The Hierarchy of Communication

In these days of social media, email, texts and on and on, it's easy to lose sight of the fact that each type of communication is more or less effective than another. We get into the rut of using one way to touch colleagues and Customers, even if it's less effective, simply because it's habit.

Remember the Hierarchy of Communication, in order from most to least effective.

For one-to-one or small groups:

  1. Face to face
  2. Remote videoconferencing
  3. Telephone (voice not text)
  4. Text
  5. Email

For group communication:

  1. Face to face
  2. Videoconferencing
  3. Teleconferencing
  4. Recorded video
  5. Text
  6. Twitter
  7. Facebook
  8. Email
  9. Print
There are place-changers, of course, depending on your Customer demographic. If your Customers are primarily over 55, print moves up to number 4 or higher, and Twitter likely drops to the bottom. But why in the world would you shotgun a message to every demographic using one outlet? Or use the same message for every demographic? That's the marketing equivalent of using worms to fish for marlin.

Every time you interact with a Colleague, try to make it face to face. Don't have time? Does that mean that it takes you less time to field the ping pong series of emails that it takes to convey your point - and hear your colleague's points - that way? Sounds like a hollow argument to me.

Remember: If a communication medium isn't effective, it doesn't save time, it wastes money.

Acquisitions

Congratulations! You've worked long and hard, invested in the right people, done the right things, and you're ready to make your first strategic acquisition. Now is the time for due diligence.

As part of any acquisition process, there are questions that you need to ask yourself first. If you don't have black and white answers that your management team understands and agrees with - especially your Sales Manager and CFO - the process must stop here. If it doesn't, you are making a potentially fatal mistake. What questions? Glad you asked:


  • Why this company?
  • Why now?
  • Are there other companies that would be a better fit?
  • How many people do you need to keep? For how long?
  • Do they have some people that are better than yours? Does it make sense to be redundant?
  • How much will it cost to let people go? Make sure that you are in chrge of the layoff package - not the other company.
  • Can you afford the buyout in one go, or are you financing it? If the acquisition company tanks, can you afford the loss plus the financed acquisition cost?
  • Who is going to review their books with a fine-toothed comb?
That last one, in particular, should be tattooed on your forehead. I don't care if you're buying your mom's company; business is business. They are willing to sell out for a reason. It's your job to find out what that reason is. I don't care that they told you that they're retiring; everyobody says that. Why are they retiring now? You need someone who snoops into books for a living to do exactly that, because you can't trust them and you don't know what you're looking for. At a minimum, your snoop should know this by the time they're done:

  • Are their sales rising or falling? Why?
  • How profitable are they - not just gross, but net?
  • Are they over-comping their people?
  • Who are their star performers? Can you afford to keep them?
  • Have they already made written promises to any employees - or Customers - that you will have to make good on?
  • Who are their best and worst Customers?
  • Does their Customer list add enough new names to yours to make the acquisition worthwhile? Don't assume - find out by pulling their database and having it deduped and matched against yours.
  • How do their processes work? Sit with their teams. Are there some processes that are better than yours that you should adopt? Can you make them more efficient?
  • Are you stuck with a building lease that you don't need or want?
  • How about vendor agreements? Are you assuming your competitor's headaches?
  • How long will it take the company that you acquire to pay off what you paid for them? This should be part of not just your financing agreement, but also your negotiations with the owner(s).
  • Who else are they talking to? Because it's not just you. The sooner you know who they're in bed with, the sooner you can put an agreement in place to stop all other negotiations. If they won't agree to that, it's time to walk away from the table.

That last one is a bigger issue: Never be afraid to walk away from the table. Any acquisition is a huge step, and even the biggest players get it wrong on a regular basis (just look at Time-Warner and AOL). Getting it wrong can mean not only missing a key opportunity to grow, but killing your own business in the process.

Follow the Jackrabbit Rule: If anything smells bad, run.

Pay for Value

Here's a crazy idea: Pay everyone in your organization based on what they contribute to your bottom line.

Before you call the fellows with the straitjacket or start gathering torches, slow down for a moment and really think about this. I grant you that it will take a lot of time and thought up front, but there are some important payoffs involved that may work for your business, including having a compensation system that is fair, equitable, and transparent.

When you hire someone, how do you currently determine what to pay them? Do you fall back on the age-old method of looking to see the median wage for that role and experience level, then come up with a range slightly above or below it? Why? How does what 'the average' is have anything to do with that role's value to your company? What if 'the' average is wrong, or comes from companies that are much larger or smaller than yours? Doesn't this seem awfully arbitrary for something as important as someone's paycheck - something that's probably your single greatest business cost?

Maybe you look at what the prospective employee makes in their current position, or average the highest and lowest wages from their last few jobs. Again, what does any of that have to do with your organization, their role within it, and your needs?

Nothing.

Salespeople are easy. How much did they sell? Pay them a percentage of that. Piece workers, too - how many gimcracks have they made today? Where the real work comes in is looking at every other role within your organization the same way.

Do you employ an accountant? How much money do they collect for your organization? How much do they save? Don't you think they'd be incentivized by getting a little something extra based on that?

How about your marketing department? Did their latest campaign increase sales? By how much? Do you think they would work harder or longer if they had skin in that game?

IT, HR, Customer Service... everyone has value based on revenue they create or money they save. Especially if you are just starting out, and can't afford to pay 'the average', you can build loyalty and ownership by paying people for going above and beyond the bare minimum. And I don't mean some kind of hokey award or slap on the back - I mean a culture where such things are measured and comped on a daily basis.

What's wrong with everyone knowing what everyone else makes? If the goals and their incentives are clear, nothing. How can you complain about what you're paid if you have the means and the incentive to do better? You might, but no one else will listen, and you won't last long. Everyone will be too busy raising their own pay.

And if they are doing what needs to be done to justify that pay, imagine how much faster your organization will grow. Do you think your employees will tell their hard-working friends what a great place your organization is? Especially if you give them an incentive to help you find great employees?

"Yes," I hear you say, "but what if they decide to work somewhere else that will just pay them more?" Folks, there is always somewhere else that will pay your employees more; that's how free enterprise works. You have to be able to show the value of your organization and its incentives in a way that makes sense to prospective employees. Do you really want someone who will leave the moment they're offered more money, or do you want employees who believe in bettering their condition by having control over their own value?

Just because you do something the way that you'e always done it doesn't make it right. In a world of constant competition, you have to question everything you do, re-examine it, and not be afraid to face change if it doesn't make sense any more.

3rd Thoughts

When your organization wants to accomplish something, and the group that will address the project, change, or issue meets for the first time, that meeting is likely to be filled with what I call 'First Thoughts'. First thoughts are all about wants and needs, and you frequently hear those words pop up during this discussion. It's all about defining what you or your organization need or want.

Second Thoughts are exactly that - the other folks that are involved ask that all-important question (Why?), then proceed to tell you why the thing that you want or need can't be done, or how much it will cost, or how many man-hours it will steal from other tasks, etc. Second Thoughts are thinking about your thinking, looking for holes in the boat and kicking the tires good and hard before investing man-hours and money.

The author Terry Pratchett - our time's equivalent to Shakespeare - takes this process one step further, to what he calls 'Third Thoughts'. According to Pratchett, "Third Thoughts are thoughts that watch the world and think all by themselves. They're rare, and often troublesome. When a huge rock is about to land on your head, they're the thoughts that think: Is that an igneous rock, such as granite, or is it sandstone?"

Once you've heard all of the 'Why' answers, Third Thoughts are what lead you to re-examine the want or need in light of the organization as a whole, using the perspective of the other meeting attendees as the dental tool that looks for cavities. For this reason, it's always a good idea to involve people from other departments in at least the first meeting, even if their department is not involved in the issue. In fact, folks not involved in the issue are most likely to have Third Thoughts, because they have no vested interest in the outcome.

Pratchett also differentiates between 'Second Sight' (seeing what you expect to see) and what he calls 'First Sight' (seeing what's actually there). As you look at your list of meeting participants, think about who is most likely to have First Sight. If you don't come up with at least one name, you aren't inviting the right people.

Decisions cost time and money. Every mistake doubles both. The way to minimize risk is to put as much or more time into tire-kicking and perspective-sharing as you do into execution. Take time between each meeting to get it all down on paper, pass out the notes, and ask people to add what they've thought of since you met.

In the end, it will take less time and money to measure twice and cut once - especially if you figure out up front whether the cutting should be done with scissors or a chain saw.

Story

What do you know about the history of Apple? That it was founded by 2 nerds in a garage? That they stood up to corporate behemoths like IBM and kicked their butt? That Apple prospered by giving people well-designed, cutting edge products? That their products reflect what people want?

Great story.

What you may or may not have heard is that, before Apple was even formed, Steve Jobs cheated Steve Wozniak out of money. Or that Wozniak was content to hang out with Apple's user groups and refine their existing computers rather than work on the Mac. Or that Jobs didn't bathe. Or that Apple has had just as many failures as successes. Or that they have a long history of treating their Customers like crap.

Because of social media, you don't have control over your message any more. It can be argued that you never did - that basic fact is just more visible now. But because of that, it is vital that you deliver content that resonates, so that your Customers become advocates. Because there's nothing people like better than a good story.

Did your company actually start in a garage? Great! Do you have photos of those days? Put'em on your press page. Got some funny anecdotes? Get those puppies out there. Remember your first big win against a bigger competitor? Tell it. What do you believe in your heart of hearts? Strip out all of the marketing-speak and say it as simply as possible.

Become a storyteller.

A great story is the difference between Apple and IBM. Do you know IBM's story? Of course not - nobody does! (And if you do, you need to get out more. Life awaits.)  But you might know Ben & Jerry's story, or Thomas Edison's, or Alexander Graham Bell's.

Granted, large parts of those stories aren't true, and there are bad sides to every tale, but that's not what people remember - give them the right ingredients, and they will believe. (Disney knows this to its bones; their whole business model is about telling this story over and over again. Only the names and costumes change.) I'm not saying lie - if you do, in this day and age, you will absolutely be found out. I'm saying deliver the ingredients that make your story sticky, so that people want to tell it:


  1. Was your founder a maverick? People like underdogs. Even better if you had 2 founders who are/were pals.
  2. Did your founder come up with a brilliant and original idea that was just common sense applied to a market need? The trend may be against intellectuals, but common sense sells.
  3. Did your company go up against a bigger, more powerful rival and win? We all love a good fight - especially if it's long and involves hard work and sacrifice.
  4. Do you employ a lot of people? If you treat your employees well, say so. People like to think of the companies that they like as big, benevolent families. If that's what your organization is, people will love you for it.
The basics don't change, of course - you still have to deliver great and timely service and communicate perfectly - but story builds goodwill, and belief can often buy you the benefit of the doubt (even if your grammar is poor).

Tell your tale. Keep it simple. Keep it concise. Keep it clear.