Street Smarts

by Norm Brodsky

  I’ve had the entrepreneurial bug since I was in college fifteen years ago. Now I’m happily married with two sons. Those relationships bring joy and meaning to my life, as well as a lot of responsibility. For that reason, I plan to keep my day job as an executive of a Fortune 500

  company, but I feel I must also honor my entrepreneurial itch. I have a great deal of experience and knowledge that I feel would be useful to someone launching a new venture. I’m thinking about volunteering in a start-up, donating up to twenty hours of my time per week. In return, I’d ask that I be treated like a partner, but with no salary or equity. What do you think?

  Gregory

  Dear Gregory:

  I think you should be applauded for making a tough life decision, putting your family obligations first. A lot of people couldn’t do that. And yes, I think your idea has a lot of merit. I also love starting businesses, and I’ve found that I can satisfy my itch by helping other people start theirs. But twenty hours a week sounds way too ambitious. Instead, I’d offer to meet once or twice a week with an entrepreneur to offer advice and serve as a sounding board. You’l be doing a great service and learning lessons you can put to use when you start your own business—after the kids leave home.

  —Norm

  The manager showed up a moment later and also offered his apologies. He wiped ketchup off a chair and sat down with us. “I’m terribly sorry about this,” he said and gave me his card. “Just send the cleaning bil to me. I’l make sure it’s taken care of.”

  Both Elaine and I were suitably impressed. Every business, including ours, has its share of accidental, unavoidable, nightmarish customer screwups. If we’re the customers involved, we mainly want people to act as though they’re sincerely sorry and to do what they can to repair the damage. We would have been quite satisfied if the manager had left it at that. But as he stood up to leave, he said, “In a way, you were lucky.”

  “What do you mean?” Elaine asked.

  “The last time this happened, the person got ketchup al over her hair. We had to send her to the beauty parlor. At least you just have it on your clothes.”

  “You mean this has happened before?” I asked.

  “Oh, yeah,” the manager said. “It happens fairly often. This part of the restaurant can get extremely hot during the day. We ask the waitresses to loosen the caps of the ketchup bottles, so the pressure doesn’t build up inside, but sometimes they forget, and the bottle explodes when the guest goes to open it.” With that, he excused himself and walked away.

  Elaine and I didn’t know whether to be outraged or to burst out laughing. We were dumbfounded. I could think of al kinds of ways to make sure customers don’t have to endure ketchup bombs: take the ketchup downstairs every evening; buy a smal refrigerator for the balcony and keep the bottles there during the day; put the ketchup in vented containers; serve ketchup only when the customer asks for it. Instead, the restaurant had come up with a solution that solved nothing. The bottles kept exploding; the ketchup kept flying; the staff kept cleaning up and apologizing; and the victims kept tel ing everyone they met about their experience, thereby turning what should have been a onetime embarrassment into an ongoing public relations problem. That’s what can happen when you don’t learn from your mistakes.

  The ketchup case is an extreme example, but the phenomenon is by no means uncommon. When you’re deluged with problems, there’s a natural tendency to focus on the crisis at hand, deal with it, and then move on to whatever else is demanding your attention. I know a couple, for example, who had a company that made women’s clothing. In order to ensure that they always had enough stock on hand to meet the demand, they would habitual y produce more clothing than they needed. Inevitably, they’d wind up with a ton of excess inventory, which they would then sel off at a loss.

  That was easier and quicker than dealing with the underlying problem, their inability to forecast accurately, and so they kept doing it, year after year

  —until they went out of business.

  The fact is that if you don’t eliminate the root cause of a problem, it only goes away temporarily. For that reason, I’ve tried to introduce a certain discipline in my company by constantly reminding people that there are two steps involved in fixing problems. First, you have to stop the bleeding—

  that is, deal with the consequences and minimize the damage. Then you have to figure out why it happened and make sure that it doesn’t happen again.

  I’l give you an example from the early days of my records storage business. We were getting lots of boxes at the time. To keep track of them, we put in a bar-coding system that al owed us to identify each box and pinpoint its location. That way, it didn’t matter where we stored the boxes. We could always find them when we had to.

  Before too long, however, I began getting phone cal s from customers complaining that we’d lost some of their boxes. At first, I was skeptical. I believed our system was foolproof. To me, it seemed less likely that we’d lost the boxes than that the customers had made a mistake in their record keeping. But when we found some of the missing boxes in our warehouse, I knew we had a problem, and so we moved into our two-step problem-solving mode.

  First, I put together a team to search for the missing boxes. We had to go through the entire warehouse and scan the boxes in each location, then compare the list to the one in our computer. Fortunately, we had few enough boxes at that time for the task to be manageable. A couple of years later, it would have been much more difficult.

  We did in fact find the boxes, and I suppose we could have stopped then and there and hoped it wouldn’t happen again. But that wouldn’t have gotten to the root of the problem. So I ordered that no new boxes be put away until we figured out what was going on, and I created another team to find the cause and come up with a solution.

  It didn’t take long. In reviewing our procedures for tracking boxes, I realized we’d made a basic mistake: we had failed to take into account the inevitability of human error. We had no system for double-checking our work. A driver would pick up boxes from a customer and deliver them to our warehouse, where they would be put directly on the shelves. At no point did we stop to count the boxes and make sure the number we unloaded from the truck matched the number we’d received from the customer or that the number we put away matched the number we’d unloaded.

  Clearly, we needed to add a step to our box-storing routine. We decided that in the future, when a truck returned from a pickup, we would put al the boxes in a temporary holding area marked by a cone. We would scan the bar codes on the boxes in the cone, as we cal ed it, and download the information into our computer. Then we would move the boxes to a permanent location and scan the bar codes again. When we downloaded the list of boxes in the permanent location, the computer would compare it to the list of boxes in the cone. If the two lists didn’t match, we would know right away that we’d made a mistake, and we could attempt to fix it immediately.

  With the new system, we put the problem of the missing boxes behind us. We eventual y added another safeguard by purchasing equipment that al owed our drivers to scan the bar codes at a customer’s location. As a result, we now have checks between the customer and the truck, between the truck and the cone area, and between the cone and the shelving. Yes, it’s stil theoretical y possible that a box might get lost, but it hasn’t happened in years.

  The point is that you don’t real y solve a problem unless you attack the cause as wel as the symptoms. As obvious as that may seem, most people tend to lose sight of it in the press of everyday business demands. How can you make sure that you keep it in mind? My advice is to get yourself and your people into the habit of asking, “Why did this problem arise in the first place?” And one other thing: the next time you find yourself in a fancy seafood restaurant in Dal as, be careful when you open the ketchup.

  Be Prepared

  Early in my career, a judge taught me a great lesson that has served me wel to this day. I was twenty-three years old at the tim
e and fresh out of Brooklyn Law School. Although I had passed the bar exam, I was not yet a ful -fledged attorney. In those days, it took six to eight months to be admitted to the bar after taking the exam. I, like most young lawyers, spent that period working at a law firm, where I received my initiation into the practice of law.

  The initiation began during my first week on the job. As I was getting ready to go home at about five-thirty one afternoon, the attorney I worked for handed me a massive file and said I should show up in court the next day to represent a motion he had submitted on behalf of the client. I was taken aback. “You want me to go into a courtroom?” I said. “I’ve never been in a courtroom.”

  “Don’t worry,” he said. “It’s nothing. Just be there at 9:30 a.m.”

  “Nine-thirty!” I said, staring at the file. “You want me to read al this tonight? ”

  “No, no, no,” he said. “You don’t have to read anything. Nothing’s going to happen. When the judge cal s the case, you just say, ‘For the motion.’

  The judge wil say something like, ‘I’l take it under consideration.’ Then you can leave.”

  “OK,” I said, but I was nervous al the same. The next morning, I took a seat in the gal ery of a dingy courtroom in Queens, New York. It looked to me as though the other people there were al in their nineties. We stood as the judge entered. He, too, looked about ninety years old to me. I waited until he cal ed my case, whereupon I leaned forward and said tentatively, “For the motion.”

  At the sound of my voice, the judge put on his glasses and looked in my direction. “Is that you, sonny?” he asked. “Did you say that?”

  My stomach tightened. “Yes, your honor,” I said.

  He pointed a long, bony finger at me and curled it back abruptly. “Come here,” he said. I rose and walked down the center aisle toward the judge’s bench. I could hear people snickering al around me. The judge waited until I was standing right in front of him. “Now-w-w-w,” he said slowly, peering down at me from the bench, “is this your first time in court, sonny?”

  “W-w-wel , yes, your honor,” I said. I heard laughter from the gal ery.

  “Are you admitted to the bar yet? ” the judge asked.

  I must have turned bright red. “No, not yet, your honor,” I said. More laughter.

  “Wel , sonny, tel me what this motion is al about,” he said.

  I stammered and squirmed. “Wel , I, uh ... it’s about ... I mean, we filed this motion ... wel , not we, but the attorney I work for...”

  The judge cut me off. “You have no idea what it’s about, do you, sonny?” he said. “You came into this court unprepared, didn’t you? I should deny this motion for that reason alone.”

  People behind me were now roaring with laughter. I felt so embarrassed I wanted to melt through the floor. “Yes, your honor,” I said.

  “But instead I’m going to give you your first lesson in life out here in the real world,” the judge said. “Never, ever walk into my courtroom unprepared.” He glowered at me for a moment to let the lesson sink in, then waved his hand dismissively. “Now scoot, scoot, scoot. Go back and tel your boss that you didn’t do so wel today.”

  I turned and walked out with my tail between my legs. Everybody was in hysterics. I heard someone say, “He got another one.” I left the courthouse as fast as I could and drove back to the office. When I walked in, my boss had a big smile on his face. “What happened in court?” he asked.

  “You know what happened!” I said. He just laughed.

  So I’d been set up. I later learned that the judge had a reputation for dispensing such lessons to novice lawyers. The experience had been excruciating, and I swore that I would never al ow myself to be so humiliated again. In the fol owing months, I went to dozens of such hearings and said, “For the motion,” many times. No judge ever asked me what the motion was about—but I could have answered if I’d had to. I’d read the file. I was prepared.

  By the time I went into business, the habit of intensive preparation had become second nature to me, and it proved to be a major competitive advantage. I found that I could close a significantly higher percentage of sales than my competitors simply by knowing more than they did about the customer, its representatives, and every other aspect of the deal. That’s stil true today. Our closing rate is better than 95 percent among prospective customers who come to visit our facility, and not just because we have nice warehouses, beautiful offices, and wonderful employees (though al that certainly helps). We prepare thoroughly. Before the customer’s people arrive, I go online to find out as much as I can about the organization’s structure, mission, and history. My salespeople give me a ful briefing on the visitors I’m about to meet—what they’re like as individuals, who else they’re considering, how the decision wil be made, and so on. I tailor my presentation accordingly.

  Once, for example, I gave a tour to some people who were thinking about switching their company’s business to us after many years with another provider. Their biggest concern, my salespeople said, had to do with maintaining access to their files during the transfer. Now, in the course of one tour, I can’t tel visitors everything we do, but if I know about a specific concern, I can address it without waiting to be asked. In this case, I made a point of saying, “One of the things we’re most careful about is making sure that people have access to their files or boxes during the move. Here’s what we do.” The prospects were delighted. We closed the sale.

  It’s even more important to be prepared when you meet with a customer after you’ve screwed something up. To be sure, you need to apologize and promise that the problem won’t arise again, but you should also be able to answer the question that customers always ask: “How did it happen?” That takes preparation. You have to figure out exactly what went wrong, and why, and how you can ensure it won’t recur. Then you can say right up front, “Listen, we’ve researched this incident, and here’s what caused it. We’re not making excuses. We just want you to understand what happened and what safeguards we’ve put in to protect you and al of our other customers in the future. The truth is, you’ve helped us to correct an important problem we were unaware of. We real y owe you our thanks for that as wel as our apologies.” In most cases, I’ve found, customers wil be wil ing to give you a second chance.

  There are no shortcuts here, not even when you’re dealing with customers with whom you’ve had a long-term contractual relationship. You can’t assume that you or they know what’s in the contract just because you’ve been operating under it for several years. It’s too easy to forget critical details—details that may determine whether or not you keep the business in the future. I remember one account that came up for rebidding after we’d had it for twelve years. The customer was a city agency. Because of our track record and our cordial relations with people who work at the agency, we figured we had a good shot at landing the contract again, but—when the bids came in—we discovered that, on paper at least, our bid was higher than the others.

  “What are we going to do?” Brad Clinton, our sales manager, asked me.

  “The first step is to read the contract,” I said.

  He gave me a curious look. “Sure, if you say so, but...” He shrugged.

  “But what?” I asked.

  “Wel , it’s not like we don’t know what’s in it,” he said. “We’ve had it for twelve years.”

  I couldn’t help smiling as the memory of my first day in court flashed through my mind. “Let me tel you a story,” I said.

  Brad got the point and pul ed out the contract. When we went through it, we came across a clause stipulating that whoever got the business could not use subcontractors. That eliminated one of the other bidders, whose people had neglected to read the contract as closely as we did. In addition, we were able to show that the remaining companies had based their bids on unrealistic expectations about how some parts of the job could be done. Instead of doing the research, they’d guessed. When you calculated what they would actual y have to
charge, it turned out that we were the low bidder after al . So we got the contract again, and I owed it to the judge I encountered the first time I ever set foot in a courtroom.

  Ask Norm

  Dear Norm:

  I’ve been in executive recruiting for fifteen years. Two years ago, I formed an alliance with one of my clients, and it’s working out great. I’ve had to hire two new recruiters to keep up with the demand. My annual revenues have already gone from $150,000 to $800,000, and we’re barely scraping the surface. I see only one thing that can stop us from building a substantial organization: me. I’ve come to realize that I don’t have the ability, the patience, or the know-how to manage and grow this franchise. What should I do?

  Bruce

  Dear Bruce:

  First, don’t be too hard on yourself. You’re lucky you came to this realization before getting your company in trouble. It took some tough experiences to teach me that I didn’t have the qualities required to manage a business, patience being perhaps the most important one. I eventual y learned that I can take a company only so far and don’t enjoy running it beyond that point. I need to bring in real managers—patient, detail-oriented people. They aren’t good at starting businesses, and I’m not good at managing them. We get along just fine. Just remember that you’l need to have a good working relationship with the person you bring in. That means both of you have to be open to learning from each other.

  —Norm

  Hurry Up and Wait

  Without doubt, the most educational experience of my business career has been my passage through Chapter 11, although I wouldn’t recommend that you fol ow my example. Before the bankruptcy, I was like a lot of the young entrepreneurs who now come to me for advice. They’re al in a big hurry. They have a tremendous sense of urgency about achieving whatever goal they’ve set for themselves—now. Most of them have already decided on their next step, and they’re on the verge of taking it. What they want from me is encouragement. What they get is advice to stop and think.