The Law of Diminishing Marginal Utility; or, Do You Want Fries with That?

We trick ourselves into counterproductive behaviour far more often than we realize. We have two very different decision-making processes in our heads: intuition, our gut-check that things feel right, and reasoning, the logical deductions based on empirical data. Both have their place in life and in business—the trick is to know when to use which. A refinement of that trick is to know which one our prospects, suspects and clients are using.

Sociologists talk about the law of diminishing marginal utility, the fact that when something good happens, our enjoyment doesn’t increase in direct proportion to the good. Obviously not all events can be enumerated, but for the sake of example, if we’re given a gift of $100, or a gift of $200, the second gift will not make us twice as happy. And as the numbers get bigger, the enjoyment shortfall increases.

We have the same reaction to losses; losing twice as much money doesn’t hurt twice as much.

But losing $100 actually triggers about twice as much pain as the amount of enjoyment triggered by being given $100. As human beings, we are ‘risk averse’, meaning we’re more affected by loss than by gains.

As a business person, it would be easy to take advantage of that (in a negative sense, or a positive one.) It would be easy to offer a single, all-encompassing service or product, and then ask the prospect which parts they don’t want, in order to reduce it to their choice. When auto dealerships do this, for instance, people end up keeping more of the optional equipment and spending more money than if they’d started with a base model and added on what they wanted. It’s a cheap psychological trick.

On the other hand, you may know that this package of services is truly at its best (for the client, not you) if they take the whole package. Starting with the basic service and adding on options isn’t the best way to reach that objective. Instead, offer it as a package, the meal deal. If they really belong together, that’s the right thing to do. And if it makes sense, allow folks to remove parts of the service to meet their economic or other limitations. The act of removing options, the feeling of loss, will nudge them toward making the best choice.

The best choice for themselves, not you, right?

Of course, when you’re the customer, being aware of this concept gives you real power. Always start with the base model, and add on only those options which add real value. Remember, not every sales person is as ethical and customer-centric as you are.

Business Advice—Two Centuries Old

I’m reading the Autobiography of Benjamin Franklin, partly for historical interest, and partly because of the business lessons in it. Franklin was a serial entrepreneur, regularly seeing huge success implementing ideas which others thought were impossible or pointless.

At one point, an acquaintance asked Franklin’s advice about who he should ask for donations for a worthy cause. Franklin replied, “I advise you to apply to all those whom you know will give something; next, to those whom you are uncertain whether they will give any thing or not, and show them the list of those who have given; and, lastly, do not neglect those who you are sure will give nothing, for in some of them you may be mistaken.”

There’s quite an array of good advice just under that suggestion’s surface.

First, begin with success. The initial step in developing a new idea, selling a new product, or beginning any project, should be one you know you can finish quickly and easily. Get a single success under your belt, and the rest of the process will be less formidable. Fail in that first baby step, though, and you’ll be forced to step back and analyze your position, process, and goals.

Next, defuse fear by showing prospects and suspects that others have already taken the plunge. Joining a group of folks we respect or trust or just know is much less risky than being the first to jump into the pool.

Finally, never assume you know who’s interested. Ask them all. I remember the story of two boys walking to school. One told the other “Today, I’m going to ask every girl I see for a kiss.” His friend replied “You’re gonna get slapped a lot.”

Walking home, the second boy said “Get slapped a lot today?” to which his friend replied “Yeah—but I got some kisses, too!”

Don’t assume. Within the bounds of personal, anticipated and relevant communication, ask ‘em all.

What do you get from Franklin’s advice?

Bit-by-Bit Reading

I don’t own a copy of Franklin’s autobiography. I’m reading it by email.

DailyLit is a web service which emails you books, from the brand new to classics, in short sections you can read every day. Franklin’s autobiography is 75 sections, which I’m getting only on business days. By the time I finish, it will have taken me 15 weeks to read a book I might not have read at all if I wasn’t being nudged every day.

There are loads of free books available. Seth Godin’s “Bootstrapper’s Bible” (http://www.dailylit.com/books/bootstrappers-bible) for instance. You can sign up for this free service, and read all the free books you want. If you prefer something more popular, the prices are about the same as buying a paperback, with the advantage of a simple tool to read in bits and pieces.

What do you think about reading like that? If I serialised my books, would you want to get a free copy, bit by bit, every day or once a week by email, or do you prefer to have the physical book in your hands to read in your comfy chair?

New Book! The Commonsense Virtual Assistant

My wife and I have just completed our first business book together.

The Commonsense Virtual Assistant—Becoming an Entrepreneur, Not an Employee, is designed to help the growing number of virtual assistants analyze their business skills, and find and fill any gaps.

It’s also a resource if you’re looking for a VA. The book outlines what you should expect from a professional virtual assistant.

You can pre-order an autographed copy for $19.95. The book will ship in May.

What Folks Are Already Saying About the Book

“Your book will be a great asset to many new VAs.” Jan, Your Virtual Wizard

“Good luck with your book. I hope it will emphasize the importance of self-worth and encourage future VAs to value their skills, to always continue their education, and to be responsible and conscientious business owners.” Jennifer, www.ccvirtually.com

“Can’t wait to buy your book!” Rosalind Harris CPS, www.instantassistant.net

“Sue and Joel, I really appreciate your efforts in putting this information together and look forward to the final product.” Margie Gibson, MG Virtual Office Solutions

Plan Ahead. Expect Change.

When my wife went into the hospital for emergency surgery almost three weeks ago, we weren’t quite ready for me to take over her business. But, as John Lennon famously said (and Murphy always knew) life is what happens when you’re busy making other plans.

We’d known that since her business has reached a certain stage, my job is to take over as general manager and project manager and put some systems in place. It’s been a challenge, but no major crashes.

She’s home again, slowly stitching things back together. Three immediate benefits came from this:

1. The crash course brought me up to speed faster than if we’d lollygagged for the next six months.

2. Her clients know that, even if she’s not at the helm, the business will still function.

3. We have two employees we can depend on.

Cassi Brazil has been assisting Sue with Awesome Assistant for some time. She’s intelligent, talented and hard-working. Sue calls Cassi her clone. If you know Sue, this says much about Cassi.

The surprise was when it made sense for our daughter, Rachelle Ashman, to quit her job at the photography studio to work with us. She has the finest customer service skills I’ve seen and puts a high value on our family’s success through entrepreneurship.

Rachelle will be our customer service front line from now on. She’ll be watching the office, helping connect the right client with the right people here at BizBa6, and making sure you’re taken care of. Sue and I are always available, and Rachelle will be there to help make it happen.

We’re proud of our junior entrepreneur and her willingness to pitch in and make our shared dream a reality.

We Want You to Fail

Bolaji Oyejide shared these questions, the genesis of a book he’s writing. I’m not in the same league as the folks he’s targeting, but I know to be successful I have to act like I’m successful, so I’m going to answer these questions five years in the future when I’m where I know I’ll be.

1. Tell us of a time or two when you felt at your lowest. What caused it, how did you feel?

2. Who knocked you down, stonewalled you, or overlooked you, before you became famously successful? And what effect did it have?

3. Tell us of a time that a monumental failure got the best of you.

4. In times of self-doubt, where did you draw the strength to persevere from?

5. How did you build up your perseverance “muscle”?

6. How did you combat fear, uncertainty, or feelings of not being good enough?

7. How did you believe you could achieve the unachievable? could do things no one had ever done before? There was no precedent for it. What made YOU feel so special to think/know that you would succeed?

8. What three failures most contributed to who you are today?

9. What audacious thing do you fail at today that you know you will succeed at in the future?

10. Who’s a person of perseverance you think we should add to this book?

Pretty, Powerful in Pink

This post is used by permission of its author, T. Scott Gross, author of “Positively Outrageous Service”

(This month’s e-ziine is a little…soft. But hang in to the end and you’ll be glad you did!)

She’s a girly girl. Pink is her favorite color. She experiments with hairstyles and thinks she has an eye for fashion. She sings in the shower and sometimes skips through the living room. She studies gymnastics as well as ju jitsu.

Did I mention she is only ten?

While I’m at it, let me remind you she is also Pops’ girl.

We’re talking about my granddaughter. I call her “The Princess” and it’s my job to teach her things that too often parents forget. So far we’ve learned how to change the AC filters, a chore that included a lesson on using ladders safely, instruction on writing the date of the change on the edge of the filter, and how to check the direction of the air flow so you get the right side out.

We’ve learned how to put a spit shine on a pair of Pops’ dress shoes. (She like the spit part! We know about fixing a leaky flapper valve on a toilet, when to use gloves and safety glasses, how to dump brush at the city landfill, and why the sky is blue and what makes the setting sun look so big.

She can set a fire in the fireplace, use the wire grinder to prepare the grill for spring painting, and can tell you how to light and frame a photograph.

Granny Buns has added fun lessons on baking sugar cookies, frosting chocolate cinnamon cake, and how to wrap a gift. The Princess has her own apron hanging in Granny Buns’ kitchen. She can tell you where to find the sugar, the vanilla extract, and she’s learning who likes what to drink with dinner and what each family member will want to go with their dessert.

Because my office is in the front of the house I usually spy The Princess and her older brother “Big Guy” before they reach the door. For some odd reason I always alert Buns by yelling, “Incoming!” When the door opens the kid with the ponytail is usually the first in.

“Is that the prettiest girl in the whole wide world?’ That’s always the question and the answer is taken for obvious. Big Guy and The Princess never know when a visit will result in a lesson in addition to a piece of the latest baked masterpiece from Granny Buns’ kitchen.

At ten when you ask the “what do you want to be when you grow up” question the answer changes with each asking. But Pops and Granny Buns know the answer and we are proud to say they are already well on their way to a lifetime career of honesty, solid work ethic, and unlimited curiosity as well as the ability to find the answers they seek.

We want our grandkids to be powerful individuals who are free to do whatever they chose and not be cowed by the opinions of others or the dimwitted spirit that comes with incompetence.

I won’t leave this earth until it has a princess who knows that she need not bend to the controlling wishes of others.

This spring there will be a new tool box lined up on top of the workbench. It will be a pink one.

Big, tall, hairy-legged boys show up at our house to raid the dessert stock and hang out with our grandson, Forrest. Skinny ten year old girls with long shiny hair and too-big front teeth come in on puffs of fresh air and mom’s perfume to dig through the refrigerator with The Princess.

Every one of them zooms in for a hug before leaving. Every one says in puberty-laced bass voices or girly girl falsetto, Thanks Pops! Thanks Granny Buns before disappearing for who knows how long.

Not all, maybe darned few of your employees have someone in their life to teach them how to tune a guitar, sing in harmony, flip an egg, or even that you take your shoes off outside if they are muddy. So when they screw up… and they will screw up… take time to discover if their behavior was negligent or simply the result of not having a Pops and Granny Buns. If that’s the case… step up to the plate, we have work to do!

Creating Creativity

For the entire month of January I was in a slump mentally. I just couldn’t focus on anything even remotely creative, any kind of problem-solving; even reading was a challenge.

Some of it was probably diet, some of it was other things. It surprised me, though, what broke the dam and got things flowing again.

Songwriting.

Every year, I participate in February Album Writing Month where songwriters from all over the world to cheer each other on as we write an entire album, 14 new songs. Each.

Each January 31st I wait up ’til midnight so I can start writing the very second it’s allowed (one of the very few rules at FAWM is that you can’t start before it’s February wherever you are.) Official challenges are posted at the website (“Title involving a color ” “Mangled cliché” or this year’s first, “Photograph”) to inspire you if you need it.

I started writing a song and it just wouldn’t come out. Last year, I had a song written and demo recorded to post at the website by 3 a.m. but this year, at 2 a.m. I just went to bed, mulling over the lyrics I couldn’t write.

I woke up with the song almost fully written in my head, and had a demo recorded within a couple hours.

And then, they just kept coming. I’ve written and recorded eight songs in seven days, and I’ve intentionally avoided doing any musical work this week to focus on other kinds of work. Still, I have eight more song ideas on the whiteboard on the wall behind me.

It’s not just music, either. I’m suddenly having ideas for blog posts, solving web design problems, creating graphic designs for my wife’s clients, organizing projects under tight time constraints. I’m thinking more clearly, I have more mental and physical energy, and as a result, feel better both emotionally and physically.

Creativity transcends boundaries. Even when you chased it with a stick instead of waiting for inspiration.

(If you’re so inclined, you can listen to the wildly eclectic music I’ve written this year at the February Album Writing Month website.

What’s Your Leadership Philosophy?

Good friend Jule Kucera wrote “The work and the joy of leadership is to:

• Communicate a compelling vision of where we are going and why.
• Ensure that each member of the team has the ability and the heart to do the work.
• Create an environment that supports success.
• Get out of the way, so that when the vision is accomplished each member of the team stands back, impressed with themselves and with each other, and says, “Look what we have done!”

to which I responded

I’d say almost exactly what you’ve said, Jule, but as usual, twist it around just a bit:

• Find out what each member’s abilities and heart are
• Find out where we can go with those
• Create the environments that support success for each participant
• Hover anxiously in the background like an expectant father, then give all the credit to the Mothers of Their Own Success

and added

Actually, I’m living an example of Jule’s philosophy at February Album Writing Month right now. You, too, can create this, if you follow this simple (hah!) recipe:

Burr Settles, the real honest-to-goodness leader of FAWM, had a compelling vision and attracted others to it: jump-start the song-writing process by forcing yourself to write 14 songs in the 28 days of February. (Burr does not call himself the leader of FAWM, yet every single other person on the website forums does.)

Anyone is welcome to participate, and songwriting newbies are nurtured and congratulated and taught by the 500+ active members of the tribe. This nails criteria 2 & 3 on the list.

Burr has never set any rules except the original three: all writing has to be done during February, a song is whatever you think a song is, and while the goal is to write 14 songs, you win by just trying. Any genre you like: classical, rock of all kinds, country, folk, ambient trip-hop with vicuñas; whatever trips your switches.

In six years, it’s gone from four guys to 2,292 members (587 active, meaning they’ve posted at least one song so far this year) who have written 2,081 songs in the past 10 days. Oh, most of us record demos, too—1,525 so far.

Burr’s active pursuit of this leadership philosophy has created, so far in February, two thousand eighty-one songs that didn’t exist eleven days ago, one thousand five hundred and twenty-five of which you can download and listen to right now. (Some of last year’s songs are my favorite songs in the world; Best Beloved and I listen to FAWMers like Resonance, oddbod, Phil Norman, Phil Henry and Old Lost John who really should be household names; infinitely superior to virtually anything on the radio.)

Last year we wrote a total of 5,710 songs. This year our fairly conservative goal is 10,000 songs. If we reach that, we will have written enough music in February that it would take all of February (24 hours a day) to listen to it all.

THAT is what it looks like: someone finds a group that was looking for a leader (you can’t create a group, you find them) and follows the ‘vision, tools, support without smothering’ philosophy, and the pent up energy in the tribe explodes into activity.

That’s my plan, anyway.

11:59

Guest Post by Triiibes Friend Rick Wilson DMD

For the next 3 years, it’s 11:59. All the time.

And in spite of all odds, January was a good beginning for us. Because we made it so. Laser focus, people, that’s the key. Full-throttle sense of purpose. Nothing less will do in these times.

Trust me, though. You can do it. Si se puede!

I’ve set goals and I’m determined to rock out in spite of the overall economy. Operating within Seth’s philosophy which so far is working beautifully. It’s not fast, not a quick fix, but I’m just beginning to see real long-term rewards.

I believe that each business should identify their own “Four Horsemen of their Apocalypse”. Maybe three, maybe five, but some tangible things that hold us back. I also firmly believe that it’s hard to see your own challenges clearly, and that it helps a great deal to look at other industries or fields that are different than your own. Then draw parallels and learn and apply the lessons to yourself.

Wanna hear mine? The last will surprise you. OK. Essentially all I need to experience growth are a certain number of new patients per month. Leave the rest up to me and my wonderful staff, we practice Edgecraft etc. and treat people in Anne’s Visceral manner, very I-You. All I need is to have enough folks find us. We’ll handle the rest.

So my Horsemen are:

1. People who move away. Our society is a very mobile one. I still miss folks who moved away a long time ago, and recently we’ve had such fine patients go far away. It’s sad, and also of course it drains away a little part of the practice each time it happens.
2. Patients who pass away. (No, not in the chair!) Our practice has a large elderly population. Even sadder than when they move, of course, and same effects in losing potentially more than we can gain with new patients.
3. Patients who say, “My insurance changed, I can’t see you anymore”. But you have to say this out loud in that exact voice that Jerry Lewis used when he screamed “Laaaady!” ;} Here’s the irony—they are usually folks who are healthy and have very little dental needs besides maintenance, and it might cost them, say, $140 per year instead of, say, $57 per year. I can understand changing doctors when thousands of dollars in some reconstruction might be reduced, but these smaller amounts do leave me bemused.
4. Here’s the interesting one—people get healthy! If patients are reasonably compliant and listen to health advice, we can reduce cavities and periodontal disease to very low levels. It has been said that dentistry is the only major business that is constantlly trying to put itself out of business.

I post these in detail because, again, it takes a lot of deep thought to truly identify the challenges in your own business, and I find going far afield helps to figure it all out. So maybe someone here who does something quite different than me can use this, and will see something that they missed before.

So, in my case I need Marketing. Not Advertising, which is broken, but Marketing. So we Embrace The Cow, we use Edgecraft, I recognize that we’ll always serve a crowd but also we can lead a tribe within that; I reflect on and use Anne’s Visceral Business and Blatant Integrity concepts. I’m a bit fortunate that way because Dr. Sukoneck practiced that way instinctively since the 70’s, before it was ever called that.

So, bringing in an appropriate number of new patients and treating them with excellence is what I need to do to counterbalance my Four Horsemen. As long as we stay focused every minute as if it’s 11:59 we will continue to grow. The best thing about using Seth’s concepts as opposed to “Y’all come” advertising is this—nearly all of the new patients who are referred by our existing patients are fine people with whom we can have a good mutual relationship, and this is simply because they were referred in by similar people who are already in the practice. We rarely have an extremely difficult, cantankerous new patient these days because it’s not a random selection process.

Rick Wilson DMD

How Does That Feel?

So where were we? Ah, yes; Marcus Buckingham’s tools.

We tend to go on semi-autopilot when we’re working. We also tend to assume work is work and shouldn’t be fun. The former habit makes it really hard to disabuse ourselves of the latter notion.

Part of Buckingham’s program is to step out of autopilot and consciously analyze how we feel about what we’re doing. The first step to loving what you do every day is to know what you love and what you don’t.

For one week, pay attention to how you feel about while working. Every task, consider whether you’re looking forward to it, or you’d really rather not. At the end of the week, compile the list of what you look forward to in your work, and what you dread. You may find activities clearly grouped, or you may discover that your interests are scattered, but either way, at least you have a starting point: I love this and I loathe that.

If you like fun tools for the process, you can download the ‘Loved It’ and ‘Loathed It’ cards from Oprah.com.

Of course, now you have to know how to offload the stuff you don’t like, and how to amplify the stuff you do. We’ll start there next week.