Perception Trumps Reality

I attended a “Franchisor Boot Camp” last week in Denver that was hosted by Greg Nathan, a well-respected expert on franchising and psychology.  The goal of the conference was for franchisors to learn techniques for building more profitable partnerships with their franchisees.  It was a great learning experience with lessons that apply to both business and life, and I’ll likely touch on many of them for a long time in this blog.

One of the first and most frequent things Greg Nathan said was:

“When perception meets reality, reality comes in second place.”

This resonated with me because I recognize it as being very true but it’s a difficult concept for me to wrap my mind around. 

“Reality” is defined as the state of things as they actually exist, rather than as they may appear or might be imagined.  “Perception” is defined as the process of attaining awareness or understanding of the environment by organizing and interpreting sensory information.

My tendency is to look at facts, analyze them in black/white terms and come to a logical conclusion.  Meaning, I focus on “reality” and place a lot of value on it.  And I’m a big believer in taking responsibility for this reality.

What can be missed in this process, however, is an analysis of how people perceive these facts/terms/conclusions.

For example, when a franchisor rolls out a new initiative, have they taken into account how the franchisees will receive it?  Let’s say the initiative will create long term value but it requires an initial investment of time and money.  How will the franchisee feel when he hears about this required investment?  Maybe his cash position is strong so he sees it as a great opportunity.  Or, maybe his margins have been squeezed during the recession, the financial stress of which has caused stress with his spouse, and this new expense will be perceived as the proverbial “straw” that breaks not only the business, but the marriage. If the franchisor is unaware of this, the messaging and execution will be way off.  Now, while the franchisor feels good about themselves for this new initiative, the franchisee blames the franchisor for ruining his business and his marriage.  The seething franchisee then becomes vocal about his disdain for the franchisor and starts eroding the culture of the entire organization.  Meanwhile, the franchisor doesn’t know what the hell just happened.  They deployed an initiative that creates long term value, which is what the franchisees pay royalties for, right?

This is extreme, but it demonstrates how a mismatch between reality and perception can spin out of control pretty fast.  Whether you’re a franchisor, franchisee, entrepreneur, manager or anyone else in the workforce, you can probably think of your own similar examples.

So how do we build a better understanding of people’s perceptions?  According to Greg Nathan, the answer is to connect with them on a personal, human level.  Talk to them.  Ask questions.  Understand what’s going in their lives.  How are they feeling?  What are they nervous, excited, etc. about?  Let them tell you where they’re coming from.  Empathize, and be authentic.  Not only does this help you understand their perceptions, it develops trust and commitment.  And this makes all the difference in your ability to communicate, assist, lead and motivate.

Developing healthy relationships is a critical component of business success, especially for an entrepreneur when the company is young and fragile.  Understanding that perception often trumps reality is a key part of building these strong, healthy relationships.  I’ve added another post-it note to my desk to remind me of this “reality” and hopefully the advice helps you too.

Good Sales vs Awful Sales

Please note: A variation of this blog, targeted towards franchise candidates and titled “Buying a Franchise Shouldn’t Feel Like Buying a Car,” originally appeared on the Franchise Business Review’s website.  You can read it here.

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I bought a car this week from a dealership for the first time in many years.  After multiple trips, dealings with several people and countless headaches, I came to the conclusion that there are two types of sales – good and awful.  And this translates well to the start-up world.

The point of sales is to solve a problem.  The buyer has a pain, and the seller can cure that pain.  It’s actually a beautiful concept.

“Good sales” reflects this problem-solving mentality.  The buyer and seller agree on a transaction that is mutually beneficial and everyone walks away better off than before.

“Awful sales” occurs when there’s a breach of trust in the inherent “mutually beneficial” aspect of the transaction.  For the seller, the goal is not about solving the customer’s pain but rather getting as much from them as possible.  Which, in fact, usually adds to the pain. 

Most of my car experience was of this “awful” variety.  Ultimately I got the car I wanted at a price I wanted from a decent guy, so I’m happy with the outcome, but the game was overly tedious and left a bad taste in my mouth.

As I went through this process, I thought a lot about my experiences at TGA Premier Junior Golf.  I recalled those initial years when a sale could determine whether or not we made payroll.  And I thought about all of our franchisees who go through this same reality as they start their business. And I reflected on my current role as both the head of franchise sales and franchise training.

For a young company, initial sales are critical.  So it’s natural for entrepreneurs to do everything they can to secure a sale and get as much from the customer as possible – a la the mentality of several of the car salesmen I dealt with.  But this is wrong.  Initial sales are important, but so is sustainability.  And you will only have the latter if you’re creating mutually beneficial agreements with your customers.

At TGA, we established a solid system of checks-and-balances with our franchise sales process.  I’m responsible for selling franchises, but I also have a critical relationship with each franchisee long after a transaction takes place.  So, while I’m providing training and support, I’m there when rubber hits the road and the things I said/did pre-transaction come to fruition or not.  This gives me a strong inherent interest to create mutually beneficial situations.  I encourage all companies to set up control mechanisms like this. 

Contrary, most sales people are in situations where the relationship severs at the point of transaction.  Systems like this create the environment for “awful sales” because the salesman doesn’t have to worry about the ramifications of his actions.

So, if you’re involved with sales – which all entrepreneurs are – please focus on the “good” variety and make a commitment to solving problems as opposed to closing deals.  You may lose some short term sales but you’ll gain long-term relationships and ultimate prosperity. 

And as customers, we decide who we buy from so let’s make a point of opening our checkbooks for the good guys. 

If we all do this, we’ll sell and buy solid vehicles that do a great job of navigating, driving and supporting us on our various journeys.

Are COO's Really Needed?

Mark Suster wrote a blog last week about the role of COO's in startups and basically argued that they're not needed. You can read it here. He got such a strong flood of opinions in response (check out the comments) that he wrote a follow-up this weekend, which is here.

As a COO myself since 2006 of what for many years was a startup (and some could argue still is), and as an avid follower of Suster's blog,I found the discussion quite interesting. I don't want to argue the merits or lack thereof of Suster's comments but rather touch on a bigger issue. The one that I think Suster was really getting at.  And that is the role of building a management team at a startup.

It is well chronicled in the annals of entrepreneurship that success of a company is determined by the management team. Great ideas come and go, strategies change and competitive landscapes shift. These are all things that are inevitable. Successful companies aren't the ones with a great start out of the gate but rather the ones with the personnel to manage this ever-changing path and stay a step ahead of the others.

I interpreted Suster's point as being that it's important to have razor-sharp focus with your employees and ensure that investments in employees are producing maximum returns.  His assertion is that COO's are like Chiefs of Staffs to the CEO - and in a startup, is that really necessary when you need folks focused on sales and marketing, product, engineering, business development and finance?

I agree in principle with Suster's point while at the same time defending my title of COO as being accurate.  In a young company, all employees wear several hats and mine include corporate strategy, franchise development and operations management. COO fits that job description better than "VP of Sales or Franchising or Business Development." And I think that’s the thing with the COO title – there isn’t a clear-cut job description and the roles look differently from company to company.

So are COO's really needed? Well, it depends. When it comes to your startup, I encourage you to look hard at the duties you need as opposed to hiring based on preconceived notions of the titles you need. Then hire accordingly.  Some of you may need a COO while others may not.  The key is to invest in employees who have job responsibilities that provide the greatest return to the company. And at the end of the day, titles within a startup are mostly inflated and don’t make a lot of sense anyways. It’s the job function that counts.

Given the importance of management teams and the reality of limited funds and resources at a startup, it's imperative that you get your initial hires right. That, I think, was Suster's point ... And as a COO, I agree with it 100%.

PGA Fall Expo & Golf 2.0

I found myself in a weird sort of dual time capsule at the recent Fall PGA Expo in Las Vegas and it was an interesting experience.

On the surface, this looked like every other Fall PGA Expo I’ve attended.  It was small – a fractional size of the Orlando show in January – and the vendors were from the same breed of decades-old golf companies.  There were the equipmenteers, the gadgeteers, the fashioneers and the suppliers.  A few interesting things caught my eye, but for the most part it was the same old stuff.  And there were more people selling than buying.  It was a great symbolic snapshot of the golf industry.

Below this surface, however, something special was happening.  There were murmurs and words and plans of change to challenge the status quote in a real way.  It’s called Golf 2.0. I’ve been on record as believing that golf needs fundamental and significant alterations to the current model in order for the game to grow – and while little on the showroom floor represented this, Golf 2.0 does

The PGA of America recently announced Golf 2.0 as the industry’s answer to a recent Boston Consulting Group study that confirmed what those of us in the industry already knew – golf in the U.S. is a shrinking business.  The initiative has three core strategies – 1) Retain/Strengthen the Core; 2) Engage “Lapsed” Golfers (of which there are supposedly 90 million with 70% interested in returning); 3) Drive New Players.

You can read a comprehensive article about BCG’s study and Golf 2.0 in this month’s digital PGA Magazine, located here. 

PGA President Allen Wronowski had a great quote that encapsulates the initiative and why I like it:

“We need to make golf more welcoming and more relevant to women and minorities.  We need to overcome the misperception that golf costs too much, and that it has to be an 18-hole experience.  Golf is such a fun game that is ideal for families, so we now have a great opportunity to attract millions to our game who have expressed an interest in playing.  But we have to change the way we run our businesses to make that a reality.”

Amen.  I support this plan and hope to be a part of it at TGA Premier Junior Golf.

As entrepreneurs, we know that success with a new initiative has less to do with the plan and more to do with the execution, and execution comes down to the management team.  I applaud the PGA of America for recognizing this and recruiting Darrell Crall, a man I respect and admire, to lead Golf 2.0.  I’ve known Darrell for several years and couldn’t think of a better person in the industry to spearhead this initiative. 

Usually a great leader with a strong plan executes well and produces significant results, and I certainly hope that’s the outcome here. 

If you read through the Golf 2.0 report, you’ll also see that there are many opportunities for entrepreneurs to capitalize on the shifting landscape the golf industry will undertake with these initiatives.  I look forward to exploring some of these opportunities on this blog.

  

Good luck to Darrell Crall, the PGA of America, PGA Professionals and all of the entrepreneurs who will hopefully make Golf 2.0 a huge success.

Franchisees are the QB & Franchisors are the Coach

(Please note - this blog originally appeared on the Franchise Business Review website and you can read it here.)

We were reviewing franchise performance at TGA Premier Junior Golf recently when the conversation shifted to the universal components of the top performers – the crème de la crème.  There were three:

1.    They get out of TGA what they put in (an adage hugely relevant to franchising), and they put in a lot.

2.    They follow the model. 

3.    They are engaged in the system.

As the discussion transitioned to what we at HQ can do to better facilitate these qualities, we found ourselves engaged in an age-old conversation about the role a franchisor plays in managing its franchisees. 

On one hand, we take personal responsibility for the success or failure of each franchisee and our instincts are to do everything we can to help.  On the other hand, each franchisee is the owner and boss of his or her TGA franchise, so we at HQ have to respect the fine line between being supportive and overbearing.

My colleague LeeAnn O’Donnell made a great analogy for this relationship that really stuck with me.  She said: “Franchisees are like the quarterback and we’re like the coach.”

Yes, exactly.

Coaches utilize years of experience and proven results to create the game plan and in-game support.  The franchisor.

Quarterbacks combine the coach’s game plan, natural talent and years of skill development to lead the team to success.  The franchisee.

Coaches/franchisors cannot control a QB's decision-making and actions during a play - nor should they want to.  But, they can provide a strong system that a great QB can become a legend in (i.e. Tom Brady, a 6th round draft pick, winning three Super Bowls with Bill Belichick) and an average QB can execute with success (i.e. the Baltimore Ravens winning the Super Bowl with Trent Dilfer).

If you’re thinking about starting a franchise, I encourage you to consider three questions:

1.      Are you a QB comfortable with leading a team of role players (your employees) while shouldering responsibility for the execution and ultimate success/failure of your business?  If yes, proceed to #2.  If no, then employment with an established company is likely a better fit for you.

2.      Are you a team player who wants an experienced coach creating the game plan and helping you out?  If yes, proceed to #3.  If no, then starting a business alone from scratch is likely a better fit for you.

3.      Is the franchise system you’re considering a Bill Belichick (great), a Lovie Smith (decent) or a Josh McDaniels (poor)?  How does this match up with your own talents? 

a.      If you’re highly experienced, you can likely succeed in most competent systems, whether it’s Belichick or Smith’s, so you should probably pick whichever business is a better personal fit. 

b.      If you don’t have a lot of business experience, you can likely succeed with Belichick but you may struggle with Smith. 

c.      Under no circumstance should you continue looking at a Josh McDaniels system.

If you answered “yes” to the first two questions and your talents properly align with the quality of system in question 3, then you very well may be looking at a great business opportunity. 

Good luck and happy entrepreneuring.

Wild Entrepreneurial Ride - Zuckerberg, Keg Cups & More

TechCrunch recently discovered an interview with Facebook founder Mark Zuckerberg from 2005 when the company was still very much in its infancy.  You can find the video below and watching it in 2011 is almost shocking – a 21 year old Zuckerberg talking about how he doesn’t want to change the world and is happy with a network that solely includes college students.  Meanwhile, he’s holding a keg cup full of beer and glancing at a co-founder taking a keg stand.  This was filmed at their office.  Wow.

Fast forward six years later and you have a company valued at $84 billion and a 27 year old founder/CEO who has, in fact, changed the world.  According to TechCrunch, 11% of the world's population and 35% of people online are part of the Facebook community.

If there was ever a perfect example of the entrepreneurial journey, this is it.  Zuckerberg saw a pain – he couldn’t locate fellow students’ info at Harvard – and he created a solution.  He brought this solution into the marketplace and let the customers (i.e. users) take it from there.  He had no idea what he had created.  He threw his board into the ocean, found a wave and rode it.

To me, entrepreneurship is all about taking smart risks.  I remember my dad, an entrepreneur, telling me that he didn’t gamble in casinos because he couldn’t control the odds … whereas, at work, he gambled every day in venues where he could control the odds.  That stuck with me.

Zuckerberg had some traction at the time of this interview.  He would launch Facebook (“The Facebook” as it was referred to at that time) at a new university and have thousands of users within days.  So, he wasn’t working on blind faith.  He knew he had something, and he ran with it.  The “smart” part of the equation.

On the other hand, he had no clue what that “something” was or where the journey would take him.  As demonstrated by this video, he didn't have visions of grandeur.  But, he had the guts (or intoxicated bravado, depending on perspective) to move to Silicon Valley, put himself on the path and walk down it.  The “risk” part of the equation.

For every Mark Zuckerberg of the world, there are thousands of entrepreneurs who don’t make it.  However, for the millions of people with unexplored entrepreneurial aspirations, there are undoubtedly many Mark Zuckerberg’s out there.  If you take a smart risk, who knows what you'll create. 

Enjoy the video:

Coach Wooden & Leadership for Entrepreneurs

I was recently speaking with an accomplished entrepreneur about leadership when he referenced this John Wooden quote: “Never mistake activity for achievement.”

What a great maxim for today’s culture, and today’s entrepreneur.

I’ve always found the relationship between “entrepreneurship” and “leadership” to be interesting.  Paradoxical, to a degree.

On one hand, most of the good entrepreneurs I know are folks who are great at operating independently, and enjoy doing so.  They don’t like bureaucracy.  They despise long meetings.  They feel cramped sitting in an office all day.  They don’t like suits, cooler talk, memos or TPS reports.  They like to innovate.  Challenge the status quo.  Get things done.  This is why they shun the corporate world for a life in the trenches as an entrepreneur.

But on the other hand, if you’re successful as an entrepreneur, you then have to build the same corporate infrastructure that you left behind to become an entrepreneur in the first place.  Either that, or you need to hand over your baby to someone else – which some entrepreneurs do but many can’t and won’t.  These latter folks need to evolve from a small team captain into a C-level executive.  An organizational leader.

Motivated by this conversation and my enjoyment of the previous quote, I took off my USC hat for a weekend and dove into leadership books from the “Wizard of Westwood.”  I found many of the lessons relevant to myself as well as entrepreneurship in general.  These are my favorites (in addition to the "Pyramid of Success" and "Seven Point Creed") and perhaps you’ll be able to connect some of your own dots as well: 

·        Coach Wooden focused on process instead of the outcome.  “Failing to prepare is preparing to fail.”  For example, he taught players how to tie their sneakers in the first practice, and would often run plays over and over without shooting the basket.  What was important was not the shot but the action that made it possible.  "I'm not going to be talking to you about winning or losing because I think that's a byproduct of our preperation."

·        Coach Wooden experienced almost immediate success thanks to implementing an innovative, fast-break offense that disrupted and overpowered the slower traditional play of west-coast teams. The offense was based on the fitness, quickness, selflessness and teamwork of the players.

·        Although they were winning, they had yet to win a national championship so Coach Wooden decided to change tactics.  “Failure is not fatal.  Failure to change might be.”  “It’s what you learn after you know it all that counts.”

·        “Coach Wooden enjoyed winning, but he did not put winning above everything.  He was more concerned that we became successful as human beings.” - Kareem Abdul-Jabbar

·        “Be more concerned with your character than your reputation, because your character is what you really are while your reputation is merely what others think you are.”

Amen.  Good luck and happy entrepreneuring.