There are three questions that govern any (potential) business relationship. Sometimes they are asked out loud, more often not. In both instances they nevertheless require an answer:

1. Do you care about me?

Or are you just trying to sell me something with the sole goal of personal benefit.

2. Are you competent?

Or are you just trying to bluff your way into this domain and don’t you know anything more about it than I already do.

3. Can I trust you?

Or will you sell me down the river when you get the chance.

The fact is that most business conversation is directed at answering question 2.  That’s because it’s easy to argue and let’s you do the talking.

If you want a client to answer the first question with a “yes”, you shouldn’t do much talking but a lot of listening instead. More difficult for most.

The third question seldom gets attention in a business conversation, but is always answered by the client quickly and is most determining for whether or not he will do business with you. So you’d better have a strategy there. Very difficult perhaps, but also very worth your efforts.

What’s your strategy and tactics for getting the answers you want?

There’s no doubt that we live in an age that quests for precise information.  Precision can however be dangerous as it keeps us from imagining new possibilities. Vagueness on the other hand is a reminder that we don’t know the answer yet, as is nicely pointed out Jonah Lehrer.

Moreover, researchers from Stanford University have now highlighted another important point regarding vagueness: contrary to popular wisdom it can actually help improve performance!

Here is how it works. Let’s say you want to lose 10 pounds. After following a strict diet you decide to weigh yourself: you’ve lost 4 pounds. That is progress towards the goal, but you’re not quite there, which feels disappointing. Result: you might become a little less motivated. In the Stanford experiment the opposite happens when people are provided with vague information:

“Our research suggests that, at times, vagueness has its merits. Not knowing precisely how they are progressing lets people generate positive expectancies that allow them to perform better. The fuzzy boundaries afforded by vague information allow people to distort that information in a favorable manner”

Too much precision in measuring progress can therefore have the unwanted effect of diminishing motivation to reach goals.

Further contributing to the case for vagueness is research from the Eastern Kentucky University: problem-solving ability is increased when relying on vague verbs to describe the problem. Domain-specific verbs namely inhibit analogical reasoning, making it less likely to discover useful parallels. Sometimes simply rewriting the problem in vague terms led to impressive improvements in the performance of subjects to come up with a solution.

So the next time you want to come up with a better solution to a problem or want to reach goals that are still far away, consider throwing some vagueness in the mix in order to improve performance.

Every company needs a strategy. A strategy for solving the most important challenges a company faces in its market.

Few companies actually have a strategy though. What they do typically have is a set of ambitions and/or goals and mistake these for strategies.

For example: “Our strategy is to become the leading provider of product X “. This is a goal, not a strategy. Strategy is a coherent set of actions that you should take in order to accomplish your goals. So how you will become the leading provider of product X.

One way to start, is to pinpoint the most important hurdles that you have to overcome in order to reach your goals. The next step is to detect ways to overcome those hurdles.

Whenever you have to answer that “How-question”, it becomes immediately clear that it requires making choices. There are always different paths to Rome.  So you have to decide. This is the path that I am going to follow. If you don’t make choices, you don’t have a strategy.

Making a choice is hard. It requires thorough analysis of the possibilities, picking the ones that are logically most beneficial, and gearing up specifically for that journey. It’s much easier to don’t do this hard work and simply start moving with everything we’ve got, only making decisions when the situation forces them upon us.

A good strategy isn’t a blue print though. It’s a substantiated hypothesis of how you think the world works, that nevertheless requires testing and, if necessary, restatement of the strategy when practice doesn’t meet theory. In other words: strategy is finding the most effective and efficient route to your goals, through focused trial-and-error.

A good strategy takes into account everything you know and believe about shooting a specific moving target. This doesn’t quite guarantee a hit, but it surely beats the odds of taking a shot in the dark.

The problem with many company “strategies” is that of shooting in the dark; the belief that simply stating the desired end-state will mysteriously lead to actions that will accomplish that goal. This however seldom happens because it leads to scattering organization’s resources: people will either start running into all kinds of different directions, or they won’t do anything at all.

Good strategy is as much about creative vision as it is about concerted effort. And it is as much about diagnosis as it is about action.

Bad strategies merely set goals, refrain from making choices and result in management mumbo jumbo.

Good strategies identify the most important hurdles, come up with sound principles of how to overcome them, and culminate into a set of coherent and practical actions.

Before you dive into your next strategy session, take the above into account and read Richard Rumelt’s latest book for more guidance about what separates good from bad strategy.

Update 18 August 2011: Bloomberg wrote a nice summary of Rumelt’s book which is worth the read.

Economics writer Tim Harford studies complex systems — and finds a surprising link among the successful ones: they were built through trial and error. In this sparkling talk from TEDGlobal 2011, he asks us to embrace our randomness and start making better mistakes.

Harford describes the “God Complex” as the overwhelming belief that we are infallibly right in the solution that we know, a complex seen in many of our business and political leaders.  In reality it is of course completely impossible for us humans to understand the universe in its entirety and  it is okay to accept that limitation. We too often think that we can explain the complexities of life, the universe and everything in between through charts, statistics, computations, diagrams, etc and that these are the only explanations. What Harford reminds us of is to keep an open mind, that life is far too complex to be measured and explained in its entirety, and to not be afraid of making mistakes; as long as they are in the right direction.

Many entrepreneurs are  in love with their product or service.  And that’s fine as you need this mind set to make it through the inevitable ups and downs in order to see your ‘child’ to market.

The consequence however  is as well, that entrepreneurs often fail to clearly position their company against the competition, being rather internally focussed.  That is problematic for three reasons:

1. Customers always compare you to the competition, and if you don’t position clearly, you’ll be leaving it up to them to figure out why they should prefer you, for which they have -or take- no time. Consequently, you risk being seen as non-differentiating, despite the facts.

2. Investors are generally only interested if you bring something to the table that the market does not. Competition is good provided that you have a strategy for crushing them.  Don’t have any competitors? Then is there really a viable market?

3. Positioning requires clarity as to where you fit in the bigger scheme of things, and makes tough decisions easier as you’ll know more clearly what market void you are trying to occupy. Without positioning you lack that clarity.

So position your product, your company and your people. Make it crystal clear for everybody how you are different within your industry and what makes you good value.

Too many entrepreneurs unfortunately don’t and that unnecessarily costs them dearly.

There isn’t a day that goes by without a couple of splendid ideas that are thrown at me.

Sometimes, people just hint at having a brilliant idea, but are so afraid that somebody will steal it, that they get all defensive in requiring a complicated signed NDA, before even disclosing the idea.

That always makes me smile, as it reminds me of an excellent article that Derek Sivers once wrote on this topic: an idea is basically worthless, it’s the execution that makes a business valuable.

Derek’s rule of thumb:

AWFUL IDEA = -1   WEAK IDEA = 1   SO-SO IDEA = 5   GOOD IDEA = 10  GREAT IDEA = 15  BRILLIANT IDEA = 20

Which then is to be multiplied with execution power:

NO EXECUTION = $0  WEAK EXECUTION = $1000   SO-SO EXECUTION = $10.000 GOOD EXECUTION = $100.000 GREAT EXECUTION = $1.000.000  BRILLIANT EXECUTION = $10.000.000

So the most ingenious idea without execution is worth about 20 bucks. A weak idea with great execution gets you in the millionaire’s camp.

Interestingly, the error of valuing an idea over its execution is commonplace; just look no further than patent law.

If there’s anything you should try to protect as an entrepreneur, it’s not your fantastic idea, but the brilliant way you are able to execute upon it.

Technological progress over the past 50 years has been tremendous. If a person who died in say 1930 were to be brought alive today, he would be truly amazed about being able to telephone without a wire, seeing high quality color TVs that are as flat as a dime and mind boggling advances in the way we travel. Just to name a few.

But our visitor from the 1930’s will probably be most flabbergasted by the social changes that occurred. Men and women are equal now and so are different races and people from different backgrounds or professions. People no longer dress alike or proper for that matter. Most people don’t go to church. They can have romantic relationships with the same-sex. Everybody is on a first name basis. Children rule the adult agenda, not the other way around. You can basically say everything you think.

And the list goes on and on. Individualism, Equality, Freedom and Flexibility are just a few labels for this change of society’s mindset.

Remarkably however, many businesses haven’t changed along with society.  As Mike Rollings handsomely points out, the prevalent management doctrine is still the same as it was over the past 239 years: Taylorism. That means that many businesses are still run in a hierarchical, top-down, command-oriented way. In this efficiency-seeking paradigm, people either control the machinery or are the machinery. They do as they are told by their “boss” and have very specific, tiny, roles in the whole. A job is a monthly exchange of time for money, not a work of art.

This mismatch between how people live in society and in their work environment can be explained by the boiling frog theory according to Rollings. Incremental changes over centuries have simply prevented the frog from jumping out of the water thus far.

But the tide is changing. Growing numbers of people no longer wish to participate in work that became so mechanized, impersonal, and non-participative. So they are starting their own businesses or leave for organizations that do understand that humans want the autonomy to make relevant contributions and need curiosity, cognition and interaction in the nature of their work.

With Western societies getting older, leaving fewer youngsters to fill growing numbers of job openings, entrepreneurs and managers alike had better rethink Tayloristic management doctrines. Before it’s too late.

Every CEO should be tech-savvy because Technology no longer merely facilitates business, but actually drives it. Most CEO’s would agree that their business is now highly dependent on Information Technology, and without it properly functioning nothing much will get accomplished. Fewer CEO’s understand the importance of IT in achieving an organization’s strategic objectives.

That often has to do with (very) limited knowledge and comfort of the Board with IT related  issues. The higher up the hierarchy, the more often I still hear things like “Can you please print me that email”, see executives carry around pilot cases full of files and sense their disbelief when arguing that social network presence is not just for juveniles but actually makes a lot of business sense.

Unfortunately these same executives often do decide whether a company runs a blog, rolls out iPads,  provides non-blocked access to the Internet, enables customer support via chat or Twitter and markets through social media. Guess what, it seldom happens. And when it finally does, that company is one of the many “me-too’s” having failed to use technology as a competitive differentiator.

Whereas only a decade ago business was at the front line of new technology adaptation; nowadays widely available consumer-setups sadly outperform those of most businesses.

CEO’s had better catch up by becoming more tech-savvy. The knowledge and comfort gained will not only prevent them from being the laughing-stock, but more importantly, it will open up their minds to use technology to significantly improve their company’s value proposition.

Or as Deloitte put it nicely in a recent report:

“Just as the growing complexity of accounting and disclosure issues made financial literacy a mandatory requirement for members of audit committees, the growing complexity and pervasiveness of IT is increasingly making IT literacy an essential competency for directors. In the future, the existence and contributions of a tech-savvy board will become an indispensable component of organizational success.”

About four years ago Bain consultant Paul Rogers coined the acronym RAPID – Recommend, Agree, Perform, Input and Decide- as a tool for allocating decision roles in a company. For every strategic decision, make sure the following roles and responsibilities are in place:

Input. Providing relevant facts that shed light on feasibility and implications.

Recommend. Gather input, provide analysis to make a sensible choice and recommend a course of action.

Agree. Get the relevant people to agree with the recommendation (or execute veto power), modify it or escalate it to a decision maker if differences can’t be resolved.

Decide. Single point of accountability that brings the decision to closure by resolving any impasses and commits to implementation.

Perform. Seeing to it that the decision is implemented properly and effectively.

In assigning roles, so the RAPID-logic goes, make sure that:

• only one person has the “D”
• the “A’s” are limited,  if many people must agree, the decision is not pushed down far enough in your organization
• there are few “I’s”. When many people give input, at least some aren’t making meaningful contributions.

No matter how great your strategy is, you will loose ground if the right decisions aren’t made effectively and aren’t executed quickly and consistently. So the next time you have to make a strategic decision, remember the RAPID-model.

Know where to gather inputs, who to ask coming up with a recommendation, which people to involve in agreeing on it, who will make a decision if no consensus is reached and who will execute when the decision is made. Keep the list of people involved as short as possible and provide role clarity upfront. Only then you’re off to a rapid decision.

Hire the LAZY one??? Yes. German military leader Helmut von Moltke already explained why in the 19th century. According to this general there are namely 4 classifications of people: the smart, stupid, active and lazy. Some combinations of these characteristics are very desirable, others are outright dangerous.

Smart & lazy

Intelligent lazy people should be everybody’s favorite. They do things in a smart way while spending the least effort. They don’t rush, but find the shortest path to a goal. More importantly, they strive to make what they do repeatable so that they don’t have to do it all over again. These people are your leaders and are an asset to any team or army.

Smart & active

These people are also useful, as they are smart, but their intelligence can be somewhat diluted by their activity. Their urge to act on everything, leads them to micromanage and, as result, makes them poor leaders. These are the people that are great at intelligently carrying out orders, addressing the details, and seeing things through to completion. Great to have on board, provided somebody else does the steering.

Dumb & lazy

The dumb and lazy people have their place too. If you leave them alone they might just come up with a good idea one day, but if they don’t they won’t cause any harm either. Great people for simple, repetitive tasks who take pride in doing them and who are easy to manage as they behave in a predictable manner.

Dumb & active

These people you want at the team of your competition. They act without thought and get you into all kinds of trouble. They require constant supervision, which leads to overhead and distraction, and they create problems faster than anybody can manage.

The good/bad thing of this for you

Ask 100 people who they would hire, and the majority will undoubtedly say: 1. Smart actives, 2. Smart lazies, 3. Dumb actives and 4. Dumb lazies.

The good thing therefore is, that it’s rather likely that your competition is lead by 1. micro managers which results in 2. natural leaders leaving because they can’t be bothered with so much detail, that clients are serviced by 3. loose canons who are an energy drain to everybody and that 4. work horses are doing the mundane yet necessary jobs somewhere else.

The potential bad news is that you previously hired like the majority did.

When in doubt

Since you want to avoid hiring the dumb actives at any cost, and since it easier to determine if somebody is lazy/active than it is to know if somebody is smart/dumb, when in doubt and under no further constraints, your best bet is therefore to go for the lazy one.