Home Advice For The Young At Heart Three Counterintuitive Ways To Build A Business That Lasts

Three Counterintuitive Ways To Build A Business That Lasts


by Gareth Wilson, Head of Marketing at Fog Creek Software

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Follow the leader in business and you’re almost certainly doomed to fail, especially when you consider that 90% of new companies go under. Those that end up in that successful 10% follow a less obvious, even counterintuitive trajectory.

Although it’s key for every business to forge its own path, there are certain non-obvious hacks any entrepreneur or small business can take on board to swing the odds in their favor. In this article I will talk about some approaches that have continued to work for my company, Fog Creek, over the last 15 years.

1. Invest more in what counts.

When you consider that 88% of people leave their jobs for a position with a matching or lower salary you come to understand that the reasons for changing companies is rarely financial. It costs up to one fifth of an employee’s annual salary to replace a team member when they go, so it certainly pays off to keep your staff on board for as long as possible.

The environment you work in has a big effect on your staff and is one of the major factors contributing to employee retention or turnover, according to Abasyn Journal of Social Sciences. The chairs, desks and lighting, even the flooring and decoration all go towards creating (or hampering) a productive environment.

Though it may sound trivial at first, it’s important to set aside a good portion of your budget to establish a comfortable place to be and show your staff that you care about them.

This is the route Fog Creek took 15 years ago when we were first starting out. Despite being a bootstrapped company with little revenue, we over-invested in a central New York City office at a rate of 15% rent to revenue. Our customers never visited our workspace; this was a decision made solely for the comfort of our staff.

We then created private offices for each developer and provided them with catered lunches. We also established a rule: there would be no cap on employee spending on furniture, software and hardware, nor would we have any process to go through to get those things. It’s a simple philosophy – if you need it, you buy it, we pay for it.

Of course, there’s a drawback – it costs the company tens of thousands of dollars a year. But in reality, that’s tiny in comparison to the costs of replacing staff. It’s an unconventional approach, but it helps keep the good people we’ve hired onboard, happy and extremely motivated.

The same is true for companies working on a shoestring budget. The key is to make investments count. While you might not be able to spend thousands of dollars (just yet), it is hard to go wrong when investing in your team – the most important resources you have.

2. Don’t focus too hard.

It may sound strange, but many businesses make the mistake of being too focused on one particular goal, product or service. The truth is, it’s better to be more diverse in what you do.

Although short term objectives are good, markets ebb and flow over time, and products have a lifecycle. There are also unforeseen disasters, such as the 2008 financial crisis, that businesses need to be agile enough to overcome.

A survey undertaken by the Council on Competitiveness took the views of 400 international CEOs, and focused on competition in manufacturing. The key finding was that innovation trumps labor or manufacturing costs when it comes to success.

If your business is set up to do one thing very well, it’s probably too specialized. It’s far better to create a culture of innovation, following market trends, listening to your customers, trying new things and seeing what works.

However, a Mind Matters survey outlined a huge problem with innovation in the USA. Findings showed that 81% of participants said that their companies don’t have the resources required to innovate and remain competitive, and a mere 5 percent of innovation program participants said they were motivated to innovate. What’s more, just over three quarters of workers consider their ideas are poorly reviewed and analyzed.

In light of these results, it’s clear that companies need to dedicate more of their resources to innovation and also take on board what their employees put forward. If innovation is encouraged, but ideas are swotted away, employee motivation is bound to take a dive. 

Successful skin care company Ella Baché has been in operation since 1936. It dedicates approximately 10% of its annual turnover to innovation, and invests it in product, company processes, marketing options and sales channels.

Companies like GoogleX, also encourage employees to experiment, even going so far as to reward failure. By giving their engineers dedicated time each month to focus on side and personal projects, team members keep their creative juices flowing and stay motivated. It’s about creating a “culture” of innovation, even if it’s not all directed internally.

It’s far better to base your business on a culture of innovation and be ready to change your ideas at the drop of a hat than it is to get set in your ways and fail as soon as market conditions change.

3. Hire great people to do boring work.

According to an article from the Harvard Business Review, “Who’s got the Top Jobs?”, while more than 50% of executives had started their careers with their current company in 1980, this fell to 45% in 2001, and now it’s less than a third. This underscores a real problem in business today: we’re not investing enough in our entry-level employees.

Many companies spend a lot more time and effort searching for top level employees, but somewhat slack off when comes to looking for people to fill less glamorous positions.

It’s a big mistake not to hire the best talent, whatever role you need to fill. If you look at each employee as a potential VP working from the bottom rung up, you’ll spend enough time, effort and money helping them get to where they want to be – and the business will benefit a hundredfold.

What’s more, when you trust great people to come up with great solutions, like automating menial tasks, they can then focus on more important things. It means resource-consuming issues are resolved, which would otherwise have continued and been ignored because those doing them usually don’t have the nous to bring about the change required to fix them.

It’s important to give your new hires a career path and development days, which take them away from their daily grind, and give your team the chance to develop their skills on any project of their choosing. Not only does this compensate for when they get bored, but also it means you have a developing and motivated team. Following that tack, three of our top level executives came to Fog Creek directly out of college and rose through the ranks, and of course this benefits the company as well as the employee.

Although some of these approaches might have you shaking your head at first, they’ve helped us get through the tough times, and kept our team motivated. By investing your time, effort and money in your team, and giving their ideas the attention they deserve, your business is laying solid foundations for the future and up the odds for success.


Gareth Wilson

Gareth Wilson is Head of Marketing at Fog Creek Software, a company specializing in project management tools for helping the world’s best developers make better software.  


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