There’s a reason why safety is visualized in terms of nets.
Why do your clients hire you? If you’ve got 40 seconds to answer a few anonymous questions about why your clients hire you, I appreciate your input: https://pmc-why-clients-hire-you.paperform.co
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I’ve been thinking about business resilience lately.
Probably for obvious reasons: coronavirus/COVBID-19, travel distruptions, stock market ups and downs, elections, etc.
I’ll avoid inserting the Kermit the Frog frantic hands GIF here, but it’s the one I would paste here to capture the current mood.
I definitely hope your business has not been harmed by current events. If it has, I hope you recover very quickly.
In no particular order, here are some meditations on resilience.
One of my clients has a whale client. A lucrative one, but one that brings all the usual risks of a whale client.
He could seek other whales to replace this one when it inevitably swims away. He’s doing that, but he’s also doing what I refer to as self-commoditizing his own expertise. This involves:
- The difficult work of examining and formalizing all of the things that he as an expert does almost un-thinkingly. He has to bypass the curse of knowledge, and think about how his approach to a certain class of client problems can be abstracted into a modular, repeatable approach that works across most of this class of problems.
- Turning the building blocks of his approach into a framework that can be applied without him being present and in fact can be applied by non-experts.
- Packaging that framework in a way that makes it usable and perhaps even enjoyable.
If some other company did this, my client would rightfully say, “Uh oh! My expertise is being commoditized!” But when he does it, he’s turning his expertise into an even more valuable asset and de-coupling it from his direct high-touch involvement so that it can be sold as a product.
This will help him smooth cashflow, serve a broader range of companies, and cultivate future “mini-whale” clients for his strategy consulting services.
My client is doing something we should all do: balancing the risks he’s taking with a hedge.
Finance folks talk about hedging as a sort of insurance; the cost of that insurance reduces the profitability of your investment but it also reduces or limits the potential downside of that risk.
I think of hedging as something you do that keeps you in the game if your risks don’t pay off.
If you have a whale client, a hedge could be:
- A romantic partner that has a less risky job and the related accoutrements (medical insurance at relatively attractive cost, for one example) and a willingness to support your risk-taking behavior
- Savings, liquid asset(s), or credit you’re willing to tap
- An in-demand skill you can quickly deploy through remote contract work or keep continuously deployed through a part-time cash cow gig
- Significant flexibility in your costs
A book that sells well can function like an annuity. I’ve had clients who’ve gotten a bit lucky and have a very low-maintenance SaaS product that continues to generate meaningful amounts of revenue well past the time when they were investing heavily in building it.
Some people treat their email list like a liquid asset. They let it sit there largely neglected or sending out automated emails recycling old blog posts and then shake the list like a piggy bank when they want some revenue or have a product to launch. I find this distasteful, but it’s an informative example of how hedging in our world looks different than how finance people will define it.
Hedging keeps you in the game even in the face of a few tough months.
The most fragile position I’ve been in as a self-employed person is needing to work more than full time doing implementation work in order to barely cover costs.
That’s one lens to look at profitability through: Business Revenue – Business Costs – What You Need to Pay Yourself = Profitability. One optimization approach you could take with this model is to not care or not limit how much you work and simply seek to maximize profitability each month.
There’s another lens to look at profitability through, and that involves thinking of time that you are unable to invest in future value creation as a business cost. This is how I see profitability.
Personally, I’m willing to sacrifice current monetary profitability in order to minimize this cost. Or seen differently, I’m willing to sacrifice current monetary profitability in order to maximize the amount of time I’m able to invest in future value creation.
I won’t accept this tradeoff long-term, but I am confident I won’t have to. I’m confident the investment I’m making in future value creation will pay off very well. It’s an investment in self-made expertise and intellectual property, and those function as assets, revenue smoothers, and hedges.
What contributes to greater resilience: more cash in the bank or more expertise/IP in the “bank”? We all have to solve for our personal ideal equilibrium here. In somewhat rare cases, no tradeoff between these two things is needed. You can have your cake (cash) and eat it too (expertise).
But more often, it seems like our choice between maximizing cash vs. maximizing expertise is a critical career management decision.
The Expertise Incubator (http://theexpertiseincubator.com) applies a specific form of pressure that forces participants to face this choice and — often — make changes that enhance their business profitability so they have more time to invest in expertise and future value creation.
The daily publication challenge takes time. If you commit to publishing something worth the time it takes to read it, you can plan on “losing” one hour per day, and if you’re publishing 5 days/week, that’s 5h per week. At a bill rate of $200/hour, that would be a thousand bucks a week. For most folks, that’s PAINFUL.
What do you do with that pain? The Expertise Incubator is designed to help you use it as fuel on a journey to greater profitability.
Sometimes I wish good health weren’t so darn invisible to those of us blessed with it. It’s like life during peacetime, or stable government. It’s one of the very first wonderful, valuable things that hedonic adaptation claims for itself and makes invisible and therefore less valued.
Last year my right leg went numb from the knee down. It turned out this was the result of a certain sitting posture I slump into at my desk putting pressure on a nerve that runs around the outside of the knee join. It was easily corrected through a change in behavior. Sit differently, no numbness.
And it was a reminder of how the invisible blessing of good health can become visible.
I’d rather make good health visible to myself through a gratitude practice than temporary numbness — or worse! — in my leg.
And I’d like to add additional resilience to my business by maintaining or improving my health.
For me, that involves:
- Sufficient revenue profitability, so that I’m not over-working and spending less time outdoors than I need to
- Sufficient sleep and exercise
- Minimizing anxiety and depression, which are for me the primary thiefs of gratitude, and gratitude is the lynchpin of happiness for me
In the face of current events, I might be a bit lucky in terms of travel?
For a variety of reasons, from day 1 of my business I’ve defaulted to working with my clients remotely. This established what was normal for me.
David C. Baker was kind enough to invite me to some of his seminars over the last few years, and I got to experience the flip side: in-person engagement. It was eye-opening. The potential richness and impact of in-person experiences is profound, and I can see how it’s not a fungible thing.
The behavior changes that are coming out of both legit and overwrought concerns about COVID-19 are an interesting and expensive and disruptive stress test for resilience. The role of travel in our businesses is a really interesting facet of this stress test.
For what kinds of interactions is travel mandatory? And what other interactions can an Innovator’s Dilemma-style cheap and less-capable competitor serve?
I enjoy some amount of travel, but I’d feel like I’m doing something wrong if I had to travel more than a half-dozen times a year for client work. This is a case where I’ve let me personal preferences set a constraint that dictates how I design my business.
As a result, I’ve worked steadily for years now to figure out how to deliver remote, online experiences for my clients that are really valuable in their own right. I don’t want my offerings to be seen as a cheap and less-capable competitor to in-person interaction. I don’t think they are.
For example, there are certain kinds of change that take time to manifest. Ways of creating or supporting these changes — at least at an individual scale — that rely on travel might be at a relative disadvantage because the cost of the travel makes it more costly to create or support this change, whereas remote collaboration eliminates that line item from the cost of the change. This is a bit of a hand-wavey explanation, and again I fully resepect the relative advantages of in-person work, but as we think about resiliance in a world where easy inexpensive travel might not always be available, this is how we have to think: what JTBD-style jobs are clients hiring for where the relative advantages of remote collaboration are complementary rather than an obstruction?
The work of designing and refining experiences like this never ends. It’s a worthy and enjoyable challenge for me.
The Positioning Manual (TPM) was, for several years, a cashflow smoother and hedge for my business. It contributed to resilience in an important way.
As I’m rewriting the book, I have a decision to make.
Do I publish the updated version of the book in a way that repeats the previous approach, thereby making it likely that I get similar results?
Or do I try an approach that I have never tried before but has produced dramatically greater upside for others, thereby making it possible (but not necessarily likely) that I could get similarly dramatic upside?
Again, the book has been a useful cashflow smoother and hedge for my business. That’s what I’m risking here.
Even so, I think it’s time for me to try an approach I’ve never tried before.
The upside I’m seeking here is reach; more people getting a chance to change their thinking based on the ideas in the book. Greater reach could create a new form of resiliency in my business, at the short-term cost of the current cashflow smoothing and hedging functions of TPM.
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Most of us have multiple levers we can pull to build more resilience into our businesses.
In that sense, it’s a bit like weaving a web, or a net.
I’m hoping that we all take every scary current event and use it as fuel to build more resilient businesses and lives.
I’m hoping to assemble a cohort of people who would like to start The Expertise Incubator journey with me in April of this year. You can always register your interest on the page describing this program: http://theexpertiseincubator.com
But you can also always hit REPLY and ask questions, etc.
Either way, if you’re interested in this journey of self-discovery, expertise cultivation, and authority-building, please let me know so that I can keep you informed as this cohort comes together.