I don’t care what kind of business you are running – I don’t care if you have 1 employee (you) or 50,000 – there is one question that matters more than any other. Are you solving your customer’s problem – or just selling them what you’ve got?

Solving a customer’s problem is hard. And it never gets any easier. Your customer’s problem changes over time – and you’ve got to keep up. Or, even better, be just ahead of them, recognizing the problem just before they do.

Selling what you’ve got is easy (or so it would seem). You make cabinets. People need cabinets. Sell them some cabinets.

The problem with selling them what you’ve got is, well let’s face it, lots of people make cabinets. So why are they going to buy your cabinets?

Pretty soon you find yourself talking less and less about cabinets and more and more about what they want to do with their cabinets. About how you specifically design cabinets to optimize storage space. About how shelving and wine racks are great space optimizers and can be even better ascetically than cabinets. Pretty soon you’ll realize that you are selling attractive and functional kitchen organization solutions.

Turns out you can’t just sell what you’ve got. The truth is you are either solving your customer’s problem – learning to solve your customer’s problem – or going out of business.

The entrepreneur’s mission is:

1. Know what problems you are trying to solve and for whom.
2. Figure out how to solve them.
3. Sell the solution.
4. Repeat

NOT

1. Decide what you know how to do/want to sell.
2. Sell it.

One of the myths I hear every day about startups (and even corporate jobs) is that the key to success is outworking everyone else. If you competitor is in the office working away at 6 am – you better get your ass in the office at 5.

We talk about hard work as if it were some magic elixir – things aren’t working out? Work harder, put in more hours…

It is a lie.

I’m not suggesting effort doesn’t matter, I’m suggesting that more effort toward the wrong things doesn’t matter. It isn’t how much or how hard, it is what you work on that determines how successful you will be.

Priorities matter – every person I know who appears to be working super hard suffers from a pathological failure to prioritize.

Think about it… if you had your priorities straight would you skip you child’s school play, or miss their championship soccer game or your spouses awards diner? Balance matters, priorities matter – not because you’ll be happier and more productive (you will) but because if you can’t prioritize life, you sure as hell can’t prioritize work.

Last night I spoke at the Gilbert FastTrac GrowthVenture meeting. It was a pleasure to see so many founders and entrepreneurs in a room sharing knowledge, insights and experiences.

I’m willing to bet any one of them could have stood up and shared their thoughts with all of us and we would have learned as much (or probably more) than we did by listening to me for 40 minutes.

The thing is, it takes a community, an ecosystem to create a thriving entrepreneurial economy – and while that is a topic for a different post – I was thrilled to see entrepreneurs coming together.

I’m including the slides below, and I hope you find them helpful – but the real value was in the richness of the dialoge.

It is funny… because it is true.

To be clear, I don’t think the specific words you use make you a douchebag… it is using them to be obtuse and appear smarter than everyone else in an effort to take client’s money while delivering no tangible result that makes you a douchebag.

Ask anyone about Social Media – what they are doing and what their strategy is and you will get a dissertation on all the places they have to create content. Twitter, Blog, Facebook Fan Pages, Newsletters, Yelp…

Give me a break.

Creating tons of content isn’t a social media strategy. It is just blasting your (usually not very interesting) message out into the world. Predictably the next set of questions that get asked are: How do I get more followers/fans; how can I get more people to read my blog; why don’t people like me?

So let me help you out by resetting your expectations. We just aren’t that into you… and here are 5 reasons why.

1) Content is king – just not your content.

Remember, this is Social Media – not Broadcast Media. It is participatory – you are not in charge. People will go to the content they like. So instead of trying to wedge your way in there find the content that already exists about your product, service or brand and promote it. Odds are it is much better and more honest than what you’ll create. After all, you are trying to sell me something, right?

2) You are not Gary Vaynerchuk

It would be great if you were. It’d be great if by replicating Gary’s tactics you could replicate his success - but you can’t. Gary is Gary – what he does works for him because he is a freakish ball of personality, boundless energy, and (lest we forget) an actual business.

3) We only care about what you DO…

I use your product/service because it makes my life better in some way. So how about you skip the 30 posts a day about your interoffice ping pong tournament and go make your product better? I know I’d appreciate it, especially if you are actually listening to your market and evolving your product to better meet our needs.

4) What is in it for me?

Seriously, what do I get from following you on Twitter, being a fan on Facebook and reading your blog every day? How are you making my experience doing business with you better? Geeezzzz… this is like a first date and all you’ve done is yammer on endlessly while swilling an entire bottle of wine and wolfing down the “market price” surf and turf. Date #2 is looking very unlikely.

5) Have you heard a freaking word I’ve said?

I’ve used every imaginable way to communicate to you that you do things that piss me off. I’ve called customer service, I’ve Tweeted my dissatisfaction, I’ve blogged about how annoying what you do is… and you keep right on doing it.

This is a conversation, not a monologue – yet you approach it as if I were at home yearning for you to say something so I could anxiously gobble it up. I hate to break it to you, but we just aren’t that in to you. Especially since your entire strategy is to talk at us without any real effort put in to listening and acting on what we say.

Marketing and PR are invaluable to any company. They help you tell the story, get the word out and draw attention to your company, product, service and brand.

What they don’t do, what they can’t do – and what they shouldn’t attempt to do is deliver on it.

Marketing and PR all all about say. They define expectations – and you’d better be prepared to deliver on them. Operations (product management, product development, customer service and support, finance, etc) are all about do. And what they do defines your company, product, service and brand in powerful ways – ways no amount of marketing and PR spend can overcome.

This is why I’m so convinced that we haven’t even begun to scratch the surface of the value of Social Media for business. We’ve only talked about Marketing and PR. We’ve focused entirely on say – and ignored do.

What social media does is erode the wall between say and do. It allows your market’s voice to to be heard – and guess what… they only care about what you do. And the bigger the gap between say and do (expectations and delivery) the more strident the voices of the market become.

To put it simply – narrow say/do gap equals promoters; broad say/do gap equals detractors.

So before you make your 2010 budgets and slot your social media spend entirely in marketing and PR ask yourself one simple question – are you broadening or narrowing the say/do gap?

It is true of any “great new thing” – our initial estimate of the work required is drastically underestimated. There are a litany of examples:

• CRM
• ERP
• Service Oriented Architecture
• Outsourcing (particularly off-shore)
• Online Self-Service
• …

Now, finally, we can add Social Media to that list. There have been a flurry of posts reacting to The MarketingProfs report The State Of Social Media Marketing – including one by Brian Solis that is particularly compelling.

In 2010, executives will measure ROI and the direct impact of social media marketing on the P&L. In order to do so, management will experience three phases.

The first will reveal that measuring social media marketing, as practiced to date, is essentially meaningless. …

Second, management will grasp the true cost of social media. In 2010, social media will cease to be free. …

Third, as the entire organization socializes affected departments, strategists will embrace a holistic and informed approach to engagement. …

I’m hard pressed to disagree with any of that. As a matter of fact, I’d actually like to expand on it in three ways:

First, in 2010 executives will measure ROI and the direct impact of social media efforts in multiple organizations. This means marketing will become just one organization using Social Media to improve practices, processes and ultimately the end to end customer experience a brand provides. We will see internal focus shift from “who is paying attention and responding to this” to “who is analyzing, interpreting and acting on this”.

Second, social media metrics and measurement will be highly individualized to the culture, strengths and temperament of the company. And this is as it should be. Intuit is very different than EA – and given that it is vital that the outcomes they pursue and the metrics they measure should be unique to them and the unique demographics of their target markets.

Third, management will begin to see social media as an enterprise wide activity funded at the enterprise level. No longer will social media be a line item on a PR or marketing budget. Multiple organizations will have social media initiatives, tool requirements and staff engaged in social media activities. Support for these activities will begin to be centralized (TIP: Look out IT – 2011 will be the year IT will have to deliver enterprise Social Media integration).

Brian Solis comes to this conclusion:

As a result, social media marketers will shred the cookie-cutter manual and expand the focus based on real world activity. This is social media marketing with a purpose.

I’d offer this slightly broadened version:

Social media will develop from a niche marketing/PR activity into a full blown enterprise solution. As with most enterprise solutions (CRM/ERP) the implementation will be highly customized to the objectives, culture and target market of the company. The solution will be required to achieve real, tangible outcomes measurable in terms of existing business metrics (e.g., revenue, sales, costs, etc).

Yep, Social Media for Business is going to be hard. There will be a lot of work making the promises a reality. It won’t transform your company overnight, but it can transform your ability to better tune your business to your target market – and by doing so grow your market share. The question is, how bad do you want it?

If you’d like to see an example of the extreme “no taxes” political persuasion – you need to look no further than Arizona.

In Arizona taxes are evil, for years our politicians have built their reputations on one simple idea – taxes kill growth, so let’s not have any. They’ve perpetuated a myth… and now we are going to pay for it.

Arizona is full of people and companies that are here for one reason – they don’t want to pay taxes. Our economic structure is built on developers putting up planned communities and strip malls. Our tax base is based on people buying all the things they need to fill their new McMansions. The problem is, that model isn’t sustainable – never has been. An effective government would have begun making the investments years ago to allow our economy to smoothly transition from population growth to a sustainable industry based model.

Instead our government (and quite frankly, we) ignored a simple reality – you can’t build a sustainable economic base on a foundation of tax cuts.

Sustainable economies don’t occur by magic – and much of what is required by companies will never be invested in by those companies:

• Education
• Public Infrastructure
• The Arts

So here we are – and it is time to pay the piper. And for all the conservative bluster about not saddling the next generation with debt or higher taxes they will instead be saddled with something much worse – a woefully substandard education and with it hugely diminished lifetime earnings.

While I do not believe that money alone can solve the problems we see in the state’s education system – I also know that reducing school funding to roughly the level of high quality daycare won’t result in better educated citizens.

And sadly, Arizona has already reached rock bottom – 50th in the US in graduating high school seniors going on to higher education, 50th in the nation in education spending, bottom third of US in high school graduation rate.

Now, it is time for the next round of cuts – and (no surprise here) education leads the way:

• Reduced Funding for Charter Schools
• Elimination of “non-Formula” K-12 Programs
• Elimination of all day Kindergarten
• Reduce funding to 2005-2006 levels
• Elimination of Building Renewal funding

Link to Govenor Brewer’s Budget Proposal

What does all this mean? No art, no gifted programs, no music, closing charter schools, no restoration of dilapidated schools, all day kindergarten eliminated.

The worst part is, there will be more to come. Why? Because our elected representatives do not have the moral character required to admit that you can’t sustain anything on a platform of:

• Times are Good!!! Lower Taxes!
• Times are Bad!!! We can’t Raise Taxes!

At some point you hit the logical limits of that line of thinking – and we are there. It is time for the citizens of Arizona to realize that there is no sustainable future for this state (or our country) if we fail to invest in the future. There is no more important investment than an investment in our children’s education.

As the owner of an Arizona Based business – and as a father, I am happy to pay more taxes in order to ensure the education of our states children. Sure, I could just spend my money on my kids – send them to private schools, but that doesn’t improve our state or our nation. Essentially it will just allow my children the opportunity to one day leave Arizona for a college or a job that is appropriate for them.

It is time for all of us to start thinking about the future. It is time for us to demand our local and state governments implement sound taxation policy (the temporary sales tax increase is a band-aid and a poor one at that). In short, it is time for Arizona to grow up…

It appears the Social Media ROI conversation is heating up – and predictably it has split into two camps, the Believers and the Non-Belivers.

The non-belivers are adamant that you simply can’t value conversations. The believers say you can because relationships are valuable. They are both wrong (and right).

Let me try to clarify things – conversations have zero tangible hard value – you can’t put a specific dollar figure on the value of any conversation. In that respect the non-believers are correct. The believers tell you that conversations are valuable because they affect some other valuable thing – and they are correct (however they insist on pointing to the wrong affected things).

Here is a great example:

Shel Israel – who is very bright and who I have immense respect for – is one of the non-belivers. KD Paine – of whom I have no previous knowledge – is one of the believers (at least for the purposes of this post).

Ms. Paine wrote a post taking issue with Mr. Israel’s assertion from his blog that there is value in conversation that can not be measured.

The way to measure the value of conversations is to first measure the degree to which people trust you, and the degree to which your stakeholders are satisfied and committed to your relationships. Find out just how valuable people think those relationships are. Then start a conversation and measure how much MORE valuable people think the relationship after you’ve been talking with them awhile.

I think we would all agree that these statements are accurate – but do they assign hard value to conversations? No, in fact this is simply a list of other intangibles that conversations affect. Ms. Paine lists tangibles (i.e., lowered costs across several functions) but never comes out and says that conversations lower costs in functions x, y and z.

It isn’t that Ms. Paine is terribly far off – it is just that she refuses to make a well formed argument that translates to a hard dollar ROI. She simply refuses to connect the dots and commit to a hard dollar outcome from her “conversations”.

On the other hand, Mr. Israel posits this thought experiment via Tweet:

Mr. Israel makes the opposite mistake – he is essentially telling us that unless you can directly connect an action with it’s effect you can’t call it an ROI. If that were true about 85% of corporate spending would stop today.

So, just for fun, I’ll complete Mr. Israel’s thought experiment:

First let’s figure out the investment:

• Assume you need 12 pair of pants that cost $125.00 each – total cost of pants: $1500.00
• Pants maintenance (i.e., dry cleaning) costs of $18.00 per week – total cost of maintenance: $936.00
• Total sunk cost for pants (for one year) is: $2436.00

Now, let’s talk about the return side of the equation:

• Assume an average deal size of $25,000.00
• You take 42 “business meetings” per year and you currently (wearing pants) convert 62%.
• That means you win 26 deals per year @ 25k each – for a total of: 650k/year

Here is where the fun begins:

• Let’s make the conservative (and if you disagree with this being conservative please speak up) estimate that not wearing pants to business meetings would lower your conversion rate by 8%.
• Now you only convert 54% of your opportunities.
• You now generate 22.5 deals per year at 25k each – for a total of: 562k

Net change in outcome metric: -88k

ROI on Pants – for an investment of $2436.00 you (conservatively) generate an additional $88,000.00 per year. That is a return of 3600%.

Then non-belivers will read this an suggest that there may be hundreds of reasons that you didn’t win those deals – and they’d be right. But that isn’t the point. The point is that the proximate cause of losing those deals was – with a very high degree of probability – the fact that you were sitting in the meeting with your junk hanging out.

ROIs are built on proximate causes the vast majority of the time – and that isn’t a scam, it simply reflects the reality that most of the things we do directly affect input metrics, not our hard dollar output metrics. In other words, we do things to improve important measures that have no direct tangible dollar value because those metrics have a proven affect on measures that do.

The takeaway here is that we should stop trying to assign hard dollar values to Social Media metrics/measures and get busy showing how they affect the hard dollar metrics for your business.

People make a lot of noise about what is wrong with Arizona – and specifically our ability to start and sustain technology companies. Most of it is pointless blather and pompous windbaggery – here is why:

The problem is we have too many people who want to be the expert, advance their point of view or prove how freaking smart they are instead of doing one of the only three things that will change it:

• Found a Technology company in Arizona
• Invest in an Arizona Technology Company
• Engage in making changes in our Public (because that’s all we’ve got) education system

Everything else is noise.

I admit I have not read the entire report from the Milken Institute entitled Charting a Course for Arizona’s Technology-Based Economic Development but I’m willing to bet the phrase “creative class” never appears once. You know what does?

Arizona actually ranks 3rd in the country for number of business starts per 100,000 people; it also places 12th for the percentage of business births in the high-tech sector. But too many high-tech firms fold or leave the state, and Arizona has only five firms ranked in Deloitte and Touche’s Fast 500 company list. Addressing human capital concerns and increasing access to venture capital would jumpstart the right kind of long-term development.

I’ll bet you didn’t see that one coming. How about:

Perhaps the single greatest threat to Arizona’s high-tech future is the fact that the state does not develop and retain enough skilled technicians, scientists, and engineers. In terms of sheer numbers, Arizona seems to produce sufficient graduates in science and engineering, but many are foreign-born and therefore more likely to return home, either due to preference or to a limited number of available work visas.

Shocking – our Universities actually produce “sufficient graduates”. Or my personal favorite:

Arizona will clearly be on the right track when it achieves solid gains in the indicators measuring whether local high-tech growth outpaces the national average; in recent years, it has fallen behind in these measures.

I defy anyone to tell me they are shocked by this or fundamentally disagree with that finding.

The problems, and their solutions, have been obvious for years:

• We need a robust public/private R&D partnership
  • We get private organizations and companies openly bashing our Educators and Institutions without making any attempt to partner with them and create systemic change.
  • We get Universities who blatantly attempt leverage “incubators” as a source of revenue.
• We need an active investor class
  • We get realestate investors who have no affinity with technology looking for a guaranteed 4% (to replace their realestate investments).
  • We get pay to pitch events, endless gatekeeper organizations, and every imaginable mechanism possible to keep actual investors from talking to actual founders.
• We need jobs for the quality Math, Science and Engineering students our Universities churn out.
  • We get organizations who complain about how much our Higher Education System sucks – and watch the best and brightest they turn out go to CA, UT, OR and NM
  • We get a legislature that thinks shipping in University students from overseas/out of state is a great way to reduce education costs borne by the state.

We are failing – across the board, by any measure EXCEPT our ability to plan events, talk, point fingers and sit on the sidelines doing nothing.

We don’t have an entrepreneurship problem – we are 3rd in the nation for new companies and 12th for technology companies – we have an attitude problem.

It is time to drop the “it happens my way or I’m not playing” attitude and start engaging – across organizational, belief, strategy and ideological lines to generate results.

Because I swear to you – as a Founder of a Arizona based Technology Company – the next organization that spouts off about how “we’ve got it all right and everyone else is stupid” will earn my wrath.

Found, Invest, Engage or Shut Up.