Wednesday, May 26, 2010

The Mirror Test Book Review + Interview with Kodak's CMO Jeffrey Hayzlett

Image representing Jeffrey Hayzlett as depicte...Image by via CrunchBase
Jeffrey Hayzlett's book "The Mirror Test" is a hands-on guide for small business owners and entrepreneurs that are looking to start a business or are reevaluating their current way of doing business.  After reading it I actually think it's a wake up call for business owners and start ups that are getting too comfortable with what they're doing.  Jeff says that his job involves creating tension in his company, to challenge the way things are currently being done in order to get innovation.

I was fortunate enough to meet Jeff at an SMEI presentation where he was the keynote speaker.  I bought his book and asked him to do a book review - surprisingly he said "Sure."

So here are the 10 questions that I asked Jeff in 20 minutes.

F: Florence
J: Jeff

F: In your book, The Mirror Test, there are 3 mirror tests, with the first one being Proof of Life.  How about for businesses like Google, where they spent years developing in the garage before they ever turned revenue?  Wouldn't they think that they fail the first mirror test?

J: That's the key portion they anticipated that over a period of X number of years they knew they would be losing money before they give up; if they're not meeting their objectives; so that's the key thing in mind - you can still lose money the first couple years - but you need to figure out if you're hitting your set milestones and whether you're generating enough traction.

For entrepreneurs that hang on for way too long - you know when things are goin south and you see the writing on the wall - with enough experience you know when it's time to get out of the business, experience showed me that I can do a lot better than staying with what I was doing.

F: On Leadership - you say that we should fire ourselves from jobs that we aren't good at and focus on our strengths.  This is what small business owner struggle with; we have limited resources that don't allow us to fire ourselves.

J: There's an evolution for small businesses.  You start out as a one man band, doing everything.  You gotta do what you gotta do.  Paint the walls, clean the bathroom.  In the second phase you develop followers that join your business because they believe in what you are doing.  The third phase is where you start adding skilled technicians and experts; this is the step that people don't make the transition to and it kills the business.

To actually transition from the second to the third phase, it is understanding that I don't have all the answers and look beyond just myself for the answer; some people find it hard to do that and they get comfortable.  My belief as a leader, I have to create tension, continue to ask people whether I want to do it this way or that way, more innovative.  Not resting on your behind so to speak.

F: You say that we should get everyone involved in the process, but how realistic is it to show employees our roller coaster cash flows if we're running a start up business?

J: They know it anyways if you don't have money to pay them tomorrow; if that's the case, being transparent that they start seeing that things are coming in on credit.  You're better off having transparency so they can help you speed up collection and make sure you don't make an over commitment to a supplier and vendor.  They know when things are good when the business owner is taking more trips, afternoons off for golf and buying a new Mercedes.

F: I agree that a small business should never compete on price, like what you said "people can go anywhere for price but can't go anywhere for happy".  Can small businesses scale enough to compete on price with the big boys if they initially focus on providing quality?  

J:  I don't think it's possible to do both or even to do a switch strategy - I say you have to pick and choose - stick with one strategy, either high quality or low price.  It's like you're on a seesaw, you pushed down the other way had to give.

F: The story of Mike, your copier technician.  You paid for him and his family to stay at the hotel across from your print shop so you would have access to a technician in the middle of the night.  Looking at this buyer/supplier relationship, do small businesses have to treat our suppliers better because of our lower buyer power?

J: In a lot of cases yeah you can't have the scale of the big boys and you don't have leverage to pull on but there are things you can do better.  You can be more agile than the other guy and you don't have to go through all the steps to make decisions.  For example there was a customer in store A that told store A owner about the low prices offered by the big box competitor.  So store owner A picks up the phone and dials the service line for the big box competitor, only to be put on hold for the duration of his entire conversation with the customer standing in his store.  He then called his own service line, which was picked up immediately - this is a very good way to show how small businesses can be more responsive than the big guys.

F: You like to refer to ROI as Return-on-Ignoring, but even though you're not a huge fan of using tons of performance metrics, you still have to measure something in business right?

I measure 3 key things:
  1. Increase in sales;
  2. Increase in margins;
  3. Increase in customer satisfaction.
These are the three most important things to measure.  I know whether things are working or not just by looking at the bottom line.  You don't need a lot of fancy tools to tell whether it's working or not.  I've worked in companies where they use predictive modeling to see where things are going - I just don't think I need to spend tens of millions of dollars when I can look at the results very quickly with these three metrics.
...then we get to know Jeff

F: You strike me as being high on intuition and your book says that people shouldn't be afraid of a little bit of Ready, Fire, Aim.  Is this a correct view of who you are?

J: Yes - but it's deeply grounded in a lot of experience; I'm shooting from the hip and some people think there's no process behind my madness.  My decisions are based on a lot of what I've been through - it's based on experience.  It's my gut telling me and it's also my head telling me.  To do what I do you have to go out there and TRY doing things yourself, not just go out and learn.

F: What's the biggest mistake you've ever made in business?

J: I think in business we're always going to be making mistake and I think I have yet to make my largest one.  If I'm running an innovative business I want to keep making mistakes because I gain a great deal from them.

F: I read the press release on your resignation from Kodak as their CMO 2 days from now - what's in store for you after this?

J: I am pursuing another book, some television projects, and probably do something more entrepreneurial - I have an idea of what I'm going to do but I'm not ready to announce it.  

F: You like hunting - does that affect the way you do business?

J: There's a soft side to me too.  Some people are just more aggressive than others and it's just more my style.

Thank you Jeff for spending your valauble time with me for this interview and I'm sure all of you reading this interview knows Jeff better now.  I would strongly encourage you to pick up a copy of Jeff's book The Mirror Test if you haven't already.  It is in your face but is a much-needed wake up call for some of us who are getting too comfortable in our business.
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