Studio Non Troppo

Photo: MShades

When there’s more of something in one place than there is in another, that discrepancy can be a resource. The water at the top of a creek has more potential energy than the water at the bottom of a creek, and that’s why a water wheel can do something useful like mill grain. Or if you have fine silk fabric and the people around you only have coarse or low quality fabric, you may be able to exchange some of your high quality fabric for food or something else you would like. We’re used to thinking of benefits and value together.

But inefficiency and waste can also be resources in some cases. Lawyers benefit when two parties cannot come to an agreement on their own. Matchmaking websites make money in addition to matches because the process of finding a good partner for a relationship is rarely straightforward. The stock markets have built-in inefficiencies: they’re known as commissions, and stockbrokers don’t seem to mind them.

In thinking about how you’re trying to earn money with your business, have you considered how to leverage inefficiency and waste? Some of the strongest solutions to tough problems don’t just ameliorate failures; they use failure as a resource.

Here’s a lesson from a university in how not to support your employees. For those of you in the academic world, nothing here will surprise you (you may accuse me of toning down the story, even). But for anyone in business, I hope at the very least this typical story will cure you of any grass-is-greener (or grass-is-more-sensible, or grass-is smarter) feelings you might have.

Photo: Bibi

I’m on the docket to teach an advanced problem solving course this coming fall, and the best book for this particular course happens to be published by a consultancy in England called IFR. The campus bookstore is a for-profit store with a contract with the university, and the bookstore routinely tries to minimize its costs by under-ordering textbooks.

Over time, the bookstore managers have found that some significant percentage of students orders textbooks from places like Amazon, where they can frequently be had for much less than the bookstore is able to sell them. So, rather than have to return books to the distributor, the bookstore just orders fewer books than will be needed for the course. For a course with an expected enrollment of 25, the bookstore may order 15 books.

What happens when there are too few books in the bookstore?

Now what generally happens is that this causes students to go through the first several classes of the semester without a textbook. In this particular case, with the book not available through Amazon and coming from across the pond, I’d say it’s more likely to be several weeks without a textbook.

Yay England!

So I contacted the author in England, who very generously offered to ship me a stack of the books (at a 15% academic discount, even) and to take back any books I didn’t sell to the students. Even with costly shipping from the U.K., the amount per book came out to about $62.

The sources I had found in the U.S. for the book (though only an older edition is available in the U.S.) ran about $100 plus shipping. I can imagine that the campus bookstore, if it even were willing to get the books, would probably have to charge at least $100.

But then the department chair asked the administration if it would be OK for our department to front the money for the purchase of the books, and the administration said no, it would not be OK.

The reason given was that the university has a policy of not “going around” the bookstore.

Now I understand the business interests of the bookstore in wanting an exclusivity agreement, but I don’t know why such a policy is really in the interests of the university.

Or, to put it another way: shouldn’t there be a policy that the university will help students get the best resources available? Or reward faculty who figure out ways to teach more effectively while reducing costs? You can imagine how disincentivized I will be in the future to try to work out a deal like this at this university.

What to do, what to do?

I think there’s a valuable lesson here: use your policies to help you help your employees and customers. Policies should be useful tools that can be–and should be–modified when necessary for you to achieve your goals. If your policies are running you, instead of being sensibly used by you, chances are they’re doing lasting harm to your business relationships.

Photo: James Jordan

It used to be the “mailing list.” Now, it’s generally just called “The List.” Building and maintaining your List takes time, especially if you’re aiming for 10,000+ list members.

I find it helpful to have reminders at hand as to what I’m doing and why I’m doing it when I’m working on a long-term project, so here are four properties of a list that I hope will help you keep on track when building or maintaining your own List:

1. The List is a form of capital

Your list is a resource, but don’t think of it as a consumable. It generally takes other resources (time, at the very least) to build the list, and some ways of building a list are more expensive than others. If I offered to paint a wall-sized fresco of the Albuquerque downtown skyline (actual size) for anyone who will sign up on my list, I’d run out of time, money, and the willingness to look at the Albuquerque downtown skyline long before I had a list built.

Alternatively, if I gave away a PDF file with blueprints of my own design for a 1/20th scale model of the Duomo in Florence in exchange for a signup on my list, I’d have much less work on my hands. After I’ve put together the PDF, there’s no more effort involved in providing 20,000 digital copies than there is in providing 20.

Once you’ve built your list, it has an intrinsic value, regardless of how much effort went into building it. At that point, knowing how much time and effort was required to build the list, you will gladly put in the time needed to maintain your list capital.

2. The List is principal – don’t fritter it away

This goes along with the non-consumable nature of the list. Don’t sell out your list, and don’t squeeze the list for money. If you do, some members might still buy something from you, but they won’t like you for it, and they’ll leave. Instead, by providing value to the members of your list on an ongoing basis, you can expect to receive dividends in return. It’s a longer-term outlook. Think in terms of mutual benefit, and you’ll do well.

3. A business is made up of relationships, and that’s exactly what The List is

Selling a single product can bring some income, but getting orders for a product isn’t nearly as important as getting re-orders. If you’re getting re-orders, you have a business. And the only way to get re-orders is by building relationships. That’s the heart of the List idea.

4. The List isn’t a community in itself

Through your list, you have a relationship with each member. In general, however, the list members don’t have direct relationships with each other. Now if you work at it, you can bring some of the trappings of community to your list, by sharing selected members’ comments and questions with the rest of the list, for example.

There are different community/list mixtures available if you want to experiment. A blog with comments enabled will still have you at the center of the discussion, but participants can relate to one another directly through the comments. A discussion forum that you moderate would be still more community-focused. Besides the limits on your time, there’s nothing to keep you from building a list, running a blog, and moderating a discussion forum if you want to.

What questions or concerns do you have about building a list? Are they “why” questions, “how” questions, “when” questions? Or maybe “whether” questions? Please post your comments by clicking on the “Comment” button or in the comment window below this post. If you’re reading this post through an RSS or email feed, please stop by the studionontroppo.com site and share your thoughts. I look forward to your comments and questions!

Photo: Kanko*

Musashi, the samurai, artist, and author of The Book of the Five Rings, wrote down a list of what he expected of a master swordsman.

I don’t have the book in front of me (probably having lent it out one more time than I got it back), but I remember one of the items on his list: know the ways of all professions. “Know the ways of all professions” is not the same as “be proficient in all areas.”

The latter is not only impossible; it is pointless to attempt. The former is a more subtle instruction.

Although it may also, in the end, be impossible to know the ways of all professions, setting this as a goal puts one on a path of observation, learning, and most fundamentally, compassion.

In the very specific context of running a business, you may wonder how far you need to immerse yourself in the interflowing currents of marketing, analytics, copywriting, and design. My answer is this: it depends.

How much expertise it is appropriate for you to develop or attach yourself to will depend on all the contexts of your business, not least on what kinds of things you enjoy learning and doing. To learn more about the particular contexts in which you find yourself, and to know what steps you should take, your first choice should be to determine to “know the ways of all professions.”

You can practice anywhere.

Consider all the people involved in creating and installing the following sign:

Photo: * Photography by Chris *
It can be challenging and perplexing, but also fun and rewarding, to think about how and why people do the things they do.

What do web analysts get thrilled about? How do marketers spin utter failure? What is the bane of the copywriter’s existence? What does that odd laugh coming from the designer mean?

To the extent you know the play of wills, frustrations, and breakthroughs for the professionals who could someday work with you, as teachers, partners, or contractors, you will know what is best to ask or ask for.

Photo: Ryan Wick

One of the things I teach in my “other life” is a very weird and wonderful problem solving methodology called TRIZ. The letters T-R-I-Z are a Russian acronym for what in English is called the Theory of Inventive Problem Solving.

In TRIZ, we talk about a system’s primary function. What’s the system designed to do? Or: what’s the point?

This is part of the WHY I talked about in the last post. When things get complicated, when people feel under time pressure, or when we stop acting mindfully, it’s easy to lose sight of the WHY.

So here’s the question you must ask yourself: what is the primary function of my (new) business?

If you answered with some version of “to make money,” it’s because you are falling into the auxiliary function trap. An auxiliary function is some function internal to the system, something that is done besides the primary function.

It’s time for an example.

Let’s say the primary function of a jellybean-making machine is to make jellybeans. Beautiful, delicious, marginally-nutritious jellybeans.

Photo: Angie Torres

Pouring the sugar from a container into a mold is an auxiliary function. In this case, it might be something you need to do, but let’s not mistake moving sugar around with actually producing finished jellybeans.

Measuring the jellybeans for appropriate size and shape is also an auxiliary function. If you could measure the jellybeans perfectly but still only produced ugly, terrible-tasting jellybeans, I think you’d have to agree your machine was failing at its job. On the other hand, if your system was designed so as to produce glorious, awesome jellybeans, and if you didn’t need to do any measurements at all, the machine would be succeeding. That’s because measuring the beans isn’t the point; making beans in the point.

“So why,” you might ask, “is the bean-counting approach to my business so wrong? It worked for your jellybean example, didn’t it?”

Selecting “the production of money” might work on some level as a primary function for your business, but there are real limitations and pitfalls that result from this way of looking at things.

Money (think a fistful of dollar bills) doesn’t actually do anything for you. You can’t eat it. You can’t construct a house with it. You can’t nourish your soul with it. And that’s the big clue… Money is only useful for what you do with it. In other words, money is an enabler, not a goal in itself. The production of money is an auxiliary function.

So here’s what you can do.

Remind yourself that money, though quite possibly necessary, performs only an enabling, auxiliary function. Take the time, now and repeatedly, to ask yourself, “what is the primary function for my business?”

Here are some examples of primary functions for a business:

• “Creates free time for me to spend with my family.”
• “Makes me feel productive, energized, and creative.”
• “Creates inner peace.”
• “Makes beautiful things in the world.”
• “Spreads fun contagiously”

Sometimes, you will find that the money-making, or measurement, or marketing, or [insert another auxiliary function here] function may be contributing positively to some piece of the system but is harming the system’s ability to perform its primary function.

You can correct this, or figure out a way for the disruption of the primary function to only be temporary and a positive change in the long run….but only if you’re paying attention.

Photo: kevindooley

As promised in the last post, today I’m going to present a high-altitude view of one type of internet information business. I’ll pick one of the possible business models (the What), I’ll describe what’s appealing about working this way (the Why), and I’ll lay out the three components that are necessary for the business to succeed (the How).

It’s a high-altitude view today because there are many, many details in even a straightforward business model like this one, and a holistic overview will help you decide which aspects you’d like to explore and in what order.

The WHAT

I’ll begin by presenting the components of one particular internet business model: creating and selling digital-delivery products, such as downloadable pdf files or videos (think YouTube). There are many other business models available, ranging from blogging to affiliate marketing, and many of the technologies and approaches relevant to this model can be directly applied to other models. This ability to recycle and repurpose your knowledge and know-how is one of the benefits of developing your information entrepreneur skillset.

The WHY

First, here are some of the guiding principles that might lead you to consider this kind of business. This model might be good for you, if:

1. You want to devote only a few hours per week to the tasks of running a business. You’d rather spend the majority of your time doing other things, such as starting new projects, creating content, or doing something completely non-work-related.
2. You like the idea of your product being out there on its own, marketing itself, sending you some income whether you’re paying attention to it or not.
3. You’re not interested in leaving your day job (right now, at least), but you wouldn’t mind some extra income each month.

Downloadable products can be sold to internet customers (almost) anywhere, and there is very low overhead and little maintenance in selling this way.  It’s exciting to imagine being able to connect people who really need particular, specfic information, know-how, and experience with the people who have that information, know-how, and experience.  The goal is mutual benefit: value for the customer, compensation for the provider, and good will generated between them.

OK, time for a little thought experiment.

Imagine a downloadable, pdf-format text-and-images resource, such as a how-to manual for Vespa owners who want to repaint their scooter.

Photo: antmoose

Now consider some of the ramifications:

• The manual might sell online for $20. If 10 people (worldwide!) purchase the manual each month… [math left as an exercise for the reader].
• It can be delivered (i.e. downloaded) without paying for postage.
• You don’t need a warehouse or even a garage for inventory of your product. The manual is a file on a computer server.
• Customers don’t have to wait to get it delivered in the mail.  They can download it and read it right away or print it out to read wherever they’d like.
• If you want to change something in the manual, you don’t have to reprint it; you just change the file, and the new version is ready immediately.  There’s no necessary, intrinsic cost to change the product.

The HOW

Here are the components you would need to make this work (high-altitude overview only, today):

1. The product itself
2. A website set up to deliver the product and perform financial transactions (accepting credit card payments, handling refund requests, crediting your bank account)
3. A marketing system that helps potential customers find your site

Depending on your personality and your skills and inclinations, you may feel that at least one of these three components seems extraordinarily difficult. I’m here to tell you that all three components are really, truly manageable, and you don’t have to be a Rhodes-scholar-who-spends-all-her-free-time-between-high-powered-sales-meetings-in-the-computer-lab to get them all to work together.

Does this sound doable? Do you run a business like this? If this sounds reasonable and intriguing, but you’re not doing it, why not? Where are you stuck? I welcome your feedback and questions.

 Today, I’m going to look at three reasons people use to avoid starting an online, information-based business. If any or all of these reasons sound familiar to you, I hope to show you why this might be the time to jettison them and go ahead in spite of your earlier concerns.

1. “I don’t like business.”

I understand, and I believe you. I’ve experienced this feeling and used it as a reason to avoid getting involved in business before.

Then I discovered I was stereotyping. I was “profiling” (as in “racial profiling,” only in this case I was guilty of “activity profiling.”) The business world is not monolithic, and not only are there different types of businesses in the world; there are also different ways to think about business.

Don’t like unethical, pushy, greedy, dehumanizing, soul-draining, just plain evil businesses? Great! (Neither do I.) The good news is that it’s actually possible to be involved in an ethical, courteous, generous, empowering, soul-reinvigorating, just plain good business. Heck, you could even start one yourself.

2. “Business doesn’t like me.”

Ah, the flipside of #1. Do you worry that maybe you’re not cut out to be a businessperson, that you don’t have something worthwhile to offer, or that other people wouldn’t be willing to compensate you for what you do have to offer?

Whether you’re “cut out” to be a businessperson is really a trick question (or is it a trick worry?) There’s no one type of business, and if or when you find the really right business to be in, it will feel more like play than work, and how can you not be cut out for that?

It’s true that to be in business, it’s essential to be able to provide value to others. Many entrepreneurs are outstandingly proficient at discovering ways to create and provide value. This doesn’t come easily to everyone, but fortunately it’s a skill that can be learned and practiced. Whether or not you are in business now, the ability to see the parts of yourself that create value in the world is a crucial life skill. And once you start practicing “self value awareness,” you’ll find yourself feeling increasingly energized and motivated.

And as far as compensation goes, you don’t need everyone to compensate you. If only a tiny fraction of people finds your folding instructions for a remote-controlled origami banjo even remotely interesting…no problem! Enter the world of the internet, where you can reach (as of the last count) over a billion people. Even if it’s only a fraction of the internet world that finds your information valuable, a tiny fraction of an immense number can be a substantial number. The internet has changed all the ground rules of the information matchmaking game, and even if you didn’t think it was worth playing the game of business before, you owe it to yourself to take another look.

3. Go into business now? In this economy? That can’t make sense!

One of the key benefits of being an online information purveyor is the extremely low startup cost. You have to put in some time, and the learning curve can be daunting at first, but the initial investment is pretty small. Certainly no more than a few hundred dollars, and that includes web hosting costs, getting your first webpage designed, and paying for some online advertising to test whether there is real-world demand for what you have to offer.

Worst case, if your ebook or quickstart guide (or remote-controlled origami banjo instructional video) doesn’t work at all, you’ve had fun putting it together anyway and can move on to your next idea which may well work. Failing quickly and repeatedly is the best way to learn and get better. The key is to set your process up correctly, so you can start small, without taking unnecessary risks. I’ll have a lot more to write about this shortly. It’s a very important point, probably the critical point when going into business.

What’s next?

In coming posts, I’ll be describing the big picture, the information entrepreneur business model as seen from 35,000 feet. Then, I’ll dip down some to show the largest components of the model and how they interact with each other, and I’ll start getting into the learning curves involved with each one.

I’ll also start pointing out various landmarks to help you find your way around this new country, including key websites, tools, people, and ideas.

Thank you for reading this far. Please share your feedback in the comments. For a little more information about where I’m coming from and going to with Studio Non Troppo, you can visit the About page for this blog.