Balancing Superior Products With Arrogance And Incompetence

While attending an out-of-state college showcase soccer tournament with my high school daughter, I had the occasion to get together with an old colleague, one I last saw about 18 years ago when we were both relatively young, inexperienced, rising stars at a software firm that catered exclusively to the publishing field. Let's call our old employer "Q." Seeing my old pal and reminiscing about old times led me to reflect on some of the lessons we learned together at Q, lessons that for me have been very helpful in my career. Here are a few. Build what the customer needs and you will generate customer satisfaction and loyalty. This sounds fairly obvious and intuitive, but too often we see products that solve problems customers don't have. Or more maddeningly, products that solve minor customer problems but ignore major customer problems. The founder of Q didn't run the company, but he served as chief technologist, essentially deciding what to build. And he determined this in large part by walking the exhibit halls at industry trade shows like MacWorld and Seybold, asking questions, listening to customer complaints, sitting in the back row during product demonstrations, eavesdropping on the chatter, and so on. By and large he was unknown except to die-hard users, so by merely turning his name badge around he could wander unobtrusively and gather impressive intel. Typically before the end of each major industry conference we would announce some aspect of a future release that was uncannily tied to a new customer demand. In those days, our product offerings were known to be comprehensive and tightly in line with market needs. Accordingly, our market share grew quickly from radical upstart to duopoly with the then market leader.

Try hard to disguise your hatred of customers and employees. Another lesson that should appear obvious, but how often have you encountered an inexplicably complex product and wondered if anyone, even once, just once, who worked at the manufacturer ever tried to actually use one of their products?! One of my personal pet peeves is that annoying tamper-resistant adhesive tape found on Compact Discs. While it may resist tampering, it also prevents opening! (I think illegal music file sharing could have been completely eliminated if they had removed that tape!) Another pet peeve is the hard plastic packaging in which many consumer electronics are sold, the kind that requires a Ginsu knife and the dexterity of a neurosurgeon to avoid severing a finger while opening. The president of Q was one of the most disagreeable people I've ever met. It's not that he was outwardly unfriendly; he seemed gregarious enough. It was that he maintained an unbridled contempt for customers and employees. His idea of a motivational speech was to recount yet another way in which he bullied a valued supplier into giving us free product, or how he reacted to an unhappy customer by deactivating the software license and demanding the product back. He refused to allow anyone to "test drive" the product, demanding that any potential user buy the product first -- and we naturally offered no returns or refunds. He didn't trust salespeople to abide by this rule, so only the most trusted salespeople were allowed to have working software in their possession. And even this was monitored through a special serial code and any attempt to activate it for a demonstration would lock it and render it useless.

The actual incidences where our president personally offended customers were relatively few; he typically reserved his wrath for his employees. But the tone he set came through loud and clear in our pricing, service posture and employee turnover. We eventually learned an important lesson: Even superior products aren't a sustainable advantage for the future, and often aren't even enough today. Customers routinely told us they loved the product but hated the company, and the moment the competition caught up they would run, not walk, to kick us out. Others would tell us outright that they were much happier creating manual and more expensive workarounds for what the competing products didn't do, than spending money on our product and in so doing support the madman running the firm. In short, if you hate customers, you should avoid going into commerce. If you hate employees, you should avoid being an employer.

When all the competent employees leave, a lot of useless employees are left behind. I've had many excellent mentors during my career who taught me positive lessons. But I've also learned what not to do from some of the less than shining stars in my past. But by a significant margin, the worst manager, the worst leader and the person who most embodied the Peter Principle (in a hierarchy every employee tends to rise to his level of incompetence) was Q's Vice President of Sales. It would be too much of a compliment to say she embodied the Dilbert Principle (companies systematically promote their least competent employees to management in order to limit the damage they are capable of doing) because that suggests there was a conscious understanding of the depths of her incompetence. Whether it was her lack of knowledge about the sales function, her lack of knowledge of our products or customers or markets, her unwillingness or inability to be a conduit for market feedback on pricing or service issues, her fear of one-on-one conversations and the resulting hire of an administrator whose sole job was to intercept calls and say "no" to all requests, or the fact that she rushed from every team meeting to attend other, more important, and often imaginary, meetings, we found her laughably inept and completely useless. Her specialty was not hiring quality salespeople, it was terminating productive salespeople when they earned too much and then devising innovative schemes to avoid paying severance and earned commissions. The greatest contribution generated by Sales was product revenue; the second was the profit generated by retaining earned commissions rather than paying them. The fact was, because the president considered everyone fungible, the good employees eventually left. Those who remained were a mix of evangelists, good people who hadn't yet left, teacher's pets, employees with limited employment prospects and incompetents.

This lesson has been repeated many times over the years. In fact, at a later employer where I spent a mostly enjoyable decade plus, I saw CEOs come and go, I saw strategies come and go, I saw products come and go. Some of these were good, some poor, some market-leading, some lagging. But one constant throughout were the middle managers, the civil servants who kept the company running even as regimes changed at the top. I don't know why so many CEOs fail to realize that market forces and competition typically pose fewer challenges than internal forces, like inertia and a desire to avoid change. At Q, I suspect that even the evil president was aware of what an idiot his head of sales was. However, at my more recent longtime employer the same sales leaders have reigned for years, outlasting several CEOs and doing all they can to thwart progress. My advice to the current CEO, and his imminent replacement when he's ousted shortly: fire your sales managers. The only constants in the organization have been declining growth and lack of turnover by the people charged with driving that growth. Instead they conduct layoff after layoff of the worker bees, they rearrange the titles in the board room, and yet they continue to wonder why the reports from Sales reflect no material change in the company's fortunes. If only they learned the lesson I learned long ago at Q, that when good people leave, many incompetents remain.

Despite the harsh tone, the story ends well. My incompetent VP of Sales now runs a sales consulting firm, reportedly educating sales managers and salespeople how to do what she spectacularly failed to do. The president of the firm retired a rich man. The founder also retired a rich man, and now spends time advocating some admirable social reforms. And my buddy and I, well we're a bit grayer, a bit pudgier, a bit wiser, but the lessons we learned as young comrades are as vivid today as our friendship is, even after an 18-year absence. I hope you too find lessons and friends that endure.

Advice for a new CEO

In a recent column, the well-respected Financial Times business journalist Stefan Stern discussed research findings suggesting that "CEOs who carry out a big deal in their first year outperform their peers in the long run."  Stern quotes research from the Mergers and Acquisitions Research Centre (Marc) at Cass Business School in London, which studied the relative performance of 276 CEOs in 171 European companies. I thought of this when a business colleague informed me that he was taking on his first Chief Executive Officer role, after years of climbing the corporate ladder.  Having already made this leap some years ago, it occurred to me that few of the many business books I own and little of the friendly advice I received from peers were very helpful when I finally sat in the chair.  "Now what?" I recall thinking.  With that in mind, here are 15 practical lessons I've learned along the way that new CEOs might find helpful.

Bold actions speak loudly to the market. Just as Stern reports, many business leaders become constrained by their environment, burdened by the many internal forces striving to maintain the status quo.  Often a new leader can walk in the door and see an obvious course of action over which the previous leader endlessly hemmed and hawed.  Just as often, the metrics by which the new leader are measured offer greater flexibility than those constraining the previous leader.  In my own experience, my team and I pitched our corporate parent for years to obtain capital investment for our slowly dying business, but as the cash cow we were required to fund every other risky investment.  Years later the business received its capital investment, but only after losing tens of millions in revenue (essentially reducing the business by half), and even then it required a bold new CEO to drive through the necessary changes.  New CEOs have the ability to make bold moves, so instead of wasting time in analysis paralysis, study the data already available and make a move.

Small actions speak loudly internally. Global strategy is important to analysts and shareholders.  Having a clean restroom and a snow-free parking lot mean far more to the staff.  A CEO must consider these as priorities too, despite the temptation to delegate all minutiea.  You'd be surprised what one can learn when interacting directly with staff on issues that matter to them.

One of the first company-wide edicts I made as a new CEO was to eliminate our "no blue jeans" policy.  Our main facility was part production plant, with big whirring machines and forklifts and trucks coming and going at all hours, and part cubicle farm.  While clients and potential clients regularly toured our facility, I felt my staff was quite capable of judging when to dress up and when to dress comfortably, so I removed a rule I felt was paternalistic and unnecessary.  In another example, a telephone agent cautiously approached me on behalf of a wheelchair-bound colleague who had difficulty accessing a shared fax machine.  The worker's teammates had designed a lower shelf configuration using existing interchangeable cubicle materials and identified a new fax machine with controls on the side rather than on top. But since it would cost a few hundred dollars and require several levels of management approval, the proposal languished for months. I approved the plan on the spot. In a final example, I took over a team that spent all day every day marking up documents, yet the manager would allow only two new pens or pencils each week, the distribution of which was tightly controlled.  If you needed another pen during the week, you had to bring one from home!  When my new team told me this I laughed, thinking they were being facetious.  They weren't.  So we dispatched some folks to Staples and they returned with a huge box of pencils and pens and notepads and sticky notes and staple removers and other odds and ends.  Total cost was maybe $500, but the loyalty it created was priceless.

Care about everything. All CEOs rise through the ranks with expertise in some business functions and blind spots in others.  But a CEO has to be fluent in everything, even when there are good lieutenants responsible for the various business functions.  In fact, the greatest risk for a new CEO is to trust too much that the lieutenants have everything under control.  As a new CEO I cared about all that I could manage until I felt comfortable with how things were progressing and with the person in charge.  Until then, despite the hurt feelings and nasty looks I received from my senior managers, I cared about the menu for the holiday party, I cared about the high turnover in the call center, I cared about the aging machinery that frequently led to 3rd shift downtime, I cared about the building sign with the perpetually burned out lights, I cared about the low activity exhibited by our newest salesperson, I cared who was selected to throw out the first pitch on employee night at the local baseball field, I cared to inquire why the vending machine guy had his own key for our supposedly secure facility, and on and on.  Care about too much at first, rather than too little.

Finance is your friend. And your enemy. Without question your CFO or head of finance will be one of your most important allies. You don't have to be best friends, but you do have to have mutual trust. Sooner or later your CFO will gloss over a detail or two, explaining that the result is what matters not the underlying calculation. Or maybe she'll present a forecast with several nested assumptions that can't be readily explained.  Stop her right there and don't proceed until there is full transparency. Corporate finance is challenging. Even with an MBA and a lifetime in business, few new CEOs are readily conversant in every nuance. But you must be a master of your P&L, especially the numbers reported to the parent company, to the board or to the market.  In my own experience, a long-standing President who reported to me took it upon himself to protect me from the messy calculations necessary to produce our monthly financial dashboard, and my repeated attempts to learn more were thwarted. Only during his vacation was I able to scare the finance staff into revealing all of the complicated machinations, only to learn that (a) it wasn't rocket science, and (b) many of the assumptions were flawed.  Yet as CEO my signature and my signature alone was on the SEC filings. Don't leave a stone unturned when it comes to understanding the numbers that matter most.

Manage by sitting down. We all recall the management philosophy "management by walking around," which I quite obviously believe in.  But walking around isn't enough.  Sit down too.  Have lunch in the cafeteria occasionally with people you don't know.  Arrange for periodic informal breakfast sessions with random employees.  Go to the company-sponsored softball game and buy a round of drinks after.  If you have the skills (and whether I do is questionable), don a jersey and play in a game or two -- just don't wait until the playoffs.  Don't worry, few will be bold enough to criticize your performance!  (But if someone does, call on them for honest opinions on other matters too.)  I used to regularly don a headset and listen in on calls in my company's call center. And not the escalated calls that required a senior manager.  Just everyday calls from everyday customers with everyday issues. A half hour now and again is quite an education, and it sends quite a strong message to your staff.  (Incidentally, the TV show "Undercover Boss" effectively demonstrates this philosophy.)

You are not the top salesperson. This might be surprising coming from me, since my background is in sales. I pride myself on being the top salesperson in the room, knowing not only how to understand the client's needs but how to tie these to the benefits of my company's offerings, or knowing when there isn't a tie-in.  I'm good at it.  But there's nothing more disappointing to me than learning I have to be the best salesperson because no one else gets it done.  CEOs should be in the field regularly, far more often than most are.  In some cases it's ceremonial -- trot out the big cheese so the customer will see how important they are.  In many cases it's for someone else's benefit -- such as a sales manager or salesperson who stages a performance with you as the audience.  But as good as you may be, learn how to hire top sales leaders and salespeople and then work to support them from your position as CEO, not as top salesperson-in-chief.

Find a common enemy. One of my former CEOs taught me this lesson.  I was his first appointment on his first day, hours before anyone else arrived at the office.  My division was in trouble and I had made it abundantly clear to him during the interview process and to the corporate parent's CEO who was doing the hiring that my division needed attention.  He listened and within weeks we had a common enemy.  Ours had to do with some internal supply chain issues which were causing significant strife with our key customers, issues I had been railing about to deaf ears internally for some time.  Within weeks our new CEO created a company-wide slogan and an aggressive timetable to fix the issues, along with a public progress meter.  Then he did what I could not do with my peers -- he based a large chunk of the executive team bonus on solving the problems.  I won't go into details, but suffice it to say our battleship was spinning pirouettes in very short order, even though the management team had previously said it couldn't be done.  Your particular enemy may be a competitor, a technology challenge, a new product launch.  Anything that can be made tangible is fair game. Too many CEOs waste this tool on a too-common problem: they want more revenue or they want lower costs, so they try to pull out all the stops to work harder or to do more with less.  This isn't inspiring.  Of course some companies need a kick in the tail.  But if your main contribution as CEO is to suggest everyone work harder, then perhaps you too can work harder to identify something to rally around.

Good ideas may be right in front of you. Years ago our corporate parent hired a consulting firm to drive innovation among the various divisions.  They toured the world asking us for ideas we hadn't thought of, using a formulaic approach to "ideation" (consultant speak for brainstorming).  The main rule was one could not suggest an idea that in some form or another had been suggested previously.  The assumption was that our wise leaders had already discarded these old ideas after careful consideration, and as if to prove the point Exhibit A was the absence of the idea in action.  Trouble is, many of our good ideas had never seen the light of day in the normal course of business, whether due to politics or inept management or distractions.  So these consultants spent millions of our money to collect new ideas when there were thousands of solid ideas readily available if only the right level of management could see them.  As a new CEO, you will be approached by many people with agendas.  Learn how to filter out the noise and the self-promotion and you will absolutely find game-changing ideas already well-formed in the minds of your people who live and breathe these issues all day long.

CEOs learn to eat alone. If you believe in management by walking around (or sitting down) then you really shouldn't eat alone very often.  But you will find that nearly everyone you meet has an agenda for self-promotion.  They nearly always start the same way, praising everyone and everything and then slowly they begin to criticize everyone and everything.  Some are blatant, some are more subtle, but nearly everyone hopes that you'll intervene in their particular problem.  And this is not directed solely at junior staffers -- I'm referring to the executive management team!  If we could harness the energy of the animosity typically found between fellow executives, then we could provide sufficient electricity for the eastern seaboard for several months.  If you befriend one, you make an enemy of another.  If you befriend one of their staff, they begin to harass their staffer. If you let slip some gossip or a dig at a colleague, it will be shared before the day's out.  Sadly, you can be great acquaintances with your staff.  But you can't truly be friends.  For me, playing pickup basketball after hours with the inside sales and mailroom guys was a way to interact as "just one of the guys," once the guys learned I didn't expect to be passed the ball when I didn't deserve it, and it was okay to call fouls on me when I did deserve it.  But for many CEOs, they find companionship in peers at other businesses because as CEO you can never really let down your guard.

You are the CEO of Human Resources. If you haven't read Robert Fulghum's fantastic book "All I Really Need to Know I Learned in Kindergarten" then run, don't walk, to buy a copy.  If you've reached CEO status, then you've spent years in executive management where you learned that much of your day is spent addressing petty squabbles among your staff, including even senior (in rank and age) people.  As CEO, you may be surprised to learn that the only thing that's changed is the titles of the combatants include "Vice" and "Executive" and there is no higher court than you.  Much of your time is spent dealing with H.R. issues that will distract you from the real business at hand, but if left unattended will get out of hand.  But H.R. issues are not all bad.  One primary role of CEO is to find quality talent.  I recall hearing that Jack Welch, the famous (former) head of GE, spent half his time on people management.  As a young manager I found this preposterous.  But as CEO I realized there was almost no action I could take that would have as lasting an effect as finding the right people and eliminating the wrong people.  So as much as you like strategy or operations or sales or finance or IT, get used to H.R.

Value your secretary... from a distance. A good assistant is hard to find.  They combine a talent for time management, logistics, politics, scout leader and mother. Some secretaries come with the office, and they have the advantage of knowing the ins and outs of the organization and how to get things done. Some you bring with you, and they have the advantage of knowing how you operate. Most are quite capable of acting on your behalf, though some go too far and act as if they're second-in-command.  I grew up watching television secretaries like Betty, at Bewitched's McMann & Tate, and I recall thinking that asking your secretary to handle anything but work-related tasks is demeaning, until I met Arleen, my capable assistant of several years, who went out of her way to handle small errands and other minor personal business for me so I could focus on the job at hand. With time being a CEO's most precious commodity, I learned that it's okay on occasion to ask your secretary to handle some personal business, so long as she (or he) is okay with it.  Needless to say, when you spend a lot of time with someone in a work setting it's necessary to maintain certain boundaries. An assistant is a valued employee, not a serf, and not a "companion" in every sense of the word. One of my prior executive secretaries was a paid informant for the parent company's leaders, which was helpful when I needed to "send a message" through back channels but challenging when my every move was recorded and reported. Find what works for you, find someone you can trust and delegate to in verbal and non-verbal ways, and then treat him or her very very well.

Everyone is someone's Assistant Brand Manager. I learned this maxim from a former CEO who rose through the ranks of Proctor & Gamble's well-known executive development program.  In consumer products parlance, an assistant brand manager (or ABM) is the grunt who does all the work while the brand manager gets the glory, the worker bee who keeps things moving behind the scenes. However, even when you reach the CEO suite, the one with the kitchen and the private bathroom and shower (I've had this and it's as cool as it sounds!) and you believe you've finally arrived, it's helpful to remember that you are still answerable to someone. There will come a time when you can't delegate some menial task, when the Board or the parent company CFO comes calling, and you have no choice but to roll up your sleeves, edit that acquisition justification memo, tweak the quarterly earnings PowerPoint, add up the proposed savings in the departmental budget submissions, and so on. No matter how important you are, or how important you think you are, someone will always consider you their go-to person, their assistant brand manager. And you had better be ready to answer the call.

Embrace the We. At times a new CEO, particularly one joining from outside the organization, will slowly ease into using terms like "our business" and "our markets" so as not to offend the insiders. I'm sure we can all dig into our past to recall hearing a new leader use a phrase like "our products" and finding it odd, even offensive, that this person claimed ownership of our output on day one. The reality is that it's healthy to take ownership right away -- of the failures and the successes, of the future and the past, of the team and the offerings. Like a star athlete who joins a new team, displacing the existing captain and becoming the new face of the franchise, a new CEO must take charge because he is in charge. There is no time to waste on blaming the last guy or whine about fixing the last guy's mess. There's only time to focus on our problems, the ones we're facing right now.

Act. When you're in the CEO seat, there's no time to gently ease into anything. Whether you're in a position to strike a sizable deal or a substantial acquisition as Stefan Stern reports, or merely take ownership of existing work streams, Stern is absolutely right:  CEOs who take immediate action are more likely to succeed than those who take their time getting up to speed. It's easy to select a CEO from the existing executive ranks, one who knows the culture, the markets, the products, one who won't disrupt too much while perhaps incrementally improving the business. But CEOs are expected to drive change, and you can't drive substantive, sustainable change if you don't act quickly and boldly.

Focus beyond the bonus. I grew up in Rochester, New York, the headquarters of Eastman Kodak.  My father spent 28 years toiling for the once mighty film manufacturer, which has struggled to adapt in the digital age, and my formative years were spent observing CEO after CEO miss opportunities to drive change.  I firmly believe this resulted from misaligned incentives. How can a CEO make decisions and allocate resources to build a company for the long run when bonuses are meted out based on short-term results? Many CEOs have significant compensation triggers at 3-year intervals, so they focus on short-term performance metrics and too often this omits consideration of long-term, more lucrative investments. It seemed as if no Kodak CEO would choose the long-term health of the business over short-term wealth creation and as a result the business floundered, until finally it lost enough market share and profits that there was no choice but to rebuild for the long-term.

I have similar observations about a former legal technology employer of mine. The CEO has had an unusually long 10-year reign, but he has no 10-year vision. Rather, he's had a series of short-term plans where acquisitions grow the top line and reorganizations improve the bottom line, while the business slowly but inexorably declines.  You can blame the worker bees for only so long, but I find it unconscionable that he's earned millions while the main export of the business is quality alumni.

I have absolutely lost compensation from decisions that helped my organizations in the long-run because it was the right thing to do, when I could just as easily have made a decision that earned me money and helped the business in the short term, but I shouldn't be lauded for that.  As CEO, we're expected to think long-term and it's partially the fault of boards and flawed senior management for creating incentives that emphasize the short-term.  As you ponder your strategy and investment options, try to limit the amount of influence your personal compensation will have on your decisions, and instead focus on whether your decisions will leave a healthy company 5 and 10 and 20 years out.  Obviously you can't ignore the short-term, but trust me, there are plenty of people on your team whose incentives will drive short-term performance.  Try to be the one who thinks differently.

Good luck in your new CEO role, my friend.

Timothy B. Corcoran is principal of Corcoran Consulting Group, with offices in New York, Charlottesville, and Sydney, and a global client base. He’s a Trustee and Fellow of the College of Law Practice Management, an American Lawyer Fellow, and a member of the Hall of Fame and past president of the Legal Marketing Association. A former CEO, Tim guides law firm and law department leaders through the profitable disruption of outdated business models. A sought-after speaker and writer, he also authors Corcoran’s Business of Law blog. Tim can be reached at Tim@BringInTim.com and +1.609.557.7311.

Don't Tell Me What You Think I Want to Hear, Tell Me What I Need to Know!

Have you ever been placed in a situation where someone protected you from a painful truth, but in so doing left you at a disadvantage because you couldn't make a fully-informed decision?  A common complaint I hear from in-house counsel is that outside counsel often don't share small problems, and some of these grow into big problems.  This applies whether it's a budget overrun or a curve ball in the legal matter they're addressing. I've written previously about the critical need for in-house counsel to budget accurately for legal matters -- matters that from the perspective of corporate chieftains are no less variable or uncertain than global supply chain costs or revenue projections.  At a recent discussion on the topic, a Chief Legal Officer explained the impact of a cost overrun in her legal department.  As a big box retailer with profit margins in the mid-single digits, there is very little excess spending in the organization from which they can divert funds to address cost overruns.  As a result, some cost overruns are distributed as a sort of "tax" on sales, or in other words, for every $50,000 overage in the legal department, the organization must sell an additional $1,000,000 of product above forecast.  And since there are incremental costs associated with additional sales, and in some cases revenue cannot be fully recognized immediately, the actual surcharge is something on the order of $2,000,000.

Think about that for a moment.  Imagine the GC addressing her peers in the boardroom in late Q3 of the fiscal year.  She claims that because legal matters are so uncertain there's no way to submit a proper forecast, and as it turns out she'll need an additional $50,000 in her budget, maybe more, and so Sales must step up and deliver an additional $2,000,000 in revenue.  Someone's going to be eating alone in the executive cafeteria.

Of course this applies to legal matters that start out small but grow into big hairy complicated messes.  If the outside counsel doesn't provide early warning that the matter is growing beyond the expected scope, the GC can't properly re-assess the situation.  Since legal matters are, at heart, business issues, it's critical to inform business management how new developments impact expectations.

Does the discovery of a smoking gun during document review warrant a fast reversal of course in the SEC investigation?  Will previously unknown IP infringement claims that surface in acquisition due diligence alter the calculus in a make vs. buy decision?  The earlier a GC knows of the potential issues, the better she can advise business management.  This is not to say outside counsel routinely and purposely withhold information, not at all.  But when project scope is ill-defined in advance it sometimes takes too long to understand when the scope has materially changed, and this lag time is unacceptable.  For help on defining scope, look into Legal Project Management.

As with many of my life lessons, I learned the hard way.  I vividly recall a product development project for which I was an executive sponsor.  Each month for nearly two years the development team provided progress updates, sought additional funding, looked for guidance on feature/function decisions and otherwise adhered to the development schedule.  However, two months before launch, long after we had incorporated significant new revenue streams into our current year forecast, the development team advised that they were six to eight months off schedule.  They had hoped to make up time and they didn't want to deliver bad news, so they hadn't raised the alarm earlier, but other projects interfered and now there was no way to meet the deadline.  As executive sponsor I wasn't necessarily expected to be sitting with the developers each day, looking over their code and analyzing their progress, but I was expected to know if the launch date would be delayed into the next fiscal year, putting all of our revenue projections at significant risk!  I ate lunch alone quite a bit that year.

Let's close with an unrelated anecdote.  Because of my heavy travel schedule, much of it at hours when others in my time zone are fast asleep, from time to time I hire a car service to take me to and from the airport.  I grew fond of one car service owner-operator and hired him exclusively for several years.  Needless to say, I was a lucrative client for his small business.  For one return trip I had a tight schedule:  land at the airport, dash to the car waiting at the curb, try to shave off some time on the hour-long ride to my home, and make it to my daughter's band concert a few minutes late.  There was no room for error, such as an unanticipated (but quite common) traffic jam, so I also consulted the train schedule.   I could take a train and almost certainly have no delays, but I would miss more than half the concert.  I gambled on the car service.

When I left the plane, I called the driver to alert him that I was walking to the airport exit.  He said he was slowly circling the airport, as is his custom so he doesn't have to park.  The flight was long so I needed to visit the restroom and it was maybe 20 degrees (F) outside, but instead I waited outside for 10 minutes knowing the airport police would shoo away the driver if he approached and I wasn't there.  After a few minutes I called back, and the driver revealed he was actually pulling into the airport now and would be there momentarily.  Another ten minute delay.  I called again and as the driver was telling me that he drove by but didn't see me, I heard a toll booth agent in the background.  The driver then sheepishly admitted that he was just exiting the nearby interstate highway, and now he really was about 10 minutes away.

You know how this ends, don't you?  By now I had missed my train.  There was no way I would see even a moment of my daughter's concert.  I had been standing in below-freezing weather for nearly half an hour expecting the driver to arrive at any second, and, not to put too fine a point on it, I was in dire need of a visit to the restroom.  So I told the driver I would no longer need his services, then I went inside, visited the restroom, bought a Starbucks and headed to the next train.  A week later the small business owner sent me a letter scolding me for throwing away our cozy relationship merely because he was a little late.  And, by the way, he claimed I owed him for the trip since I didn't cancel in time.

The real error was not giving me the information I needed.  I could have visited the rest room, secured a hot beverage and stood inside the door.  I could've taken the train -- and I still would've paid the driver for his time.  In other words, I could have explored my options.  Instead, his misguided effort to protect me from the truth eliminated all of my options, leaving me furious, cold and in search of a new business partner.

I'm presently conducting several client satisfaction interviews for law firm clients.  Often we hear about poor communication and poor budgeting skills.  Sometimes my Biglaw partner clients will dismiss these as one-time easily-explained situations that are blown out of proportion, certainly not the sort of issue to derail a longtime relationship.  I caution them to put themselves in their client's shoes.  Are these the comfortable loafers of a well-informed client?  Or are these shoes hopping from one foot to another, trying to stay warm in the absence of information?

Timothy B. Corcoran delivers keynote presentations and conducts workshops to help lawyers, in-house counsel and legal service providers profit in a time of great change.  To inquire about his services, click here or contact him at +1.609.557.7311 or at tim@corcoranconsultinggroup.com. – See more at: http://www.corcoranlawbizblog.com

Law Firm Cross Selling Basics

In today's vignette, let's react once again to search engine key words that have led recent visitors to my blog.  Law firm cross selling is a search term that quite frequently appears in my search logs. Most lawyers perceive cross selling as the other guy's job.  "I told them what I do, now it's their responsibility to introduce me to their clients."  This is a waste of time, whether due to apathy, or busy schedules, or -- in large firms in particular -- the inability to really know what everyone else does.

So many firms, or the firm's marketing team, create elaborate Intranet sites and internal newsletters where success stories are published and deal lists and practice descriptions are housed, so that each lawyer may spend time perusing his or her colleagues' area of specialty.  But no one really does this.

Let's assume for a moment that there is no financial disincentive, such as a compensation system that rewards isolationist behavior or at least fails to reward collaboration.  These systems exist, but like wallpaper they're a big pain in the neck to remove and replace, so they remain.

Why, then, do so many lawyers fail to go out of their way to cross sell?

First, many lawyers are bad at math.  If every lawyer is more fully utilized, and we're doing more work with existing clients (or, in other words, our cost to acquire new work is lower than it would be to seek new clients) then the firm overall will be more profitable and all shareholders will benefit.  Instead, many tend to focus on their personal performance and origination.

Secondly, many lawyers fail to recognize that cross selling is MY job.  If I want my colleagues to recommend me to their clients, then they need to know what specific problems I solve, and what specific triggers or flags should lead to an introduction.  Vaguely advertising that I do real estate work is less specific than educating my colleagues that, for example, any client with distressed assets in need of protection or disposal, or clients conducting an acquisition that includes real assets with unknown liabilities, should speak to me.  It's incumbent on each of us to educate our colleagues about the top two or three problems we solve, and how to identify one of these problems in the making.

Yes, yes, I know that if we limit it to two or three problems, then we'll be completely overlooked by our colleagues when a separate but equally lucrative issue comes along, and since we didn't identify it they'll recommend that their client seek another law firm with more relevant experience to handle it.  Or so we think.  Have you ever gone to a steakhouse with a vegetarian? She doesn't starve! Or to a seafood restaurant and ordered a steak?  Just because we promote one or two or three compelling ideas doesn't mean we can't or won't provide services outside this range.  So narrow it down, make it easy, and trust your colleagues to know you also do other work in this field.

Finally, cross selling requires familiarity and trust.  We've heard the maxim that clients buy from people they like and trust.  This applies within a law firm too.  So make time to get to know your colleagues.  I've been in law firm practice group meetings where two partners had never met in person, yet they practiced in the same group for a couple years, and presumably attended the same annual practice group offsite meetings, but their schedules had never really coincided.  In today's growing law firm, it's hard to get to know everybody.  But try.  Work from another office periodically.  Pick two or three colleagues you don't know, even if your clients have never had a need in this area, and take them to lunch this year.  When traveling to a client site, if there's a satellite office nearby, drop in and walk the halls.  Your colleagues will refer business to you when they trust you, and they won't generally trust you until they know you.

This is also why every law firm retreat I'm asked to organize includes some pub time, or golf time, or spa time.  This is sometimes eliminated due to cost or optics, but in fact it's critical to spend time off the clock with your colleagues.  Work the room, get to know people.  You'll be amazed how frequently your name will come up in their client meetings when they know you, know what problems you solve, and how to spot the issues when they arise.

Good luck!

Corcoran's Greatest Hits, Volume 1

A long time ago when I was a radio and club DJ, I owned a lot of Greatest Hits albums and CDs so I could fulfill listener requests for popular songs. Some of these collections were hastily compiled by an artist's record company in order to fulfill a contractual obligation. But sometimes the collections were compiled with care and enthusiasm and included never-before-released songs from the vault, liner notes from the artist and other material to appeal to the true fan. With that in mind, I present the top five posts from this blog over the past year along with additional insights of my own and public and private reader reactions. Legal Project Management Q&A - For quite some time I've been writing about the need for law firms to embrace business concepts to improve operations.  Last year I adapted some of the concepts and techniques I learned in my corporate life and developed a curriculum for educating lawyers about project management.  Turns out there's a whole discipline growing on this topic, now dubbed Legal Project Management, and there are some quality trainers offering insights.  But there are also a number of folks hopping on the bandwagon.  In my view, one can obtain certification in a discipline, one can even teach the concepts, but one doesn't really know the topic until one applies these techniques in a commercial enterprise to make money.  Ask your project management consultant for real commercial examples of these concepts in action.

In addition to imbuing my approach with real-life experience, I also focus on the big picture and keep away, at least initially, from the statistical and quantitative basis that others believe is necessary to commence a project management process.  One Six Sigma Black Belt criticized my approach, exclaiming in disbelief that no program that addresses project management and process improvement could possibly succeed without a heavy dose of analysis and math.  I disagree.  Well, at least I disagree insofar as I'm confident few law firm partners will sign up for a course that's heavy on math and analysis.  But many will sign up for a workshop such as mine (and hundreds have!) where we cover the basics, whet participants' appetites for how project management skills can be applied to a law practice and generate sufficient interest to go to the next level where -- surprise! -- we get deeper into the underlying math and analysis needed to truly benchmark and track performance.  On a few occasions my colleagues and I have replaced a consultancy that specializes in engineering firms, or that applies a standard Six Sigma methodology to any business process with little customization.  I've learned that the practice of law, while not as unique as some lawyers would have us believe, does require customization and care to ensure that the concepts are properly applied.

If you lead a law firm and you're convinced that with an improving economy everything will go back to the way it was, and this is a good thing because it's right that lawyers should demonstrate value primarily by billing time, and it's right that lawyers should treat each new engagement as if it's the first of its kind because this is the only way to ensure the client receives the most thorough work product, then you don't need project management.  But write down these beliefs and note how firmly you believe in them, and then let's talk again in a couple years.  I'm certain your views will have changed, because once everyone else has adapted you will too.

A Note on Reducing Law Firm Compensation - This post generated a number of emotional responses.  It's also one of the most commonly searched topics on the blog, suggesting that it's a hot topic elsewhere.  When I wrote this post, quite a few large law firms were conducting public and stealth layoffs of staff, associates and even non-equity partners, and just as many were reducing compensation of these same groups.  Popular legal gossip blog Above the Law teamed with Law Shucks to track these layoffs, and according to their research as of today's writing there have been nearly 15,000 job losses in the legal sector.  This is an unprecedented statistic in a business segment that is typically known to perform well in good times and bad.

It's challenging to write academically on such an emotional topic while the lives of real people are so significantly impacted, but the original intent of this post was to provide some context for why the same market dynamics of supply and demand that influence other industries are certainly factors in the legal profession.  In short, when demand for a product or service declines, there tends to be an oversupply of the product or service, and this drives prices down.  When product or service producers experience lower revenues from lower prices, they look to reduce costs in order to maintain profitability.  It should have come as no surprise that associates and staff, the lowest members on the Biglaw totem pole, would experience the greatest pain when demand dropped and law firms cut costs.  But as I said then, when demand returns, hiring and compensation will increase.  And it is, and they are.

That's the thing about markets -- they tend to operate efficiently when you look at the big picture.  Unfortunately, real people and their livelihoods were sorely impacted, often through no action or inaction of their own.  Which is why this blog is intended to help business leaders make smarter choices, to run more efficient and effective businesses, so we can enjoy profitability while also delighting customers and attracting quality employees.

Law Firm Leaders: Save Money Now By Cutting Marketing - The title is ironic.  I would not counsel any business leader, especially a law firm leader, to limit the organization's visibility to its target audience, particularly when there's a good possibility that buyers are actively seeking new providers.  But I figured the title would catch the eye of leaders looking to do just that, because after all, isn't marketing a nice-to-have, not a must-have?

There were a few different points in this post.  First, every marketer will claim that one should spend more on Marketing during a downturn, but like a politician who's developed a nice ten-word sound bite but doesn't know the next ten words, i.e., the substance behind the rhetoric, many marketers repeat this mantra without offering salient details such as when, where and how to increase marketing in a downturn.  As marketers, we can't just try to protect our jobs without regard for the consequences, like auto workers refusing to negotiate labor rates even if it means the plant must close.  We should be thoughtful and prudent in our spending during a downturn, because while surely there are opportunities to be had, there are also a lot of people willing to take our money in return for a lot of empty promises because they too are suffering.

I also wanted to take on the lazy business leader who applies cuts across the board without regard to growth potential or profit contribution.  In tough times we all need to tighten our belts.  But if Mom loses her job, do we sell the car to save money, and now Dad can't get to work and he loses his job too?  A corny analogy, but in effect many business leaders our of some misguided sense of fairness try to spread the pain evenly.  Hogwash.  The current and potential growth engines might need relatively greater investment in tough times, and the slow growth or cash cows might deserve nothing, so long as we're willing to acknowledge that this will effectively kill them.

The other point was to distinguish between marketing as defined by many lawyers and marketing as defined by experts.  Just the other day I was reminded that this is a long-term battle.  A Biglaw partner asked me if I could help the firm get its RFP response approach "right."  I suggested we might have very different views for what is "right."  An elegantly bound booklet full of deal lists, league tables and lawyer bios, accompanied by boilerplate responses to an RFP's standard questions is very often a waste of everyone's time.  An RFP that addresses the client's business challenges and offers potential solutions along with a project plan and a budget is very often a winner, even if it's a tenth of the size and weight of the alternative!  But lawyers want the former (and so do many marketers).  If a law firm leader wants to cut marketing costs, my suggestion is that in addition to reviewing the marketing budgets and org chart, he should look in the mirror and identify the silly things lawyers do under the guise of Marketing.  And the marketers can help.  After all, we're in this together.

Addressing the Martindale-Hubbell Question - I receive calls nearly every week from law firms big and small asking if I'll help them negotiate their Martindale-Hubbell contract.  Many, but perhaps not all, readers of this blog may know that for a period of time I led the large law, international and corporate business for Martindale-Hubbell.  Obviously I know where the bodies are buried and how to negotiate against my old team (actually, now that LexisNexis manages the business, nearly everyone I knew is gone).  But I have no interest in doing so.  Despite the unethical, short-sighted, juvenile and profoundly incompentent manner in which I was treated when I left the organization, I spent too many years building its brand to take any joy in knocking it down.  Besides, the leaders of the parent company need no help from me or other alumni to harm the franchise.

Of more interest is that when it comes to directories, everyone continually asks the wrong questions!  There is no list of "good" directories and "bad" directories.  Even comparing Martindale to Ted's List of Blond-Haired Left-Handed Lawyers of Southern North Dakota is a misnomer, because one is a multimedia network connecting buyers and sellers, and the other is a vanity listing which lawyers buy to feel good.  But I'll leave it to the Martindale marketers to tell their story.  Despite the title, the post is about how one measures the impact of any legal directory to influence your prospect's buying decision.  After all, isn't that what it's about? 

The calculus is fairly simple: define your target market, identify the ways to reach this market, identify the manner in which they make buying decisions, and then be in those places and do those things.  If the cost to do this effectively is too high, seek out proxies.  If a legal directory has access to the target market and influences a buying decision --and it can prove it -- then perhaps an investment of a dollar there gets you ten dollars of return.  If not, move on to the next tactic.

Marketers are just as bad as lawyers when it comes to judging legal directories, just on the opposing side of the argument.  Typical legal marketer discussion of directories:  "Does anyone use the Tall Lawyers of Montana directory?  One of my delusional lawyers thinks it's an important investment.  I've tried to tell him that all directories are a waste, and he should spend time developing a Facebook fan page instead because I think it's a better investment."  In Biglaw land, few buyers will identify, evaluate or select a law firm based solely on its representation in a legal directory (or network), but sometimes it can be a differentiator when all other factors look the same.  It's important to know when this is the case and when you're throwing your money away.

Web 2.0 / Social Media Update - I've long been active in social media, before we even used those terms.  I had the good fortune of joining Steve Brill's team in the early '90s when Counsel Connect was launched as a sort of AOL for lawyers, which was several years after I joined AOL and participated in its chat groups, which was a year or two after I joined Compuserve.  For many of you, these names mean nothing.  That's okay.  Suffice it to say, I've long been a fan of learning from experts wherever they hang out, and occasionally I'll have something to say that I think others might find useful.  The venues change, but the concept still applies.  In this post I shared the many legal and non-legal blogs I read daily, and the legal and non-legal social networks where I spend time, as part of my effort to stay connected and stay informed about the changes in my chosen field.

This was an enormously popular post a year ago, and while untold millions of users have joined the social networking bandwagon since then, I suspect many are still looking for a roadmap of what's good and what's a waste of time, from the point of view of someone who's been there.  Rather than point people to the year-old summary, I'm updating the post and I'll publish that shortly (Update here).  My daily reading list has expanded yet the frequency of my commenting (on this blog and elsewhere) has declined somewhat as I try to strike the right balance between studying my field and working in my field.  I know that I'm not alone in seeking this balance.

So there you have it.  The top 5 posts from this blog in the past year.  I hope you enjoyed them the first time, perhaps enjoyed reading them a second time, and I hope these liner notes were helpful additions.  Feedback is always welcome.