Leadership Laws

August 5th, 2009

I recently finished listening to The 21 Irrefutable Laws of Leadership by John C. Maxwell and wanted to share a few of the most interesting laws from it.  John Maxwell is a renowned author on leadership and former Pastor.  He has significant experience leading churches, which as he explains, are even harder to lead than businesses because everyone is a volunteer; nobody’s getting paid to be there.

The book is very concise and easy to follow with great information and examples, and a clear action plan for each law.  Some of my favorite concepts are below.

  • Law #1 – The Law of the Lid.  – John Maxwell opens his book with the Law of the Lid, and I wanted to start with it as well.  It’s a concept that is somewhat well known outside of the book as well but worth mentioning, as it justifies the reason for learning the additional leadership laws.  The law states that you can only be as effective as your leadership skills allow.  Without strong leadership skills, your potential for effectiveness will be limited.  While it seems like common sense, without the ability to influence others you can only get 1 person worth of work done (that’s your maximum or your lid), whereas with many people (10 for example), you can get 10 times the amount of work accomplished.  Assuming your task is a worthwhile cause, the ability to produce 10 times the results raised your lid more than you could ever accomplish on your own, no matter how hard you worked toward the goal.  Your effectiveness will be limited by your ability to influence and motivate others to contribute to your goal.
  • Law #4 – The Law of Navigation.  – As Maxwell phrases it “Anyone can steer the ship, but it takes a leader to chart the course.”  Careful planning and a clear vision are crucial when you set out to chart a course.  There are innumerable obstacles that you may encounter on the journey, and being prepared for them is the difference between success and failure.  It involves paying attention to the details, while being able to still focus on the long term vision and direction.  The Law of Navigation requires that as a leader you look ahead to the possible conditions you may encounter, and plan the course accordingly, or as I like to think of it – Think Forward and Work Backward.  So, where are you headed?  Have you charted your course, or are you being tossed from wave to wave, traveling wherever the current takes you?
  • Law #20 – The Law of Explosive Growth. – The law of explosive growth is partially linked to the law of the lid.  If one leader is only as effective as the sum of those he can lead, then the only way to increase the effectiveness further, is to lead leaders.  By leading, mentoring, and developing other leaders who can then themselves develop leaders and attract followers, you build upon their ability to lead, exponentially growing your potential for effectiveness.  It’s a similar concept to a sales marketing pyramid scheme, but if it’s toward a worthwhile goal, it is a wonderful strategy for growth and results.  Leadership is not a zero sum game, everyone can benefit from strong leadership, and learning to develop that skill in others is even more important than developing it in yourself.

The most interesting law to me, was the last law, the Law of Legacy.  I am planning to write a separate post regarding that law, as it’s recently become more relevant and thought provoking to me, and hopefully will be to you as well.

While I would highly recommend the book, it brought to mind a few questions and thoughts.  He focuses on top leaders, CEO’s, senior pastors, etc but I think it applies at every level and can be effectively used by each of us.  In some area of your personal or work life you lead at least 1 person (in addition to leading yourself), and these 21 laws can be applied to improve the effectiveness of your leadership, as well as the motivation and development of those you lead.  I believe this is an important distinction because it helps answer the question “Can everyone be a leader?  Should everyone be a leader?”  While it’s obvious that if everyone was the CEO and nobody did the work we’d never get anything done, everyone can be a leader to some degree within their organizations, community, families, worthwhile causes, and churches.

What are your thoughts and experiences on leadership?  Do you agree everyone can/should be a leader in some aspect of their lives?  What are you leading?  What could you take the lead on? Do you agree with the leadership laws, or have anything to add?  Leave a comment below with your discussion.

The B-Word – Part 2

August 2nd, 2009

This post is part the second in a series on Budgeting.

Previously we discussed the importance of budgeting, and (hopefully) dispelled the myth that it’s restrictive, difficult, or not necessary.  So what’s the next step?

Before we start entering your budget into a spreadsheet – there are just a few first steps:

  1. As David Bach recommends, the first step is to take the time to list your values.  What do you value the most?  If you are married, be sure to discuss with your partner to ensure you are working towards a common goal.  What percentage of your income can you give to charity, church, or other causes you value?
  2. Dream.  Using your goals as a guide, consider what dreams you may have, and what you’d like to buy.  Do you want to travel the world or buy a new car?  Buy a house, or make improvements to one you already own?  How much do you want to save towards retirement?  Do you have outstanding loans you want to save for and pay off?  Do you need to save to build up a nest egg, or a “just in case” fund?  At this point, do not limit your dreams.  Come up with anything and everything you would like, and prioritize your list.
  3. Gather a couple of the previous months bills and paystubs to use as a baseline for your budget.
  4. Plan any non-monthly expenses including gifts, travel, insurance (or anything else that is paid other than monthly).  These are some of the hardest expenses to budget for, and it’s important to make sure they’re included.

Once you’ve prepared the items above, it’s time to get down to business.

I was planning to include a link to the budget that we currently use, but while doing research for the blog found a number of other great templates as well, so I’ve included all of them.  Here is an example of the template we use (adapted from a sample here).  Additional examples I like, and may start using some day are here, and here.  Based upon your interest in budgeting, spending habits, and other factors, each of these templates has it’s benefits.  Using the template you selected, follow the recommendations below to fill in each of the line items.  Feel free to remove/add any items as necessary.

Virtually all budgeting books and advice include one fundamental concept that is often missed.  That concept is: “Pay Yourself First.”  The pay yourself first theory holds that when budgeting (and spending) it is crucial that you do not start by listing your known expenses such as housing, utilities, entertainment, etc.  Instead, start by including your investments, savings, and a portion to save each month for your dream items.  If you do not start by paying yourself, you can easily blow through all your income just by listing expenses, and will never get out of the monthly grind of living paycheck to paycheck.  Another key to getting out of living paycheck to paycheck, is to continually add to your “just in case” fund.  Unknown expenses can and will occur.  Medical, automotive, and other expenses will come up, and the just in case fund is the only way to avoid going in to debt each time they do.

Dave Ramsey, and a few other religious financial planners alter the “Pay yourself first” approach, to make it pay yourself second, while first giving to Church, charity, or other organizations.  I agree and recommend this approach highly.  I’ve found it easy to find the money to give, when it comes right off the top of the budget.

So, once you’ve given to others, and paid yourself, take a look at your monthly bills gathered above, and start to add them in.  Start with your critical expenses, moving down to things like entertainment, eating out, and shopping.

Review your list of non-monthly expenses, and calculate the amount that needs to be saved each month in order to meet those expenses.

Once you’ve got all your expenses listed, add everything up, and subtract from your income.  How’s it look?  Are you still in the black (positive) or are you over your budget (in the red)?  If you’re in the red, that’s ok, we’ll get it back in check.  Take  a look at your expenses to see where you may be able to cut any expenses.  Can you reduce some or your entertainment or other discretionary expenses?  If not, you may have to review the items you paid yourself, based upon your priorities.

Congratulations – you’ve thought forward, and worked backward with your finances.  The next post in the series will cover maintaining and reviewing your budget monthly, to ensure that it’s accurate, and that your spending is inline.

Do you have any questions on your budget or the process?  Have you done a budget before, and if so do you have any differences in how you’ve done it that you can share with the other readers?  Post a comment below, we’d love to hear from you.

You’ve Got Mail

July 29th, 2009

Think Forward Work Backward is now available via email subscription, so you never have to worry about missing a thing!

While many people subscribe to the RSS feed, I’ve received feedback from some of you that an email subscription would be easier to keep up with.  Now you can!  Just enter your email on the right side of the page, and you’ll be subscribed to receive all the newest posts as they come out.

The second of three posts on Budgeting will be available Sunday, including a link to a sample budget template, so subscribe now to be sure you receive it.

No matter how you get to the blog, thanks for reading – and for your feedback on the email subscription.  Shoot me an email or leave a comment with any other ideas/questions/tips!

The B-Word

July 26th, 2009

Money Grab

Everyone is always looking for the next financial advice tip, the best way to get rich, or in this economy, a new way to save, but often times when you start to use the B-Word they quickly start coming up with excuses…  “Budget’s don’t work for me, they’re not flexible enough.”  “I don’t have time to budget, or I don’t know how.  I’ll budget when I’m older.”

All these excuses however, while they may even be true, just keep you from reaching your financial goals, and consequently, many of your other goals as well.

One of the crucial components of a think forward, work backward life strategy, is the ability to visualize your ideal “end state” in any situation, and develop a plan to achieve it.  A budget is exactly that, with regards to your financial future.

While many of you may already budget to some extent, it is such an important part of living a deliberate life that it’s worth discussing.

Contrary to what you may be thinking, a simple personal/family budget does not take a significant amount of time (my wife and I spend a few hours a month working on it), doesn’t require special skills or accounting knowledge, and gives you all the flexibility you want, without any of the guilt associated with spending.  While you may currently feel guilty eating out, shopping, or buying other things you “want” but don’t “need”, now you can simply budget for those items, and gladly purchase them according to the amount budgeted.  A budget in and of itself is merely a plan for where each dollar will be spent based upon your priorities, nothing more.  One of the side effects of the increased transparency into your spending may be that you decide to revise your spending habits to bring them more inline with your short and long term priorities, but who wouldn’t want more control over their money, to ensure it gets spent on the things they value most!

There are as several varying theories on budgeting, each with a different emphasis, but regardless of the theory you subscribe to, there is always one resounding theme.  Just do it.  After you get started you can revise and modify your budgeting strategy based upon what works best for you, but waiting to start is the worst strategy of them all.

My budgeting strategy has been modified and refined as I use it, and continue to research other techniques and ideas.  Some of the more recent authors I’ve researched, and would recommend are below.

Dave Ramsey is a Christian radio and tv financial talk show host, and popular author and speaker.  His advice is immediately applicable and easy to follow.  He breaks things down into easy to understand lessons, and explains many more complicated topics including retirement investing, real estate, and insurance.  He is largely focused on getting out of debt, so if you are already mostly debt free his show won’t apply as much, but his examples can greatly help you get started with budgeting.

David Bach is best known for his book Smart Women Finish Rich but he has since written many other books including Smart Couples Finish Rich and various others.  He also has a practical approach to financial planning, but one of the most important things he brings into his financial planning advice is what he calls a “Value Circle”.  It is intended to allow you to determine what you value most, and ensure that your budget and financial plan are inline with those values.

Ramit Sethi is a popular financial blogger, and author of I Will Teach You to be Rich.  He has a very direct approach to saving money, budgeting, and becoming wealthy, but has some great advice throughout the book and on his blog to add to your daily lifestyle to ensure that you are setup for success in the future.

Convinced?  In my next few posts I will be providing more details regarding how to get started with a budget, as well as a sample budget template for you to use to get started, followed by a discussion on maintaining and adjusting your budget going forward.

Do you have any good budgeting tips or stories to share with me and others?  Please leave a comment below so we can all benefit from your experiences.

TFWB Action Plan:

  1. Decide you want to control your money and have the ability to direct it to of your priorities, instead of wondering where it went each month.
  2. Research some of the above resources, or others, to begin to learn more about the budgeting process.
  3. Check back soon for additional information and resources to get started

Photo by Steve Wampler

http://www.flickr.com/photos/sgw/ / CC BY-NC 2.0

Is that normal?

July 12th, 2009

Every day we do things based upon habits and norms established in our community, companies, and culture, often times without thinking about them.  They seem so fundamental to us that it’s rare we even notice them.  While these norms help a group to function together smoothly, it’s important to recognize the norms we adhere to, and challenge them to ensure they encompass the best possible solution.  It’s easy to see the norms being followed by people whose norms differ from ours, for example other countries or cultures, but it’s much more difficult to identify them within our own society.

I’m currently reading (actually listening to) The Wisdom of Crowds, and have been amazed by the norms identified and discussed in the book, partially because they are things I’d not yet considered as needing to change.  For example, the author discusses supply and demand, and the general economic law that when demand goes up relative to the supply, the cost will increase.  However, there are a number of situations where this is not the case, in large part due to following norms that may have been established decades prior or no longer apply.  He mentions a movie theater, where (at least in America) all the movies cost the same amount, regardless of the popularity or age of the film.  Sure, there are “dollar” movie theaters, but within the main theater, all movies are treated equal.  How much more revenue could the theaters receive, if they priced the movie appropriately based upon the demand, thereby allowing for less popular movies to be cheaper, hopefully increasing the number of viewers?  People will pay $4 to rent a movie, but not $10 to go to the theater.  There has to be a cost between there that will attract more viewers.  Until the movie is removed from the theater, their costs to show it are fixed, yet they don’t maximize the potential by adjusting the price, because that’s how it’s always been done.  Previously however, films used to be released to A and B theaters, which charged different rates based upon the quality of the movie.  Today, all movies (assuming they make it to the theater) are effectively charged as if they are A quality, despite the demand for them.

What norms are you following, and are they you’re best option?  Are you losing revenue by following norms that may no longer apply to your business or situation?  Today in our global environment, what norms may your customers be accustomed to or be expecting that you may be unaware of?  Take a moment to stop and think the next time you do something out of habit, to see if it can be improved.  Also, take a look at other cultures from your own, to see what they may be doing differently.  It’s amazing how different a decision people can make when coming from a fundamentally unique perspective, simply because of the norms established hundreds of years earlier.

Collaboration Continued…

July 5th, 2009

As I’m working on Today’s Collaboration I’ve come across a number of resources I’m incorporating into the wiki, but wanted to pass along the following link from Mashable (a leader in social media) to help as you brainstorm ideas for collaboration.  It has some great information especially as it relates to utilizing wiki’s within business.

I’ve added a links section to the wiki and will be continuing to add content there, so that it can be provided as a reference and to give the appropriate credit where due.  Add any links you discover as well.

Please continue to update the wiki as I am to further develop and build out the concept, from as many perspectives as possible.

Today’s Collaboration

June 28th, 2009

Collaboration is changing.  Collaboration yesterday is not the same as collaboration today, nor is it adequate to compete in today’s market.  Customers and employees alike, are demanding the same type of collaboration and communication in their business life, that they have grown accustom to in their personal lives.

Collaboration is changing, but with change comes resistance.  “What if the new technologies are misused?”  “Do the benefits outweigh the risks associated with the changes?”  “Why do we need these new methods of communicating when the others are working just fine already?”

New forms of collaboration are not a passing trend, and they are not equivalent to the current methods.  They’re far superior, and if used in the right ways, can increase productivity, quality, and motivation.

Rather than view those who resist the change as people who “just don’t get it” however, it is important to justify and explain the benefits in a manner that speaks to them.

I can’t do it alone though, I will need the collective experience, perspectives, and knowledge of each of you to fully explain the methods and benefits for Today’s Collaboration, in a way that speaks to the risks of change (and opportunity costs of not changing), as well as the potential upsides every corporation, organization, and team can see from utilizing them.

Please join me in developing Today’s Collaboration, a wiki written by today’s collaborators, to explain and promote the possibilities that exist for every group that chooses to adopt them.

To Plan or Not To Plan

June 24th, 2009

If you Fail to Plan, Plan to Fail.

There seem to be two competing perspectives on the benefits, and even the necessity of planning.  While it’s easy to criticize planning, as discussed in Less Wrong’s Planning Fallacy, and Signal Vs. Noise’s commentary on the post, I believe it’s missing a critical factor.  Attributing the results associated with poor or improper planning is not justification for skipping it all together. 

It is clear that planning can go wrong, and that there is an inherant inaccuracy associated with people’s initial estimate.  This can be seen every day when asking someone how much time they have left on a given task.  It will almost always result in a low estimate, as many studies have shown.  Recognizing this fallacy, as Less Wrong discusses is vitally important.  By recognizing the risk of inaccurate planning, you can address it head on, and consequently improve your estimating.  Furthermore, deriving a process by which you plan and estimate to combat your inherant fallacies, then validating the results and refining the process, you can consistently improve the planning process and it’s accuracy. 

Next time you make an estimate, ask yourself “If I am wrong by 25%, is this still a good decision?”  If you can confirm that even given the traditional fallacy you are still in a good situation, the risk is significantly reduced.

No plan will be 100% accurate, so it is clear that waiting for the perfect plan is simply foolish, but discounting the exercise entirely is equally as foolish. 

While it’s not as cool to tout the benefits of old fashioned planning, done correctly with an established process and constant result driven improvement, it can yield great benefits.  I am currently in the process of planning a new process for a business venture, and as I develop it will be sharing the plan, as well as the results with you.

So, keep thinking forward and working backward, just know when to quit thinking, and when to start working!

Halfway there?

June 17th, 2009

“Half way there…  It’s almost the weekend…”  If you’re still out in the corporate world, you probably also heard some similar quip about the end of the coming week.  But I have to ask, is the weekend really the goal?  Is that what all of us are working towards?  I got news for you… there’ll be another Monday next week, followed by 5 days of wishing it was the weekend.

This comment, made in passing in the hall, again reminded me there’s more than nine to five.  If time is your most valuable resource, is a 2 day return for a 5 day investment an acceptable ROI?

It seems like more and more people in the “Net Generation” have this same disenchantment with nine by five by forty years.  Everyone seems to all think that the baby boomers are missing the boat and we wont get caught working that hard and long.  But…is it just our generation? Do all generations go through a similar phase, then come to the realization that for the majority of people it’s just a dream?  Does the reality of mortgages, kids, and retirement accounts always trump the initial vision?  Again I ask, is the dream of escaping the corporate rat race new?  I believe it’s an important question to ask, not only because it’s getting so much attention these days in blogs, books, and other media, but also because so many of my peers seem to think they’ve unlocked the key their parents were missing.  I’m still on the fence as to whether it’s new, and would love to discuss with some baby boomers.  I have a few thoughts on both sides…

Why it might be different this time:

  • The web makes generating income from home (or better yet from another country) something previous generations could never imagine.
  • The days of pensions are over, changing jobs is a fact of life, so finding another job after “living the dream” isn’t a far fetched idea.

Why it might not:

  • It’s not our generation, it’s our life stage.  Everyone goes through it.  What about the 70’s?!
  • Just like previous generations, everyday life will take over and it’ll just be one of those things we wish we’d done.

What are your thoughts?  I’m interested to hear from anyone in the baby boomer generation to get your perspective.  (Or ask your parents and post it. :))

PS. Missed posting on Wednesday by 9 minutes… that’s what proof reading will get you!

Link: The secret to hearing, Yes!

June 10th, 2009

Wanted to share a link with you to a very interesting post by Alex Moskalyuk as he summarizes the book Yes! 50 Scientifically Proven Ways to Be Persuasive by Noah Goldstein, Steve Martin, and Robert Cialdini.  I’m definitely going to pick this one up.

Some of the items I found most interesting are below.

5. Too many options necessitate selection, and hence frustration, when brain decides it’s unnecessary work.

This is an interesting one, and something that I’ve read about in other books, for example Made to Stick. For some reason people can’t process that much information and would rather make no decision at all.  The example in Made to Stick dealt with selling Jams, and having only a few flavors yielded much higher sales.  How can you reduce the number of options you’re providing your users to ensure conversion?  Do you need a dozen different products or license options?  In a time when it seems like everyone wants different options, it’s interesting to see that simple is still effective.

17. Writing things down improves commitment.

I agree here, but would emphasize one of the points that seems to have gone unnoticed in the post.  While writing it down will improve commitment, writing it down and being accountable to someone is what will significantly increase commitment.  Writing down something and keeping it to yourself helps, but it’s too easy to rationalize why you don’t have to follow through.  Even if the other person provides no other consequences than just to have known about the commitment it still has significant impact.  Have your customers and employees write down their commitments, and give them to someone.  In addition, if you want to force yourself to do something, use the same persuasion on yourself.  Just look at this blog.  By writing my commitment to posting twice a week, and making myself accountable to the readers (regardless of how many there are! ;)) helps persuade me to stick to it.

28. Admitting your wrong makes people trust you more.

This has been true for me in many situations.  So many people are too worried about their appearance that they will not admit when they’re wrong, even when everyone else knows it.  A simple apology can go a long way, and builds significant trust because if they know you will tell the truth when it’s difficult, it’s easy to trust you on the easy things.  Trust is the foundation for power and influence, so anything to help build it is worth the uncomfortableness of admitting a mistake.

47. Face time still beats email time.

This one is fascinating, especially with all the online communication today.  I’m curious what the demographics were of the control study, and whether younger subjects would produce the same results.  Either way, what can you do to gain the additional cooperation and effectiveness of face time if you really are distributed across the country?  For me, teleconferences have always been an effective way to build that additional relationship.  While not extremely common among business yet, video conferences will further narrow the gap when face time just isn’t feasible.

Which items stick out to you?  How can you use them in your daily life to help in your influence with others?  Do you have other tactics you use for persuasion not listed?  Do you think it’s “unfair” to use some of these tactics on others?  Let us know.