Anecdote: Learnings from losing 100x lifetime value on a customer

I once made a catastrophic mistake that cost my employer over 100 times the potential lifetime value of the customer account I was servicing. Here’s what happened, and what I learned.

I used to work in utilities. Utility companies, as they face the end customer, are often little more than brokers of the commodity they sell. That means they buy their services from multiple providers, gearing the xxxx and making slim margins on the product, relying instead on volume.

Being geared this way, and maintaining tiny margins, it’s possible to incur costs far greater than would ever be earned on any given customer by making any error on their account that brings about a manual labor cost from the upstream suppliers.

Long story short, I incorrectly ordered our supplier to cut off the supply this customer. Complex task. Takes hours. Costs big cash. About 125 times the cash we could ever earn in this customer’s lifetime.

I immediately explained my mistake to my boss (who is also the CEO), and was expecting severe frustration, possibly repercussions. The conversation went something like this:

Me: OH MY GOD I’M SO SORRY, HOW CAN WE FIX THIS!?

Boss: Chill out, explain what’s happened.

Me: AAAAAAAAARGH! {{Insert technical explanation of cutting off customer supply here}}

Boss: Oh. That sucks. That’s probably over 100 times our potential earnings on that customer. No way to fix it now though. How do we stop it from happening again?

Yeah. No pay reduction. No anger. No firing.

This really got me thinking. It’s taken a while to process, and here’s what I came up with –
My boss founded this company. He lives in the entrepreneurial mindset. My mistake, as perceived by him, was simply an exposure of a weak part of the process he had designed, by which the company is run. As such, it was an opportunity to fix the weak link, and strengthen the entire service chain for the business.

To some people, even some excellent leaders, such a mistake would be seen as proof that I was not good enough to handle the job given. It stuck me that it depends a great deal on the goals you optimise for.

My boss optimises his life and business for learning. Your boss might optimise for operational excellence or growth. Maybe even cost reduction, or employee performance. It’s fascinating to me that the initial outlook on how to optimally run a business could have such wide influence on how such a simple situation as an employee’s failure to perform would be construed and subsequently handled.

Future-foods – biodynamic, organic, wholesome

Future-foods – biodynamic, organic, wholesome

The global population has never been larger, and while global population growth is leveling off (https://www.ted.com/playlists/474/the_best_hans_rosling_talks_yo go educate yourself), humanity still faces multiple enormous challenges in feeding so many hungry mouths.

Credit to https://ourworldindata.org

Global agricultural yield is now high enough that nobody needs to starve, and the most problematic situation in terms of sheer volume is simply distribution. However, the massive improvements in yield volumes have brought with them a new set of ethical challenges. Just like designer babies and bio-medically augmented humans, speedy advances in crop yield and livestock poundage and growth require immediate considerations about where to draw lines and limits.

Biodynamic agriculture is one paradigm that provides partial aid in making those decisions. Today’s post is a discussion of the clash between biodynamic, holistic agriculture, and the perceived need for advancing yield and minimising effort.

To try out a new post format I’ve invited Mona Lund Hedeager to participate in an ad-hoc interview setting, a specialist in innovation and part of the Hedeager family agro-business – centred around biodynamic principles.

Check out her take on biodynamics, progress and whether there’s a conflict.

Question:
Hvad does “biodynamic” mean to you? Why is it worth working with?

Answer:
For me, it represents a lifestyle. I know that when something is marked with the Demeter-symbol (editor’s comment: The Demeter symbol marks a product as biodynamic similarly to how organic goods are marked), extra care has been taken to ensure the wellbeing of animals, environment and climate. All things that benefit humans in the long run. That’s why I see biodynamics as a positive cycle. When we watch out for the “organism” of Earth, it reaps rewards for both animals and people.

In biodynamic agriculture there’s space for diversity – so we don’t use any pesticides to kill unwanted plants and animals, and we avoid artificially provoking enhanced growth rates of specific life forms. Instead we use general-purpose fertiliser.

When working with biodynamics, you get to take part in something greater, a social responsibility. You strengthen the bond between helath, food, and humans. Oh, and bio foods are not just healthier, they’re tastier – something largely achieved through slower growth rates, packing in more taste and nutrition.

Question:
Hedeagergaard switched to fully biodynamic in 2011. Until that time, I presume you did business with commendable respect for the animals. So why the change? What differences did you see?

Answer:
In 1998 we switched from conventional to organic, and in 2011 we took the next step onwards and upwards to biodynamics. The change helped us to feel more balance at the farm. A lot of the tighter regulations required to meet the aforementioned Demeter standard were in line with the values of the farm and household anyway, so it was a natural step.

Animal welfare has always been one of the driving values at the farm. Requirements like “dehorning cattle is forbidden, as it impacts the quality of life as well as the quality of milk” are really easy for us to follow. Cows simply need enough space that their horns aren’t an issue, so we simply maintain a lower population.

That means less volume and less revenue, but it’s balanced by higher margins.

Question:
When farming biodynamically, or using biodynamic principles on top of organics, the yield is reduced as compared to “conventional” agriculture. That means less edible product, and keep in mind that some regions there’s still not enough food to go around. Without a vegetarian revolution it’s impossible to convert all agriculture to biodynamics, due to a lack of space. What are your thoughts on these challenges?

Answer:
My answer would be “prioritisation”.

We have experimented with our meat and we agree that the biodynamic meat is both more nutritious and tastes of more. We’re hearing the same from our customers. So we’d say that the amount required falls and the quality rises. Often, supermarket meats are fatty, or pumped up with water to make them seem larger. We don’t want pull stunts like that, we just want to focus on selling real, clean, quality product.

Question:
Does being in contact with the earth and animals influence your creative work?

Answer:
As a student, it’s limited how often I get to work on the farm with earth and animals. It makes me happier to work with sustainable projects. Sustainability is a personal value for me, that I enjoy working with.


Thanks to Mona Lund Hedeager for taking time out to answer these questions and shed some light on biodynamics from the inside. Check out http://hedeager.info/ for a look at what a biodynamic farm can do with online presence.

Summary:
Since our issues with feeding the population are more related to distribution that yield, we still have the choice to prioritise how we run farmlands, even though it means less yield. Combined with a more plant based diet, this approach can take us far.

Also – check out Global Agro-Science and How We’re Not Killing The Planet for more takes on earth, growth, and future.

3 Quick Creative Thinking Activities

3 Quick Creative Thinking Activities

Everybody can be creative. An artist is no more inherently creative than an accountant, despite the stereotypes we have affixed the two roles. The only difference is the amount of practice with letting that creativity out. In that spirit, here are a bunch of ways for you to practice creativity in your everyday work, to get better results.

Before you dive straight in to the creative thinking exercises, it might be a great idea to read up on convergent and divergent thinking. It’s important that you tease out the good principles behind each generated idea before you kill it. The rule you need to remember is pretty simple – don’t throw out any ideas, no matter how bad they seem. The throwing out process can begin when you’re done generating and grabbing the good bits from your ideas. So without further ado, some simple creative thinking activities:

Be Someone Else

This exercise is pretty easy, and applicable to any work you could possibly be doing. It does require some empathy, so perhaps it won’t work if you’re a little psycho 😉

To perform this creative thinking activity, simply think of someone you admire, for any reason. Imagine that person has to do the job you’re doing right now. How would they do it differently? How would they do it better?

Some examples:
A truck driver who really likes David Beckham. How might David Beckham get from A to B in a truck? Well, on the pitch, a great player is determined by how much of a team player he is. So, in the spirit of team-play, how about a world where all truckers assist each other with wind-resistance, through a tight setup of caravanning, just like a pro cycling team? How much fuel might that save? Is it an idea worth throwing at management? Quite possibly!

A designer working at a marketing agency, who really likes Mike Tyson. What would Mike do, if he was set to work on digital marketing design? The brain is a massive associative machine, and right away you can probably picture the enormous muscle-bound man sitting at a 13″ macbook air doing graphic design. Seems dissonant somehow. Nonetheless, there are some things Mike would definitely do differently. First off, he’d introduce his special brand of self-deprecating humour to whatever was being communicated. Also, perhaps he’d alter the process in favour of a speedy hand-off, so perhaps making sure to send out an extra mock-up or two, to ensure he was still tracking right.

This method works with your brain’s fantastic ability to connect the dots, stereotyping (the good kind), and by providing creative constraints.

Imagine you had unlimited/0 budget

What happens if you have to do your work with no resources? What about if you have access to unlimited resources? Unlimited resources probably gets you thinking in terms of automation/robotics and 0 budget probably gets you thinking about sourcing cheaper to earn a higher margin.Pursue this for a bit. Especially thinking outside of economic constraint, as this lets you consider more deeply why your work is structured the way it is.

Play with words

In exercise #1, we used empathy and stereotypes to kickstart the brain’s associative machinery. In this exercise we’ll just use a simple list of words. How you generate the words is totally up to you, but go for nouns. If you don’t fancy generating a list of odd words, here’s one for free:

Fish – Pork – Potion – Castle – Peanut – Road – Park – Plastic – Brick – Ruins – Knife – Staircase – Knight – King

Now, the process is simple. Pair the task you have at hand, with the words in the list, one at a time. Remember to extend the meaning of the words to be non-literal. So, if you’re trying to invent a new type of soup, and you pair that with fish – don’t invent a fish-soup. Instead, expand into the word fish. There’s some saltiness, some freedom. There’s caviar/luxury. Fish-eyes, so perhaps your soup can should have a peep hole. See the idea? Let your brain associate, it’s super good at it.

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Those were 3 quick and easy creativity exercises, which you can expand infinitely or use as they stand in different contexts. These tools are valuable if you are looking for a business idea too, and are partially how these to business ideas were generated: Great business idea #1Great business idea #2

There are a bunch of other tools for ungluing your creativity, just comment if you want more, I’ll make this post much longer.

The Creative Instinct

The Creative Instinct

During conversation with a friend, it became apparent that we were misaligned in our understanding of where creativity flows from.

I presupposed that creativity is a skill to be trained. My friend pointed out that creativity could be viewed as an instinct, a natural force to be directed. The distinction sounds small, but has profound implications.

Viewing creativity as a skill, there is essentially no assumed base proficiency – no internal baseline that all humans have within them. Training creativity in itself would yield marvellous world-changing ability. Some people would be driven to pursue creativity, and others would not.

Thinking of creativity as an instinct really brought on a paradigm shift for me. If creativity is an instinct, then all humans are driven by a desire to create. I’ll let that stand as a block quote because it’s fantastic.

All humans are driven by a desire to create.

Creativity is not something to be trained in itself, rather, it is something people find an outlet for, a way to channel. Practicing the techniques you choose as an outlet for your creativity becomes the way you strengthen your creative expression in the world.

The mode of creation can vary wildly between individuals. Some folks want to create change, others want to create good concrete mixtures, some want to create the best music scores, and others want to create perfect soundproofing. We’re all architects and builders though, regardless of what it is we’re building.

Some consider creativity to derive from both instinct and skill, or take influence from even more parameters. Notably, Francis Bacon is attributed with the following:

The creative process is a cocktail of instinct, skill, culture and a highly creative feverishness. It is not like a drug; it is a particular state when everything happens very quickly, a mixture of consciousness and unconsciousness, of fear and pleasure; it’s a little like making love, the physical act of love.

But then, philosophers are generally odd types.

There is something inspiringly beautiful about thinking of creativity as this tempestuous force from within, just fighting to find an exit, a way to express itself upon the world. It’s a strong mental image to keep.

Free Business Idea #2 – Pre-Filled Family Calendars (Physical)

Free Business Idea #2 – Pre-Filled Family Calendars (Physical)

You know those big A3 size family planners smacked up on the wall in every family household around the globe? You know, the ones that list everybody’s birthdays, school terms, afternoon activities and weekend trips. The one stop overview of a busy family.

They’re super cool, except for one time of the year – new year, when you have to go and get a new one. When you have to copy over every single birthday and recurring event specific to your family into the new planner.

So, there is pain. And luckily there is an easy solution.

You, the entrepreneur, may choose to enter this dying niche with some fresh perspective. The world is going online, but there is still some tech missing for us to bring all of our family planning into the cloud, and so there are a few good years of physical calendar sales to tap into. So how about a hybrid?

Set up a subscription based calendar service, where each family can enter all of the birthdays, planned holidays, term lengths for the kids, meditation weekends, family trips and other goodies they have planned, and save it as part of an online profile.

You then take this information and print and fulfil calendar shipments once each year on a subscription basis, saving your customers a day’s work of copy pasting, and making some smooth looking cal’s in the process.

 

Yes, there are rough edges, and no, the challenges are not insurmountable.

Go and make the future.

 

Not your cup of tea? How about Free Business Idea #1 – Niche Book Club / Publishing Gig ?