BERKONOMICS by Dave Berkus - 19 October 2017
How about employees all the way down the line and through the corporation? How do we align them to the goals and strategies of the enterprise? Obviously for the appropriate individuals, a bonus program aligned to the department’s goals is appropriate. But how about awarding stock options for all employees?
BERKONOMICS by Dave Berkus - 12 October 2017
In 1981, Herb Cohen wrote and published 'You Can Negotiate Anything', an excellent guide to great negotiating.� I've read and reread the book a number of times and find myself using the techniques often in many areas of my life.� ...
BERKONOMICS by Dave Berkus - 5 October 2017
Recently I was asked to review an offer letter for a senior director of business development. The CEO was concerned that he was offering far too much in the form of incentive compensation, with bonuses that could greatly exceed the base salary if all the bonus items were achieved. I asked the CEO to imagine what the company would look like if all those bonus-expensive items were completely achieved in one year.
BERKONOMICS by Dave Berkus - 28 September 2017
Here is the warning: The execution of partnership equity allocations and of a good incentive program using equity is often mismanaged, damaging the corporate capitalization structure and even affecting the outcome of subsequent investment into the company.
BERKONOMICS by Dave Berkus - 21 September 2017
Here is one that takes a real leap for a younger manager or CEO to believe. After hiring someone with all the attendant enthusiasm followed by the training and learning curve, if an employee shows signs of weakness in the job or problems dealing with contemporaries, it is the natural tendency for most of us to go first into coaching mode, and reset the observation clock to see if our excellent coaching does the job.
BERKONOMICS by Dave Berkus - 14 September 2017
Many of us go through the motions of hiring to fill a position, trying to use our intuition and skills to find the best candidate for the job. Sometimes we use consultants or recruiters; often we use internal talent to fill most positions. And over the years, we students of business success have learned that there is a science to the hiring process that continues through the life of an employee’s tenure with the company. Bradford Smart captured this succinctly in his book, Topgrading. His thesis is that “A” players amount only to the top ten percent of the talent pool at any given time, and that your job is to find, recruit and retain only “A” players to make a successful business. It is hard to argue with that.
BERKONOMICS by Dave Berkus - 7 September 2017
I guarantee that there comes a time when growing businesses outgrow the original span of control of the entrepreneur. It is a critical period, and is a test of the entrepreneur’s desire and ability to delegate. And I found from experience – after investing in many other entrepreneurial businesses over the years – that this stage typically occurs first at about twenty employees or $3 million in net revenues (or gross profit) for most any kind of company. In future weeks, we will dissect this $3 million-dollar phenomenon separately.
BERKONOMICS by Dave Berkus - 31 August 2017
You’d know the symptoms, if not the name. You’re fighting to put out the fires from customer complaints, or incomplete work, or are suffering from an inability to focus upon new development or new customers before cleaning up the mess inside your organization.
BERKONOMICS by Dave Berkus - 24 August 2017
Let me illustrate this insight with a personal story. As my enterprise computer software company which produced innovative lodging systems for hotels and resorts grew quickly, we found ourselves straining to keep up with the hiring and training of good customer support representatives, a critical part of the equation then and still so today in the 24-hour environment of hotel front desk operations.
BERKONOMICS by Dave Berkus - 17 August 2017
Let’s examine the relationship between time, quality and competitiveness. If you are getting the impression from these many insights that complex relationships cause simple problems, you are right. We have heard the “haste makes waste” ditty since childhood. There is little need to reinforce the obvious. On a larger scale, there are epoch stories of giant companies eating massive losses in a recall of product, often based upon limited testing before release.
BERKONOMICS by Dave Berkus - 10 August 2017
There is a relationship between time and money that is more complex than most managers think. Fixed overhead for salaries, rent, equipment leases and more make up the majority of the “burn rate” (monthly expenses) for most companies. Since this number is budgeted and pre-authorized, managers tend to focus upon other things such as sales, marketing and product development issues.
BERKONOMICS by Dave Berkus - 3 August 2017
There is so much history behind this insight, and so many stories that illustrate this point. Your first customers for any product or service form your reference base, the important group of allies that your marketing and sales people rely upon when attempting to create buzz and make a mass market for a new product. If you’ve been involved in the launch stage of any product in the past, you should recognize the overwhelming feeling of panic when initial customers make first contact with complaints about quality, functionality, speed of service or other critical part of the new release.
BERKONOMICS by Dave Berkus - 2 August 2017
Well, if you’ve had a computer long enough, it has certainly happened to you. Power surges, power outages, surges upon reinstatement of power, low or high voltage from your utility (brownouts or surges.) I’ve had all of these over the years and lost equipment from motherboards to microcells. And I’ve lost data due to sudden power loss. I have worried over every wind storm or thunderstorm.
BERKONOMICS by Dave Berkus - 27 July 2017
This week’s insight came from personal experience and from a good friend who advanced the notion of the “teacher-customer” years ago. I internalized this phrase, recalling the many times I had partnered with customers to design new feature-functionality into my hotel computer system back when such systems were brand new to the industry. It was an ideal partnership between my growing company, as it approached one hundred employees on the way to almost two hundred fifty, and selected special customers anxious and willing to spend time telling us of their pain points.
BERKONOMICS by Dave Berkus - 20 July 2017
You can take this headline as a rule, not an exception. You’ll recognize the truism, “No battle plan ever survives contact with the enemy” first stated by German Field Marshall von Moltke way back in the 19th century. Our variant of the “battle plan” truism is important to internalize. A product at the concept stage contains feature-functionality that customers may not want or be willing to pay for, or which just might not work well enough for release to the public.
BERKONOMICS by Dave Berkus - 13 July 2017
But what have you done to test the concept against the realities of the marketplace? Have you developed a prototype, alternate pricing schemes, even a PowerPoint mock-up to show to potential buyers? I would be very, very nervous without testing the product in the market as early as possible, ready to make changes and enhancements before committing to production and release.
BERKONOMICS by Dave Berkus - 29 June 2017
If you have been following our recent insights, you’ll be up to speed knowing that professional investors negotiate tough terms, from provisions of control over asset acquisition, eventual sale of the company, future investments, forced co-sale when others attempt to sell their shares and more. And yet, in an earlier post, we spoke of the problems that come when taking unstructured investments from friends and family. So how does the statement above fit into this sandwich of alternatives?
BERKONOMICS by Dave Berkus - 22 June 2017
Stop me if you’ve heard this story before. “My job as a (newspaper publisher telephone installer, stockbroker, travel agent, retail store manager) is safe as this economy continues to grow.” Yup. Thought so. We are in a decade of creative destruction that will affect most everybody. And the prime motivators of this massive destruction are the same class of entrepreneurs and innovators that have done it before. This time they are aided by tail winds brought on by the rapid spread of access to the Internet. In 1995, thirty-five million people used the Internet. That is six-tenths of one percent of the world’s population. And only one percent of these who had access also had mobile phones.
BERKONOMICS by Dave Berkus - 15 June 2017
Taking in angel or venture money requires a setting of an entrepreneur’s expectations that may come as a shock at least at first. From the moment such an investor looks seriously at your company, the investor or VC partner is thinking of the end game, the ultimate sale of the company or even of an eventual initial public offering. There is no middle ground.