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Why You Should Put All Your Eggs In One Basket

Derek — Thu, 01 Jan 2009 20:29:37 +0000

Prevential offers Success Factors to help rewire your business and personal life for success. Please check back for a new “Success Factors” article daily in January 2009.

Remember the old saying, “Never put all your eggs in one basket?” People believed that options were the key to success. Unfortunately, they had it all wrong.

They meant well, but they taught us to divide our free time across several “baskets.” The lack of focus prevented us from developing one basket substantially, which created an army of mediocre people doing mediocre things.

When the great Chinese General, Xiang Yu, burned his own ships the night before a battle with the Qin dynasty, he eliminated the “we could always retreat” basket. In Predictably Irrational, Dan Ariely notes that Xiang’s troops were scared, but since they were left with no choice, they had to fight. They ended up winning nine consecutive battles against overwhelming odds.

Xiang put his eggs in one basket and his troops accomplished the impossible. Luckily, you can apply this to your life and business without the fire and the blood shed. You need to rewire your brain and realize that options and diversity is not the answer. You need to “put all of your eggs in one basket and then watch that basket” (Andrew Carnegie).

But why do you need to focus on one basket?

10,000 Hours

Have you heard of the 10,000 hour rule (Malcolm Gladwell made it famous in Outliers)? K. Anders Ericsson and his associates found that elite music performers all had one thing in common and that was 10,000 hours of practice. It didn’t matter how “talented” they were, it just mattered how much time they spent practicing.

10,000 hours is a huge amount of time and it will be impossible to accomplish without focus. You simply can’t give 10,000 hours to every opportunity because there is only 24 hours a day.

This rule also applies to business and success.

It takes a long time to perfect a product and a business plan. Without initial focus, your company may struggle with several mediocre products that will never make a difference.

When McDonalds first started, they used to sell several different products. Once they realized that Hamburgers were the key to their success, they eliminated everything else. They focused on their core product and now you can see what happened with McDonalds.

Or, how about the story of Apple? When Steve Jobs resumed as CEO, Apple was floundering. They had tons of products and zero focus. Steve Jobs began canceling entire departments and brought Apple back its profitability and now you all have iTunes and iPhones and iPods.

So ask yourself, are you focusing on your core product or main opportunity? Are you giving one project all of your time and dedication? If not, it is time to reconsider and you may experience breakaway growth.

Deliberate Practice

Now that you know you need 10,000 hours of practice and complete focus, this doesn’t mean you can just start logging hours and expect success. It is possible to log 5,000 hours and have them equal 1 hour of practice.

In “Talent is Overrated,” Geoff Colvin talks about Deliberate Practice. The practice that makes you so tired and exhausted that you can only do it a few hours a day. This is what you need 10,000 hours of. You can’t simply do the same thing day in and day out and expect to get better. You need to push yourself beyond your limits and count those hours.

A friend of mine who is an executive officer at a Fortune 100 company was talking to me about recruiting and how to hire the perfect employee. He said something like, “you need to hire someone with 10 years of experience, not 10 years of the same one year of experience.” Or, in short, you need to hire someone who develops their career because the development shows successful deliberate practice.

From a business perspective, you can’t focus on one product and never make improvements. You need to constantly lower the price, improve usability, or add effectiveness. If you don’t, you may join the ranks of the other floundering companies in this competitive world.

So, if you recently began to focus on one thing and one thing only, what are you doing to ensure that you are pushing yourself to your limits? Are you improving the quality and efficiency of your company and products? Are you expanding your market reach?

Success Factors Spotlight

Throughout the “Success Factors” blog series you will see “Success Factors Spotlight.” This is where you will see real life examples of companies, people, or blogs that will benefit or have benefited from the ideas we talked about in the article.

We talked about Apple and about McDonalds, but what about the small business owners today? Are they carving out their niche by focusing on a single product and developing it relentlessly?

Yes they are.

Have you heard of Chris Pearson? He’s the guy behind the new Wordpress Theme called Thesis. It was released early 2008 and it has been revised and updated no less than 7 times. Most designers create a theme, release it, and forget about it, but not Chris. He continues to support Thesis and now you can see many well known blogs using it.

But do you think his success was an accident? Do you think Thesis became one of the most popular Wordpress themes because Chris got lucky?

Chris built Thesis with a ton of experience under his belt. He created four wildly popular Wordpress themes prior to it (Cutline, Pressrow, Neoclassical, and Copyblogger), so he knew where to start. However, the most important thing contributing to his success was his intent focus on developing the best Wordpress theme on the internet.

In short, Thesis became popular because of Chris Pearson’s single basket. He picked the Wordpress theme basket and put all of his eggs in it. So, if you’re looking to experience breakaway growth, you need to take a page from Chris Pearson’s book and focus on one basket. Then, continue to watch that basket to ensure you continue to do it right over the course of the product’s life.

What Do You Think?

Leave a comment and lets start a discussion.

When Companies Stop Growing, What Do They Do?

Derek — Mon, 08 Dec 2008 14:52:28 +0000

Photo Courtesy of Wolfgangstaudt

Have you reached a growth plateau? A place where everything you do no longer yields results? A place where your hard work goes unrewarded and unrecognized?

From fitness enthusiasts trying to break their bench-press record to bloggers looking to grow their website traffic, a plateau means they achieved some level of success, but can’t seem to take it to the next level.

You may feel like you reached your limit, but you refuse to accept stagnant growth.

A plateau is a temporary challenge — one more way for you to prove that you will remain incredible. So, here is how you can conquer your plateau and ensure long-term success.

Plateaus and Long-term Success

While growing your business, you will encounter several growth plateaus. They indicate that times are changing and its time for your business to follow. You could ignore them, but you need to overcome them for long-term success.

Just think how many businesses encounter a plateau and remain there for years. They ignore them because they convince themselves “what worked in the past will work in the future.” In reality, these companies are sitting in an open field while their competitors take effortless shots at their company.

So, ask yourself, has your business reached a plateau? If so, are you ready to try something new to break free?

The Plateau Energizes Growth

Some companies know that they need to conquer a plateau to achieve long-term success. So, they make growth their number one initiative and do everything in their power to sustain it. Now let me share a quick story of a company who executed this perfectly.

Two entrepreneurs, Stewart and Lynda Rae Resnick, bought farmland in 1987 that came with a 100-acre Pomegranate grove. Despite experts suggesting they chop down the Pomegranate trees and replace them with pistachios, they decided to “just see what happens.” They saw the plateau of opportunity.

POM Wonderful is what happened. They confronted the stagnant Pomegranate market with marketing prowess and innovation. They funded research that showed the health benefits of pomegranate juice, created original double bubble Pomegranate juice bottles, and found celebrity enthusiasts. Their plateau started to look much more like exponential growth.

In short, Stewart and Lynda Rae Resnick broke through the Pomegranate plateau by selling Pomegranate juice. It was a huge success (Newsweek reported that their sales rose from $12 million in 2003 to $91 million in 2006). They now enjoy significant market dominance and a bright international future.

We know that POM Wonderful is a great success story, but what are you doing to revolutionize your business? What are you doing to differentiate?

The Plateau Assassinates Business

Do you believe the old way is the only way? Do you ignore the tell-tale signs of the fast-approaching cliff because you are blinded by arrogance and your past success? Well, I’m here to tell you that as you approach this cliff, your protective ego and pride will fade as Chapter 11 hits you upside the head.

Let me tell you a quick story about a company who has remained on the growth plateau.

Microsoft has been on a growth plateau since the release of Windows XP. They face rigorous competition from Apple and continue to lose computer market share. Their repeated copy-cat attempts have failed them and Apple continues to gain more computer market share.

Overall, Microsoft coasted by on their market dominance and now it is being challenged. I’m not saying Microsoft will fall because they won’t. They are just heading down the wrong path and they need to fix it.

Do you currently enjoy a decent sized market share in your niche? What are you doing different than your competitors to maintain this? Are you still innovating your way out of your growth plateaus?

The Skill of Conquering Plateaus

Conquering a plateau is a skill. It can be learned, taught, and repeated. The more plateaus you conquer, the faster and more efficient you can conquer additional plateaus.

Your ability to conquer plateaus improves with experience because you learn how to think the right way. For example, have you noticed that with every new Olympics, the old world records fail to hold up? It’s not a coincidence. These old records were plateaus and athletes found ways to overcome them.

Or, from a blogging standpoint,many top bloggers keep getting bigger. While their brand equity plays a huge role in their continued success, they also continue to launch new features and new programs that help them maintain this success. They speak at conferences, launch new blogs, and leverage their connections to grow their reach.

So, if you find yourself on a plateau for an extend period of time, you need to list specific action plans that will help you break through it. For example, if you’re a blogger, do you plan on writing more? Guest posting? Or if you’re a businessman, do you plan on making additional sales calls? Building a website?

Why Do Companies Remain on The Plateau?

If conquering plateaus is a skill, you may be wondering why successful companies seemingly ignore the overwhelming evidence of failure and success. Well, join the club because it is perplexing. However, I do have four theories why companies fail to break out of their plateau.

Some large companies view the plateau as temporary. They blame the external environment for their lack-luster growth and use prior performance as reassurance for future growth. Or, to put this more simply, these companies don’t take accountability for their situation and assume its out of their control. (Take a look at almost every large company)

Other companies embrace new technology and new ways to do business, but they still reach a growth plateau. They most likely understand the problem and know they need to fix it, but they don’t know how to kick-start their break-away growth. (The Myspace giant is falling fast. They have the technology, but they are doing nothing).

Some companies believe they have no reason to change because of their past success. They reject new ideas and innovation because they assume they know best and continue doing their business model their way. (who feels bad for the recording industry? Not me!)

Finally, there are some companies with multiple product lines and multiple businesses on a plateau. Since each product and business is unique, they can’t use the same plan to spark exponential growth. Additionally, they can’t focus on all of their product lines because resources are limited. So, these companies sit there frozen and do nothing. (Hello, Yahoo).

Whatever the reasons, many companies rationalize their situation and shirk the responsibility. They fail to confront the plateau with full-force and they remain stranded in an open field while their competitors take shots at their company.

Are you guilty? Now is the time to figure out why and fix it.

How Do You Overcome The Growth Plateau?

Now there are the select few companies who “get it.” They are led by success-driven people, like me and you, and they’re looking to revolutionize their industry every single year. They may hate the sound of “plateau,” but they welcome it. They know that within every plateau lies hidden opportunity and they look for it.

But how do you overcome a plateau? How can you start improving your business so you can experience break-away growth?

There is no sure-fire formula, but here are some things to consider:

Seek Outside Consultation

Raise your hand if you are familiar with the “Curse of Knowledge.”

For those of you who kept their hand down, Chip and Dan Heath talk about the “Curse of Knowledge” in “Made to Stick.” Extensive research shows that when people know something, it is impossible for them to imagine not knowing it. In short, this phenomenon makes communication difficult.

Unfortunately, this adversely affects companies seeking growth as well.

Many companies are accustomed to the way they do business, which makes it hard for them to imagine doing it any other way.

Luckily, outside consultants solve this problem. They may not be experts at running your company your way, but they do provide valuable opinions on how you can take your company to the next level.

Implement a Process

Variable work schedules are hard to maintain and improve. Without process, it could take years to find out what you’re doing wrong. With a process, it can take less than an hour.

When I started blogging on the internet, I would spend hours on the computer and always feel like I got nothing done. To solve this, I did a 7 day study where I logged everything in an excel worksheet. It was tedious writing “7:30 a.m: washed my face and 8:15am: tied my shoe,” but it provided me some data and I was able to find out where I wasted most of my time.

In business, you want to capture all the things you need to do on a “To-Do” list and create a process for each one of them. It’s going to be tedious and boring, but are you going to turn down the chance to improve your business?

Find an Expert

Use this tip sparingly and with caution.

Experts know a great deal about their respective field, but I would never ask them for specific action plans to improve your company. Instead, you should use them as a resource to find out what other companies are doing right and then decide for yourself if it applies to your business.

Take Some Risks

Companies end up on the never-ending plateau because they stop taking risks. They do what’s safe, or what they call a “sure-thing.” Unfortunately, the only thing about a “sure-thing” is that you can guarantee yourself mediocre or below average results.

I’m not telling you to take risks to the extreme, but instead, you need to implement a process that manages some risk. You need to be doing something risky if you want to break out of your plateau.

Find Growth Opportunities

You know the importance of planning, but you don’t know how to find growth opportunities. Well, one of the easiest ways to do this is by creating Competitor Swipe Files.

Find 10 of your biggest competitors and create a one page summary about their business and their features. I don’t suggest you copy their features, but I do expect you to use them as a starting point for innovation.

Scale Business Down

Do you currently operate in too many businesses? If so, this may be your chance to scale it down and become specialized. This is your chance to focus on the 20% of your business that produces 80% of your sales. This is your chance to focus on your strengths.

When Steve Jobs took the CEO reigns at Apple again he came into a complete mess. Apple operated in too many businesses and they weren’t the market leaders in any of them. So, Steve Jobs started cutting products until they were left with the bare minimum. Then, he made Apple known for media and the iPod was a huge success.

Just remember, sometimes you need to minimize to maximize.

The Growth Plateau

I developed a love-hate relationship with the growth plateau. On the one hand, I’m frustrated that I stalled on my journey towards achieving my goals, but on the other hand, I’m glad to receive early warning signs of potential failure.

When you hit the growth plateau, you know exactly what you need to do and that is change. You need to change or innovate your way out of it or you might end up with a company with dwindling profit and sales.

So if you take away anything from this huge article I want you to realize that you need to treat every growth plateau as an opportunity. You need to treat every growth plateau as one more chance to differentiate yourself from the competition. Or, just one more way to completely overthrow your competition.

If only everything else could be so clear…

What Do You Think?

I want to know what you think. I also want you to tell me what you did to overcome any of your growth plateaus. Send me an e-mail or leave a comment.

Why People Buy Anything

Derek — Mon, 24 Nov 2008 19:55:15 +0000

This article is the 1st article in the Sales Training 101 article series.

Photo Courtesy of Volpelino

“Create value and people will buy.” It makes sense. Right?

Unfortunately, I don’t understand jargon like “create value.”

Do people really buy because the product “created value?”

Personally, I never went to a store and thought to myself, “Wow, this product really creates value. I need to buy it.” Quite frankly, I don’t know why I buy anything.

In the past 12 months, I bought two iPhones (1st generation and 2nd generation) and two computers (Mac Pro and a Macbook Air).

I didn’t need the stuff, but I bought it.

So, what are the main reasons why people buy? What makes someone like me buy 2 iPhones and 2 computers in the past 12 months?

The answers are much more simple than you think and successful people need to know them.

Community is Why People Buy

Have you ever walked through the office and had someone say “nice shirt?” Well, I bet the person who said “nice shirt” was wearing a similar shirt.

Or, have you ever been riding your Harley Davidson down the street and someone else on another Harley waved to you? Of course. You’re both HOGs (Harley Owner Group).

People are social creatures and they love to be a part of something – a community, a lifestyle, a Seth Godin Tribe. It doesn’t matter what you call it as long as people feel they are a part of something bigger.

Tip: you should create a community around your product or vision.

Scarcity is Why People Buy

Just imagine if you wanted to attend a training conference that only allowed 100 people to attend, but you forgot to buy your ticket in advance.

Luckily, when you checked eBay you saw there is one, and only one, ticket for sale.

Perfect!

The conference, which allows 100, has one ticket available and it is on eBay. You would be constantly refreshing that eBay auction and bidding on that ticket until you won it.

Not only is it the last one, but you want to be one of those 100 people.

Now ask yourself, what if 95 tickets were available for sale on eBay? Would you still be as excited?

Probably not.

There is no reason for a 100 person limit for a conference that has 5 attendees. Since the aura of scarcity no longer exists, people may lose excitement.

Tip: you should create a sense of scarcity around your product or idea.

Recognition is Why People Buy

Do you know one of the main reasons why people complain about work?

They feel unappreciated.

They drudge through their projects and finish them before the deadline, but they almost never receive a pat on the back and a compliment like “good job.” Instead, they’re given the next project and a new deadline.

The same applies to why people buy.

People buy products because they’re looking for recognition. They want to be recognized wearing the hottest new clothes and carrying the most technologically advanced phone. They want people to notice them.

Tip: you should create a sense of recognition around your product and your idea. Just look at what Seth Godin did when he launched his new book, Tribes. He included a picture of each person who joined the Triiibes community on the inside of the cover jacket. People were ecstatic.

Prestige is Why People Buy

Why do people buy luxury items? Just why would someone spend $5,000 on a watch that tells the same time as a $30 watch?

The quality of time doesn’t change, the features are the same, and both watches run on batteries. Yet, there is a significant price difference.

The $5,000 watch carries an aura of prestige, whereas the $30 watch is just plain cheap.

However, prestige is not just about price.

You may remember how Steve Jobs lured Pepsi’s CEO, John Sculley, from Pepsi back in the day. Steve said, “Do you want to sell sugar water the rest of your life, or do you want to change the world?”

Do I even need to ask you what you think sounds more prestigious?

Tip: you should create an aura of prestige around your product or idea. Just be aware, prestige does not come from price, it’s created by positioning.

Needs is Why People Buy

When I started working on the internet, I was working from home while sitting on a cheap and uncomfortable chair from Staples and using a small monitor, which strained my eyes.

After talking to Chris Pearson, he said something that completely changed the way I thought about my home office: “Derek, if you’re going to be working on the internet, you may as well do it with the right equipment.”

He was right.

He convinced me to buy a Herman Miller Aeron chair and a 30″ Apple Cinema display. He made me feel like I needed it to be successful.

Tip: you should create an idea or product that people need. Once people feel they need it, they will be your number one supporter. For example, have you seen Apple’s new Iphone Your Life campaign? They are relating the Apple Iphone to every aspect of life so people feel they need it.

The Bottom Line

While I can’t define “create value,” these five reasons why people buy, will help you craft your personal and business brand so that you tap into people’s desires.

What Do You Think?

Why do you think people buy? Please leave a comment.

My Personal Home Office

Derek — Sun, 16 Nov 2008 23:09:04 +0000

Do you want to know what my main problems were with my home office?

My favorite shows begged me to turn on the TV, my favorite books demanded to be opened, and my family always needed me every second of the day.

It was pretty much impossible to get things done. So, I wanted to build a home office that would help me achieve my goals. I wanted to limit distractions to have unlimited productivity.

Here is how I built my home office.

Researching Home Offices

Like any artist, I needed inspiration. I needed to look at several pictures of home offices so I could get an idea about what I wanted and what I needed. Here are a few home offices that helped inspire me:

Home Office Needs

After I found sufficient inspiration, I listed out my needs as a professional worker, entrepreneur, and a success hungry early twenty-something.

Ample Workspace
Comfortable Chair
No Clutter
Few Visible Wires
Absolutely No Television
Screen Real-estate
Relaxation

My Personal Home Office

Once I made my home office needs tangible, I put it all together and here is what I came up with:

30″ Apple Cinema Display – A lot of screen real estate
Macbook Air – the best mobile workstation
Dell laptop – the mandatory PC
Mac Pro – a fast desktop machine
Herman Miller Aeron Chair - a comfortable ergonomic chair
Two 5′ tall Corn Plants – plants relax me
One Bookshelf – I read a lot, so I needed a book shelf for reference material.
Bose speakers – I listen to music while I work
Google Refrigerator – A place to store cold drinks within reach

My Personal Home Office Pictures

The Bottom Line

If you’re going to be working at home, there is no such thing as spending too much on your home office. Success will come later if you lay the proper foundation.

Bonus Tip: Successful people only buy things that are functional. So, refrain from squandering money on overpriced luxuries and non-essential commodities.

Success is a Choice

Derek — Sat, 11 Oct 2008 02:02:45 +0000

Do you know why Apple offers 5 million different versions of the iPod?

People like choices. They like to go into the store, play with the different iPods, and feel they are making a decision. When they leave the store, they will love their decision. They will defend their decision to friends and coworkers. They will try to convince other people to make similar decisions. In short, they will be ecstatic.

I remember when I started working a 9-5 job last year. It was amazing. I was earning a full-time income off of the internet and I chose to start working for a corporation. I was am happy. I was promoted after 9 months for great performance. I willingly chose to start working in Corporate America and my performance reflected it.

And then it hit me. The key to success is about making choices. As long as you continue to control your decisions, you will be more likely to follow through with them. After all, people do not like being forced to do anything.

Sure, you may be thinking that your life is not a choice, but it is, and you need to break the preconception that you do not have control over your life.

You Don’t “Have” To Do Anything

The very second you feel you “have” to do something, you will often instantly hate it. I know I do. After all, people like choices, not commands.

To remedy this you need to realize that you don’t “have” to do anything. You always have a choice. Even if there are serious consequences associated with your choices, you still have a choice.

Start Replacing “Have” with “Want”

Don’t go to work because you “have” to pay the bills. Go to work because you “want” to make a difference. Go to work because you “want” to accelerate your career. Hell, go to work because you “want” to pay your bills, but never say you “have” to do anything.

While this may seem trivial, turning a task into a desire makes the world of difference in both your happiness and your ability to start doing something now instead of later.

Make the Choice and Move On

Many people stress over making the perfect decision. They research aimlessly and postpone the decision for as long as possible, or in some cases, forever.

Unfortunately, postponing a decision indefinitely is not how you get things done.

Harry S. Truman once said, “All my life, whenever it comes time to make a decision, I make it and forget about it.” He really did hit the key to success perfectly. Not only do you need to make decisions, you need to follow through with them and never look back until it’s time to make another decision.

Choice is a Choice

Taking complete control of your life is a decision, but it is not for everyone. When you believe you are the puppet master of your life, you are the only one to blame and it can be discouraging when you experience setbacks. However, I have always believed that if you put yourself there, you can get yourself out, which is why I love my right to choose.