Get Off the Treadmill With the 7 Stages of Business Ownership

OK, so you're building the business of your dreams. But do you have any reference point for how your business actually affects you personally? If you don't, you just might be building a trap for yourself, not the business of your dreams. If you don't have a handle on the Seven Stages of Business Ownership, you're likely to flame out personally, even if your business is successful.

Will You Be Owned By Your Business? Just about every business founder/owner makes the mistake of assuming that if they build a great business, they'll automatically get a life, too. Big mistake. If you're building a business, you need to be as intentional about eventually getting a life as you are about building the business. Building the business always comes first, but if you don't intend to USE your business to build your ideal lifestyle, you won't own the business; the business will own you.

There are plenty of tools to grade what stage your business is in, but none for measuring how your business is impacting you. Here's one from our book, Making Money is Killing Your Business that focuses on what the business is doing for (or to) you personally. As you read through the Seven Stages of Business Ownership, ask yourself,

1) What stage am I in personally, and

2) What stage is my goal? You can stop anywhere from Stage Five through Seven. But if you stop at Stage Four, which most business owners do, you will always be a hostage to your business. Stages One through Four are about generating money. Stages Five through Seven are about ensuring your business generates both time and money for you.

Get to at least Stage Five so you can have both.

Stage One--Start Up

Pouring time and ideas into creating the business & getting it off the ground. This is fun!

Stage Two--Survival Survival is everything; funding is drying up. Urgently driving sales. We burn a lot of fuel on takeoff. I didn't think it would be this hard."

Stage Three--Subsistence Regularly breaking even--woo hoo! But the business is totally dependent on me. Tension..."If I stop, the business stops. Must keep going...

Stage Four--Stability (& Growth)Regularly profitable, finally. The "American Dream!", followed in a few years by quiet desperation. Outwardly successful, inwardly deflated. My business owns me."

Stage Five--Success Now others can "make the chairs." The business makes money when I'm not around and I don't have to stitch it back together when I return. Only 5%-ish of business owners ever get to Stage Five. You can make millions and be stuck in Stage Four for decades because you have no time to enjoy the money. The reason only 5% make it? The Big Mindset Shift. They decide to demand that their business give them BOTH time and money, not just money. It's that simple. "I'm off the treadmill!"

Stage Six--SignificanceLeadership inplaceThe owner is about vision and guidance, not production. "I'm focused on making a difference, not making a chair."

Stage Seven--SuccessionLeadership incharge. The owner delegates guidance and focuses on vision, passing the day2day torch of leadership to others. They become "the myth"--when they walk in, people whisper, "Hey, that's the person who started it all." Leadership--"I used to solve and decide. Now I ask questions."

Beware Stages Four and Six Stage four is the most dangerous stage. The urge to escape any future risk to get to the next stage keeps us on the treadmill for years, if not decades. But stopping at this stage ensures you bought a job, not a company, and will ensure you regularly fall back into Stages Two and Three.

Stage Six is the second most dangerous stage. If you go off and "play" too quickly at this stage, you will come back to a disaster. Focus for just a little bit longer, and make sure someone else is giving day-to-day guidance, and reporting transparently to you.

Which Stage is Your Objective? Where are you? What's the one thingyou need to donowto get to the next stage? There's a hundred things you could do; just do the next one. If you can't get past Stage Four, it's head trash. Nobody is as good, competent, experienced, committed, etc. You made that come true. Stop it.

If you're in Stage Five or greater--congratulations--take the next month off with pay. They won't miss you!

Article as seen on Inc.com

Why You Need to Become a Prisoner On The Road To Business Freedom

Want freedom? First, you must become a prisoner to your business, which is why most business owners never achieve freedom.

Research published in Harvard Business Review reveals something very telling about the way we work; we're too busy to follow the rules. And ironically, that has a profound impact on whether we will ever stop being so busy.

Don't Kid Yourself, You're a Hostage

Almost every founder, CEO and business owner I know is a hostage to their business. I was through six businesses until I learned to move from hostage to prisoner. Six months as a hostage can have more lasting negative effects on someone than years in prison. Why? A hostage is not in control of anything, the rules are always changing, others seem to be calling all the shots, all we can do is react, and worst of all, a hostage never knows when it will all end. Welcome to owning or running a business. But it doesn't have to be that way.

Want Freedom? Become A Prisoner

In Simple Rules for a Complex World, Donald Sull and Kathleen M. Eisenhardt make my case on why we need to become prisoners if we truly want freedom. They found that companies that flourish through hard times, do so because they are following a few, simple rules while others are flailing around with what I call the Random Hope strategy of business. It makes sense. A prisoner has a few simple rules they need to follow, and most importantly, they know when it will all be over. It's difficult for a hostage to be encouraged and have hope because the future is a big unknown.

Just a Few Specific Rules

Simple Rules says the fewer the rules, the better. Here are my four simple business rules, which I published in my first book, Making Money Is Killing Your Business. We call them the Four Building Blocks of success:

1) A Big Why

Your Big Why is something you can never check off as completed; being a lifelong learner, being a great mom, giving back to business owners, solving poverty. A Big Why motivates a business owner to filter daily decisions through how they help solve problems and create freedom.

2) A Strategic Plan (not a business plan)

A Strategic Plan will keep you clear about where you want to end up three years, twelve months or three months from now, and will motivate you to figure out the one or two things you need to do this month to obtain the freedom you've described.

3) Freedom Mapping

This is where the rubber meets the road. Everyone in our business (especially the founder or CEO) needs to get the brilliance out of their head and onto a piece of paper so others can do it. There have been many copies of famous paintings, like the Mona Lisa, that were so good that art experts couldn't tell the difference. If Da Vinci can find someone to paint the Mona Lisa for him, you can find someone to train to be better than you.

4) Outside Eyes

You can do the above three on your own, or you can get help and accelerate the whole process exponentially. I was an 18-20 handicap in golf for twenty years. Then I got a coach and in two years I was a two. I can't imagine how much time and money I wasted doing it myself. I'm talking to you, Mr. Rugged Individualist.

I'll Get To That Tomorrow...

Here's the kick in the head. You can go an entire forty-five year career and never do any of these four simple things, and most founders do just that. They don't know why they are in business, how they plan to use their business to accomplish that, or how to create the Freedom Maps to get them off the treadmill. And they aren't about to ask for Outside Eyes to accelerate the process.

Choose

Founders and CEOs who employ the Random Hope strategy of business will never get off the treadmill. Those that create a very few, measurable, specific rules, and follow them slavishly, can create a business that makes money when they are not around. He who makes the rules wins. What are your few simple rules? How are they ensuring you will experience freedom? If you have them, and follow them carefully, who knows, you even might get out early for good behavior. Article as seen on Inc.com

One Learned Skill Contributes to Success More Than Any Other

The CEOs of the fastest-growing companies in America have a single, learned attribute that makes them more successful than anyone else. You can learn it too.

For decades while helping founders build their businesses, we have told them the number one attribute of success is Speed of Execution, which is the practical outcome of being willing to take risks. Entrepreneurs and founders who exhibit Speed of Execution are able to do so because they move on an idea without having enough information to know for certain the idea will work. While others are researching and doing case studies, they are already turning the idea into reality. They can do this because they have learned by experience that the only way to perfect an idea is with movement, not planning.

Planning never creates movement, but movement can create a great plan.

The Data Is In--Moving Fast Works

New research confirms this is the path to success. Gallup, which built the popular StrengthsFinder assessment, recently developed an online version specifically for entrepreneurs--the Entrepreneurial StrengthsFinder evaluation. They invited the founders of the 2014 Inc. 500 fastest growing companies to take the assessment, and discovered that the number one attribute, shared by a whopping 85 percent of the founders, was the willingness to take risks.

Our Beliefs Determine Our Behavior

Risk-taking is the belief system, the mindset. Speed of Execution is the practical outcome of that belief system. Risk takers believe that moving quickly with all the information will work better than trying to get it all figured out before you move. They understand that you don't get comprehensive information in an ivory tower, but from experience. Those who move on an idea quickly in the trenches, always get information not available by analysis.

The number one indicator of success in an early stage business is not how good your product is, or how smart your marketing is, or your uniqueness, or your funding, or any of those traditional ideas of what makes for success. The number one indicator of success in early stage business is simply Speed of Execution. Get an idea and get moving on it. You will find out if it's a good idea or not much more quickly and reliably by moving on it than by musing on it.

Steering Your Business

How do you steer a ship? The logical answer is with a wheel and a rudder--that's wrong. The intuitive answer is, "Get it moving." Movement steers a business in the same way. Moving the rudder on a ship dead in the water does nothing to change the direction. Only movement will affect change.

Planning is your rudder. I would never advocate putting a boat in the water without a rudder. But most people are sitting around building hand-carved, silver inlaid, 100 foot tall rudders to stick on the back of their 12 foot dinghies, and wondering why their idea sinks before its launched. Get a simple piece of metal (a basic idea), stick it on the back of your boat, and get out of the harbor.

Move Fast. Break Things.

The faster you move, the less rudder you need. Bill Hewlett famously said, "When I talk to business schools occasionally, the professor of management is devastated when I say we didn't have any plans when we started. We were just opportunistic. Here we were, with about $500 in capital, trying whatever someone thought we might be able to do. So we got into this thing not by design but because it worked out that way."

For HP, considered by most to be the founders of Silicon Valley, movement created the plan. For the first ten years of Facebook's existence, Mark Zuckerberg echoed Bill Hewlett, and led the company with the mantra, "Move Fast. Break Things. If you're not breaking things, you're not moving fast enough."

Stop thinking. Stop planning. Your plan, like Bill Hewlett's, will form as you move, not while you're reading case studies. Get a nice little rudder, stick it on the back of your business, and get moving as quickly as you can. It's counter-logical, but to the most successful entrepreneurs in the world, it's very intuitive.

Implement now. Perfect as you go.

Article as seen on Inc.com

Why Did The SBA Just Gift Millions To For-Profit Businesses?

The SBA just gave away millions in corporate welfare with no strings attached, to venture- capitalists accelerators. This is wrong on multiple levels.  

The U.S. Small Business Administration just announced the award of millions of dollars in grants to 50 "accelerators," which are designed for venture capitalists to sift through countless startups to find the few they think can make them money. But the rationale, efficacy, and fairness of this program all need to be challenged.

The Rationale--Accelerators Produce More Jobs (NOT)

Over the last decade, the SBA has shifted its focus away from the 98 percent of small businesses with 1-19 employees, to work with very large corporations with up to $36.5 million in revenue and/or 1,500 employees. This accelerator grant program is another example of that shift.

The SBA says accelerators produce a lot of jobs, but the evidence suggests the opposite. Over the last five years, the approximately 200 accelerators in the U.S. have created between3,300 and 4,800 jobs, or a measly 700 to 960 jobs a year, at a cost of $130,000 per job created. Small businesses add around 600,000 businesses and three million jobs every year, or an average of 15 million jobs every five years; all without handouts from the government.

The Efficacy--Accelerators Product High-Growth Companies (NOT)

The SBA says accelerators produce high-growth companies. The evidence suggests otherwise.

The best data on job creation from the Kauffman Foundation shows 100% of net new jobs are created in the first twelve months of a new business. 98% of those will never have more than 19 employees (and don't want more), and less than 00.06% have more than 500. And most importantly, nobody can figure out which startup will be the freak that will grow quickly. Not a single business that has gone through an accelerator program over the last couple decades has become "high-growth", and generated tens of thousands of jobs.

In contrast, McDonalds started as a hot dog stand in 1937, and didn't start growing until eighteen years later. It was not built to be big, "high-growth", or even make hamburgers. Accelerator owners would have laughed at it.

Sara Blakely designed and started selling panty hose from her apartment because she didn't like the way her panty hose fit. In a few short years, Spanx became a billion dollar company without the help of an accelerator, or even a single penny of outside investment. And no one, including Sara Blakely, could have guessed it would become huge.

In 1996, two college kids started a company called Backrub on their college campus server. Three years later they moved out of their garage and renamed it Google, which lived in obscurity in the backwaters of the Internet for another couple years. These kids would have never survived the "pitch deck" process to get into an accelerator.

The accelerators never recognized these or any others like them, and the overwhelming evidence is they never do. The fact is, good ideas don't need to be coddled. 81 percent of the fastest growing businesses in America never took a dime of venture capital, and those that achieved the highest financial return also took no vc money. Not one of the fastest growing businesses in America on anyone's list over the last twenty years has come through an accelerator.

Throwing free money at accelerators in not an effective use of SBA funds. They would be better off lending it to small business owners with interest.

The Fairness Issue

The SBA was formed to help small business owners get interest-bearing loans, not to give free money to wealthy vc's. One recipient of the handout, the Arizona Center for Innovation, is owned by Tech Parks Arizona, which owns 5.2 million square feet of commercial office space producing over $100 million a year in revenue. Do they really need a government handout to make more money?

Just as questionable, many other grant recipients formed their accelerator in the last few months, possibly just to get the grant. Some don't have a website yet. Some haven't even opened. One is a rental kitchen that opens this month and will rotate chefs in their for-profit restaurant area. How is that "high growth"? With no track record at all, the SBA is throwing money at all these, no strings attached. It's mind-boggling and a terrible investment practice that no accelerator with integrity would support.

How does any of this giveaway make sense? This is crony-Industrialism, and an affront to the millions of small businesses slugging it out in the trenches, who are more deserving, but won't see a dime of this giveaway. The SBA has a lot of explaining to do.

by Chuck Blakeman, Author of the #1 Rated Business Book of the Year, Making Money is Killing Your Business and Top 10 business book, Why Employees Are Always A Bad Idea

www.ChuckBlakeman.com

Article as seen on Inc.com

Marissa Mayer, The Old School Manager, vs. Ricardo Semler, The Participation Age Leader

Mayer manages to the Lowest Common Denominator. Semler leads to the Highest Common Denominator. The difference is dramatic. Last year, the CEO of Yahoo, Marissa Mayer, created shock waves throughout the tech world by dictating that “work from home” was no longer permitted. She summarily herded everyone back into the Office Day Care Center to be closely supervised like seven year olds. A few years earlier, a large multi-national company headquartered in Brazil named Semco, threw a party for their leader, Ricardo Semler, to commemorate his 10^th anniversary of not making a decision.

Managing to The Worst vs. Expecting the Best

LCD Management (lowest common denominator) asks, “What’s the most incompetent or laziest thing somebody could do?”, and then creates an environment to make it hard to get away with it. In contrast, HCD Leadership asks, “If given a clear vision, what is the best possible thing people could do without being managed?” HCD leaders then create the kind of environment that will attract self-motivated, self-managed achievers. Both of them are self-fulfilling prophecies.

LCD Managers create an environment where people will live down to our worst expectations of them. HCD leaders understand that the art of leadership is to know how few decisions the leader should make.

Ricardo Semler is perhaps the best, low-profile CEO leader in business today. Mayer is a high-profile CEO manager, using personal superpowers to hold everything together - for now. As a result, the futures of Yahoo and Semco are going in dramatically different directions.

Centralized Decision-making vs. Everyone is Capable

LCD managers assume they are the most motivated, qualified, committed, invested, and experienced. With all those superstar qualities, it would be foolish to have others making decisions. That’s why they are paid the big bucks. Mayer is infamous for regularly having a few dozen people waiting outside her office for hours, as she solves problems and makes decisions for them one at a time.

HCD Leadership believes most people are inherently motivated, qualified, committed, and invested, and that they make better decisions than someone in a hierarchy.  Semler doesn’t make decisions anymore because decisions are made where they will be lived out. Stakeholders throughout the company are responsible for Semco entering a variety of industries and growing dramatically year after year, from $4 million 29 years ago to $1billion+ today. As an HCD leader, instead of making decisions others can make, Semler is free to ask questions, cast vision, and work with others to build the future of the company.

Superpowers vs. Delegation

Mayer is a supermanager – which allows her to get away with a lot in the short term. But it is not sustainable. When she goes, the energy goes. She has entrenched herself in decision-making, making her nearly indispensable. While at Google, Mayer pulled 250 all-nighters in five years and held up to 70 meetings a week. She sleeps four hours a night. In contrast, Semler trained others to make decisions. There are now six co-CEOs who rotate leadership every six months, allowing Semler to function at the highest levels of leadership and not make decisions. As with any great leader, he has worked hard to get out of the way. He is fully dispensable, while nobody could replace Mayer.

The Results Are In

Semco gets hundreds of unsolicited resumes every month, and no one leaves. In the worst 10-year recession in Brazil’s history, revenues grew 600%, profits were up 500%, and productivity rose 700%. Innovative Stakeholders have taken them into profitable industries they could have never dreamed of entering, and they continue to grow exponentially. And unlike Yahoo, Semco hasn’t told people how or where to work for over three decades.

LCD management may get quick, short-term results, but Yahoo’s future will never look like Semco’s – it’s too reliant on a very high-profile, LCD superhuman manager. Very impressive in the short-term, but very old school.

Why They Lost Their Shirts with a Documentary Collection Payment

Documentary collection, sight draft, documents against payment, D/P, time draft, bill of lading, invoice, packing slip, insurance certificate, inspection certificate, protest, documents against acceptance, D/A, at sight, draft, customs, maturity date, open account, notary public, acceptance of the draft, International Chamber of Commerce

The Buyer Refused Payment

A customer of a bank in Minnesota, for which I worked, imported shirts from a supplier in Greece. The buyer and seller agreed to payment terms on Documentary Collection with a payment 60 days after acceptance of the draft, easily calculated once the buyer accepts the draft. On the maturity date, the treasurer informed us he would not make the payment.

Protesting Non-Payment of the Collection

After we informed the bank in Greece that we could not collect the payment, the bank in Greece requested us to perform a rarely used technique. They asked us to protest non-payment of the draft – a formality sometimes used to provide material evidence, if needed, in a legal proceeding, or sometimes nothing more than a bluffing technique.

I asked a coworker, a notary public, to accompany me to the buyer’s business. The treasurer invited us into his office. We explained that the bank in Greece requested us to either collect payment or protest non-payment. We produced the draft with his signature on it and bluntly asked, “Will you pay this draft or not?”

Without hesitation he shouted, “No, I’m not going to pay that draft. We ordered large shirts and received small instead. Our customers primarily consist of big Norwegian men,” he emphasized, “and they can’t wear the small shirts.”

We thanked him and returned to the office where we prepared a notarized statement that we had witnessed non-payment by the buyer and sent the notarized statement with a letter to the bank in Greece along with an invoice for our services. When the Greek supplier finally realized they would not receive payment, they agreed to exchange the small shirts for large shirts and the buyer subsequently authorized payment.

The buyer and seller agreed to a “documentary collection,” one of the four methods of payment used internationally. When paid immediately, banks refer to the draft as a “sight draft,” “documents against payment” or simply, “D/P.” If the buyer and seller agree to a delay in payment, the transaction becomes a “time draft,” “documents against acceptance” or simply “D/A,” as illustrated in this lesson.

Understanding Risks of the Collection Payment

In a documentary collection method of payment, both the buyer and seller bear some risk, and, likewise, both have a measure of security. Therefore, I refer to this method of payment as a “compromise” payment. With a sight payment, the buyer has the protection that the seller can receive no funds until he has proved he has shipped the goods. This prevents the seller from using the money for a weekend ski trip or some other frivolous use. The seller, on the other hand, has the protection that the buyer cannot receive the goods without paying for them.

Logistically, the transaction begins when the seller delivers the goods into the hands of the transportation company, which issues a bill of lading as proof of shipment. The seller prepares a draft and attaches the bill of lading and other documents such as an invoice, packing slip, insurance certificate, inspection certificate, etc., and delivers all documents to his bank with the request that the bank attempt to collect the payment.

The seller’s bank then couriers the documents to the buyer’s bank with clear and precise instructions to: “collect payment from the buyer before releasing the documents.” Without the documents, the buyer cannot claim the goods and clear the goods through customs. When the buyer authorizes payment, the bank releases the documents and the buyer claims the goods.

Since the buyer pays on receipt of documents only, he will not see the goods until after payment. If the goods do not comply with the order, the buyer has little recourse. The buyer can mitigate the risk by arranging for inspection of the goods at the port of departure. (The buyer cannot inspect the goods at the port of arrival because he needs the documents to see the goods.)

The seller assumes the risk that the buyer may not pay. In that case the seller can exercise one of four options: (a) renegotiate with the buyer and try to induce him to make payment and accept the goods, (b) return the goods at the seller’s expense, (c) find another buyer, or (d) abandon the goods.

When the seller presents a time draft, as in the shirt story, the bank requires the buyer to indicate his acceptance of the draft by signing and dating a notation that reads “Accepted” across the face of the draft. The seller must consider the risk that the buyer may not accept the draft. In that case the above four options remain available to the seller.

After the buyer has accepted the draft, the bank will release the documents and the buyer can claim the goods. Ideally, the time period until maturity date will sufficiently allow for the buyer to liquidate the goods and collect payment before the maturity date. On the maturity date the buyer instructs the bank to remit the payment to the seller.

If, however, the buyer refuses to pay the accepted draft on the maturity date, the seller loses all of the previously mentioned options. Selling goods on a time draft basis falls only one degree short of open account. With open account terms the seller agrees to allow the buyer to receive the goods and pay for them at a future date.

Sellers have an advantage with a time draft because they hold the accepted draft which becomes tangible legal evidence as proof that the buyer owes the money. Once buyers accept a draft they have an obligation to pay at maturity. If buyers fails to pay, they risk facing legal action by the seller. In some countries, the buyer’s name may find its place on a “black list” which would effectively prevent them from further trade.

In a D/A transaction, the buyer's risk is accepting the draft before he sees the goods. If he wishes to mitigate this risk, he can arrange inspection of the goods prior to shipment.

The International Chamber of Commerce has published guidelines to promote uniform handling and to prevent misunderstandings when processing documentary collections. The publication # URC 522 is available from the ICC at 212-206-1150 or at www.iccbooksusa.com.

Used by permission from "More Bankers' Insights on International Trade: 101 Practical Lessions."

Two Business Lessons From a Guy Who Ate An Airplane

Two great questions - Is it possible? Should I do it?

Thirty five years ago a Frenchman, Michel Lotito became well-known because he ate a Cessna 150.  Yep, he ate the whole thing; wings, tires, windows, seats, engine - everything.  It took him two years, but he got the whole thing down, and I’m assuming, out.

On a tech forum in 2001, someone recounted the story, and the first response was, “Uh ok… but why an airplane?” Which leads us to two really important business lessons we should learn from eating an airplane.

Business Lesson #1 – Hard stuff is rarely impossible

You can do anything one bite at a time.

Born prematurely at 4.5 lbs, Wilma Rudolph took her first steps at eight years old, after suffering for years from polio. She went on to become the fastest woman alive and the first to win three Olympic gold medals.

At 16, Chris Zane convinced his parents to let him take over a bike shop going out of business, borrowing $23,000 from his grandfather—at 15 percent interest. This year, 30 years later, he expects to bring in $21 million.

Anna Mary Robertson Moses stopped embroidering at age 76 when her hands became too crippled to hold a needle. With no formal training or education, she took up painting and became one of the most famous and acclaimed painters in history, Grandma Moses.

Ray Kroc started franchising McDonalds at the age of 59. Colonel Sanders franchised KFC at 62.

A lot of personal and business accomplishments defy the possible. Stop whining about what you think you can’t do. Henry Ford said, “Whether you think you can, or think you can’t, you’re right.”  Take one step at a time. Keep going. Don’t give up.

Business Lesson #2 – Pick something worth doing before you start

There’s nothing worse than eating an airplane just to have someone ask, “Uh, ok… but why an airplane?” Business is hard enough. Don’t make it harder by continuing to beat your head against the wall to do things that, in the end, won’t matter. Choose wisely. Just because you can do something, doesn’t mean you should. Michel Lotito died at the age of 57 of "natural causes". Uh-huh. Eating an airplane is a bad idea.

When setting out to do something, always make sure you ask BOTH the following questions.

1)    Is it possible? (It almost always is) and…

2)    Should I do it? (What is the possible reward?)

Lotito only asked the first one. Don't make that mistake.

Put your hand to what others think is impossible, but make sure it’s worth doing before you start.

article as seen on Inc.com

Why Doesn’t Everyone Use the Incoterms® Rule DDP? Incoterms®, EXW, DDP

The Choice of Incoterms® Determines the Seller's Responsibilities

U.S. exporters must prevent their products from entering into a counties or markets which are prohibited by U.S. laws, or into the wrong hands for use of the product in a detrimental way. Exporters need to know and have trust in the purchaser.

At a recent workshop on Incoterms®, I prepared my usual outline, using the technique of ranking the Incoterms® from least responsibility for the seller to most responsibility for the seller. Initially, exporters like the term with least responsibility for them, Ex Works. In laymen’s terms, the seller says, “The goods are at my back door, come and get them.” As the workshop develops, exporters learn that Ex Works has risks, one being diversion into the wrong hands..

The Transaction may Determine the Choice of the Incoterms® Rule

A company in Colorado sent two employees to my workshop at the Rocky Mountain World Trade Center Institute. They dutifully took notes but made very few, if any, comments during the course of the class, until we got to the last Incoterm®, DDP (Delivered Duty Paid). Then one of them made a simple statement, “I don’t understand why everyone doesn’t use DDP.”

I responded, “Sir, with that comment, I know you understand Incoterms®.”

The DDP term places full responsibility on the exporter and very little on the importer. The exporter must jump through all the hoops and over all the hurdles including transportation and insurance to the buyer’s facility. This Incoterm® requires the seller to arrange for customs clearance on the buyer’s side.

Why the Incoterms® Rule DDP Was the Exporter's Preference

Why was this important to this company? They manufacture computer products that have the potential for misuse if the goods find their way into the wrong hands. Exporters need assurance that their products arrive at the intended destination and are only used for the purpose intended. By using DDP, the seller has complete control of the shipment to its destination and can avoid the possibility of diversion to unwanted parties or countries.

4 Steps To Hiring People You’ll Never Have To Manage

Resumes Are Nearly Useless

Most of our hiring practices were developed for the Industrial Age. But it turns out resumes are nearly useless and our hiring process is backwards.

#1 - Business Beliefs and Culture

Business Beliefs determine your culture. Beware the picture on the wall of an eagle with a clever saying. You don’t create a culture; you just live out what you believe.

Before you ever look at a resume, test for Business Beliefs. Your best future Stakeholders will believe they should Make Meaning at work, not just money. And they’ll believe that taking ownership of their job, processes, teamwork and results are fundamental responsibilities. Traditional employees believe they trade hours for money. Stakeholders believe they go to work to create Significance in the world around them.

Business Beliefs and Culture are everything, and you don’t find these on a resume.

#2 - Talent

Unlike skills, talents are those innate abilities that can’t be taught; a sense of urgency, attention to detail, silver-tongued communicator, ability to work alone or in teams, etc. Every job requires unique talents. Figure out what those are and hire second for talent, before you look at their resume. You don’t find talent on a resume.

#3 – Skills (Demonstrated)

Resumes are a terrible place to find talents, too.  You don’t test for skills by sitting across from someone asking them if their resume is true. Have the person demonstrate whatever they are being hired to do. If they are good at it, they have the skills. If they don’t, you have to decide if training them makes sense. My company focuses on hiring talented people, because you can teach skills, but talent can’t be taught. People who are highly skilled but untalented will never be great contributors.

#4 Experience.

If someone passes the first four tests, only then should you bother to glance (yes, glance) at their resume. Resumes are just obituaries about what someone used to do, and like obituaries, they are always embellished while downplaying shortcomings. Use resumes at the end of the hiring process to see if someone is a job-hopper, and to help you talk to their references.

We have it all backwards.

So to hire someone who you’ll never have to manage, who will take ownership and become a contributing Stakeholder, interview for these four things, always in this order:

1. Business Beliefs and Culture

2. Talent

3. Skills (test for them, don’t look at the resume)

4. Experience

But how does the traditional Industrial Age process do it? Backwards:

1. Experience - “We need someone fast. We won’t have time to train.”

2. Skills - “Their resume says they’re good. They must be good.”

3. Talent – Rarely looked at

4. Business Beliefs and Culture – At best, an afterthought

Is it any wonder we end up hiring Industrial Age style employees who need to be herded into office day care centers and supervised like seven year olds?

Key-Word Searches Are The Worst Possible Hiring Practice

Using software to do key-word searches as the first step is broken. The rationale is that there are always too many candidates and it eliminates the 90% who won’t be a fit. But what it eliminates is great people who could be a perfect cultural fit, with all the right talents and possibly even the right skills. Instead it selects BS’rs who wrote the best, and possibly most exaggerated obituaries.

Reboot

If you want to hire people you won’t have to manage, throw out most of what you’ve been taught about hiring. Hire first for Business Beliefs and Culture, second for talent, third for demonstrated skills, and use experience as a tiebreaker. You, and the people who you hire, will all be happier and more productive.

Article as seen on Inc.com

by Chuck Blakeman, Author of the #1 Rated Business Book of the Year, Making Money is Killing Your Business and Top 10 business book, Why Employees Are Always A Bad Idea

www.ChuckBlakeman.com

I'd Swim across the Pacific to Avoid Using a Letter of Credit

Letter of Credit, Open Account, Documentary Collection

As I found my seat on the plane in O’Hare Airport to return to Denver, I introduced myself to the passenger next to me. He introduced himself as the controller of a meat packing plant in Colorado. My international banking instincts caused me to ask, “Do you export your product?”

He replied, “Yes, we export boxed beef.”

I next probed, “How do you get paid?”

“Cash,” was his short answer.

Letters of Credit and Other Methods of Payment

In my experience, most exporters use all or most of the various payment methods: cash, letters of credit, documentary collections and open account. Industry and market conditions often dictate the choice. When asking the question, “How do you get paid?” I expect answers such as: “We get paid by cash when selling to countries A and B, Letters of Credit in country C, and open account to our established distributors in countries D and E.”

My fellow passenger’s short answer caught me off-guard because I expected a more elaborate response. “Cash?” I asked. “Don’t you ever ship on a letter of credit?”

“No way,” he said with conviction. “If I can’t collect payment on a letter of credit, I’m not swimming after the boat to get our goods back.”

Leniency with Payments Can Be a Competitive Advantage

He implemented a hard and fast credit policy. One has to admire the quality of his foreign receivables. He slept well at night and never had to inform his president of a slow paying customer overseas. However, one has to wonder if this policy didn’t limit their ability to expand their export markets. Certainly they had competitors who offered more lenient terms. Competing involves more than just pricing. Payment terms often dictate the success of an overseas sale.

---

Why You Should Hire Stakeholders, Not Employees

Let's retire the idea of an employee. These days, your company needs something different.

The Factory System gave us cool toys and a cushy life, but it also came with business diseases, and one of them is the Industrial Age concept of the employee. That version is a very new idea in the history of man, and one that needs to go away. Let's replace them with Stakeholders.

Employees Are Silent

The Industrial Age recreated people as extensions of machines. If people left the messy, creative human part at home, they fit into the Factory System much better. Sadly, people adapted, to the point that the generation that entered the work force at the very peak of the Industrial Age (1945-1965ish) was given the worst generational label in history--The Silent Generation. They understood the Factory System mantra, "Be loyal to the company. Do what you're told. Show up early, leave late. Shut up, sit down, don't make waves, live invisibly, and go out quietly. The company will take care of you, from cradle to grave." They bought the promise hook, line and sinker.

Employees Are Children

This view of work (and life) turned adults back into children. The most respected person was one who obediently took orders, did what they were told, didn't question authority, was blindly loyal to those in charge, and lived passively as others directed their life. Pretty much what we want a five-year-old to do.

To keep the children from ruining the house, the Industrial Age herded people into company day care centers, penned them in with clear and narrow rules on performance and hours, and endless limitations on being human and adult at work. Machines didn't need them to ask why, or to create, or to solve problems. Machines just needed them to "do".

Childlike Employees Are Replaced By Adult Stakeholders

The notion of an employee is a business disease which turns people back into children, and it should be eradicated. Some companies can't even use the word anymore. They don't want to hire children who need to be supervised so that they don't run into the street. They want adults. Enter the Stakeholder.

Stakeholders bring the whole, messy, creative person to work. They can think, take initiative, make decisions, carry responsibility, take ownership, be creative, and solve problems. And they incessantly ask the most human of questions, "Why?" They are self-directed and creative, and they solve problems. They don't expect the company or other adults to take care of them.

Stakeholders Are Owners

Ownership is the most powerful motivator in business. Adults own stuff. Even if they don't own a piece of the company, Stakeholders own their work. And as Stakeholders, they receive profit sharing, just like an owner should. To create ownership, Stakeholders in Participation Age companies own some of the fruit of their labor.

Stakeholders Require Leadership, Not Adult Supervision (Management)

If you hire adult Stakeholders instead of childlike employees, it changes the way you lead people. Participation Age companies with Stakeholders don't have office hours, vacation time, or personal days. They're not interested in whose car was in the parking lot first or who left last. In these companies, Stakeholders don't need adult supervision, they need leadership.

Stakeholders Make Meaning and Money At Work, and More of Both

Industrial Age employees traded time for money, and then went home to Make Meaning. Stakeholders won't settle for a j-o-b that just pays the bills. They want to be able to go home at the end of the day knowing they made a difference, not just a product. And everyone is a lot happier because they all work with adults who contribute and pull their own weight.

In the Participation Age, employees are always a bad idea. Stakeholders will replace them. There is a growing wave of companies looking to replace employees with Stakeholders. Don't settle. Find one you can join, or build one yourself.

Come join us in the Participation Age.

by Chuck Blakeman, Author of the #1 Rated Business Book of the Year, Making Money is Killing Your Business and Top 10 business book, Why Employees Are Always A Bad Idea

www.ChuckBlakeman.com

Article as seen on Inc.com

Dealing with the Patent Trolls

Start-ups face a lot of adversity in their quest to become profitable companies and, in fact, most don't make it.  One large factor in preventing start-ups from moving forward is the intervention of the dreaded "patent troll."   Patent troll is a derogatory term for a business that produces no products or services, yet obtains patents and uses them to launch a plethora of law-suits against other companies.  A patent troll uses the threat of a lawsuit against businesses in order to extort settlement money without having to go to trial.  What set these trolls apart from companies that legitimately license out thier patented ideas, is that the trolls have no interest in developing the idea, only using it for threat purposes.  They don't want to lease the idea out, and they don't care about the benefits of the final product. Patent trolls are a pain in the butt for not just start-ups but many other businesses as well.  Adam Corolla, a comedian and owner of Lotzi Digital Inc, a podcasting company, is being sued by a company called Personal Audio, a company that claims to own the rights to the idea of a podcast.  When it realized that there wasn't much money to be made in suing podcasters, Personal Audio moved to dismiss the suit, a dismissal that Carolla refused.  Carolla wants to see the suit through to the end, in the hopes of getting Personal Audio's patent revoked, a move which would free other podcasters from the fear of an absurd suit showing up on their front doorstep.  This trend, the trend of taking the fight to the trolls, seems to finally be making some headway and others have started to follow suit.

In 2011 patent trolls were estimated to have cost businesses over $29 billion in legal fees and settlements costs, and creating legislation to curb their suits is hard to create.  Any move to abolish software patents would work, but this would also harm legitimate research companies, companies like Toyota which has software patents on the device that controls the hybrid engine in their Prius.  So what can be done?

In June of 2014 the Supreme Court gave those fighting the trolls a great new weapon for their arsenal.  The case of Alice Corp. v CLS Bank made huge waves when the supreme court ruled that “merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention.”  This means when dealing with computer software, simply having the idea for something is no longer patentable, and only becomes patentable when implemented.  Even then, only your particular version of the implementation is patentable, and not the idea as a whole.  For trolls, who rely on not implementing to protect them from similarly absurd suits, this is a striking blow.  Fresh on the heels of this Supreme Court decision, another trend is making the trolls take notice.

Patent Trolls make a large portion of their money from settlements outside of lawsuits.  The cost of fighting a lawsuit is high, and rather than pay giant legal fees, many companies choose to pay what amounts to blackmail, often having to close down the company to do so.  When one NYC startup was faced with a similar decision, they reached out to Brooklyn Law students for help.  The students quickly realized that this was an opportunity for the best real-world practice that they could find, and put the troll on notice.  With an unlimited number of hours of legal representation by third-year law students available to the defendant, the patent troll had no option but to tuck his tail and run.  This free legal support drastically changes the game against the trolls, and could seriously impact many companies who make their money this way.

The Disappearance of the Entry Level Job

The first job out of college is a huge learning experience that can set the tone for an individual's future.  That first taste of employment can give a first timer the determination and drive to move up in a company, while creating a safe environment to learn the basics of a trade.  This first time experience is crucial for developing the confidence in an employee to succeed in their future with the company.  Unfortunately for recent job-seeking grads, the business climate of today may not be as open as it once was.

No mom, I want to be an Art Major! Idiot...

Those seeking entry level jobs, jobs designed to ease an employee into the responsibilities of the position, are finding themselves under-qualified for even the starter positions.  These job-seekers are finding that "entry level jobs" are requiring more and more advanced and industry specific skill-sets.  Entry level jobs in finance and accounting particularly have evolved from simple data entry jobs that bring an employee up to speed over time, to requiring advanced data analysis and a professional understanding right away.  No longer do these new hires have weeks to acclimate, but more often than not have orientation day one and expect full competency day two.

In addition to your data entry, you're also responsible for growing the money tree. 

The change has been so rapid, that many universities are struggling to acclimate by offering the best available solution to their students in the form of internships.  In order to gain the necessary experience to fulfill the requirements, students are taking to internships to supplement their educations and it seems to be helping close the gap.  However, this solution only works for those able to attend college, and even then there aren't enough internship opportunities for all students interested.

First one there gets the spot, the rest of you are cleaning toilets! READY, GO!

Analysts are unsure what is causing this trend, with some citing automation in the workforce, some citing the changing economy and some say it may be due to over-competition for available spots.  Whatever the cause, the fact of the matter is that the definition of an entry level job is changing, and anyone looking to enter the workforce better be prepared for that.

For more on this topic, visit the original post here. 

Leaders and Managers Have Nothing In Common

Manage Stuff. Lead People.

Managers are one of the core business diseases of the Industrial Age. They are sacred cows who have been around only for a little over a century, but who should go away as quickly as possible. Few things are as disruptive, unhelpful, and unproductive in the workplace as managers.

Solve and Decide, or Become Less Important?

The manager’s worst habits are to a) solve things and b) decide things. No other actions are as debilitating to others. When a manager solves and decides, the only thing left is to delegate tasks to be executed—“put this nut on that bolt, at this rate.” But when we delegate tasks, people feel used. Managers who solve and decide things are fundamental in the dehumanizing of the workplace, because tasks are for machines.

Leaders do it quite differently. They train others to solve problems and make decisions, and then they get out of the way. If you’re becoming less and less important in your position, you’re leading.

The Best Business Leader Makes the Fewest Decisions

The art of traditional management involves planning, organizing, staffing, controlling, and manipulating human capital. In the awful assumption of traditional management model, people are “capital” to be manipulated and controlled.

In contrast, the art of leadership is to know how few decisions the leader needs to make.

Ricardo Semler, the architect behind Semco, an $800 million Brazilian Participation Age company (with 3,000 stakeholders, but no managers), just celebrated his 10th anniversary of not making a decision. That is tremendous leadership, the kind we should all aspire to by training others to “solve and decide” and then, by getting out their way.

It works because Semler and other Semco leaders have trained others to solve problems and make decisions. Having gotten out of the way, the leaders are now free to stop solving and deciding, and instead to ask questions and think about the future. If you’re making decisions for others, you’re managing. If you’re just asking questions, you’re leading.

What Are You Delegating; Tasks or Responsibility?

We said earlier that when managers delegate tasks (“put this nut on that bolt”), people feel used, because tasks are for machines. But leaders delegate responsibility (“make a great product”)—a much broader request that requires thinking, solving, and deciding. When given responsibility, people take ownership, and ownership is the most powerful motivator in business. Are you delegating tasks, which simply require action, or delegating responsibility, which requires the whole messy, creative person to show up? Management Is Not Leadership; Leadership Is Not Management Management is a very recently invented construct, but leadership has been around for centuries. We’ve conflated the two. Here’s a simple reference for pulling them back apart:

Manage Stuff. Lead People.

The traditional business model we inherited from the factory system of the Industrial Age made the flawed assumption that people need to be managed like stuff. They don’t. They need to be led, and the difference is not semantic, it is gigantic.

Stuff needs to be managed. People don’t. The factory system reinvented people as extensions of machines, and when people are extensions of machines, they are “stuff” to be managed. But if they are fully human, they require leadership, not management.

In our company, we only manage stuff; computers, numbers, software, processes, systems, delivery of goods and services, accounting, marketing, sales, etc. These are all “things” to be managed, and everyone in our business manages stuff. But we don’t need someone with the title of “manager” to hover over any of us to ensure the stuff will get managed. People manage the stuff, and we lead each other by vision, guidance, training and support, and then, most important, by getting out of the way.

The manager’s quest is to be as helpful as possible for as long as possible. The leader’s quest is to relentlessly train others to solve and decide, and become less necessary every day.

It’s important enough to say twice: the art of leadership is to know how few decisions the leader needs to make. Become a leader—stop solving and deciding, and focus instead on asking questions. Everyone will be better off if you do.

Article as seen on Inc.com

by Chuck Blakeman, Author of the #1 Rated Business Book of the Year, Making Money is Killing Your Business and Top 10 business book, Why Employees Are Always A Bad Idea

www.ChuckBlakeman.com

Tesla Could Upend Utilities

Morgan Stanley, a major investment bank, thinks the utility industry underestimates the potential of Tesla Motors ability to achieve dramatic reduction in battery storage costs. This breakthrough could potentially convince more people to go off-grid. In their detailed report released in late July, Solar Power & Energy Storage, Morgan Stanley says, "Energy storage, specifically Tesla’s product, could be disruptive in the US and Europe. Given the relatively high cost of the power grid, we think that customers in parts of the US and Europe may seek to avoid utility grid fees by going “off-grid” through a combination of solar power and energy storage. "

“We believe there is not sufficient appreciation of the magnitude of energy storage cost reduction that Tesla has already achieved, nor of the further cost reduction magnitude that Tesla might be able to achieve. once the company has constructed its “Gigafactory”, targeted for completion later in the decade.“

While the costs of the utility networks are fixed and rising, the costs of these new disruptive technologies will continue to fall, and they're falling quicker than the incumbents realize.

Most battery manufacturers, the report notes, have a capacity of around 40MW to 50MW per annum. Tesla is proposing one of 1,000MW – and possibly many more. This, says Morgan Stanley, will slash the capital cost of Tesla’s battery from the current $250/kWh to $150/kWh by 2020, whereas its closest competitor will be at a cost of ~$500/kWh.

Morgan Stanley canvasses three types of approach to the arrival of storage:

On the grid, but net zero grid power usage. Under this approach, a customer’s solar panels produce excess power during the day (which is sold back to the grid), and at night the customer draws power from the grid. This approach could result in low or net zero usage of power produced by large-scale power plants attached to the grid.

On the grid, partial grid power usage. This approach is often taken in Europe, where solar panel systems are not sized to fully allow customers to eliminate their net usage of power from the grid, and where economics and regulation mean moving fully off-grid is very unlikely. It is thus unlikely that such customers pursue a fully off-grid approach.

 Fully off the grid. In this approach, consumers fully depend on their on-site power generation, using storage and a power management system to provide power to the home when needed. Consumers could choose this approach for a number of reasons. For instance, in select markets, customers who choose to “net meter” as in the “on-grid” approach described above, have to pay a large non-bypassable, fixed grid charge; these consumers have an incentive to go fully off the grid.

“By 2028, we estimate Tesla’s 3.9 million units NA car population (or “park”) will have an energy storage capacity of 237 GW (443 GW globally), equal to 22% of today’s US production capacity and nearly 10x larger than the entirety of US grid storage that exists today. These figures exclude any recycled (2nd life) battery after EV use."

"Tesla Model S (85 kWh) can store enough energy to power the average US household for 3.5 days."

How a Standby Letter of Credit Can be Used to Create an Earthquake

Cash, Letter of Credit, Standby Letter of Credit, Collateral, Small Business Administration (SBA), Export Working Capital Program (EWCP), Guarantee

An engineering company in Boulder, Colorado, designs and builds shake-tables used to simulate vibrations and movements. The hydraulics mounted underneath the table are operated by computers which are programmed to simulate movements ranging from minor vibrations to earthquakes. Equipment manufacturers, electric utilities, etc. buy the custom-built tables to test equipment prior to installing it in their power plants and for product qualification.

The company in Boulder received an order for a shake-table from a ship builder in Korea. The buyer wanted the shake-table to simulate the vibrations of a ship and the motion of the waves. In this way he could test the durability of the equipment prior to installation in ships.

The engineering company had to invest a considerable amount of money in engineering, parts, and labor to build the table to the buyer’s specs. In this transaction they negotiated payment terms as follows: 40% cash in advance, 50% payable by a letter of credit upon presentation of shipping documents, and 10% upon acceptance by the buyer after installation of the shake-table and completion of on-site training.

Securing the Cash Payment

The buyer in Korea had one condition for the 40% cash payment. He wanted a standby letter of credit for an amount equal to the down payment, payable to the buyer upon his certification that the exporter failed to build the shake-table. The standby letter of credit would provide assurance that the buyer could get his money back in the event the supplier never produced or shipped the goods. The supplier asked a bank to issue the standby letter of credit.

By way of a brief background, the supplier was a well established, proven, capable and well managed engineering firm. However, the de-regulation of the energy industry caused a collapse of a major market segment for this company. As a result, at the time of the Korean contract, the company’s liquid collateral had weakened. This contract to Korea proved their proactive effort to diversify into other markets.

When the bank received the request for issuing the standby letter of credit, they agreed to only do so with cash collateral. This caused a “catch 22” for the supplier. In order to get the cash payment he needed a standby letter of credit. In order to get the standby letter of credit he needed the cash. The bank partially resolved this problem by stating in the letter of credit that it would become effective upon the bank’s receipt of the cash in advance. However, this did not help the supplier’s cash flow. If the bank kept the cash to secure the standby letter of credit, the exporter would not have use of the cash and would be no better off than before issuing the standby letter of credit. Enter a government program.

Assistance from The Small Business Administration (SBA)

The Small Business Administration (SBA) of the U.S. government has a program to assist with the financing of exports. The program, “Export Working Capital Program” (EWCP), provides guarantees to banks to eliminate a major portion of the risk. In short, if an exporter has an order with an acceptable, firm means of payment and can prove ability to perform, the transaction may qualify for the guarantee.

Since this company had a proven track record of performance with many satisfied customers, SBA issued a guarantee, which enabled the bank to issue the standby letter of credit without the cash collateral. The company then had use of the cash for the purpose intended. SBA’s guarantee also allowed the bank to advance funds over and above the standby letter of credit. This enabled the company to borrow money for purchasing raw material and meeting payroll during the six months it took to build the equipment.

The company constructed the three-axis shake-table on schedule, received payment and paid off the loan, thanks to the SBA.

Business Insider Ranks Colorado #1

With states finally starting to recover economically, Business Insider decided to take a look at the numbers and see just how each state has grown over the past few years.  The metrics used ranged from last years GDP growth, percentage of unemployed citizens, to international exports, housing prices and even auto sales.  ICOSA is proud to report that, according to Business Insider, Colorado is number 1 on the list.

Highest on the list and highest in altitude

The list credits Colorado's wide range of industries as well as a 3.8% growth in GDP and an added 66,000 jobs.  Colorado came in just ahead of Utah, Arizona, Texas and California.

To see how other states ranked, check out the full Business Insider list.

Companies Without Managers Do Better By Every Metric

Participate and Share

Last week we described Participation Age companies - Stakeholders, who work in self-managed teams, replace employees; Leaders replace managers; there is profit-sharing for everyone, no work hours, etc.  But how do they perform against traditional, management-centric companies with Industrial Age hierarchies?

Quite well, it turns out. They don’t just hold their own; they blow the lid off! Let’s start with tiny companies and work our way up to huge.

Crankset Group

Our little seven-year old company, Crankset Group, with 20+ full and part-time people grew 704% in the last five years, and growth is accelerating. Nobody reports to anybody; everybody is a Chief (Relationship Officer, Results Officer, Transformation Officer, Connecting Officer, etc.). Everyone leads in their area of expertise, and we all know exactly what result we are supposed to produce, and if you get the result agreed upon, nobody cares WHERE you are or WHEN you are. And everyone has the ability to grow, learn, start things, and make more money by expanding their impact.

Menlo Innovations

Menlo Innovations, a software company with over 100 Stakeholders, has a manager-less Participation Age culture, and is well known because its founder, Richard Sheridan, wrote a book called, Joy, Inc., that tells how they built a company with almost no hierarchy. They now have courses teaching other companies how to do it.

Valve Corporation

Valve, a software/game company has 300 Stakeholders. There are no managers.  People transfer to other projects without “permission,” choose what to work on, decide each other's pay, and go on vacation for a week together every year (Hawaii last year). Valve is significantly more profitable per Stakeholder than either Apple or Google.

Semco Partners

Semco, a Brazilian company with 3,000 Stakeholders, made washing machines in 1951, but is now in multiple industries including real estate, banking, and web services. In a 10-year recessionary period in Brazil, Semco’s revenues still grew 600%, profits were up 500%, productivity was up 700%, and for the last 20+ years, employee turnover remains at an incredibly low 1-2% per year. They have no managers, no HR department, no written policies (just a few written beliefs) and no office hours. Everyone works in small, self-motivated, self-managed work teams who make their own decisions regarding salary, hiring, firing, and who leads the team for the next six months. There are no managers to involve in the process.

 W. L. Gore, Inc.

W. L. Gore (Gore-Tex), with 10,000 employees has been a Participation Age pioneer, functioning without managers since the 1960’s. Stakeholders at Gore say it takes 6-12 months for new hires to believe there will be no manager looking over their shoulder. One Stakeholder said, “If anyone here ever told someone else what to do, no one would work with them again.”

Fortune 500s and Internationals

Thirty Fortune 500’s are also moving aggressively in the direction of being Participation Age companies and are growing an average of ten times faster than the average S&P 500 company over ten years. Forty-one other international companies and organizations comprise the WorldBlu list of “most democratic” manager-less companies.

A Big Duh

These examples just scratch the surface. The Participation Age company isn’t a fringe idea, but is the wave of the present. In ten years, this will all be a big “duh”. And those that don’t embrace the Participation Age will be left behind.

The results are in. If you want to make a bucket-load of money going forward, you will want to join the Participation Age, and replace managers with exponentially fewer leaders.

Next week we’ll look at the radical difference between the two, and how most companies that think they have leaders, actually have managers.

Article as seen on Inc.com

Who is at Fault? A Look at Incoterms®

Bid bond, standby letter of credit, performance bond, charter party bill of lading, conference vessel, Incoterm®, FOB

An exporter submitted a bid to supply soybeans for approximately $6.5 million to a buyer in the Middle East. To fulfill a condition often required in these transactions, the exporter had to post a bid bond equal to 2 percent of the bid amount, or about $130,000. Since the buyer in the Middle East agreed to accept a standby letter of credit in lieu of a bid bond, the exporter asked a bank to issue the standby letter of credit. The bank agreed, and the exporter received the contract.

The terms of the contract required the exporter to post a performance bond equal to 10 percent of the contract. Again, the bank issued a standby letter of credit, this time for $650,000.  The standby letter of credit was payable against the buyer’s statement that the exporter had failed to complete the transaction according to the terms of the contract.

The buyer, in turn, opened a letter of credit for $6.5 million to the exporter payable against a charter party bill of lading. A charter party bill of lading represents a bill of lading issued by a shipping company that contracts to ship the goods from point A to point B. The vessel does not have a schedule of ports or dates as a conference vessel does. In most cases, the chartered vessel carries only one shipment; in this case, filled with soybeans for the buyer.

The parties agreed to the Incoterm® FOB New Orleans. After shipment, the exporter presented the required documents and received payment of $6.5 million from the letter of credit. One month later the buyer demanded payment of $650,000 from the standby letter of credit (performance bond). He claimed the goods did not meet the specifications of the contract. Later, the seller discovered the goods had deteriorated in quality. The exporter denied responsibility because he claimed the goods met specifications at the time they arrived at the port, but deteriorated while in storage at the dock. The vessel, chartered by the buyer, arrived two weeks late. If the buyer had scheduled the vessel to arrive on the date agreed, the exporter argued, the goods would not have deteriorated.

Who was at fault? This is an example of the use of an Incoterm® which required the exporter to bear the responsibility of loading the goods (FOB) but no responsibility for contracting the vessel. Only after the intervention of a dedicated bank officer, who made a trip to the Middle East on behalf of the exporter, the buyer agreed to retract their demand for payment on the standby letter of credit.

ICOSA Hosts City of Denver Community Planning and Development Workshop

On July 30th, ICOSA played host to the City of Denver Community Planning and Development department and Urban Land Institute.  That morning a variety of city planners and volunteers spent their day at the ICOSA facilities touring the area and working on plans to revitalize the 40th station area.  The 1/2 mile area surrounding the station includes portions of the Swansea, Northeast Park Hill and Clayton neighborhoods. The evening event was open to public, and was attended by roughly 100 neighbors, community leaders and business owners.  The meeting's agenda focused on what the neighborhood could be like in 5,10 and 20 years and what type of housing, employment or neighborhood amenities could be implemented. The group also discussed how can the area can be improved with foot, bike and vehicle or bus routes and the positive and negative health impacts could be.

Presenters discuss possibilities for the future of the area

The morning brainstorm sessions were the focus of the evening meeting, making residents aware of the possibilities in the area and gathering feedback on what the area residents would like to see happen.

The RTD's East Rail Line, otherwise known as the Eagle P3 Project will connect Downtown Denver to Denver International Airport and is scheduled to open in 2016.  In a report from TRD FasTracks, released for July-October 2014 the Eagle P3 project has added more than $954 million to the Colorado Economy.  Since groundbreaking, the Eagle P3 Project team's contractor, Denver Transit Partners, has also employed 4,800 employees.

Presenting to the community about the proposed future

The next public meeting will be held at ICOSA (4100 Jackson Street) on Wednesday, August 13th from 6:00 - 8:00 p.m.  At this meeting it will focus on community design around the 40th and Colorado station. Discussion will include proposed land uses, connectivity, station access, building heights, storm water quality and other important considerations.