My 5 characteristics of a leader…

With a nominated field of 300 talented leaders in Kansas City, I was recently honored to be named one of 25 applicants to receive the NextGen Leadership award.

Honestly, it was the first award I have ever submitted for and I didn’t expect to win – at all.  I was nominated and I pretty much wrote it off after I went to the nomination party and met just 100 of the other nominees personally.  Some of them I knew and some of them I had heard of but most of them seemed more qualified than myself.  Some I know had received leadership training and managed large teams at big companies, neither of which I have had the good fortune to experience.  So then how did I win among a group of highly qualified leaders?  I believe many of the most important attributes of a leader can’t be learned in a training session or a book and I compiled a list of what I think are the most important leadership qualities:

1. A leader is someone who isn’t afraid to change the narrative in an industry and champion that narrative

It takes courage to stand up and say something different, especially when it isn’t popular.  THEN you have to convince people that you aren’t a crazy person.  If you can find a weakness in a market – which there are infinite – and not just point it out but try and build a company it takes grit and dedication with a pinch of myopia.  Remember, your brain doesn’t want you to say anything different than what others say, falling into the crowd is safe – albeit, a false security.  A great leader grabs a flag, creates a new message and starts marching in a different direction.  I believe being the flag bearer for your narrative is a keystone of a great leader.

2. A leader stands strong in the face of both criticism and skepticism

If you start becoming successful expect to be met with both criticism and skepticism – it is part of the reason you know you are on the right path.  Criticism and skepticism comes with the territory when you are trying to do something great.  Our brains release dopamine when we criticize things that are different – it views those things as disrupting the status quo and therefore a threat.  Stand strong when you are met with criticism and as long as you provide a combination of emotional and logical support for your narrative you can turn your biggest skeptics into admirers.

3. A leader takes what they do seriously but doesn’t take themselves seriously

Most great leaders have a humble confidence about them that makes them magnetic to others.  This humble confidence is created by having strong presence of self and knowing when it is time for fun and when it is time for business.  These leaders are self-deprecating on the golf course but serious as a heart attack in the board room.  This personality polarization can be natural but is mostly a learned behavior and can be healthy – it creates an internal equilibrium – and is a strong indicator of a great leader.

4. A leader gains perspective

Having perspective and gaining perspective are two different things.  Having perspective is when you come into a company or market with fresh eyes and fresh ideas.  Gaining perspective is an active process that involves removing yourself from the minutia of your business and looking at your message and operation from a customer or outsider’s perspective.  This is a challenging and humbling exercise that involves eliminating  best practices from your mind and looking at your message and business without assumptions about your customer.

5. A leader invests in their community especially when there is no obvious return on their time

We are only as successful as the community that surrounds us.  Your time as a leader is a priority and volunteering in the community sucks that precious commodity away without a financial return.  So many choose not to engage with their community.  This is a mistake.  Immersing yourself in your community provides perspective (see #4) on not only your personal life but your business.  Some of your best ideas will come to you when you are out of your comfort zone and doing something that is completely selfless.

While there are many leadership qualities that are valuable, these are the 5 that I consistently see in great leaders.  I also see that a natural byproduct of a great leader is that they tend to create other leaders – so in the spirit of this I have to ask you…What is the leadership narrative you are championing?

Your Customers Don’t Care About You

It’s true.

The moment you start talking about yourself is the moment you start losing.

Personally, I am just as guilty as the next guy when it comes to this, it’s challenging not to engage in self-gratifying communication.  Like most, I am passionate about what I do and I want the person across from me to be confident that I am able to deliver on our company promise.There is no doubt that as human beings we have a natural affinity to talk about ourselves; self-promotion is hard-wired into our DNA as a survival mechanism.  However, when it comes to our businesses it seems that all we do is talk about ourselves.  At least in most personal conversations there is some give and take. But whether it is on our website, in our client presentations or in a sales pitch all we do is talk about our capabilities, longevity, happy clients, experience with a little bit of the client peppered in so we don’t look too selfish.

We have had several clients ask how much they should be talking about themselves to their customers so we starting digging into our data to find some answers.

For reference, our company, PROOF, uses customer insights and data to help companies identify the most effective messages and communication to differentiate themselves and drive sales.  So we have mountains of data around what kinds of messages are most effective across a litany of industries.

Out of the last 100 studies we have run we tested an average of 15 communication concepts per study. On many of these studies we tested communication concepts that were about the client (i.e.  “We have won several industry awards,” “Our company has worked in your industry for XX years” and “We have a proprietary process that does XYZ”) and then tested how important those communications were when considering whether to hire them.

Here are the 5 most commonly used self-important communications used by companies, what percent of the time we tested those communications and where they ranked (out of 15) in importance to their customers and prospects:

Communication tested % of the time How important (out of 15)
Industry expertise 74 percent 12th
Awards 71 percent 15th
Experience / Other clients 65 percent 9th
Proprietary IP / Method 59 percent 11th
Exclusive partnerships 42 percent 14th

What this means is that there is an average of 11 different communications that are more important to your customers than something about you.

So, if you are talking about yourself you are losing the battle to win over customers and losing big.  Think about your elevator pitch, the content on your website, your collateral, etc. How much of it is about you or your company?

Here is a quick exercise:

  1. Write down 10 things that you think will win over your customers and you can’t talk about yourself.
  2. Which one of those things do you think is most important?
  3. How many times do you talk about that vs. yourself in your communications?

Your Wimpy Brand Needs to Pick a Fight

Think about your three biggest competitors. … Got ‘em?

Now, what do you say when a potential customer asks you why they should do business with you instead of them?

More often than not your response contains subjective and ineffective language. You say things like “x years in business, trusted leader, great customer service, quality, value, blah, blah, blah.”

Ever stop to think why they ask you that question?

The reason isn’t because they’re challenging you — it’s because they honestly don’t know. They don’t know because you look, sound and smell just like those other three competitors and they have no idea why you are different or why they should hire you.

I know what you’re thinking. “We are not like our competitors. We are much better …”  and you can likely site 5 to 10 real-world examples of how you are better. If this is the case, then why does your pitch sound just like theirs? Why do you copy each other’s brochures? And why do your websites look like clones?

The answer is because you are a wimp.

Probably not you personally, but your company is almost certainly a wimp.

Most people in business are highly competitive by nature, so why aren’t their businesses reflective of that competitive spirit? Most “competitors” act more like 13-year-old best friends who watch the same shows (training); copy each other’s speech (industry lingo); and mimic each other’s behavior (marketing), catchphrases (messaging) and clothes (website) rather than acting like competitive enterprises that are vying for winning business to stay alive.

So how do you escape the homogeneity and not be a wimp? You pick a fight.

Picking a fight forces you to take a position and stick to it.

Picking a fight and owning a position not only shows industry leadership, it shows vision and confidence. You will begin to attract the right people who agree with your position and they will fight vigorously on your side.

Here are five steps on how you pick a fight and WIN:
1. Establish a hypothesis of where your competition is failing its customers.
2. Validate that hypothesis with consumer research and confirm the need.
3. Develop objective language that reinforces the need and back it up with numbers.
4. Solidify your position and create a stark contrast from the rest of your industry by developing expertise and consistency in that position across all of your training, speech, marketing, messaging and packaging.
5. Pick a fight with your competition and call them out.

Demand to be better, have a chip on your shoulder, stand up for yourself and pick a fight with your competitors. If you do, you will earn the respect of your team, your colleagues and start winning over your customers.

But you can’t win if you don’t pick a fight.

Stop Drinking the ‘Competitive Advantage’ Kool-Aid

Your competitive advantage doesn’t exist anymore.

Not only is this true but the whole concept of “competitive advantage” as you understand it likely doesn’t exist either.

What’s taken its place is a cool new thing called “transient advantage.” Transient advantage is what happens when technology exponentially advances to the point that “cutting edge” perpetually becomes “yesterday’s news.” Maintaining long-term profitability based only on a product or service is almost impossible to do.

Transient advantage, by definition, isn’t sustainable.

Previously, established companies had all the advantage when it came to researching, developing and launching a product or service. From market research to parts manufacturing to advertising and supply chain management, you had to have a big budget just to get off the ground.

Now, it’s possible for nearly anyone to enter the marketplace with an idea and be able to realize many of these logistical advantages. For example, suppliers have innovated cost efficiencies that allow them to produce smaller orders for smaller customers, eliminating market barriers to entry.

So if a business is no longer able to sustain true competitive advantage within its product or service deliverable, how can it survive? It’s not easy, but it can be done.

Sustainable competitive advantage may be dead on the production line, but it’s alive and well in the minds of consumers.

Consider how difficult would it be for a competitor to take “greeting cards” away from Hallmark, “low prices” from Walmart, or “search” from Google. The competitive advantages of these brands are predicated on their ability to create and dominate a category in the mind and therefore the marketplace.

These brands have real competitive advantage in the form of mindshare dominance within their respective industries. This dominance allows them to profit from overall growth of the industry. It allows them to set the rules for what the industry’s innovation looks like. It allows them to change the playing field.

The consumer’s mind is theirs to shape because they create and own their respective industries.

Consider the “affordable airline,” Southwest Airlines. Southwest entered the marketplace asserting they have the cheapest available flights. However, even during their inflight introductions, they now boast that the aren’t the most affordable, but that they provide better, no-hassle service at a low cost.

Despite no longer truly having the competitive advantage on being the cheapest, they are one of the few airlines that regularly make a profit while owning that visceral “affordable” position in our minds.

If you are relying on your product’s functionality to build your brand, you are fighting a losing battle.

Here’s what to focus on instead.

  1.    Identify the emotional needs of your customer.
  2.    Figure out how your product is objectively different relative to available alternatives.
  3.    Align No. 1 and No. 2 to narrow your target market to a specific customer.

If you don’t, you will be forced to rely on communicating a functional competitive advantage that lasts only as long as the next new thing — which these days is hardly any time at all.

Narrow Your Focus to Win on an Exit

At the time it wasn’t quite so obvious, but now I realize that I was incredibly fortunate to spend the first part of my career in small-market mergers and acquisitions.

Turns out it’s an arena where one can acquire an incredible depth and breadth of business knowledge. On an almost daily basis, I was learning about the successes and failures of an endless variety of businesses, how they overcame obstacles and ultimately what those businesses were worth and how the transactions were structured.

After assessing and valuing literally hundreds of businesses over a decade, I began to notice an interesting pattern emerge. There was in inverse correlation between a company’s scope — the breadth/focus of what it does — and the multiple of EBITDA used to establish its selling price.

This correlation infers that our instincts as business owners and much of traditional business theory could be doing more harm than good. The customary method of growing our business through diversification in order to mitigate risk is patently false.

To put it more simply, when it comes to your business: The less you do, the more you’re worth.

And here’s why.

These companies that “did less,” or had a very narrow focus, tended to be able to communicate their brand and what they did more simply. As a result, they were generally viewed as experts in their industry. They also tended to grow faster, have less debt and spent less money on marketing. And because they transacted for a higher multiple, the owners had more money in their pockets when the companies sold.

Conversely, those companies that “did more,” or had a very broad focus, generally had higher gross revenue but their profitability was less stable. This was because they had to manage multiple product or service lines, diverse customer segments, multiple sales channels and more complex infrastructures. They were less agile, and when everything was said and done, the ownership generally received a lower net payout when the companies sold.

To be effective, ignore your business survival instincts. Instead of diversifying what you stand for in the market, simplify and narrow your scope. “Do less” in the mind of your consumers and expect a higher return when it comes time to sell.

Is your pitch getting emotional? Because it should be.

When it comes to selling your product or service, the devil truly is in the details.

Despite what bad salesmen might tell you, people don’t buy based on features or price. Decision making is rooted primarily in the part of our brain that controls emotions.

Science shows that regardless of whether we are buying a car, purchasing a pair of jeans or choosing a place to eat lunch, our emotions are making the call and we will oftentimes disregard hard facts to make sure that our emotional brain is satisfied.

Allow me to illustrate by getting a little nerdy. Neurobiologist Antonio Damasio created the Somatic Marker hypothesis.  The hypothesis refutes the old neuroscience that our decision making is rooted in logic. Damazio studied people who had damaged their limbic systems and were unable to produce emotions. He noted that these people were unable to make even the simplest decisions and became paralyzed with endless logical deliberation.

The findings of the study were that our emotions are responsible for decision making. A product’s features justify — in a logical fashion — emotional response.

Features become convenient logical consequences that we are excited to retain or decide to live without based on how we feel about the brand or product. We typically only examine features to logically support the emotional decision that we have already made.

I frequently hear from sales teams that they lose a sale in the features conversation. What they don’t realize is that, without an emotional connection to the product, they never had a chance at the sale in the first place. Features help us rationalize purchases, but emotional connection must come first.

As an example, ever ask someone why they bought the new iPhone? People will tell you things like, “it has a faster processor, a bigger hard drive and a better camera,” which are criteria that multiple products could satisfy, and at a lower cost. Push harder, and you’ll likely get, “I just like it more, alright? Apple is just a better brand!” We are often unable to articulate the emotional — and often subconscious — connections we have brands.

The best way to sell your brand is to emulate the emotional connection first, and sell the emotional benefits to your product or service second.

An indication that you aren’t selling emotion is if you think price is paramount. Any brand, product or service devoid of emotion is forced to compete on price and become a commodity.

A simple exercise to find your product’s emotional connection is to ask yourself what situation(s) must exist for your customer to pay double what they do now. Make a list of your answers. Then triple the price, then quadruple it and so on. Developing a brand around these answers will make your value proposition stronger, and you will likely gain a better understanding of your target market.

Ultimately, we are all at the mercy of our emotions. The moment you start selling on features and ignoring the emotional connection to your brand is the moment you start losing the sale.

Is That a Lion? Yes, and it’s Keeping Your Business from Growing

Ever watch one of those nature shows where you see a herd of gazelle that gets spooked by a lion and they all take off running together?

In the ensuing chaos, the camera always follows that one gazelle that breaks from the pack. Why do they follow that one gazelle? The correct answer is “Good TV.” That gazelle is about to meet the business end of the aforementioned lion. Regardless of what happens to the gazelle, the critical moment is when that one gazelle breaks from the pack, isolated and weak.

These days we don’t run away from predators all that often, but as mammals, we can empathize with the gazelle herd because our brains are hardwired to understand their group dynamic.  Our primal instincts are to stay with the pack, to alleviate risk and to survive.  Our brains actually release a chemical created in the hypothalamus to ensure that we follow this instinct.

At the same time that our brain is creating chemicals encouraging us to follow the herd, our hypothalamus also produces a chemical that will actually slow down our perception of time when it sees something different. I call this our “Lion Recognition” instinct.

Our hypothalamus releases these chemicals in an effort to keep us alive but, ironically, it keeps us from being successful in business.  In business we tend to adopt the herd mentality, mimicking the marketplace with what is known: If someone else is doing it then we know it is safe.

It’s strange how on one hand our brain is telling us, “For God’s sake do the same thing as everyone else or you will die.” And on the other hand, our higher reasoning is saying, “If you don’t do anything different how the hell am I supposed to see you?”  I believe that this fundamental paradox is the root of the reason that many businesses fail.

As a business owner you must realize that in order to be noticed and remembered, you must be the gazelle that breaks from the pack.  The camera will follow.  The only difference is that in business, there is no literal lion.  The only lion is your own fear of doing something different.

Great brands are different. Great brands aren’t afraid to break from the pack. Great brands have realized that the camera’s eye is more important to your business than outrunning imaginary lions.

Subjective Language is Making Your Elevator Pitch Completely Forgettable

Your elevator pitch is the single most important communication of you or your business and why you are relevant.

Last month I wrote about how you can use your elevator pitch — or 20-second summary of your business — as a litmus test to determine if you are creating your own market or if you are competing in someone else’s.  I received a litany of emails and comments about the elevator pitch exercise so I thought this month I would point out the critical error most of you are making: subjective language is making your elevator pitch irrelevant.

Subjective language is usually used in elevator pitches when businesses try to point out a perceived advantage in the market.  This usually manifests itself as an ignorable “we focus on the customer first” or “we deliver a quality product at a competitive price” statement. Because these typified statements contain only subjective language the brain does not know how to categorize them, so it ignores them.

Next time you listen to someone give their elevator pitch pay attention to how you actively listen.  Without realizing it, your brain is filtering through all the words that are being said and attempting to create a simple categorization of what the person is trying to communicate.  You might even translate someone’s elevator pitch that isn’t objective enough for them: “So, you sell insurance to people who own small airplanes?”

Your brain is trying to translate what you hear into a simple, objective category called a “schema.”  Our minds use schemas, or groups of cognitive elements that are associated with a single concept, because we are bombarded with so much sensory data that acknowledging all of them consciously would be paralyzing.

Consider an objective pitch like one Zappos might use; “you can return anything, anytime, for any reason.”  Zappos is using measurable concepts that mean the same thing to everyone.  Because objective words are measurable and finite, our brain can easily categorize and remember them.

Here is another exercise to determine how effective your elevator pitch is:

  1. Write down your elevator pitch.
  2. Cross out the subjective words
  3. Circle the words that are objective and measurable.

A great elevator pitch is only one or two sentences and contains only objective, measurable language.

Create Your Own Market – Don’t Compete in Someone Else’s

“It’s a $100 million dollar industry, all I have to do is capture 1 percent of that market and I’ll make a million dollars.”

After working with hundreds of startups, I have heard this statement countless times. This way of thinking is held by many business owners regardless of their industry, background or target market.

While on the surface this thinking seems logical, it is fundamentally flawed.

These same business owners argue that their companies can succeed on customer service, competitive pricing and high quality results. These “advantages” are neither sustainable nor differentiating, making growth virtually impossible. Business owners that try to compete in this way create — at best — what I call a “job business” — that is, a business that is just a glorified job.

What makes trying to capture market share in an existing market so challenging is that you are behind everyone else from day one. Those that already own market share are advertising, creating strategic partnerships, innovating and doing whatever they can to make sure you can’t come in and steal that $1 million out of their market.

To be truly successful, you must create your own market. Create objective differentiation and you can establish your own marketplace and own all of it rather than get your ass kicked in someone else’s.

Want to find out if you are in your own market or competing in somebody else’s?

Here is a quick test:

  1. Write down your elevator pitch. It should only be one or two sentences — if it’s not, condense it (something you should work on anyway). Pro Tip: Your elevator pitch should never contain subjective words like “better.”
  1. Circle the words that describe what you do or how you do it.
  1. Now, look at each circled word and ask yourself “do my competitors do or say this too?” If your answer is yes, cross it out.

Do you have anything left circled? Most people won’t but if you do, that is your unique market position and should be the basis for how you define your new marketplace.

How Customers Perceive Value

Understanding the value perceptions of customers is critical no matter what industry you are in or role you play in your organization. As a business owner you must understand your target market as thoroughly as possible in order to effectively manage all elements of your business.

The challenge is that understanding how your customers perceive value is difficult to quantify due to its subjectivity. Value perceptions are influenced by many variables including attitudes, culture, social standing, political affiliation and a myriad of other influencers. How then can we make any measure of value perception responsibly? One thing we know we can do is understand how our mind fundamentally processes data at the subconscious level before our emotive and logic receptors muddy up the waters.

Let’s take the following series of images to illustrate this process:



Being that our minds are systematic and finite in their operation, it first attributes 100% of the possible value to the entire series. It then dissects the series of images and makes value judgments based on physiological triggers. Our mind confirms that spatially, these four images are of equal size, shape and spacing. Therefore, our mind attributes an equal 25% of value to each of the four images. At this point, as far as our mind is concerned, these four images are equal.

The next thing our mind does is process color. Because red has the lowest frequency and highest wavelength of any color, it is the first to reach our eye (this is why important things are red…like stop signs, fire trucks and Twizzlers). Yellow is the second to hit our eye followed by green and then blue. Our mind concludes that the red square must be more valuable than the yellow square which is more valuable than the green square, etc. Keep in mind that these processes are happening in a nanosecond before our core emotional reactions tell us that the red square makes us feel energetic, the yellow square makes us feel happy, the green square makes us feel comfortable and the blue square makes us feel creative.

Keeping this process in mind, it is important to understand that every potential customer makes a multitude of value judgments, on a subconscious level, about the messages they receive from your business. Do the value judgments that are made about your business help or hurt your brand as it applies to the position your brand holds in the human mind?

A frequent radio advertisement in our area depicts a handyman business with the owner declaring “I’m not sure if everyone realizes all of the things we can do.” He then begins spouting off all of the services his company can perform such as basements, kitchens, bathrooms, roof repair, plumbing, heating & AC, floor repair, foundation crack repair, siding, windows, guttering, decking and a number of other services – the list is long and forgettable (For the purposes of this piece we will ignore the fact that average human mind can only remember four to five items in any list without applying a mnemonic device). Because the only sense being utilized in this example is auditory, our mind breaks the statements that are made into a series, again applying 100% of total value to the entire service portfolio of the company. Each time this owner reveals another service our mind divides the value of the overall service portfolio in half. This means that if ten services were mentioned in the advertisement our mind attributes 10% of value to each service. So, before our mind even begins processing the specific messages being communicated it thinks that the company provides a whole lot of services…but it isn’t good at any of them.

Think of the most powerful brands that exist in our society. With few exceptions, these brands represent one concept in the human mind.

  • Google = search
  • McDonalds = hamburger
  • Coca-Cola = soft drink
  • IBM = business computers
  • Intel = computer processors
  • BMW = driving machine
  • Nike = athletic shoes
  • Budweiser = beer
  • Microsoft = software
  • Apple = computer electronics

While you might argue that our remodeling company does represent the concept “remodeler”, you should ask yourself how effective is this concept in the human mind? If you want a new deck don’t you think to call a decking company? If you need work done to your roof don’t you call a roofing company? If your pipes are leaking don’t you call a plumber? Many companies such as this one tend to group as many services together as they can in hopes that you think of them when something in your house goes wrong – they want to be all things to all people. Unfortunately, our mind simply does not work like that.

At the end of the remodeling company radio commercial, our owner says “Oh ya, we are also problem solvers, I think we have seen just about every problem there is.” This statement, which is thrown in as an afterthought, is actually the only effective brand statement in the entire commercial. This company should embrace the concept of “home problem solvers”. This concept implies strategic thinking and could be established as a premium brand to which there are many advantages, but most importantly, it is a clear, concise message that is easy to remember and that our mind will attribute 100% of value.

What concept or service does your brand occupy in the human mind? Is it one clear, concise message with which the human mind can attribute 100% value? or can you do a multitude of services incompetently?