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!