In most industries, and even non-business related activities, there are tools you can use to compare how you’re doing to some compilation of data from other similar ventures. While I believe comparative analysis is certainly something that should be considered, a more important measurement is how you are doing in your own world today and your individual trends over time.
I’ll share a few personal and business examples of average statistics that aren’t necessarily good numbers to shoot for. A golfer on the PGA tour usually puts a new ball in play every few holes of a golf tournament because he hits the ball with such power that he actually wears out the ball, while the average golfer should be able to play the same ball for at least a couple rounds. I, too, put a new ball in play every few holes, but it’s because I either hit something that scuffed it up, or it’s too deep in the woods or the pond to find. Don’t quote me on this because the facts may be a little fuzzy, but I once read an article that, on average, most serious private aircraft accidents happen when the pilot has around four hundred hours of flying experience. Of course, this is not a statistic that most pilots want to aspire to.
On the business side, there are industry measurements that a software company like Red Wing Software should spend about sixteen to eighteen percent of its budget on development. Again, that might be something worth measuring against, but we as a company need to look at our particular situation and determine if that is the right allocation for us. Another example would be comparing a particular business ratio against a specific industry benchmark. While that individual indicator might be way off, you should look at several indicators and determine if there is an anomaly in that one measurement and everything else is in line. It might be because of some significant difference in your particular business.
When doing business (or life) comparisons, make sure you look at all the facts that could affect the validity of the measurements, and make appropriate decisions. I personally prefer to look at trends and make certain they are headed in a positive direction. I’m down to about five new golf balls per eighteen-hole round.
I recently attended an annual meeting of an organization that deals with financial standards, and how information should be tracked and analyzed for their particular industry. It’s amazing how many different ways accounting rules can be interpreted and applied, even though there have been generally accepted accounting principles (GAAP) for scores of years. One of the important things for this, and many other industries, is the ability to do comparative analysis with their peers. In order for this analysis to be meaningful, it is important that everyone be keeping records in a similar way, so they don’t end up comparing apples to oranges. So when people have differing ideas on how to do things right, it makes for interesting “discussion”.
We have similar issues within our own software products since we provide solutions to so many different kinds of industries. What works well for one company, might need to work differently for another. That raises some challenges when it comes to designing software. We are fortunate to have a wide range of knowledge within our organization, and try to make our software flexible enough to handle many complex scenarios. We often call on our customers to provide input during the design of features, and appreciate their willingness to share their knowledge, as well.
Please keep providing us with your input, and we’ll do our best to supply products that meet your needs.
You’ve heard the saying “people don’t plan to fail, they just fail to plan”. Well, that’s not always true. Several years ago, (long enough that the statute of limitations has long passed), I was on the board of a not-for-profit organization that would consistently budget a negative cash flow for the year. They didn’t want to lose money, and didn’t think they would lose money, but they always planned to lose money. I didn’t understand that philosophy. I am certainly in favor of conservative budgeting, so if something doesn’t quite go according to plan, there are still prospects of survival.
Now that we’re in the New Year, you should have your plan for 2012 in place and have started executing that plan. Some businesses have to start executing their plan long before the beginning of any calendar period by buying inputs for commodities they grow or parts for finished goods they produce. In this case, their plan has to be more perpetual than based on a twelve month period. While I don’t believe the old Wall Street movie that proclaimed “greed is good”, I also don’t believe profit is a four-letter word. The best thing we can do for ourselves, the people that work in our companies, our local communities, and our country, is to plan to be successful and execute the plan. So, don’t fail to plan, and don’t plan to fail.
Are you a driver or a passenger? I read quite a bit, and it seems a lot of the things I’ve been reading and observing lately are related to this question. I’ll give you a few examples of what I’m talking about.
In a book that I just finished reading, a group conducted a study in which participants were to watch a video and afterwards would be tested on what they had seen. While they were focusing on the subject of the video, a person in a monkey suit walked pasted in the background. When they were tested on what they saw in the video, almost no one remembered seeing the monkey. As a driver, you need to be focused on the task at hand, but also need to be aware of what’s going on around you.
To support one of my hobbies, I subscribe to over ten aviation publications that come at least once per month, and in many of the publications there are summaries of accident reports. I read these religiously, because in this case, I would rather learn from the mistakes of others, than learn from my own. In one case, an airplane with two pilots crashed when a warning indicator light came on and in an attempt to troubleshoot the problem, both pilots focused on finding the source of the failure, and neither pilot remembered to fly the airplane. The result wasn’t pretty.
Here’s one we all see every day. Someone “driving” down the road while talking on the phone, sending a text message, eating, you name it. They clearly are not aware of what’s happening around them because they don’t maintain constant speed, they wander about in their lane, don’t go forward when the light turns green, or any number of other obvious non-driver acts. I argue that many of these people are passengers in a car with no driver.
One last example that hits close to home. My mom recently told me that when she and another person are traveling together, one person is behind the wheel and the other is driving. I’m not sure what to think of that one.
My point to all this is; when running your business (driving), and while focusing on the task at hand, don’t forget to pay attention to your peripheral vision. You might regrettably find that the task you’re focused on is being handled very well, while the business is crashing around you.
- Ken Hilton, President
If it works, don’t fix it. I’m sure everyone has heard that statement, but is this philosophy always good to live by? That depends on what it is that “works”. In some cases, you can get away with letting things fail, and then take the action to fix or replace them. In other cases, it’s a good idea to fix things at the first sign of trouble, and sometimes things should be “fixed” even before anything appears to be wrong. Let’s take a look at a few examples.
Let’s say the speakers on your computer are making a funny noise, and it’s not because you’re watching hilarious YouTube videos. It might be okay to put up with the noise because if the speakers fail, it’s probably not critical to running your business. Or, your car is making a noise that you have identified and it is not compromising safety. In this case, you can turn the speakers up and not hear the noise anymore.
A while back, I saw oil coming from underneath the engine of my airplane. It was running fine, but was sending me a message that something was wrong. This got my attention right away, as I don’t have a backup in case it decides to fail. I fixed it!
Speaking of backups, how is your computer running? I’ll bet it’s running just fine, so why would you need to back up your information? Computers rarely give you a sign that something is about to go haywire. That doesn’t mean you don’t need a backup. And, while we’re talking about technology, how old is the computer and/or software that your business is relying on?
Eventually, the computer will fail, and the old software on it may not run on new equipment. Are you prepared to re-enter all of the information you need to run your business because your data will not move to newer software? Think about it.
Sometimes things need to be fixed, even if they still work.
Ken Hilton, President