Saturday, October 29, 2011

Great Business...

If you follow investment news, you know that Amazon shook things up this week. Amazon stood up against Wall Street, as they always have done, by maintaining their own company philosophies instead of giving into what Wall Street analysts say they should do. A lot of companies, well basically all, big publicly traded companies do what Wall Street says they should do because then Wall Street gets what they want and investors put money in the company's pot. However, the analysts only tell companies to do things that benefit the short-term gains. They don't really care what the company is going to look like 5, 10, 20 years from now. They only care about the here and now, what returns they can show in their own and client's portfolio. 

However, back to Amazon... Amazon showed net income dropping 73% compared to last year's numbers. This was a result of very tactful and strategic leadership by CEO Jeff Bezos. Bezos is looking toward the future and that means that Amazon will need to gain market share. Particularly, the market share of the e-reader industry. Amazon knows that if they allow Apple's iPad to dominate the market then they will be dependent on an Apple product to sell their e-reader products. Which consumer trending shows it's slowly becoming the norm. So Amazon tactfully took losses on their new Kindle Fire so they could saturate the market, allowing them to avoid being at the mercy of Apple for the sales of their products and also making Kindle Fire a household name. It's a very impressive move by a company that is clearly not just a bubble. Too many companies are in it for quarter to quarter gains, but it's few and far between to see a company with selfless level 5 leadership. After Amazon's third quarter report was issued the stock price dropped from $240 to $201. Wall Street wasn't happy and was trying to prove a point, but Amazon is quickly seeing correction closing Friday at $217. You can't keep a great company down.

Amazon is a extremely smart company. I think they have an excellent business model and are growing fast. Just don't mistake this company for a bubble. They have shown they are more than willing to give up short-term gains for long-term company growth. I only invest in companies I believe in and I do believe in this company.

It's just nice to see a company stand up for it's beliefs in this Dog eat Dog world. In a way, it's very inspiring to me. Hope you all had a great week! Enjoy Halloween!

Saturday, October 22, 2011

Putting the One Minute Manager to Work...


The book of the week was Putting the One Minute Manager to Work by Ken Blanchard and Robert Lorber. It was a pretty good book and I am surprised I hadn't read it before now. The series of One Minute books are a hit because they are short and have some really smart ideas. Usually the ideas are very basic, but very smart. In this particular book the authors started it off by talking about how companies bring in a new book or management technique every year and don't truly follow through with the management styles they spend time initiating. So this book acts as a follow up to the One Minute Manger, encouraging the reader to keep with it.

I first wrote about the One Minute Manger in 2009 with the following post:

The book is written in a fictional story format, however, the principles can also explained in a list format which is what I will focus on for this week's blog. The three key tools used by the manager in this book were The One Minute Goal Setting, The One Minute Praising, and The One Minute Reprimand.

The One Minute Goal Setting- Each employee writes down their goals on about half a page. Something that can be read in 1 minute if needed. I think having goals is the best way to make big things happen. You will have a hard time getting someone from point A to point B if they don't know what or where either one of those points are... so help your team set goals.

The One Minute Praising- You need to praise your people... The one thing humans crave more than anything on Earth is attention. When you give people attention for doing good things, they want to do more good things. Praising is one of the most affective and simple ways to get a person to do something. Take, for example, a baby, when they are getting ready to take their first steps. At first they may get up and stumble the first time and hit the ground, but parents are around to cheer them on and give them big hugs for their attempt. Then the next day the baby liked that treatment, so they try again... after a few times the baby actually takes their first full steps and is given more praise than ever before! Then the parents use the same "management strategy" to encourage the first words out of a baby, then good grammar, great driving habits, and before you know it you have a full grown kid living in Minneapolis, working 60 hours a week, starting a real estate business and writing a book blog in his little free time.

The One Minute Reprimand- This book's One Minute Manager uses the technique of watching for his employees to do the "right thing." However, when he saw something that was below their ability they would get a reprimand because he wanted to reinforce that they could do better. This is one of the most difficult skill sets to master as a management professional. It is difficult because you need to reprimand a behavior and not the person.

The book gave a clever story of a couple trying to train their dog to do it's business outside. When the dog made an accident on the rug the couple would take the dog and shove it's face in it and then throw him out the window in the kitchen into the backyard. The couple asked if this was a good technique and they were told they were just training their dog to jump out the window after it had an accident on the rug. People, like animals, need to know the ultimate goal before they can try to replicate it. Humans are easier to train than animals because we speak the same language. Once the person knows what the goal is they will try to make it happen for their craved praising. And if you know they have the ability to reach that goal and they intentionally fall short it may be time for a reprimand.

Leading people is a very important skill set! I can't stress how much it can make your life and the lives of those around you more successful. To lead people you just need to leave the bread crumbs... just like the child we were training in the analogy earlier... once the baby was able to walk you don't jump up and down every time they walk for the rest of their lives. You go on to the next skill you would like to train them on... after they have all the skills you are able to train them on they will go on to be as good or better than you... and that is what we want of those around us right? To live great big successful lives? And doing this will make your life easier.... if you train someone to do everything you know how to do, you have an easier load because you have employees that are capable of handling all the responsibilities that at one time were all on your shoulders. Great managers have much more available time than poor managers...



The ideas from this book that I think are important to add to the ideas above are best summed up in a chart within the current book:
This lays it all out. Set your Goals, follow up with Praise or Reprimand, to change Behavior. Managing people really is this simple. It's just putting it to practice that starts to get tough. It's too easy to reprimand people instead of coach and train them and it's too easy to forget about praising people all together or to do it all too seldom. The formula is simple, but it's definitely not easy.

Another thing I like was the idea of resetting goals and evaluate when someone needs reprimanding. 

If a person CAN'T DO something ---> Go Back to Goal Setting because it's a training problem.

If a person WON'T DO something ---> Reprimand because it's an attitude problem.

1. Tell a person how to do something
2. Show how to do it
3. Let the person try
4. Observe performance
5. Praise progress or redirect and train

Managing and leading people is one of the most important skill sets a person can attain in our ever-changing world. When you open yourself up to new ideas in the field of leadership and development you open yourself to new and better ways of changing people's behaviors. If you can master changing behaviors you are forever an asset not only to your company but, also, your church, organizations, and even family. I hear there is a lot of behavior changing needed when raising children. 

This book was good. It's a fictional story with lots of good ideas. I particularly like the way these stories were written because they do a great job of creating scenarios where the ideas are practiced. If you have any questions about this book or The One Minute Manager don't hesitate to ask!

Saturday, October 15, 2011

Common Sense Investing...


The book I read this week is Common Sense Investing by Rick Van Ness. It's a pretty awesome little book. It is a short book that walks the first time investor through the basics of getting started. And the reader can do great at investing without reading another book because the book follows the principles of investing laid out by John C. Bogle.

I think it would be ideal for every high school senior in America to have a class based around this book. There are so many benefits if the average investor starts early. Just $100 a month goes a long, long way! Rick Van Ness discusses these simple ideas and a few more. He goes into detail explaining the benefits of long-term investing in low-cost index funds. He even has very much the same ratio of Vanguard investing that I currently use... same funds too. No doubt the Boglehead in each of us coming out. (Referencing our admiration for the investing styles of John C. Bogle.) And I think it's completely necessary to go into great detail, as he did, and really drive in the need for someone to put their money into a fund and then walk away from it. It goes against our very nature. When investing during the long-term you are bound to see recessions and possibly depressions, and people want to take their money out of investments during these time periods and put it under their mattresses. However, like I have said many times, this is not a good strategy. It is important to hold tight and let the market run it's course because over the long-term you will come out ahead!

Now there is one very simple idea that is written about in this book. The idea of figuring out what big purchases you are going to be saving for, the time you have to save, and the amount of total money needed. Writing down these things is a really good way to brainstorm your budgeting plan. The alternative is just having an account set aside and just saving. But ultimately, you should incorporate basic goal planning strategy into all areas of your life, including personal finance. And basic goal planning strategy dictates that you should plan be specific and have a timeline set on your goals. The goals laid out in this book go like this:


Big Ticket Items
Money Needed
When
Newer Car
$15,000
5 years
House (down payment)
$20,000
7 years
Retirement
$1,000,000
25 years

From here, it's pretty easy. You can evaluate how these goals fit your current income and do some simple division to figure out how much you need to save each month to make your goals come to light. So with the above examples you should be putting away $250 a month for a newer car, $240 a month for a down payment, and, hopefully, you have started investing before you have 25 years left to make your million dollar mark. But if you don't have any money put away and you are 40 years old and want to retire at 65 you should be putting away about $11,000 a year into a index fund assuming a 11% return. My suggestion is to put anything less than 5 years in a money market or high-yield savings account if you are being conservative, and definitely anything less than 1 year. I like ING accounts and personally I would put both my down payment and new car into different ING accounts and turn on automatic withdrawal so you absolutely pay yourself first once you get your paycheck.

I really liked this book. I think it's very concise and it gives the reader just the right amount of information while also providing excellent resources in case their appetite wasn't quite satisfied. I suggest you pick up a copy for yourself or a friend. If you have any questions about anything, don't hesitate to ask!

Saturday, October 8, 2011

Change...

This week I want to talk about change. As you all most likely know, Steve Jobs passed away earlier this week. I am not at all one for getting really emotional when someone passes away, especially when I didn't know the person. But Steve Jobs definitely had an impact on the world. Lately there have been a lot of clips floating around of Job's Stanford Commencement Address in 2005. I didn't see this speech until earlier this week and am disappointed I hadn't seen it earlier. Let's break and watch the whole thing, the clips shown in the media don't do it justice... Please watch the whole thing!


The quote I have had in my mind since I watched this video was:

 "Your time is limited, so don't waste it living someone else's life."

I think it's extremely important to remember what you're passionate about. Is the thing you are doing, what you should be doing? Are you stuck in a rut? Do you wake up morning after morning dreading the day you are about to have? .... If so, it is time for a change. I realize that it's difficult to make changes, and I know the change gets even harder when you have a husband/wife and kids depending on you. But you need to "stay hungry, stay foolish." Be hungry enough to want to change and be foolish enough to give it a shot. Your family will stand behind you because I promise they are more concerned with your happiness than the security your current path provides.

Bottom line: If you're not happy, make a change. You don't live forever, in fact, you will most certainly die. And we have too few days on Earth to have regrets.

"Don’t be trapped by dogma — which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary."

Saturday, October 1, 2011

Humilitas...


The book of the week was Humilitas by John Dickson. This is a wonderful book. I have had a run of quite a few okay books and this one I could hardly put down. The way he writes flows so nicely and his ideas blend quite well too. I highly recommend this book to anyone.

But in the context of this blog, let's talk about how this book relates to leadership. The title Humilitas is Latin for Humility. Humility is an incredible feature, unlike a lot of other descriptors: tall, smart, brunette, etc., to be humble is not an overnight achievement nor is it something perceived in the length of a conversation. And even though it's not an easy attribute to witness it marks the pinnacle of traits which a top tier leader must possess.

But let me back track...

In this book Dickson makes a profound, yet, simple conclusion that leadership is a mix of two things: Example and Persuasion. To be an example is to lead authentically and act as you would expect your followers to act. Persuasion is communicating in a way that brings about changes. It's easy to talk at people but if you aren't persuasive, you will not be able to change their behavior or influence their ideas. Leadership is simple on paper, but challenging in practice.

So humility...

It's a hard trait to achieve. It seems that if we don't talk about our own achievements in this fast paced world that we will go unnoticed and overlooked for promotions or praise. And quite frankly, sometimes that is true. Again, it takes time for the trait of humility to even be noticed in a person. However, when someone truly possess humility, it stops becoming about the promotions and praise and starts becoming about the people that work with them. These people will always take the blunt of failure on their own shoulders and push praise to the people they 'serve.'

When someone achieves this trait they have the potential to become a powerhouse leader. This is because they are perceived to be genuine and authentic. They have the first half being a leader down: being and example. And they can easily persuade and inspire their people because the words that come from this person's mouth have always been self-less, so when the leader speaks, the followers listen because they understand, without it being explicitly said so, it's always in their best interest.

This book details accounts of the world's greatest leaders: Einstein, Aristotle, Jesus. Dickson explains the origin of today's culture of humility and leads the reader effectively to become more humble.  I'll finish with a quote from C.S. Lewis posted in this book:

"Do not imagine if you meet a really humble man he will be what most people call "humble" nowadays: he will not be a sort of greasy, smarmy person, who is always telling you that, of course, he is nobody. Probably all you will will think about him is that he seemed a cheerful, intelligent chap who took a real interest in that you said to him. If you do dislike him it will be because you feel a little envious of anyone who seems to enjoy life so easily. He will not be thinking about humility: he will not be thinking about himself at all."