Elie Kochman on Business and Networking

I was reading a post by Jeremy Lichtman about Website Development where he raised an interesting point – he mentions the concept stage of development, where the initial idea is evaluated, and says:

It isn’t easy to tell a potential customer that their ideas are terrible, or to try and make them modify their concepts in order to allow them to work better online.
Part of that is that developers and designers are by nature creative people, and we don’t like raining on somebody’s parade.
Part of it is also the risk of losing a possible customer.

This triggered a brief discussion in the comments about how to learn the skills required for dealing with [potential] clients. It’s not something covered as part of a standard degree in Computer Science or the like. It’s not part of a certification in web development for most colleges. As a result, many would-be web developers working for themselves fall into one of the following two categories:

Customer Management Chart

1. They treat the client’s opinions and ideas like gold, and implement them regardless of whether or not it’s a good idea. While this is good for getting work, it’s not good for developing a business, as you end up spending too much time dealing with the whims of ill-informed clients. This prevents you from developing your business of building quality websites that fill real needs. In the end, your clients are not happy because the site doesn’t live up to their expectations (regardless of whether those expectations were reasonable) and you end up losing the client.
2. You build what you like building, or what you think is a good idea, and if the client likes it, that’s great, and if not, they can go bother someone else. I don’t think this method needs much explanation as to why it’s a bad idea.

What’s needed here is to find a good balance between the two extremes, a sprinkle of tact, and some of your business experience.

Evaluate what your [potential] client is proposing, and try to figure out what the client is trying to achieve. Then confirm your guess with the client. For example, the client talks about creating a blog where every web developer in the world will spend all their time (not going to happen). But what the client really wants is a way to market their new product for web developers.

Now, rather than putting down the idea completely, gather some facts about what the client is trying to do, and what they’re trying to achieve. For example, you might collect some articles about how many web developers have A.D.D. or the fact that there are thousands of sites out there for developers, and the largest such site only has 200K members. Get some examples of how similar products are marketed (e.g. show Eclipse vs. Rational Application Developer for a Java IDE) and what their numbers look like. Try to gather as many quantifiable facts as you are able.

Next, present an alternative to the client, from the perspective of someone who understands what they are trying to achieve. “In order to market your software using various social media platforms, how about we run through some options, and what some companies which are similar to yours are doing.”

There, you’ve said it – what you’re trying to do (market software), there will be choices (some options), and where they came from (other companies). Now, outline the ideas clearly, and demonstrate the breadth and depth of your knowledge by having answers ready for common questions to each option. Don’t show off, just be knowledgeable, and if you don’t know, ask: “Can I get back to you on that?”

Knowledge is Precious

Not every client is reasonable, but then again, not every client is yours. The key here is not to attack their ideas, but to understand where they are coming from. Why did they choose you for the project? It’s because you know more than they do about how to do it. Share your expertise, use your special knowledge. Make sure your opinions are clearly delineated from the facts.

At the end of the day, you may be able to reason with your [potential] client and land a project that is a good idea, that’s well structured, and balanced.

Some [potential] clients will still insist on a bad idea, despite your feedback. However, you’ve already told them it’s a bad idea, just not in those words. You’ve outlined what they’re trying to do, and you got that right. You’ve outlined some real options that would reach that goal, and they’ve been turned down. What now?

Now you need to look at your business, and the impact accepting this client, and their bad idea, will have on the rest of your business. Will it help improve cash flow because it’s a short project (i.e. high profit margin for minimal resources)? Will this client refer you future business, thus making this a strategic move? Is this a client who has other projects with you, thereby putting pressure of losing other contracts?

Or will this project keep you busy, stressed out, and prevent you from pursuing better clients who will help your business reach its goals?

The answer to these questions will help you determine if you should be accepting or rejecting the bad idea. (Note that while you may refuse the project, treat the client with respect, and you may end up with a valuable connection as a result.)

Recently on LinkedIn I asked a question about business cards and etiquette – do you always reciprocate handing out a card? That is, if someone gives you their card, should you give that person one of yours? If you hand someone your card, should you request one in exchange?

Before going any further, one thing needs to be clarified. I was asking the original question for a particular reason, and it was not so that I could write this article. I’m planning on attending a speed networking event next week, in which participants are seated at tables with five other people and get two minutes to make an introduction. The last time I attended, before anyone spoke, I had 5 cards in front of me, one from each person. After the introductions, however, I only really saw value in 2 or 3 of the connections.

The second half of the issue is that I did, at that event, reciprocate the handing out of my card. I ended up on 3 distribution lists as a result, and it took a while to get taken off one of those. All three people who put me on their mailing lists had something in common – they were all mutual fund salesmen. The question I was trying to get answered was whether I could [politely] refuse to give my card to the mutual fund salesmen at the next event.

I got many answers to my question, some of which addressed my concerns, others which seemed to ignore that aspect of the question. However, I did learn a few things about such events, and the ramifications of sharing a card.

1. Speed networking events are of limited value, because, while they allow you to meet many people in rapid succession, they often do not allow you to establish a solid connection with any one person.
2. Given then I will be attending this event (although this may be my last such event), sharing my card is considered to be a necessity. That is, I cannot politely decline to share my card with any one person or group of people.
3. I can control when to share my card – I can wait until it’s my turn to introduce, thus linking my card to my introduction.
4. I can make mention that I do not wish to be placed on any distribution lists – while I welcome networking opportunities, please keep my e-mail off any type of mailing list you may have.
5. When receiving cards, make notes on the back regarding the person who gave me the card, and any other information that may be relevant.
6. You never know where your next successful connection will come from, so don’t try to guess. Instead, hand your care to anyone who will take it, but always include a brief summary of what it is you do, and what it is you’re looking for.

What do you think about sharing your card? What value can you find is such events?

The Federal Trade Commission (U.S. agency for my non-American readers) released its official guide to those receiving goods or services in exchange for endorsements. According to the official title, it affects advertisers, bloggers, and celebrities endorsing a product (click here for the full report). The guidelines include, among other things, that the person making the endorsement disclose that they are being compensated for what they write. The details are a bit vague, but we can be sure that over time, the FTC will continue to refine this guide until it is a full-fledged regulation.

There are multiple potential impacts to this, some for good, others, not so much.

First, I held a debate a while back over whether or not bloggers should be disclosing that they are being compensated for the reviews they give (which is the basis of the FTC guidelines). The conclusion we reached was that while bloggers should be pointing out somewhere that they receive compensation for their reviews, they should not need to disclose this on each individual review they write. This lets their readers be aware that they may be biased on this account, and to value the review accordingly.

Second, there are tax considerations – when you receive compensation for work done, you have to report that as income. Robb Sutton pointed out to me in his article, published yesterday, that in the U.S. this reporting is only required if the paying company provides the appropriate paperwork. I find this to be a little odd, since in general, you have to report income regardless of whether or not the employer is filing his paperwork correctly, and I therefore suspect that it is only a matter of time before this ruling is changed to match.

Jeremy Schoemaker writes about this as well, and points out who was the cause of such regulation. The regulation is aimed to prevent a company from creating a fake blog where they review their own products. Since they would now have to report the compensation taking place, readers would then be aware that the site is merely a front for the company itself.

Except the regulation doesn’t quite pull that off. The company can now pay someone to set up a blog for them where they review the product and admit that the writer was paid for the review. This will cost them a small amount per review. Alternatively, they can risk running afoul of the FTC regulation by not admitting the bias, and be fined $10,000.00 [per violation]. However, this sum is not enough to stop a company from using fake blogs to advertise their products – such a site could easily generate $100,000.00 in profits from sales to its readers. Combined with the fact that the FTC will be unable to catch every violator makes this risk acceptable to some.

In summary, while the regulation in general is a good thing, it is not clear that the FTC has a road to its goal (namely, getting rid of fake blogs reviewing products and making outrageous claims). As the regulations and guidelines are refined, we’ll see if the FTC can figure out how to get where it’s going.

I came across a question on Linked In today which raised an interesting question about managing schedules, and what happens when the schedule starts to slip. Anyone offering a service will encounter this situation at some point in time, and those who will succeed know in advance how they will handle this situation.

At the start of a project, the timelines look good, the schedules may be aggressive, and optimism is high. People enjoy a fresh start, and the work begins. However, as time goes on, the Project Manager realizes that the schedule was unrealistic, or perhaps something unexpected came up, and now the project is a month behind. Suddenly, the client is clamoring for status updates, and wants to know why the project is late.

As a Project Manager, what do you do?

In order to answer this question, the first step is to understand the various reasons why a schedule might slip, since that can affect how to resolve the issue.

1. The initial schedule was never accurate. It was overly aggressive, and did not allow for unforeseen problems. As a general rule-of-thumb, there should be about a 20% allowance for unforeseen difficulties. Additionally, the people doing the work should be involved in creating the schedule, since they will be the ones expected to adhere to that schedule.
2. The schedule was sufficiently conservative, but a delay from a third party held up progress. Once the third party delivers, the schedule will be back on track, although pushed out by the length of the delay. The third party could be a resource for either the vendor or the client.
3. The schedule was sufficiently conservative, but changes to scope caused the schedule to break.
4. The scope did not change, but the amount of work required for some portion of the project was not estimated correctly and this was only determined once the work began.

The first step in resolving a problem with the schedule is communication. The client should be informed:

1. There has been a delay in the project, and what the new schedule is
2. What caused the delay, and whether or not another delay for a similar reason can be expected during the remainder of the project

Once the client has been informed of the new schedule, the relationship with the client must be repaired. Depending on the nature of the delay and the ultimate cost to the client, how the relationship is repaired will vary.

If the cost to the client can be measured with a dollar value, then that cost should be, to some extent, reimbursed to the client if the vendor was the source of the delay. However, this situation is not that common as making such a measurement is fairly difficult, and may not be determinable until after the project is complete.

In most cases, offer the client some form of compensation for the delay, with the amount depending on the nature and severity of the delay. Clearly, a single day delay is not as severe as a month delay. However, if that single day means that the client misses an industry deadline, the severity is greatly increased.

One form of compensation that allows for an opportunity to repair the relationship fully is to offer a discount on future work. For example, if the vendor was supplying a website, they can offer a discount on future maintenance, for example, a 10% reduction in the hourly rate for the first 50 hours of maintenance.

What is clear, regardless of the nature of the delay, is that the relationship between the client and the vendor will need repair. What should not be done is to attempt to hide or deny the delay – the client will eventually find out, and then trust will be lost. By being honest about the schedule, and keeping open lines of communication, you can work with the client to bring the project to a successful close. Your practices in dealing with delays will assist in future goodwill, as clients tend to appreciate when vendors are honest about schedules, and take appropriate action to adhere to them.

Karma, according to Wikipedia, is “…the concept of action or deed… which causes the entire cycle of cause and effect”. A closely linked topic is that of the Golden Rule, one variation of which states:“avoid doing what you would blame others for doing” Thales and is commonly quoted as “Do to others as you would have done to yourself”.

In recent months, we have watched as dozens of people and companies have been charged with unethical behaviour in their business practices. This is a clear demonstration of bad karma -  a company steals money from its shareholders will eventually pay the price (although the shareholders themselves will likely not get their full investments back). On the other hand, companies which have maintained good business practices, along with providing clear information to the public, find themselves able to weather the economic storm, and many of these will survive.

Good karma in a business is not just how you treat your employees, or your shareholders, or your clients and customers. You must treat all of your associates with respect, with consideration. In hard times, you will need to rely on all of these people to help you, even at a cost to themselves.

As an example, I read this morning in the National Post that 800 British Airways employees will be working without pay for up to a month, and thousands of others have agreed to  pay cuts. While it can be argued that this behavior is self-serving in that it ensures that these employees will retain their jobs, the fact that the cuts were voluntary speaks loudly of the good karma British Airways has with its employees.

As an example of the reverse behaviour, here in Toronto there is a strike of the unionized municipal workers, including garbage collectors and daycare workers. Part of the issue which demonstrates the bad karma is the fact that city councillors have the option of a pay freeze (but it is not mandatory), while trying to enforce a freeze or cut on other city workers. While I personally don’t agree with the requests of the striking unions, their argument of unfair discrimination is valid. (It should be noted that several councillors did take the voluntary pay freeze.)

When dealing with employees, clients, and shareholders, it is necessary to look to the future. While at the moment it may be costly to ensure a postive relationship, when the times are tough, it can become necessary to ask them to make sacrifices on your behalf. At this point, they will examine your past behaviour in great detail. If you, as a business owner or manager, were ethical and upfront with all interested parties in the past, you will find people willing to work with you in the hard times. On the other hand, if you were unethical in any manner in the past, you may be looking at spending some time in substandard federal housing.

The past can come back to bless you, or haunt you. Without a crystal ball to predict when the past will return, you’re better off erring on the side of caution and always being ethical and upfront with your actions.