Practice = Success

October 31, 2006

Fortune magazine has been running a series of articles profiling work habits of great people. There are a ton of lessons to be learned. In their current installment they discuss "The Myth of the Natural" and describe how most people achieve greatness through consistent hard work and practice.

There is discussion of what is know as the "10 year rule" that researchers have established as a minimum time to work hard and practice daily before becoming great.

Most people have no drive for anything like that type of dedication. They believe that going to school or just doing a job for a period of time will make them successful. That could not be further from the truth. The cold, hard reality is that if you want to become excellent you need to go much, much further. You need to practice relentlessly.

You need to push yourself to make one more phone call, get one more thing off your desk, read one more chapter, etc.

Whatever it is that you do, do it longer and better than everyone else. Do that for a minimum of 10 years and you have a shot at being great.

At the end of the article there is also a discussion about how most people find this very uncomfortable. It is much more comfortable to believe you are where you are in life because you haven't found your place, not because you haven't worked hard enough.

Designing Interactions - Innovation

I always love books on ideas. At the end of the day there is nothing more important for improving a business than the ability to generate new, profitable ideas. The best businesses have a culture of both execution and innovation. Both can be turned into processes. IDEO is a company that has consistently been at the forefront of innovation for many years. I recommend reading EVERYTHING you can find on how they work. Along with this book is a great website at www.designinginteractions.com

50 Lessons

October 30, 2006

Fantastic idea for online learning. Short, to the point and available on-demand.

www.50lessons.com

Organizational Change - One Difficult Question

Seth Godin asks a very difficult question - Will You Be Missed?

He makes some great points about "dead" businesses and what you can do to change your potential fate.

This is true for whole businesses as well as parts of businesses. Have you embraced all the changes that are inevitable in the construction industry?

Pre-Planning?
Pre-Fab Shop?
CAD/CAM Layout?
Building Information Modeling?
Company-Wide Project Management System?
Integrated Accounting & Operations?

If pieces of your company are getting left behind they hurt your overall business just like a dying body part hurts the whole body.

Brainstorming

October 28, 2006

Business 2.0 magazine had a great article by Michael Myser on brainstorming and how it can be very effective but is usually very ineffective.

We usually get involved in facilitation when it comes to brainstorming processes for contractors. The most difficult part is (1) getting all parties to both talk, (2) getting all parties to listen and (3) getting everyone to talk through things at the detail level required to really solve problems.

It is amazing how long it really takes to document something as simple as "How do we process change orders?"

What is even more amazing is how much this simple process can be improved within a short period of time just by having an effective brainstorming session followed by detailed documentation of the new, agreed upon process.

Build Your Business Through Exercise

BusinessWeek just ran an interesting article discussing the benefits of exercise on the health of your business.

Put simply those business owners who exercised regularly felt better about their businesses AND their sales were higher. This is definitely worth a read - full article here but I'm not sure I fully agree with the cause-effect line they are trying to draw.

In the early 90's I took some time off from construction and had a personal training business. We did not do any studies as formal as the ones mentioned in the article but we did notice that successful business people had a drive and heart that made them better in the gym.

The problem with studies like the one discussed in the article is that it could drawing connections between two unrelated things. I believe that it is the drive and heart of a person that makes them excel whether it is in business or in the gym or in anything else they choose to do in life.

Does exercising make you feel better? Yes - but does the personality type that will get up at 4AM to run before heading to the office at 6AM also use that same drive to improve sales?

Perhaps you should look at the gym and other athletic events when recruiting talent for growing your company. Maybe sponsoring some of these events would help you recruit the talent you need to grow your company.

Business / Life Balance

I just came across a quote in BusinessWeek where Jim Koch was asked what the one thing he wished he had known before starting Brewery Boston Beer Co.

"It eats your life. If you're successful, the business requires all your energy to keep it going. If you're not, it requires all your energy to keep it from sinking. I thought it might be that way for a year - that was 22 years ago. "

Jim Koch is founder and brewer of Boston Beer, brewer of Samuel Adams

This is true for all businesses - especially for contractors. It seems so easy to go out and get your contractors license. It does not take long for the cold, hard reality to set in that (1) it is not going to be as easy as it looks, (2) there really is not much training out there for the business side of contracting and (3) this is going to take much, much longer than expected.

I don't think there are any two greater challenges or joys in life than raising kids or building a business. Both are a lot harder than they appear to do correctly but both provide emotional rewards that are far greater than any amount of money.

Opportunity Interactive - Software

The Opportunity Interactive Home Page

Software specifically for smaller HVAC contractors to manage every aspect of their business including a pre-formatted QuickBooks file and sales management solutions.

If you are an HVAC contractor this is worth a look.

Building Your Brand

October 25, 2006

In a Fast Company article called Brand Yourself there are some great tips that can help any business grow. Construction companies are typically built around one or two strong personalities that other people "want" to do business with.

Building and enhancing your personal brand in conjunction with your company is a clear path to profitability.

Intesting Healthcare Options

Interesting post on the Tom Peters blog about people actually traveling outside the country for operations.

On another front there are more doctors switching to a model called Conceirge Doctor where the patient pays an annual retainer for better service - imagine not waiting in long lines and actually getting someone who can pay attention to you!

Both interesting things to keep tabs on.

10 Marketing Tips - Seth Godin

Seth's Blog: Top 10 Secrets of the Marketing Process

Fantastic summary that is applicable to every business - especially contractors. Few contractors actually "Market" their services. Bidding a job is not marketing!

A question I often get asked is about the profitability differences between contractors. I can't say that we have seen any particular niche of the construction market that is more or less profitable than another.

What we have seen is that the companies with more of a sales and marketing focus are typically more profitable regardless of how efficiently their operations seem to be.

Good marketing starts with good customer service, creating good stories and then spreading those stories. Everyone in your company is involved in this process from the estimator to the person processing lien releases or certified payroll reports.

Do not assume your customer service is as good as you think it is. Things often look far different from the provider side of the transaction than they do from the customer side.

Spend some time really trying to understand and improve your customer's experience and profits will follow.

Pre-Planning as a Business - www.houseraising.com

October 20, 2006

BusinessWeek magazine highlighted this business in an article about the next web businesses - see article and subtitle called Online Job Foreman.

The article is about how Robert McLemore who is a custom homebuilder took his construction project pre-planning experience and turned it into a business - www.houseraising.com

Basically what he did was come up with 1,269 specific problems that are encountered during the course of building a custom home. From there he came up with 3,400 steps to mitigate the problems. This was all built into a management system that allows builders, owners, vendors and subcontractors to login to a website specific to a project and manage these problems and mitigating steps.

This is EXACTLY the approach that should be taken during normal project pre-planning. Get the whole project team to look through the entire project in a structured manner, looking for all potential conflicts, problems, points of impacted productivity, opportunities for improved productivity, etc.

Of the various services that we provide I love working with contractors on project pre-planning facilitation more than anything else. Don't burn money by failing to pre-plan.

Project 2007 - The Challenges of Implementing Project Management Systems

Building on our "Profit Happens Here..." series of training and implementation programs we are going to focus heavily on the challenges of implementing project management systems for contractors in 2007.

Our goal will be to develop tools and training that allow contractors to better implement standard project management systems whether they are pre-planning, production tracking or project management software.

There are a myriad of challenges including basic resistance to organizational change, the "gray areas" that Project Managers work in, process documentation specific to a company, etc.

During the course of development we will be interviewing approximately 100 contractors for their input. Those contractors that volunteer a few hours of their time for the interview will get a free copy of our findings and the overall program guide. Please contact us if you are interested in discussing your company's project management systems with us.

Construction Industry CPAs/Consultants Association (CICPAC)

October 19, 2006

The Construction Industry CPAs/Consultants Association (CICPAC) is a nationwide network of accomplished CPA firms specifically selected for their experience in and commitment to serving the construction industry. In addition to traditional accounting, auditing, and tax services, CICPAC members distinguish themselves by providing management and consulting services that meet the increasingly complex needs of construction companies.

http://www.cicpac.com/

Non-Mainstream Hotels

When traveling it is often "safer" to choose a large chain so that you get consistent quality but the same old rooms start to look pretty boring after even a few trips.

Small Hotels, Big Personalities points to some smaller, independent hotel chains that offer great ammenities as well as individual style you can't find in the chain hotels.

Also, a helpful guide to some recommended hotels in various cities.

Brain Age?

An interesting concept - Brain Age

Exercising your brain. I believe strongly in it and would love to hear comments from anyone who has used this product. E-mail me comments about this or other "Brain Enhancing" products and I'll post them here.

You only have two real assets in the world - your brain and your body. You should treat both with the respect they deserve.

Brainstorming

BusinessWeek magazine just had a great article about brainstorming, how it can be done right and more importantly how brainstorming is often done incorrectly. The article - The Truth about Brainstorming also includes a great example of a Mind Map by David Kelley, founder of IDEO.

2006 Top Architecture Firms in California

New list publised by California Construction Magazine

2006 Top Architecture Firms in California

These studies are always good for both knowing where you stand in the construction industry as well as potential clients to market to.

Measuring Customer Service

October 17, 2006

You may know that customer service is important but how do you measure it? You could do a survey but how can you quantify the financial bottom-line? What is your Return on Investment for all your hard work?

There is a strategy called Net Promoter Score which is easy to quantify and easy to communicate to your team. A recent article in Inc Magazine discusses some basic details of the method and it can easily be used by a contractor.

I love talking about customer service and all the ways a construction project team can improve customer service including how RFI's are processed, how bills are sent, how changes are dealt with, etc. I am always amazed that while some contractors are so short-sighted that they don't send their teams to a seminar on "soft skills" the people that do stay have great feedback.

PDF Software - Worth A Look

Nuance - PDF Solutions - PDF Converter Professional 4

Cheaper than a full version of Adobe PDF professional and possibly worth a try for converting all your documents into a single format. PDF is one of the best all-around construction project management documentation tools around.

Create Your Perfect Competitor

Josh Linkner runs a successful business but knows that success can drive complacency and lead to failure. He lays out one of his strategies for Inc Magazine which involved creating a fictitious "Perfect Competitor" and used the description of that business including fake press releases to spur his team to keep innovating.

Who would your perfect competitor be?

What work would they go after?

Which of your best customers would they steal?

How would they steal them?

Which of your key employees would they recruit?

How would they recruit them away?

Answer those questions and then go out and beat the heck out of your "competition!"

The Idiocy of Crowds

October 16, 2006

David Freedman makes great points in his article titled The Idiocy of Crowds. Understand the difference between communication and collaboration. Don't collaborate in place of communicating. If a decision is best made by a single or small group of people then make the decision and communicate it. Don't dumb down the process by "collaborating" with people who do not have the skills or experience to ehance the decision.

Testing New Markets

Business 2.0 magazine's article called The Startup Facade presents some great points about launching a business.

Why not let it be market-driven?

The normal route to opening up a business is to "perceive" a market need, build a product or service and then try to market it.

When you do this valuable capital is used often leaving the business over-extended and then even when things are good the market demand usually lags more than expected because it takes time for marketing efforts to take effect.

Why not do some test marketing to see if the idea will fly and then start building the operations to support the marketing?

Some might think that is risky or even unethical - but is it any different than having a business that has spent all their capital building operations to then go out of business and not be able to provide the services offered?

The article also points to a key flaw in how most businesses advertise on the web. If someone is already going to the web and searching on "ABC Construction" they already want to do business with you. Most likely someone is searching on "Electrical Contractor Sacramento" or something else generic.

Managing Space - Managing Change

October 15, 2006

Tom Peters just reminded everyone in a quick post that space management is huge when it comes to managing cultures and change. He mentions that back when writing In Search of Excellence there was a chart showing the odds of communication based on physical proximity.

Is your utilization of space and proximimity at odds with your company goals?

Do you say you want Project Managers engaged and focused on supporting the field yet keep them in the office instead of investing in larger jobsite trailers and getting them out on-site?

Do you talk about the problems in hand-off between estimators and project managers yet keep them in seperate parts of the office?

Do you want to integrate your operations with accounting but still keep them on opposite sides of the building - or even in different buildings?

You don't have to be a big company to focus on space design. Just focus on organizing people and space around problems or opportunities, not around functions or seniority.

Ehancing Customer Service

October 12, 2006

Seth Godin makes some good points about customer service. The biggest thing that makes a difference is a shift in the framing of the problem.

If a customer contacts you and your goal is to get the "problem closed" on your tracking system then you are inwardly focused. You can only truly serve the customer by focusing outwardly, putting yourself in their shoes and working together to solve a problem.

Value-Add Services Improving Relationships

October 11, 2006

Forbes magazine recently ran a story about how Home Depot is offering health insurance service to its many small business, contractor customers.

Programs like this can make incremental money for a company like Home Depot but their primary purpose is to build loyalty.

Could you build programs like this within your company? Focus on both your customers and your vendors or subcontractors.

Do you have good internal systems that you could share with your key vendors or subcontractors? Could you help them learn to operate their businesses more efficiently?

GE helps their suppliers streamline their processes - if your suppliers and subcontractors are more efficient doesn't that help you as well?

Brainstorming With A Tech Edge

October 10, 2006

An interesting article in BusinessWeek about how an ad agency came up with new ideas for Wal-Mart. The overall article is interesting but the best part is about mid-way through the article starting just before the subsection titled A Long Day's Journey.

The focus is on using technology not only to gather the most ideas possible but also to enable everyone to have the same voice. Good thoughts for any business.

Avoiding Silos - Finding Solutions

October 08, 2006

This math guru has found some solutions to some very long standing and challenging problems. What does that have to do with business? His approach was to pull together techniques from several seperate branches of mathematics to create the solution.

Whether we are talking about the business world or academia there is always a tendency to stay within a particular box (field). In business by learning the dynamics and methods outside your chosen field you may be able to solve some long-standing problems as well.

One of my personal favorite solutions has to do with better management of change orders for construction contractors by taking lessons learned from accounting and sales management.

Go read some magazines outside your industry. Buy some books focused on other businesses. Meet some friends outside your field; buy them lunch and talk to them about how they manage their businesses.

Offshore Lawyers For Contractors?

BusinessWeek Just ran an article regarding the use of law firms located in India for basic legal support. Sound like something just for big companies? What about the mundane legal issues contractors deal with every day such as contract review? Is there any reason why an offshore company could not do the review work just as well? The work can be done at a fraction of the cost of US based legal review and a major advantage is the time difference. When you are asleep you could be having your contracts reviewed in detail.

Imagine getting a contract at 4PM, scanning it and e-mailing it to your offshore legal counsel. By the time you get back to work the next morning at 7AM you would have the contract completely marked up with an analysis of risks and potential alternative clauses. You could just pick up the phone and start negotiating with your customer rather than pouring over the legalese for hours and delaying the contract for days or even weeks.

The company mentioned in the article is Office Tiger owned by RR Donnelley and has rates running around $30 per hour - how does that compare with your legal costs? Remember that $30 per hour in India is like making $250,000 per year in the US. You are not getting second-rate support, you are shifting work to a lower income area.

A Clear Road To The Top

Enterprise Rent-a-Car succeeds in large part because of their management training program which makes everyone in the company start at the bottom.

What if such a program were instituted in your construction business?

What if every Purchasing Agent spent 6 months in the field learning the dynamics of what was required to make the supply chain efficient?

What if everyone in Accounts Receivable spent 6 months as a Project Engineer working with the project team learning the dynamics of coordinating with the field and customer to improve the process of getting cash into the company?

Organizational planning is critical for the future growth of your contracting business. Hiring when you have a need for say a Project Manager is reactive - planning for that need and creating a clear career path is what makes a company truly successful.

Operational & Marketing Excellence Lessons

A couple of weeks ago I was in a Starbucks in Santa Rosa, CA and saw the training process for a new cashier in progress. She was working the cash register and right beside her was a book about 1" thick that looked like it covered all details of her job. The pages she had it open to demonstrated exactly what all the markings and codes should be on the side of the cup before handing it to the Barista. Next to her on the other cash register was a more experienced cashier coaching her through the rush-hour morning.

This constantly amazes me because they have put so much time and effort into documentating every step of their business yet in construction which is many times more complex we hardly ever take the time to document our processes. This is why there is such variability in construction projects and construction business owners everywhere constantly blame the people. The problem is not the people but rather the processes and training setup (or not) by the company owners or management.

If you have been in business a while and have good success in the market place but are having difficulty growing then process documentation and streamlining may be what you need to take your construction business to the next level.

Not only can we learn good operational lessons from Starbucks but we can also learn many fantastic marketing practices as well. John Moore has several books and a blog dedicated to lessons learned about marketing Starbucks.

IT Reporting Structure & Profits

October 07, 2006

Jack & Suzy Welch make some great points on how the reporting structure of IT in the organization determines the success. If you want your IT function to simply keep the printers working and desktops operating then you should have and outside IT consultant report to someone who is good at the basics of management and cost control. If you want IT to be an integral part of your business process and really help improve the business then you should bring on one or more internal IT gurus that have a "Can-Do" attitude and have them report to the President or CEO. Which will matter more - keeping the printer working with toner in it or seamlessly integrating estimating, project management and accounting? How about providing real-time field production feedback to estimating?

The Broken Job Interview Process

I have been on the road traveling to a lot of client sites the last month and did not get a chance to comment on this great article by Seth Godin about the job interview process when it came out.

Here are some short thoughts about how it can relate very well to contractors:

Who the ____ cares where the applicant has parked themselves for the last decade? Let's dig into what they did. You can do this through a structured information gathering process during the pre-employment screening (see website screening example) and then go deep on that information during the interview.

Why is it that most managers talk a lot about the revenue they produced or managed? Wouldn't you rather have an estimator say "I really don't get a lot of jobs. I typically only get 1 or 2 jobs each year but they have always made $1M or more in GP." What do they normally say - "I get 75% of the jobs I bid and got $10M in work last year."

How much can you really tell about how someone performed based on an interview? Test them out by putting them on the job for a few days and working closely with them. See how they ACTUALLY perform - if they don't then move on.

Integrating these processes into an overall organizational planning process will improve your company more than any other single action you can take.

Better Business Through TV

Tom Peters recently posted some great thoughts about the TV show House and how it relates to business performance.

At a gut level I have felt many of the same things when watching the show and Tom articulates them very well. A few of the best lessons that can be learned relating to business are:

All the problems that House deals with are out of the ordinary with no clear solution (sound familiar to your business?)

The biggest difference in how he executes compared to most people in business is that he is performing against the very immediate possibility of the patient (business) dying.

People all tend to act with urgency in these situations - the key is keeping a cool head and still acting with urgency.

The other key is to constantly work with the same urgency even when death is not imminent. It is human nature to work harder to survive than to thrive. House even demonstrates this in the way he deals with his own problems. What if we all worked as hard on thriving as we do when our survival is tested?

Hard Hat Presentations - Construction Business Owner Magazine

October 01, 2006

There is a fantastic series of articles about building excellence in various aspects of a contracting business in Construction Business Owner Magazine. It is called the Construction Business Best Practices Series by George Hedley of Hard Hat Presentations.

A common theme across all of these articles is the building and documenting of systems to help run an effective contracting business.

Articles like this are thought provoking and the primary reason I recommend subcribing to a variety of construction trade magazines. Often times these articles present an idea you have already had from a slightly different point of view providing that necessary spark to implement the idea.

On The Way To Florida

This photo was taken flying into Houston Airport on the way to visit Woolems again in Palm Beach, Florida. Great waterway that the picture does not do justice to.