Small Business News
Most companies have these statements--and usually they say more or less the same thing. See the problem?
According to Wikipedia, a mission statement is intended to "guide the actions of the organization, spell out its overall goal, provide a path, [and] the framework or context within which the company's strategies are formulated."
Most companies have one, but they're all a waste of time and mental energy. Here's why:1. They're group-written.
When a group tries to write something in a corporate setting, the result is the lowest common denominator for every issue in the room. The process removes any statement that has an edge, resulting in digested wads of verbal pap.2. They're full of platitudes.
Most mission statements read something like this: "We are committed to delighting our customers by creating the best products and offering them for the best price along the best customer service." Every company makes these same promises, so why bother?3. They're full of abstractions.
Mission statements usually contain multiple words that are so vague as to be utterly meaningless. Take "best customer service," for instance. What exactly what does "best" mean in this context? There's no way to measure "bestness," so nobody knows.4. They don't inspire or motivate.
Human beings are motivated by stories that contain meaningful emotional content, typically about people who overcome big obstacles to achieve difficult goals. Mission statements are just opinions and promises. Big shrug.5. They're SO 1980s.
The entire "mission-statement" concept has a dress-for-success-while-searching-for-excellence-in-reengineering-your-corporation-which-is-named-something-that-sounds-like-"velocity" vibe to it.6. They're mostly honored in the breach.
Talking about something is the opposite of doing something about it. Ever notice how it's the companies that have awful customer service that go on and on and on about how their customer service is so wonderful?7. Nobody reads them.
Honestly, does anyone ever actually read these things? With a straight face, I mean? In short, if your company has a "mission statement," my best advice is to throw the posters in the trash, wipe it from your website, and pretend you never had one.
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McConaughey, who won the best actor award on Sunday for his role in Dallas Buyer's Club, says you need someone to look up to, something to look forward to, and a hero to chase.
The Academy Awards, celebrating the best films and performances of the year, is not the first place you'd think to find leadership lessons. But last night Matthew McConaughey, who won the best actor Oscar for his role as Ron Woodroof in Dallas Buyer's Club, explained during his acceptance speech how he stays humble and driven.
"There's three things, to my account, that I need each day: One of them is something to look up to, another is something to look forward to, and another is someone to chase," McConaughey said.
McConaughey said he looks up to God, and thanked God for teaching him gratitude. Next he thanked those in his life he looks forward to being with--his late father who taught him "how to be a man;" his mother, who taught him how to respect himself and others; and his wife and children for giving him courage.
But perhaps the most important part of your success as a leader is your motivation--that single factor that drives you to keep going, to be successful, to be a better version of yourself.
"To my hero, that's who I chase. When I was 15 years old, I had an important person in my life come to me and say, 'Who is your hero?' And I said, 'I don't know. I gotta think about that. Give me a couple weeks.' I come back two weeks later and this person comes up, 'Who's your hero?' I said, 'I thought about it, you know who it is? It's me in 10 years,'" McConaughey said. "So I turn 25, 10 years later, and that same person comes to me and says, 'So, are you a hero?' And I say, 'Not even close. No, no, no. My hero is me at 35.'"
McConaughey next offered further explanation of how his hero is his future self: "You see every day, every week, every year of my life my hero is always 10 years away. I'm never gonna be my hero, I'll never attain that. I know I'm not and that's just fine with me because that keeps me with somebody to keep on chasing," he said. "So, to any of us, whatever those things are, whatever it is we look up to, whatever it is we look forward to, and whoever it is we're chasing, to that I say 'Amen.' To that I say, 'Alright, alright, alright.' And to that I say 'Just keep living.'"
Fittingly, McConaughey won his Oscar for portraying Ron Woodroof, a Texas man who after being diagnosed with AIDS in 1985 began selling medications illegally to help others with the disease. The true story of Woodroof's entrepreneurial spirit can certainly teach founders a thing or two as well.
So, who is your hero? Who do you keep chasing to make you a better leader? Let us know in the comments below.
When success is the only option, here's what world-class performers do.
Maybe you've finally landed a meeting to pitch key investors. Maybe you've finally scored a sales call with an enabling customer you've pursued for months. Or maybe you've been invited to deliver an important presentation at an industry conference.
When the stakes are high, most people simply worry more. A few know how to prepare differently. When the potential outcome isn't normal, your preparation shouldn't be normal, either--at least, not if you want to perform at your very best.
The following is from Daniel Coyle, author of The Talent Code (one of the few books I actually give to friends) and The Little Book of Talent (a book I've written about before) and a blog about performance improvement that should be on your must-read list.
When it comes to approaching a major performance test, most of us follow advice that can be distilled into three words: Focus on success.
That is, we prepare ourselves by banishing doubt and visualizing the positive. We vividly imagine ourselves making all the right moves with fluid grace, with zero mistakes or missteps. And it feels good.But that's not what the pros do.
What's interesting, though, is that when you look closely at world-class performers, most don't use this feel-good approach. In fact, they do the opposite--what you might call the feel-bad-first approach.
It goes like this: First, they focus on the mistakes and figure out, in detail, how they will react to them. Then they visualize the positive. A great example of this is the Green Berets, the U.S. Army Special Forces soldiers. Teams spend weeks training for a mission (most of which happen at night). On the day of the mission, they follow a two-part routine.
First, team members spend the entire morning going over every possible mistake or disaster that could happen during the mission. Every possible screwup is mercilessly examined and linked to an appropriate response: If the helicopter crash-lands, we'll do X. If we are dropped off at the wrong spot, we'll do Y. If we are outnumbered, we'll do Z.
After some hours of doing this, the team members take a break and have lunch together. They socialize, relax, and maybe take a nap. Then they spend the afternoon in Phase Two, talking about everything going exactly right. They review each move, visualizing each step, and vividly imagine it going 100 percent perfectly.
You might call this a Balanced-Positive Approach: equally split between negative and positive, and ending on the positive. Notice the complete wall of separation between the two phases. The team doesn't toggle back and forth between positive and negative. The two phases are kept as separate as night and day: First comes all negative, then all positive.
Many top performers (Steve Jobs and Peyton Manning jump to mind) embody this approach. Half the time, they are persnickety, chronically dissatisfied, negative, doubtful, obsessed with potential failures. The other half of the time, they're incredibly positive, confident performers.
This isn't surprising. The balanced-positive approach helps you avoid the pitfalls of positivity--namely, that you get surprised and demoralized by failure--by replacing it with a preparation that matches the reality of the world and also leaves you ready for performance. Good things and bad things will happen, and you can't control either. But you can prepare.Now it's your turn.
Say you're making a sales call. Start with potential mistakes or mini disasters. What if your demo locks up? What if the meeting gets pushed back and you only get 10 minutes instead of 30? What if you're asked questions you can't answer? What if a key decision maker isn't in the room? Think of a number of likely--and even unlikely--scenarios and determine how you will handle them.
Then take a break.
And then come back and rehearse--but this time focus on everything going perfectly. Hit your marks. Roll through your demo. Nail your close.
That way, you won't go into the meeting worried or anxious. You'll go in confident, prepared--and truly prepared to succeed.
Some people are likeable, but others have great charisma. Here is how you can recognize and achieve the difference.
You feel charisma the moment it enters the room. It's not just that someone is likable. Charismatic people draw attention. They automatically energize you and motivate you to step up, to take action. What is it about them? All in all, they are certainly likable, but it's more than that. Are they born charismatic, or do they learn how to be that way? It's probably a little of both. But either way, charismatic people inspire us and get us talking.
It's likely that you have some charismatic traits that can be developed to help you attract and inspire those around you. If you aspire to be charismatic, here is a list of behaviors to expand on.
1. Charismatic people exude joy. The first thing you notice about charismatic people is the spark of life. Whether they are saviors or troublemakers, they have a strong passion that triggers powerful emotions in those around them. Even in anger, they make people feel happy to join a cause. They show obvious pleasure in experiences, and they invite others to share in the experience they are having. Enhance your charisma by sharing your passions with those around you and helping their passions flourish.
2. Charismatic people inspire confidence. It seems that charismatic people have the world in their control. Their personal self-worth and confidence appear strong, even when they're not. They have faith in their abilities, their knowledge, and their worth. They also know the line between confidence and narcissism. They don't disparage or dismiss the people around them. Enhance your charisma by dampening your insecurities in favor of celebrating your strengths. Share your confidence with others so they feel stronger in your presence.
3. Charismatic people share conviction. The times that charismatic people stand out the most is when they are driving a movement. Charismatic people believe in something powerfully and share that belief with others. Their conviction and consistent actions influence others to follow. Dedicated followers add exponentially to the energy that oozes from a charismatic leader. Apathy will kill charisma and momentum. Enhance your charisma by being diligent and committed. Inspire others by helping them engage in a common cause.
4. Charismatic people are great storytellers. People don't follow someone simply because they are told to do so. Moving someone to action requires context and motivation. Stories are the most effective way to get to the emotional core to break inertia. Charismatic people have a talent for spinning a yarn that connects deeply and relates directly to the action that needs to occur. Their voice, inflection, and manner are easy to listen to and pleasant. They have the ability to express drama and intrigue so people want to hear more. Enhance your charisma by learning to craft and tell meaningful, emotional stories. Practice the arts of humor, metaphor, and symbolism so you can entertain while you inform.
5. Charismatic people connect empathetically. It has been said that when Bill Clinton speaks to you, he makes you feel that you are the only person on the planet. This is a talent of charismatic people. They genuinely and instinctively focus their eyes, ears, and soul on your being, not theirs. They make you laugh, they make you feel heard, they make you feel special or fascinated or safe or interesting. It isn't the same feeling in every case. But people connect and stay, because they are having strong, positive emotions in the presence of someone truly charismatic. Enhance your charisma by focusing all of your energy and attention on the person in front of you. Shut down your inner voice and connect so you can see, hear, and feel the energy and information he or she is sharing.
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Projects on the platform have received more than $1 billion in total pledges, showing how robust a source of startup capital crowdfunding has become.
Photo, from left: Perry Chen, Yancey Strickler, and Charles Adler
Crowdfunding platform Kickstarter reached a huge milestone Monday, passing $1 billion in total pledges.
The Brooklyn, New York-based startup, founded in 2009 by Charles Adler, Yancey Strickler, and Perry Chen, has received pledges from more than 5.7 million people. According to the company's website, more than half of the $1 billion in pledges was raised during the last 12 months, signaling that crowdfunding continues to stake its claim as a viable source of capital for businesses.
The U.S. led all countries in the amount of money pledged, with more than $633 million, followed by the United Kingdom and Canada. In total, pledges have flowed in from 224 countries and territories across all seven continents, the company says.
Nearly 1.7 million people have backed more than one project on Kickstarter, including almost 16,000 who have backed more than 50 projects on the platform.
Successfully managing remote employees can be good for your business in ways you might not expect.
Thanks to the tourism, energy, and technology industries, seven of the 10 states with the country's fastest job creation this year will be in the West, a new report finds.
The West is the best--at least when it comes to job creation.
According to a new report, seven out of the top 10 U.S. states in job growth this year will be in the West. The report, by Colorado-based research and consulting firm IHS Global Insight, says businesses in the region's energy, tourism, and technology industries are largely responsible for the fast job growth.
The states with the fastest payroll increases this year will be North Dakota, Texas, Arizona, Colorado, Utah, Idaho, and Oregon, the report predicts.
According to USA Today, states such as Arizona and Nevada have bounced back from the housing downturn and residential construction is now on the rebound, bringing a surge of new jobs. Arizona's job growth is also benefiting from strong tourism, as well as Apple's new 2,000-employee factory in Mesa.
Colorado and Utah are seeing a boost due in part to natural gas and oil, and both are also riding a technology wave, USA Today reports. In Oregon, semiconductor manufacturing is spurring the state's economy.
Jim Diffley, an economist at IHS, says that the Western U.S. is claiming more residents from different states because they want a better quality of life, and more technology is allowing people to work remotely.
"They're just progressive, attractive places to live," Diffley tells USA Today.
A new study finds that the idea of breaking rules is at the root of the connection.
An individual's propensity to lie appears to be closely linked to his or her creative abilities. That's the conclusion of recent study by two researchers from prominent business schools.
What explains the connection?
"The common saying that 'rules are meant to be broken' is at the root of both creative performance and dishonest behavior," lead researcher Francesca Gino, an associate professor at Harvard Business School, said in a press release. "Both creativity and dishonesty, in fact, involve rule breaking."
Gino and her coauthor Scott Wiltermuth, an assistant professor at the Marshall School of Business at the University of Southern California, came up with a two-part experiment to study the link between deceptiveness and inventiveness.
First, they looked at participants' readiness to lie. Gino and Wiltermuth told individuals that they would be compensated for each math problem they were able to solve. At the end of the test, they were asked to self-report that number. Little did they know that the researchers tracked their actual performance, too.
Almost 60 percent of the participants cheated by saying they were able to solve more problems than they did.
For the next task, the participants were asked to spontaneously come up with "remote associates." A remote associate is a word that is related to a set of words, for example, "sore, shoulder, sweat" (answer: cold). The exercise is a common way to measure creativity.
Gino's and Wiltermuth's data showed that those who lied about their results were better at the remote associate test than their counterparts. As it turns out, breaking the rules can serve as a great primer for out-of-the-box thinking, the two concluded.
Make use of the simple--and presidentially vetted--Eisenhower matrix.
Former President Dwight Eisenhower lent his wisdom--and his name brand--to this model for dealing with the all-important practices of decision making and time management. Using the Eisenhower Matrix, pictured here, you can evaluate every decision on how to manage your time based on two elementary questions: (1) How important is it?, and (2) How urgent is it?
Featured on Shane Parrish's Farnam Street blog, the matrix has made something of a comeback in recent years. (There's even an app for it, which you can find at Eisenhower.me.) "We often focus too strongly on the 'urgent and important' field, on the things that have to be dealt with immediately. Ask yourself: When will I deal with the things that are important, but not urgent? When will I take the time to deal with the important tasks before they become urgent? This is the field for strategic, long-term decisions," writes Parrish.
We wanted to know: How did Eisenhower himself assess urgency and importance? When you're the President, isn't everything urgent and important, at least to someone? Yes--but there are degrees. Mary Burtzloff, archivist at the Eisenhower Presidential Library and Museum in Abilene, Kansas, helped us sort through them:
Urgent and important: In 1957, Eisenhower federalized the Arkansas National Guard and called in parts of the 101st Airborne Division to ensure the integration of an Arkansas high school after the state's governor defied Brown v. Board of Education.
Urgent but not important: In 1953, Eisenhower chose to break tradition and not wear a top hat to his inauguration. "He had to make a decision by the [inauguration] date, but it was a relatively inconsequential one," says Burtzloff.
Important but not urgent: In 1956, Eisenhower signed the Federal Aid Highway Act of 1956 into law. Two years earlier, he publicly shared his "Grand Plan" for upgrading America's highways. The idea first gripped Eisenhower back in 1919, when, as a lieutenant colonel in the Army, he took part in an arduous cross-country military convoy. During that trip, he saw firsthand the poor condition of U.S. roads.
Neither urgent nor important: Deciding whether to respond to notes from concerned citizens fell into this category. "Tens of thousands of letters came to the White House," says Burtzloff. "The staff responded to the vast majority, but on occasion one would be forwarded to his desk, and he might choose to send a personal response."Source: Farnam Street This article originally appeared at The Build Network.
A roundup of the day's news that can help you and your business succeed.1. Generosity of the Crowd
Crowdfunding hub Kickstarter has reached a big milestone: $1 billion pledged by the crowd to date toward projects--both successful and unsuccessful. In case you needed any reassurance, the stat suggests crowdfunding is here to stay.--TechCrunch2. South by Southwest
Which startup will become darling of the huge tech fest known as "South by"? Perhaps none, as was the case last year. The conference has become so large--this year around 30,000 people will attend the Interactive portion alone--that few new startups are able to rise above the noise the way Twitter and Foursquare once did. Stay tuned for SXSW coverage on Inc.com beginning Friday.--Wall Street Journal3. Open Windows
Under the new leadership of Satya Nadella, Microsoft reportedly may be losing two of its top executives: former Skype CEO Tony Bates and marketing head Tami Reller. If Nadella's recent promotion teaches us anything, though, it's that sometimes an organizational change up is just what a struggling company needs. --ReCode4. Rouble Trouble
Global financial markets fell early Monday, thanks in large part to an escalation of the Ukranian crisis in Crimea. Russian markets were the hardest hit, with the rouble dropping to an all-time low against the dollar and the euro.--BBC5. Photo Bomb
Ellen DeGeneres "broke Twitter" last night by posting a selfie with Bradley Cooper, Brad Pitt, Jennifer Lawrence, Kevin Spacey, and other Oscar elite that went on to garner nearly 2.5 million retweets in 9 hours--a new record. And $TWTR investors everywhere rejoiced. -- Twitter
Political and business observers have long speculated Sandberg would someday turn to politics. But a close source says it isn't happening now.
A source close to Facebook COO Sheryl Sandberg says a report that she is planning a run for Senate "is 100% untrue."
The report was published this morning in The Daily Mail.
The Mail's Sara Nathan and David Martosko reported that Sandberg would "likely" challenge sitting California Democratic Senator Barbara Boxer in a primary.
The general election for that seat isn't until 2016.
When the story first hit, we warned readers to take the news with a grain of salt. The Daily Mail is a British tabloid that doesn't have a great record of publishing breaking U.S. political news.
That said, there has long been speculation that Sandberg might quit Facebook for a political career.
During a trip to Silicon Valley last fall, a wealthy supporter of Democratic candidates told us there would be a lot of backers for a Sandberg run. But this supporter speculated Sandberg would run for Senator Diane Feinstein's seat when she retires in 2018.
In part, these political rumors circulate around Sandberg because she started her career in the Treasury Department during the Clinton administration.
The speculation has also been fueled by Sandberg's popular feminist manifesto, Lean In; the marketing of which has at times felt more like the beginning of a movement or a campaign than a mere publicity tour.
Sandberg joined Facebook as COO in 2007, following a successful run at Google, where she helped build the company's massive sales force. Prior to her joining, Facebook CEO Mark Zuckerberg had gone through several No. 2s. In Sandberg, he finally found someone who wouldn't pressure him to sell the company, didn't want his job, and was able to turn his motley collection of hackers into an organized, profitable big company.
At the World Economics Forum this past January, Sandberg reportedly said politics are "not for me." She added, "I just have a wholesale agreement that we need more women in politics."
Update: We updated this post with a response to the Daily Mail story from a source close to Sandberg.
This article was originally published by Business Insider.
Networking not working? Here are four common networking sins, and suggestions for mending your ways before another valuable connection is lost.
I attend a lot of networking events--so many that I can now spot a disingenuous, disinterested, unsuccessful networker from across the room. And I'm not alone in my avoidance of those people. Here are four common networking mistakes, and strategies for making more meaningful connections moving forward.1. You're not really there.
This is a horrible practice, yet so many of us do it. We concentrate so heavily on connecting with the right title that we begin to consider every midlevel conversation a missed opportunity for speaking with the people who really matter. This attitude will undermine your success.
Remember, the person across from you might not have a VP title or work for a large organization, but he is connected to a universe of people. You might need one of those connections someday, or you might just have an amazing conversation and learn something.
To help manage your anxiety, set a five-minute limit on all conversations. After that, unless you're having the time of your life, politely extract yourself by saying "I've enjoyed our conversation. Since we're both here to network, why don't we meet some other people?" Or "It's been great talking with you. Catch up with you later?"2. You put off networking until it's too late.
You stopped networking when you got your last job three years ago. Now you need to find a new job and you're frantically attending networking events and asking everyone you know, "Got a job?" Even friends roll their eyes when they see you coming.
Desperate job hunters are too keyed up and needy to truly connect. Their energy is awful--jittery and anxious--and the conversation is, frankly, boring ("A job? A job? A job?").
To avoid this, keep up with your contacts even when you don't need them. Keeping up doesn't need to be onerous. Some easy ideas include:
- Schedule a touch-base phone call every two months.
- Treat strong connections to lunch once a quarter or twice a year.
- Send links to articles or workshops that you know a specific contact will appreciate.
Notice that these last two suggestions require giving something to your contact. Giving is important. By giving, you model the kind of relationship you want to have: one in which people share and help each other.3. You network only with people like you.
You're tight with the people in your department. You go out for drinks on Friday nights, share pictures of your kids, and seek each other's advice. But this insularity backfires when you make a bad decision about your project. Everyone had agreed that it was the right way to go, but you all missed something completely obvious to people outside the department.
It's so comforting to connect with people like us. They share our jargon, our perspectives, and our interests. They reinforce our belief that we're knowledgeable, correct, and good at what we do. Unfortunately, they also insulate us from people who could help us broaden our skills and make better decisions.
Make sure that your network includes people with different skills, areas of expertise, backgrounds, and levels of responsibility than your own. Yes, you lose the comfort of associating only with people who think just like you do. But you gain information and perspectives that can help you fill your blind spots.4. You're too busy to follow up.
You connected with fascinating people at last year's conference. When you returned to the office, you got busy and forgot to follow up. Now you want to reach out to those contacts, but no one is returning your calls.
The underlying problem is that people often think simply collecting business cards is enough. Go to a conference, get a business card, and...done! If only it were so easy.
Getting a business card is only a first step. For a contact to become a true part of your network, you need to engage them. That means participating in some back and forth conversations after the event.
It's difficult to follow up when you've collected 100 cards. Instead of trying to connect with them all, use your plane trip home to identify the top five. These are the people who you most enjoyed, who intrigued you, and who you absolutely want in your network. Make sure to follow up with them.
See people shooting themselves in the foot with destructive networking behaviors? Let me know and I’ll address it in a future blog post.
Duds and rock stars are easy to spot. Here's an assessment system to help ensure that you don't hire the candidate who's almost good enough.
All of the best recruiters I know use performance-based job descriptions and follow this three-part guide to hiring when assessing candidates:
Rule One: Suspend judgment for at least 30 minutes. A good first impression may compel you to seek out evidence to justify a hire, and the opposite is true for candidates who begin on the wrong foot. Counteract this natural reaction by focusing on gathering specific evidence of exceptional performance during the work-history review.
Rule Two: Probe for an "achiever pattern" indicating the candidate is in the top 25 percent of his or her peer group. Specifically, look for the following:
1. People who change jobs in order to propel career growth, not seek security or avoid problems
2. A consistent pattern of taking on difficult technical projects beyond their experience level. Managers assign their best people to tackle the trickiest challenges for a reason.
3. A history of volunteering for risky assignments that stretch skills. Success builds confidence.
4. Early-career exposure to senior executives and important projects.
5. Important jobs on multi-functional project teams. Be wary of people whose team growth plateaued early.
6. A track record of being promoted ahead of peers. Award double bonus to candidates who did so at different companies and with different managers.
7. Company or industry recognition in the form of awards, honors, advanced educational opportunities, or speaking engagements.
Rule Three: Use the information gathered in that first 30 minutes to rank candidates according to the performance-based scale below. Note that it is a nonlinear scale -- in other words, Level 3 is reserved for the top 25 percent of people doing similar work. These are not C students; they are great hires.
From a practical standpoint, it's impossible to accurately assess a person in 30 minutes. However, half an hour is plenty of time to identify your Level 1s and Level 5s. Everyone else will fall in the Level 2-4 range. You should spend the next hour or two of the interview trying to make sure you don't hire a Level 2.
Avoiding the 1s is easy. You have to dig deep to avoid hiring a Level 2. Here is what you're looking for:
Level 1 -- Bottom Third: This candidate has neither the skills nor the motivation to do the work at a consistent level of quality. He or she gets hired when the interviewer emphasizes personality or first impressions, and fails to conduct due diligence (i.e., reference checking, background verification).
Level 2 -- Bottom Half: This candidate has the basic skills to do the work, but is not highly motivated. Suss this out by asking where the person took the initiative, went the extra mile, or volunteered to lead an important project. If you don’t find much, categorize the person as a Level 2. These people get hired by box-checking skills and riding the coattails of first impressions or intuition.
Level 2.5 -- Average: There is little evidence the person is out-performing his or her peers on any factors.
Level 3 -- Top 25%: This person demonstrates an "achiever pattern" indicating that she has been recognized by colleagues as a top performer and a promotable person.
Level 4 -- Top 5-10%: It's nearly impossible to determine whether someone is a Level 4 in just 30 minutes. Clues include getting some major company award like a fellowship, a special grant, extraordinary bonus or special assignment.
Level 5 -- Rock Star, Top 1-5%: Rock Stars typically have a track record of rapid promotions in different situations, always being assigned to the most important projects and succeeding, or receiving industry-wide recognition.
Follow the “No 2s” rule to ensure everyone you hire is a Level 3, 4 or 5. Some will be all-stars, some will be MVPs, and everyone else will make the starting team.
A report from Morningstar shows why having your own plan, and sticking to it, matters.
You know better than anyone that you only win by leading, not following.
Now there's more proof that you should never just jump on the bandwagon, from investment research company Morningstar. On Thursday, Morningstar published a snapshot of investor returns for 2013, in an article by Russel Kinnel, Morningstar's director of mutual fund research.
It turns out if you played follow-the-leader last year, putting money into sectors that were popular with other investors, it was a losing investment strategy. By contrast, if you took a risk and put money in less popular areas, you were likely to make out much better.
Morningstar measures investor success by examining the gap between the average investor's returns and those of the average fund. The bigger the gap, the worse investors did. It turns out the 10-year gap between the average investor return and the average fund return jumped to 2.49 percent at the end of 2013, compared to 0.95 percent at the end of 2012.
Put another way, the typical investor gained an annualized 4.8 percent by year-end 2013, compared to 7.3 percent for the typical fund.
Another way to examine the gap is to look at investor outflows from funds, and compare them to fund performance. U.S. equity funds saw outflows of $94 billion in 2012, but notched a 35 percent gain in the 2013. By contrast, taxable bond funds saw inflows of $270 billion, but notched a measly 0.15 percent gain.
"We saw massive inflows to intermediate-bond funds in 2012 just before one of their worst years in the past 40 years," Kinnel says.
The problem, Kinnel says, is that too many investors listened to messages that said the U.S. economy was doing poorly, while other parts of the globe--namely China--were doing well. And that simply wasn't true.
So the best idea is to have a plan and carry on.
"Who cares if a talking head predicts gold will surge and stocks will tank," Kinnel says. "Focus on your needs and goals."
Data breaches have compromised more than 20 million Californians' personal information in the past two years, with about a third of the breaches aimed at small businesses. Find out how to protect your customers.
Data breaches at large companies like Target and Nieman Marcus make headlines. But with comparatively small IT budgets--or no IT departments at all--smaller businesses are at a greater risk of cyberattacks.
In 2012, half of all attacks in California targeted businesses with fewer than 2,500 employees, according to a new report by the state's attorney general, Kamala Harris. Businesses with fewer than 250 employees were the victims of 31 percent of all attacks.
Last year there were 170 data breaches reported in California, a 30 percent increase from 2012, the report found. In the past two years, the personal data of 21.3 million Californians has been compromised, according to USA Today.
In response to the growing threat, Harris is focusing considerable effort to fight hackers and educate business owners about how to protect themselves. Her report found that cybercrime is largely "opportunistic," meaning that hackers are actively looking for "'low-hanging fruit'--today's equivalent of someone who forgets to lock her car door," Harris says.
In the report, titled "Cybersecurity in the Golden State," the attorney general outlines best practices for small businesses to shore up their defenses. Below, check out some of the most important tips. You can read the entire report here.Bank securely.
When banking online, you need to first make sure you're using a secure browser connection, indicated by "https" or a symbol of a lock in the address bar. After each session, erase your cache so no information stays in your browser's history. Also make sure to utilize account notifications and two-factor authentication. Data breaches usually involve an insider, so do not allow a single individual to both initiate and approve financial transactions.Use multiple lines of defense.
Your business needs to use "multiple, overlapping, and mutually supportive solutions," the report says. Then if one defense fails, you will still be protected. "This should include the deployment of regularly updated firewalls, antivirus, and Web security solutions throughout the network. Also, anything connected to your network should be secured by more than signature-based antivirus technology," the report says.Map and encrypt your data.
As your business grows, you may have to move, archive, or store your data offsite or with third parties. Make sure you know where these archives are located. Next, you should encrypt all the data you have, which makes it unreadable without a special key. "Free and easy-to-use encryption technology is widely available. Encrypting your data can dramatically reduce your exposure to a data breach and the theft of proprietary information," the report says. Another important action is to limit the access your employees have to sensitive accounts. No single employee should have access to everything, nor should employees have access to data that has nothing to do with their jobs.Strong passwords and update software.
Although it may seems obvious to use strong passwords, most people don't. As the CEO, you should create policies that require strong passwords, with more than eight characters made up of a mix of letters, numbers, and symbols. Change your passwords every three months and never use personal information like birthdays, names, or colleges you attended. Keep operating systems and software updated and uninstall products you are not using anymore. Employees should not have administrator accounts, which are easy doors for cyberattacks. Also make sure your employees undergo background checks if they have special privileges for dealing with sensitive information.
The Oscar-nominated film starring Matthew McConaughey includes Texas-sized levels of business savvy.
When Ron Woodroof, a good old boy from Texas, was diagnosed with AIDS in 1985, he decided to put up a fight. In Dallas Buyers Club, the biopic that will vie for Best Picture at the Academy Awards on Sunday, Woodroof does everything to counter his grave diagnosis from bribing a hospital worker to get him an antiviral drug to selling AIDS medications illegally on the streets.
Most entrepreneurs will never face such an ethical challenge, but there are plenty of business lessons to glean from the astonishing film, which stars Matthew McConaughey as Woodroof and Jared Leto as the sweet transvestite, Rayon. Here are a few of them:Don't Take No for an Answer
Time and again, leaders are told that what they're doing isn't realistic. But Woodroof refuses to accept his diagnosis--or the idea that helpful drugs have to be hard to acquire. Although the AZT he initially takes makes him ill, he still musters the energy to drive all the way to Mexico to visit a hospital. Once there, he encounters a Dr. Vass, whose American medical license has been revoked and who tells Woodroof that AZT "kills every cell it comes into contact with." When Woodroof's health significantly improves three months later thanks to the ddc and protein peptide T that Vass prescribes him, Woodroof decides to launch a business selling the drugs in the U.S.Target Your Best Market
For a time, Woodroof ekes out a living selling ddC and protein peptide T to young Dallas hoodlums. But his prejudices prevent him from targeting the vast majority of people suffering from AIDS. Enter Rayon, a transvestite with a heart of gold, who has connections to homosexuals, other transvestites, and drug addicts in need of medication. When Woodroof realizes she's the missing component of the enterprise, he agrees to give her a 25 percent cut, and the Dallas Buyers Club is born.Pick the Right Partner
Rayon is integral for the clients she brings in, but also is an ideal partner for Woodroof. She keeps solid records, manages every DBC membership, and shoos away customers when they're asking too much. Above all, she listens to Woodroof when he's frustrated at being harassed by a Food and Drug Administration official. When the FDA changes its rules to make any unapproved drugs illegal, Rayon begs her father for money to keep the club running. With the money from her life insurance policy, Woodroof is able to drive back to Mexico and get more peptide T. It's a heartbreaking move, but a lesson worth noting: You're only as good as the people you work with.
Watch the trailer for Dallas Buyers Club below:
An updated analysis shows a weaker fourth quarter last year, but small businesses are still buying.
If your sales have slowed in recent months, you're not the only one.
The Bureau of Economic Analysis, a division of the Department of Commerce, revised its January 30 report about the fourth quarter 2013, and it turns out the economic picture was not as healthy as previously thought.
Gross Domestic Product increased at a 2.4 percent rate in the quarter, down from an estimate of 3.2 percent. In the third quarter, real GDP grew 4.1 percent. For the full year 2013, real GDP was 1.9 percent, compared to 2.8 percent in 2012.
The revisions were due primarily to a slower growth of inventory investment among businesses, as well as decreased government spending at the state and federal levels. Tack on a downturn in housing investment, and lower expectations for economic growth seem only logical.
To be sure, inventories grew, but at a falling rate, and consumer spending was also revised lower. Yet both continued to grow quarter over quarter.
Inventories added 0.14 percentage points to the fourth quarter changes in real GDP, BEA notes, but added 1.67 percentage points to the third quarter. In dollars, private businesses grew inventories $117.4 billion in the fourth quarter compared to $115.7 billion in the third quarter, and $56.6 billion in the second quarter.
Consumer spending is also accelerating, having increased 2.6 percent in the fourth quarter, compared to 2 percent in the third. More consumer spending is always good for business. But businesses added about 100 percent more inventory in the fourth quarter compared to the second, and overstocked inventory could weigh on future economic growth. And an oversupply could also lead to problems if you're stuck with it while demand slackens.
Businesses in the fourth quarter also spent more on fixed investments like transportation equipment and software, the BEA notes.
"The upward revision to nonresidential fixed investment primarily reflected upward revisions to equipment and to intellectual property products," the BEA said in a technical note Friday.
The news corresponds to what Rob Frohwein co-founder and chief executive of alternative lender Kabbage.com has seen in recent months. Total monthly loans have grown 150 percent to $1 million a day, as bricks-and-mortar stores and online retailers increase inventory, purchase equipment and beef up staffing and marketing efforts.
"Small business owners are cautiously optimistic and they are investing wisely in their growth, rather than rampantly and optimistically spending," Frohwein says.
When he appeared on ABC's Shark Tank, Aviv Grill got a ton of publicity for his Miso Media guitar learning app. Here's what went wrong after that.
A good movie always leaves you something to think about. A business owner shares her top takeaways from the Best Picture nominees.
So, I have a confession to make. I am an entrepreneur and a mother, and my time is precious. I have very little free time-- but what free time I do have in the first two months of the year is spent watching every Oscar nominated film. I've seen every one this year, and it occurred to me that weaved throughout each of these films are some serious pearls of wisdom for entrepreneurs. As you sit down this weekend to watch the Oscars, see if you can pick up on any of these leadership themes from the Best Picture nominees:
American Hustle: Fake it til you make it.
Irving Rosenfeld and his partner Syndey Prosser are forced to work with the FBI when they are busted for running a total sham of a business. They get into a situation that is way outside their comfort zone, and are forced to work on the biggest, and scariest, con of their lives. By pushing themselves beyond their perceived limits, they discover an awful lot about themselves, and what they are truly capable of. Leaders can and should get comfortable being uncomfortable--and pushing forward even when it feels impossible.
Captain Phillips: Nice guys finish first.
When Captain Richard Phillips was commanding a cargo ship 145 miles off of the Somali coast, he was captured by pirates. Unlike the pirates, the Captain and his crew were unarmed and had only their negotiating skills to carry them through. Through his ability to connect with the lead pirate, Muse, Captain Phillips was able to protect his men and survive an incredibly challenging situation. He knew exactly how to handle this armed, unstable pirate--and it wasn't by playing hardball. He was simply kind, and thoughtful, while remaining strong and solid in his approach. He was nice, but not weak--a key lesson for all of us.
Dallas Buyers Club: Be solution-oriented.
When Ron Woodruff, a rodeo cowboy was diagnosed with HIV and given 30 days to live, he tried to begin the typical treatments of AZT, and found that the system and the drug was completely broken. He decides to cross the border into Mexico where he learns about alternative solutions to treat HIV, and begins smuggling them into the U.S. and starts the "Dallas Buyers Club," a membership club where HIV patients can get these alternative medications. His willingness to tackle this problem with an (albeit illegal) solution, lengthened the lives of thousands of HIV patients and changed the course of HIV treatment. Although he had a lot of mixed feelings about the gay community, many of whom were his customers, Ron worked to push past his own ignorance to solve a problem and had a successful, game-changing business as a result. As a leader, are you solving problems with your product or on your team? You should be.
Gravity: Remember the power of mentors.
When Dr. Ryan Stone, an engineer on her first shuttle trip to space, ends up having a freak accident on a routine spacewalk, she and astronaut Matt Kowalsky are left spiraling in space, tethered to each other. Matt spends the next hour telling her various lessons about life and space, and their connection is as deep as they come. When Matt and Ryan get separated, Ryan is forced to channel Matt's confidence and knowledge to help get her home. She brings back his words and takes from them what she needs to in order to survive. Many of us as leaders have met people who have said things that we took with us on our journeys. Remember and look for people whose words and actions can inspire you to great success.
Her: Human connection is important.
Theodore Twombley lives in LA in the not-too distant future. He becomes fascinated by a new advanced operating system--basically Siri on steroids. "Samantha," his OS, is so advanced that she feels like a real person. Their connection is deep, and as Samantha gets more and more advanced, it gets complicated. Watching Her was like a giant reminder that we are headed towards a time where technology can and will advance faster than we'd ever expect. Through all of this, it's more important than ever for leaders not to become isolated. We constantly use technology to make our time-pressed lives more efficient, but we must, to be good leaders, make time for people--our most important asset.
Nebraska: If you don't make time for family, you'll regret it.
Nebraska is the story of David and his drunken, elderly, disoriented father Woody. When Woody receives a letter stating that he won a million dollars in a mail-order sweepstakes, he is convinced it's not a hoax. His son David agrees to drive him from Billings, Montana, to Lincoln, Nebraska. David essentially stops his life to go on this goose chase for his father, and along the way, repairs old, damaged relationships with his entire family. As leaders, we can't always stop everything we are doing to spend a week on a road trip with our most difficult and challenging family members, but it's important to ensure that our family relationships are a priority.
Philomena: Don't accept no for an answer.
Based on the book The Lost Child of Philomena Lee by BBC correspondent Martin Sixsmith, this film tells the story of Philomena, a woman who was forced to give her child up for adoption by the nunnery that took her in when she was a pregnant teenager. Philomena had tried to discover the whereabouts of her son, who she signed away to an abbey in Ireland, but based on the church doctrine, she was not entitled to any information about him. It was only after a journalist contacted her and encouraged her to push past the church's refusal to cooperate that Philomena learned the truth about what happened to her son. Because she learned to not accept the first "no" that she got, she was able to achieve her goal and find peace. Leaders need incredible resilience, and they must push forward even when faced with challenges.
The Wolf of Wall Street: There are no shortcuts to success.
New York stockbroker Jordan Belfort built a giant empire off of selling penny stocks. A life filled with greed and corruption, Jordan was the ultimate "get rich quick" hustler--living a life of affluence filled with drugs and corruption. Jordan's story reminds us all as leaders that there truly are no shortcuts to success. True leaders don't cheat their way to the top, and the ones that do, have short-lived success.
12 Years a Slave: Even when the odds are stacked against you, always believe in yourself.
This true story follows the incredible tale of Solomon Northop, a free man who lived in the North in the 1800s. Abducted and sold into slavery, Solomon spent 12 years living as a slave in deplorable, unimaginable conditions. It seemed that Solomon would never return to his life as a free man--and yet, he never gave up hope and never stopped believing that he was free. Though none of us could imagine a life like Solomon's, we as leaders can face insurmountable odds. Haven't we all felt like it was totally hopeless at one point or another? We must remind ourselves that being a leader involves lots of ups and downs, and that it is only our ability to believe in ourselves and our strength to lead through difficult times that will carry us through.
When you're watching the Oscars this weekend, remember that there are leadership lessons to be learned from each and every film.
Which lesson resonates most with you? Who do you think will win the Best Picture prize this weekend?
This animated YouTube video explains why humans have a natural tendency to put things off.
If there's one thing we know for sure about procrastination, it's that everybody does it. But perhaps understanding the intrinsic urge can help you to control it a little bit better.
A video from YouTube channel AsapSCIENCE sheds some light on the psychology of procrastination. In short, your tendency to put off important tasks has a lot to do with the brain's reward system.
Outcomes that seem relatively far off are percieved to be less rewarding than the immediate outcome of, say, checking Facebook. Plus each time you play a quick game, message a friend or browse a website, you'll likely be inclined to do it again.
"Every time something enjoyable happens, you get a dose of dopamine, which modifies the neurons in your brain, making you more likely to repeat the behavior," according to the video.
The entire short video is extremely informative -- especially the last half, which provides some great tips on how to get back to work.