take away from this is not limited to BP. Every business needs a disaster recovery plan – EVERY BUSINESS.

BP was simply the lesson writ large. 

Disaster can strike any business.

• A manager can take ill, requiring coverage for her appointments and accounts
• A server can fail, risking the loss of thousands of files and years of historical data
• A building can be destroyed by fire or flood, taking with it the systems and paper on which the business is built.

Insurance may … if you have the right coverage … enable you to replace the THINGS. But how will you carry on the business?

There are certain things absolutely essential for a business owner to consider:

1.       Look… 15 years ago, I was a partner in a small law firm in which one of the primary partners was diagnosed with pancreatitis. The rest of us had to scramble to figure out his cases, appointments, and trial dates. We had no idea. He might as well have written them down on cocktail napkins. His system made sense to him…but he was hospitalized and out of commission. 

a.       The next week we began looking at practice management software that would give partners access to everyone else’s business calendar. We adopted a rigid policy that all appointments, trial dates, and critical deadlines had to be entered in the system. 

b.      We were unprepared for that one incident. But we learned from it.

                                                               i.      What about you – can you cover if a primary person goes MIA? (The hit by a bus scenario?)

2.       Look at your computer system. Think to yourself: “What if it gets knocked out or fails? Not tomorrow, but today…right now. What would happen?”

a.       Look at your back-up system. Is it working? 

b.      Do you back it up every day? 

c.       Do you take the back-up tapes offsite? 

d.      Has anyone ever run the drill of trying to restore your data with the back-up tapes?

3.       What happens if the worst happens – fire, flood, etc.? 

a.       How’s your insurance?

b.      Have you reviewed your policy to make sure it covers your business equipment as it stands today, rather than how it stood years ago when you first put the insurance in place?

                                                               i.      If you don’t take the policy out of the drawer and look at it, you may find that it’s like the dress pants you bought for your son three years ago. When you finally need them, they no longer fit.

c.       Do you have business interruption service that will help you pay the rent and pay your people so that you can take the time to get back on your feet?

d.      Can you replace your facilities or will you lose your clients and your business?

In other words, don’t be BP.

Run the fire drill. No matter the size of your business, if you rely on its ability to continue day-to-day, make sure you have a Plan B.

This podcast is brought to you by WYPR and Eliot Wagonheim.  Please click here to listen to this podcast.

I was in law school when I saw my first Kinko’s. It was sometime in the late 1980’s. I can’t remember the date, but I can remember what I thought:

“Who needs a 24 hour copy place? Who do they think would be making copies at 2:00 in the morning?”

It was later that same year that I found myself in a Kinko’s at 2:00 in the morning, thanking God for its founder, Paul Orfalea.

In 1970, Orfalea, a dyslexic C student at USC, who declared himself to be “basically unemployable,” used a $5,000 student loan to buy a copier, rent a recently vacated hamburger stand, and offer copying services to his fellow students at 4¢ per page.

Recently, I was on Midday with Dan Rodricks and Dan posed the question:

“Does it make sense to start a business in today’s economy?”

I think this is the perfect economy in which to start a new business. New businesses are like weeds, they find the cracks in the cement and somehow manage to thrive in the harshest environments and often surrounded by universal negativity. 

The art of entrepreneurship was never better described than it was by Mr. Bigweld in Robots – “find a need; fill a need.” (Although it sounded much better when Mel Brooks said it.)

That’s what Orfalea did. 

The entrepreneurs of today, however, have to be smart – not just creative. Creativity can identify the need. The smart part comes in when trying to start a business with limited access to capital.

Banks have tightened up. Loans to established businesses are hard enough to come by. Loans to new businesses, even based on the best business plans, are rarer still.   My point is that this economy has put thousands of talented would-be…could-be entrepreneurs on the street. But knowing they won’t find the capital, they have to prepare to start a lean, mean, scalable enterprise.

What I mean by that is that the new, fledgling company must follow these simple rules:

1. Little or no overhead. – No long term lease for overhead, no salary commitments, no huge investments in lawyers or accountants before dollar one flows through the door.

2. It has to be scalable – meaning the business can be expanded, if successful, to provide for growth and income.

3. It has to fill a need. Sure, there are businesses and products that first create a need and then sell you something you just found out you needed (take the iPad for example), but for most new businesses, it’s important to fill an existing need so you can appeal to a ready-made customer base.

4. Your customers have to be accessible. If your products or services only appeal to movie stars and international governments, it could be the best thing in the world, but unless you have a connection, they’ll never know about it. You have to be able to reach your customers, quickly, easily and cheaply.

And Finally…

It has to interest you. A business, like a marriage, will have its ups and downs. There has to be a spark there to keep your interest through the lean and difficult times. That’s the passion, and without it, you will never be an entrepreneur. 

With it, you can move mountains.

This podcast is brought to you by WYPR and Eliot Wagonheim. Please click here to listen to this podcast.