Bottom Line Business Insights

Your Opening Statement

Eliot Wagonheim — Tue, 12 Feb 2013 18:19:10 -0400

You win your case at Opening Statement. Sure, you can use Opening Statement to introduce the facts – “tell ‘em what you’re gonna tell ‘em” – as the saying went in law school. But the fact is that if all you do is introduce the facts, you’ve lost an incredible opportunity.

Over the years, my profession has made me a student of communication in most, if not all, of its forms. And whether employed in the service of argument, persuasion, negotiation, or something less adversarial, the one thing I learned is that Socrates was right:

“The beginning of wisdom is the definition of terms.”

I had decided during the trial that that I would refer to what the opposition called a Change Order as a “change request.” The documents had not been signed and I did not consider them to be “orders.” I believed, however, that if the word “order” became a fixture during the trial, it would become cemented in the jury’s mind. The prevailing thought being that a request can be accepted or rejected, but an order is something to be followed.

I was the first person to speak and I repeated the phrase “change request” at least 7 times before I sat down. When the opposition started using the same phrase in order to make himself understood with a jury already comfortable with the term, I knew I had already won the trial’s crucial battle.

The point is that words have power. Every day I review contracts which clients later tell me do not really depict the reality of the situation. Every day I see clients write letters, confirm statements and make proposals throwing around heavily-laden words like “partnership,” “agreement,” and “guarantee.”

When those communications come in to my world, whether they are e-mails, letters, faxes or actual agreements, they affect everything they touch. They influence the perception of a judges and arbitrators, state procurement officers, and supervisors. People who intended their communications to be off-the-cuff in order to respond quickly find themselves choking on words written in haste.

As President Obama recently said (and he wasn’t the first): “words have power.” Too often, I find myself wishing that my clients had not failed to harness it before they hit <send>.

The Blackout and the Non-Call

Eliot Wagonheim — Tue, 05 Feb 2013 08:00:00 -0400

The cries of the aggrieved always seem to drown out the echoes of the final whistle. Had the 49ers won, Baltimore fans would have demanded a thorough investigation into the cause of the blackout. As it stands, the refusal of the refs to call holding on the 49ers’ final play has sent a shockwave of outrage eastward from the normally laid back city of San Francisco.

That’s just the way it always seems to be.

Monday morning, in the wake of a weekend dominated by warring factions of purple and red, the color I find myself contemplating again and again is green. Green as in The Masters. Green as in a quote variously attributed to famed golfers from Arnold Palmer to Tiger Woods:

“Whenever I hear someone complaining about the course, I know he’s going to lose.”

You know the complaints:

The refs favored the other team
We would have won if it weren’t raining
The teacher doesn’t like me
The judge was biased
The bidding process was rigged
They don’t like <fill in the blank> (meaning “people like me.”)

Don’t get me wrong. I’ve been in business too long to think that the cards sometimes aren’t stacked against someone. But that’s hardly the point. The point is that the moment you absolve yourself of responsibility is the same moment you forfeit your opportunity to improve…to learn…to get better.

One of my biggest pet peeves is listening to someone who lost say: “I wouldn’t have done everything differently.” I would never want to do business with that kind of person. If things went against you, and you do not want to replicate that result, there is invariably something you would do differently…if you just take the time to think about it.

The 49ers lost. Could a called holding play on 4^th and Goal have turned the game in their favor? Maybe. But so could 10 other things completely within their control that they could have done better. Could the Ravens have prevented the power outage or ended it sooner? No. But they could have taken responsibility for ending the shift of momentum in favor of their opponent.

Which is what they did.

Which is what made them champions.

Temba, His Arms Wide

Eliot Wagonheim — Tue, 29 Jan 2013 09:01:08 -0400

When time is running short and they need an answer, the lawyers in my office will caution me against responding to their inquiries with either a movie quote or a Seinfeld reference. “Focus,” they’ll tell me. “Just answer the question.” Most of the time I’ll comply.

I know that when those discussions conclude, they walk away pleased that they were able to pare down a longer conversation to its essence. To be sure, those conversations yielded the answer – the “how,” or the “what,” but not the “why.” The “why” was filtered out by their instruction.

I am reminded of this episode of Star Trek: The Next Generation in which the crew of the Enterprise encountered an alien race, the Tamarians, which communicated solely through metaphor. Thoughts were not conveyed by sentences built from words, but rather through ideas constructed from what were, to the Tamarians, universal cultural touchstones.

What we might describe in a paragraph, they would convey as “Temba, his arms wide” referencing the folklore of their race. Ignorance of the story behind the metaphor, however, rendered the Tamarian language indecipherable.

But what of a listener well versed in both languages? No doubt it would be the Tamarian conversation that conveyed a broader understanding of the speaker’s full experience. That’s because the story underlying the simple phrase, “Temba, his arms wide,” contains images and background, as well as an emotional feel and richness that would invariably be sacrificed by our penchant for pruning a discussion to its core.

Those of us in professional services, operating under the misguided notion that we’re selling time deprive ourselves of our clients’ stories in the name of efficiency. More importantly, our clients deprive us of their stories in fear of the charges a longer conversation would bring. The end result, compelled by both sides of the time-is-money fallacy, is a ceiling placed on the fullness and benefits of a relationship.

A common piece of advice – you can read it in just about every how-to book on sales, management, and customer service – is to listen more. “Start listening more than you talk” is the common refrain…sometimes with percentages. To me, however, the “start listening” mantra means nothing if one is still measuring productivity and profit by minutes sold.

We “spend” time and we bill it. Time is measured and accounted for. And because of that, we in the service business are taught to conserve time wherever possible. The cost (and there is always a cost) is in our clients’ stories that lay unrecounted on the cutting room floor.

So I'm thinking that perhaps, just maybe, efficiency is overrated.

Don't We All Know Lennay Kekua?

Eliot Wagonheim — Tue, 22 Jan 2013 08:10:38 -0400

Several years ago, I was helping one of my clients go head-to-head in a trademark dispute with furniture manufacturer Steelcase, an 800 pound gorilla if ever there was one. I spoke nearly every day with the attorney on the other side. Years later, I can still hear his thin, reedy voice bringing his Midwest accent right to my desktop.

He was a thin man who looked as if he could be blown across town by a stiff wind. That’s how I pictured him anyway. In my mind’s eye, there was very little difference between opposing counsel and Bill Nye, The Science Guy.

The day before the trial, I found out how wrong I was. He met me at my hotel so we could go over a few details and he was nothing short of a wall with feet. It turns out he was a starting offensive lineman for Notre Dame’s 1988 national championship team.

This past week, the story of Notre Dame linebacker Manti Te’o’s fictional girlfriend all but wiped Lance Armstrong off the front page. It seems Manti Te’o used nightly telephone calls, tweets, and a Twitter avatar to fill in a blank page with a complete portrait of a woman.

Now, I won’t presume to opine on what he knew and when he knew it, but I would submit that the essence of what he did was not all that unusual. Not only is it done every day, but you do it every day and every day, someone does it to you and your company.

Each day, we provide people with that small fragment of information which they will use to paint the entire portrait. A few cases in point:

Call Comcast Xfinity support and the automated voice will tell you about an event Comcast is hyping and ask if you’d take part in a customer service survey before allowing you to pursue the question that prompted you to call. The portrait: Comcast cares more about its agenda than it does yours.
The About Our Team page on an accounting firm’s website leads to a second landing page with separate menu options for Principals and Other Professionals. The portrait: The firm cares more about hierarchy and ego than it does about user convenience.
A drycleaner outfits its space with a drive-through window. The portrait: This business recognizes and cares that its customers are in a hurry.
A teacher at a parent-teacher conference makes eye contact and addresses her answers only to the mother, despite both parents being present. The portrait: The teacher regards the father’s input as secondary at best.

(OK, that last one was my axe to grind, but I’m not sorry.)

I think often about how I am enabling people I don’t even know (or don’t know well) to paint their portrait of me and my firm. Are our bios out of date? Do our profiles on LinkedIn have actual pictures or are they just those witness protection silhouettes? Can callers speak to an actual person or be connected in a hurry to their intended destination? Are they used to us delivering late or do they know that we recognize their sense of urgency? Can they tell we care?

As I said earlier, I can’t pretend to know the ins and outs of the Manti Te’o story. I don’t live my life online nearly as much as Te’o’s generation, often referred to as “digital natives.” I do, however, think that those who wonder how Te’o could possibly have claimed to know a person conjured up out of whole cloth never really pondered their own reaction to the words:

“Hi, I’m a PC.”

“…and I’m a MAC.”

Hit Cancel for Credit

Eliot Wagonheim — Wed, 16 Jan 2013 13:59:39 -0400

As I type this, I can almost hear the exchange I’m going to have with Stacy Reed, our Program Coordinator, when she reads this blog post:

Me: “I wrote this week’s blog post.”

Stacy: “I saw it. It’s not a post; it’s a rant.”

Fair enough. But since you’re reading this, it’s obviously a post as well.

This post arises from a shopping trip this weekend in which I asked, for perhaps the thousandth time, “Just hit cancel for credit?” I knew the answer. I just asked it out of habit – simply to avoid that one-in-a-hundred chance that hitting the button with the red X on it would do what the button says it will do and cancel the transaction. Safer to ask.

The question that really should be asked, of course, is “why?” Why do so many retail establishments tolerate a counter-intuitive interface for their most critical system? Why hard wire even a little bit of customer frustration? It simply makes no sense.

Not only that, but it’s been years. It’s not like this customer credit card swipe phenomenon is new to retail point-of-sale processing. Today, I’m surprised when I walk into a store and they don’t have it. So why do only a perceptive few in the retail world have a “credit” button?

Pushing past my headshaking, what I really wondered while standing at the cash register in Target this weekend was: “what questions do our procedures force our clients to ask over and over again?” Those are the questions that demonstrate the kinks on our systems. Well thought-out procedures are designed to answer these questions before they’re asked. Questions like:

“When can I expect my order?
“What’s the status of our project?”
“Did that letter go out?”

Sure, anyone in your organization can answer those questions upon inquiry. But if you do more than that, if you actually contemplate those questions, you can do better than answer a question, you can improve a company.

Notre Dame, The Crimson Tide, and The Importance of Recency

Eliot Wagonheim — Tue, 08 Jan 2013 13:32:03 -0400

There’s a meeting that will take place after the one you just ran. It will convene in the restrooms, at the water cooler, or in someone’s office down the hall. That second meeting will feature only one agenda item – “what was the first meeting really about?”

It is this second meeting that will determine the success of the first. The effect of your planning of the first meeting -- the carefully crafted remarks, the written agenda, perhaps even the PowerPoint -- will pale in comparison to the impact of the second. The takeaway from the second meeting is whether or not your message stuck with the people who matter. To make sure it will, you had better learn the phenomenon known as “recency.”

Recency explains why this morning and years from now, Notre Dame’s football team will be thought of as “overmatched,” perhaps even “undeserving,” rather than what they were which was a phenomenal group of players and coaches who were Number 1 and undefeated going into the last game of the season.

Recency is not just a theory based on our what-have-you-done-for-me-lately, 24-hour talking head society. It is based on how the human brain works. Trial lawyers know it. So do psychologists, sociologists, and the world’s best public speakers. When asked to recall a list of items in any order, people tend to begin with the end of the list, recalling best those recently heard. In second position would be the first (or primary) items heard. Of the middle, the best we can say is that recall is hit or miss.

Everyone in a position of authority makes presentations throughout the year. Sometimes it’s an introduction of your company. Often it’s a discussion with employees about the next great initiative or this year’s plan. Either way, the laws of primacy and recency matter…and the best presenters know it.

What this means in the real world is that the first five minutes and the last five minutes count more than the stuff in between. In the first five, make sure people are oriented and know what you consider to be important. In the last five, when the tendency is to “wind things up,” most people tend to end with a whimper rather than a bang. Your job instead is to establish the talking points for the second meeting.

My advice: think to yourself, before any presentation: “if they only remember one thing, I want it to be this.” Make your answer – what you just said to yourself – the highlight of your last 5 minutes. That way, you won’t have to be at the second meeting. You will already have set the agenda.

Of Mother Goose, Bill W, and God

Eliot Wagonheim — Tue, 18 Dec 2012 16:41:32 -0400

In 2012, we fired a few clients and one fired us. I learned from each – which I think is the best a person can do.

Each of the clients with whom I asked to part company were bad fits…or became such. They did not value what we did. They called us at the last minute, giving us very little time to provide meaningful input. When we were able to offer advice, each of these clients made their belief painfully clear that they simply knew more than we did. They were, in a word, uncoachable. As such, they fell under what we call “the life’s too short rule” and we fired them.

The year started out painfully for us when we were let go. I remember my client’s exact words: “we’ve decided to go in a different direction from a legal perspective.” Is there any worse phrase to be on the receiving end of in the business world than “we’ve decided to go in a different direction?” If there is, I don’t know it.

The fact is the client was right. We had worked side-by-side with them as they achieved an incredible amount of success. They grew from a $12,000,000 business to ten times that in the span of a little over a decade. They outgrew us. They knew it. Their New York securities firm knew it. And we knew it too, even if we didn’t want to admit to it or talk about it.

There is a prayer, often erroneously attributed to St. Francis of Assisi, called “The Serenity Prayer.” I’m certain you’ve heard it. “Lord, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.”

The earliest established date for The Serenity Prayer is its inclusion in a sermon by Reinhold Niebuhr in the early 1940’s. It later became woven into the fabric of Alcoholics Anonymous. Personally, I prefer to think it originated with Mother Goose in 1695:

“For every ailment under the sun

There is a remedy, or there is none;

If there be one, try to find it;

If there be none, never mind it.”

Whether from AA or Mother Goose, the distinction between futile and well-directed energy is critical to any business endeavor.

It was incumbent upon me to understand who we are as a firm and who we serve best. When I did not readily confront that reality, it was forced upon me by a client who did.

When we realized that certain clients were never going to fit well into how we work best as general counsel, we were wise to cut them loose rather than fighting to change what will not.

I have watched companies spend years trying to keep people who should have left them years ago. Sometimes the reasoning was “I can change them.” Sometimes it was “I know we can change things here to make them happier.” Other times these people stayed simply because those in charge wished to avoid an unpleasant conversation.

Whatever the case, preserving situations best ended is one of a chief executive’s toughest tests and highest forms of wisdom. What’s more, those circumstances bring to mind another saying it might be wise to take to heart:

“What is inevitable should be done immediately.”

Jacintha Saldanha and the Law of Consequences

Eliot Wagonheim — Tue, 11 Dec 2012 12:35:57 -0400

One week ago, two DJs from Australian radio station 2DayFM pulled a ridiculous stunt. In what can only be described as horrible British accents, they “impersonated” Prince Charles and Queen Elizabeth in a call to King Edward VII’s Hospital in London.

The two DJs had no plan other than to entertain listeners. Listening to the call, I’m sure even they were shocked when a nurse transferred them to Catherine’s ward and another nurse provided confidential information on Catherine’s condition. People the world over laughed right along with them. “How,” people wondered, “could those nurses actually take those two seriously?”

Three days after the call, people stopped laughing. The nurse who initially transferred the call, Jacintha Saldanha, was found dead of an apparent suicide. In less than a week, the DJs had become global pariahs as the joke morphed into a tragedy.

The truth is that we rarely know the full consequences of our action. Even after the fact, books are written on the ramifications of even the (seemingly) smallest of events. There is a poem, centuries old, which I’m sure you’ve heard in some variation:

For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the message was lost.
For want of a message the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.

The lost horseshoe nail and the tragedy of Jacintha Saldanha both speak to the legal concept of consequential damages. True to their name, “consequential damages” are those damages which arise as a consequence of some action or inaction on the part of the defendant. From a contractual standpoint, consequential damages are something to be avoided at all costs.

Allow me to provide a more common illustration. Let’s say that a flooring contractor was engaged to perform work on the remodeling of a large hotel. The contract provided for an early May completion date in anticipation of a Grand Opening coupled with large Mother’s Day and Memorial Day bookings.

Unfortunately, the order was delayed at the mill, so the carpeting could not be laid until the first week of June. Without carpeting, the hotel was not ready to receive guests. In what was to be an extremely busy May, the hotel’s rooms and restaurants stayed empty.

Consider the possibilities for the flooring contractor’s contract. One version of the contract would hold the flooring contractor responsible for “any all damages that arise from or are related to the subcontractor’s work.” A second version of the contract would hold the flooring contractor liable for “any all actual, out-of-pocket damages arising from or relating to the subcontractor’s work, specifically excluding consequential damages and lost profits.”

Version 1 could kill the subcontractor’s company as it could enable the subcontractor to be held liable for all of the hotel’s lost Mother’s Day and Memorial Day profits – a claim for which the subcontractor may not even have insurance coverage.

Version 2, on the other hand, has all the makings of a carefully negotiated contract. The damages clause specifically eliminates the risk that the subcontractor would face what would inevitably be a very large claim for consequential damages such as lost profits. Not to put too fine a point on it, the rewording of that one clause in Version 2 through negotiation could very well have saved the subcontractor’s company.

Sure, the wording of this one clause is a little thing. But then, for want of a nail…

Wherefore Art Thou?

Eliot Wagonheim — Tue, 04 Dec 2012 11:43:55 -0400

We’re lawyers. Collectively, we’ve been trained for decades to write words that never appear in conversation. Words like “wherefore” and “herein” as well as phrases like “notwithstanding the foregoing.”

The problem is that these documents are generally meant to be read by real people…and by that I mean non-lawyers. Unless something goes south and readership is expanded to include a judge, there is a serious disconnect between message and audience.

This disconnect is apparent in legal documents utilized in every facet of a business: Employment Agreements, Personnel Manuals, Buy/Sell Agreements, Standard Terms & Conditions, even invoices. Take the following language drawn from the standard contract of a large, regional contractor:

“Notwithstanding the foregoing, this warranty will be rendered null, void, and of no further force or effect in the event that the Product is utilized, in whole or in part, in contravention of….”

(Tell the truth, your eyes glazed over, didn’t they?)

Now imagine if that section of the contract, instead of being buried at the end of an already long clause, started with the heading: Your Warranty will be Void if: Isn’t that much more approachable? More than that, companies probably wouldn’t have to call their lawyers for contract interpretation quite as often if the language were plainly written.

“But legal documents don’t look like that,” says the fear. “We’d look like amateurs if we didn’t have a 20 page contract written in impenetrable legalese.” Well…maybe, but odds are probably not. In my experience, maybe 10% of the legalese is necessary. The issues are complicated, there are few other proven ways to document an issue, and the other side has lawyers that insist on it. The other 90% of the contracts are written densely because that’s what lawyers are trained to do and clients have come to expect.

You should know, however, that as a business owner, you have a choice. Legal documents are yet another example of those things you don’t have to settle for simply because “that’s the way they’ve always been.” If you’re drafting something to be read and understood (let alone binding upon) real people – employees, partners, business people just like you – give some consideration to redrafting your agreements to make sense the first time you read them. Keep the same protections and preserve the same rights, but pay attention to (rather than just glaze over) the language.

The lawyers, after all, work for you.

Social Media and HR: Fifty Shades of Gray

Eliot Wagonheim — Tue, 27 Nov 2012 13:37:58 -0400

Over the long weekend, I had a chance to do something I almost never do – I spent time on Facebook. My reasons for choosing to spend my time doing almost anything else go well beyond the scope of this blog, but suffice it to say that my extremely low expectations for both content and enjoyment were met and surpassed. I did, however, find one thread worth considering because, had the person posting been one of my employees, I likely would have fired her.

The thread was started by an intelligent woman in the business of providing professional services. Her initial post contained something of a rant against what can only be characterized as “those people.” She did not offer any descriptions of race, culture or religion, but the takeaway was, at the very least, harshly critical of a certain stratus of people and, whether in a quest to laugh or to vent, was unprofessional and (to this reader) borderline racist.

I know her. And I know that if confronted, her defense would run along the lines of “well, some of my best friends are ***” or perhaps the clichéd “I’m just calling it like I see it.”

The reason the thread stays with me, however, has nothing to do with its content. She is free to say whatever she wants to say. The fact that I am not her most receptive audience, I’m sure, matters to her not one whit. I am not compelled to debate her. Instead, the thread forced me to consider what I would have done had she been in my employ when she posted it.

It is easy to form a social media policy based on absolutes:

Don’t badmouth our firm.
Don’t badmouth our clients.
Don’t discuss or refer to client matters on a public forum.
Don’t reveal trade secrets.

But what about when the thrust of the comments are in the eye of the beholder or involve controversial issues? There are many issues that divide us on which reasonable people can disagree. Is it sound or even enforceable policy to restrict one’s employees from weighing in? More to the point, wouldn’t many, if not most, employees bristle at that kind of oversight by their employer?

Here, there is no bright line. Each employer has its own boundary – that line over which even a private post, even to a limited audience, becomes detrimental to the company. In my experience, most employers have adopted a viewpoint akin to Justice Potter Stewart’s oft-quoted comment about pornography: “I can’t define it, but I know it when I see it.”

Unfortunately, that’s not really the issue, is it? Once the employer sees it, the horse has already left the barn. The post has been made, seen, and perhaps re-posted, liked, commented on and forwarded.

The question is whether, right now, today, your employees know where your line is. After all, it is one thing to blow something up by stumbling into a minefield and quite another to detonate one after having been provided with a map.

The map I am suggesting is a hard one to draw, cannot be drawn well in a vacuum, and should never be presented as a proclamation from on high. Your company’s line on social media does not begin and end with a paragraph in your personnel manual or a clause in your standard employment agreements. Those are good provisions to have, but they do not end the discussion.

Instead, the line must be identified, reviewed, and discussed by the people who matter and are expected to toe it. The good news is that this standard makes it very easy to tell whether you have failed to implement an effective social media policy. If you imagine a disciplinary conversation elicited by a post and both sides of the conversation are shocked – the employer to have read the post and the employee to have been called on the carpet for it – the policy implementation was a failure.

The social media landscape is a minefield. Any employer who understands the reach and effect of social media has an absolute obligation to provide each employee with a map. More than that, however, is the obligation to ensure, through continuing dialogue, that every employee can read it and use it to navigate.

Otherwise it’s all gray. And to give lie to the title of this posting, there are considerably more than just fifty shades.

A Thanksgiving Reflection or Why I Hate Comcast

Eliot Wagonheim — Tue, 20 Nov 2012 12:47:42 -0400

A few years ago, never mind how many, I was compelled to take action by a barrage of Comcast commercials. The advertised pricing was attractive, the featured channels offered great programming, and the packages they touted would have allowed me to receive more content for a bit less than I was already paying.

When I called, the helpful young lady on the phone told me that I didn’t qualify for the offer because I was “an existing customer.” The offers, she explained, were only for new customers. What’s more, she said the words “existing customer” the way other people would describe an offensive odor.

Tarnished as I was with the label “existing customer,” I was left to contemplate my decade-long association with Comcast. I could not help but wonder how a company as successful as Comcast could relegate me and my ilk to something of an unpleasant variety, worthy of dismissal. In the span of a few short sentences, I was made to feel foolish for my loyalty. I was made to feel less than.

I resolved at that point that I would never treat my clients that way. My experience with Comcast taught me the importance of taking a step back from the never-ending search for new clients and contacts to appreciate the people who allowed me to build my business in the first place. I guess you could say that I resolved to give thanks. More than that, I resolved to give thanks only after having taken the time to really appreciate the clients, vendors, advisors, and friends who, day in and day out, play such a huge role in every success we enjoy as a company.

So to those who read our blog, come to our Drink and Thinks, subscribe to our Not By The Book e-mail series, thank you. To those who have used these interactions to become clients and friends of the firm, I offer not only my thanks, but my promise as well:

Never, and I mean never will we prioritize new business over old friends. Even while seeking to extend our reach, we will never place current clients in the position of wishing they had just joined us rather than having honored us with their business over the years.

Never will we express or demonstrate anything other than sincere gratitude for our "existing customers."

Please accept our best wishes for a happy (and reflective) Thanksgiving.

Bi-Partisan Lessons from a $3 Billion Marketing Budget

Eliot Wagonheim — Tue, 13 Nov 2012 11:51:18 -0400

USA Today estimated that the total cost for the 2012 presidential and congressional races topped $5.8 billion – an extraordinary amount, especially in a down economy.

If you live in one of the so-called “battleground states,” you could be excused for believing that all $5.8 billion was spent to air commercials in your local viewing area. The ads were everywhere, each presenting the truth of one side or another by professing to simplify absurdly complicated issues. TV stations made a bundle.

But even with the unprecedented media spending by both sides, a funny thing happened on the Wednesday following Election Day. Both the “what went wrong” and the “what went right” explanations from both camps focused not on the ads, but on the personal contact – President’s Obama’s vaunted “ground game.”

According to the New York Times, “the [Obama] campaign recruited a team of behavioral scientists to build an extraordinarily sophisticated database packed with names of millions of undecided voters and potential supporters. The ever-expanding list let the campaign find and register new voters who fit the demographic pattern of Obama backers and methodically track their views through thousands of telephone calls every night. The power of this operation stunned Mr. Romney’s aides on election night….”

What Team Obama set out to do, both in 2008 and in 2012, was sell a product. Many early analyses focused upon the campaign’s social media presence and ad buys in critical markets. Certainly each played a role. But it is the view in the rearview mirror that fascinates me. In the 20/20 view of hindsight, we see a lesson taught by Seth Godin and John Jantsch alike – figure out what your ideal customer looks like, then go get him.

Now, I’m sure that for $3 Billion, Team Obama had entire books written on the fast food-buying tendencies of left handed Native American bowlers – a level of detail that eludes the average business. The point, however, is that most businesses do not even bother to try. If a company has been in business for more than 3 years, it has amassed enough data to paint a portrait of their best, next customer in an astonishing level of detail.

Even as each side wrestles with what the victors, on a local, state, and federal level received a mandate to do, the lessons of the campaign are unmistakable. If you know your target – what they eat, read, and think, where they sleep, what they do for fun – if you know understand their dreams and know their fears, you can reach them. If you reach them, and do so repeatedly in a manner to which they’ll respond, you will win.

These are the lessons you can bet each side will heed. As a business owner, you should too.

'Well, That's a Dumb Thing to Say'

Eliot Wagonheim — Tue, 06 Nov 2012 12:16:01 -0400

In line this morning to vote, I heard a man explaining to the person behind him how President Obama wants gas prices to increase to $10 per gallon. “He wants it, you understand, because that’s the only way he can get people to go for this green energy thing of his.”

OK, so there’s an underlying logic here. If gasoline were still hovering around the $1 per gallon mark, no one would be talking about green energy because it would be cost prohibitive compared to the cheap energy we’d already have. Even with that in mind, however, the gentleman’s statement was profoundly stupid. I don’t care which side of the aisle you’re on; no one wants gas prices so high that the economy would grind to a halt.

My line-mate followed up his statement by explaining how President Obama’s handling of Benghazi was a disgrace. I have to confess here, I don’t pretend to know much about the intricacies of the Benghazi incident, so that’s not what struck me. What struck me was the basis for this fellow’s professed knowledge. “I have two nephews in the Marines, so I can tell you…”

Again, profoundly stupid. I have close friends who are auto mechanics, but that doesn’t mean I could change a transmission…or even switch out a car battery for that matter.

There is a business point to be made here. The point is this: sometimes, maybe even often, the facts and the sources of information do not matter. I know deep in my heart that if I had turned around to debate this gentleman on the issues, we would have gotten nowhere. Perhaps the discussion would have been heated, and perhaps not. Regardless, however, neither one of us would have changed the other’s mind.

Would each of us have walked away with a greater respect for the other’s point of view? Maybe.

Would each of us have walked away thinking of the other “what a jerk?” Also maybe.

Like it or not, this is a decision that business people have to make each and every day. People often come into conversations with deeply held beliefs. The issue does not have to be one of such gravitas as a presidential election. It could revolve around a billing dispute or one of a thousand he-said-she-said incidents that crop up in every week of customer interaction.

The question, then, is how to handle it.

In my line of work, I frequently find myself talking to judges. These are not conversations of equal footing. The Judge has the last word. So when confronted with the Judge’s deeply held belief, a head-to-head confrontation is something to be avoided. Instead, a “yes, but” strategy is usually the better tactic. If the immediate response contains a validation of the other’s point of view, the follow-up, if artfully handled, can be crafted to fit the other’s world view into one’s own.

When addressing a Judge, the challenge becomes finding the areas of compatibility, rather than jumping in at the point of disagreement. In all my years of practice, I have not found a more successful tactic when confronting opposing views held by those important to me. And although I can’t say, of course, that it is uniformly successful (after all, what is?) I can say that to sincerely acknowledge the validity of the opposing point of view before pressing one’s own, gives one the best shot to prevail.

This basic understanding and respect is what I teach my students. It’s what I preach to those in my firm. And I’d like to say it is what I uniformly practice…but I can’t. There have been times, one lately that stays top of mind, at which I did not take the time to acknowledge the other’s position before leaping into the defense of my own. Perhaps, in the heat of the moment, I felt that vindication was more important, or that winning an issue trumped history and a relationship I treasure to this day.

Whatever the reason, to this day I hold fast to my truth and my client to hers. The relationship continues, but bruised. We both feel we were right, and in a way we both were, but there’s no solace there. I am responsible for damage that need not have been inflicted.

I wish I had taken the time to offer respect first.

And no matter what results are announced tonight, I think there’s no better time to remember that lesson than now.

Lessons of Hurricane Sandy

Eliot Wagonheim — Tue, 30 Oct 2012 14:50:00 -0400

Early this morning, after Hurricane Sandy ravaged much of the East Coast, my wife and I awoke to find our home unscathed. The power never flickered and not a drop of water found its way inside the house. No downed trees. No missing siding. Nothing but wet leaves.

We consider ourselves extremely fortunate and our thoughts are with those who find themselves without power or, worse, in temporary quarters waiting on a time when they can return to survey their homes and possessions.

The refrain is always the same:

“We should stock up on bottled water, canned goods, and batteries so we won’t be caught unprepared next time.”

“We should buy a generator.”

“We should increase our flood insurance coverage.”

All of these represent good, sound thinking. After all, most people aspire to be someone who can sleep through a storm. But the warning is rarely so dire and oft-repeated in business as it is on the home front. One could hardly check the internet or turn on the television without hearing about “the deadly storm’s imminent approach.”

In business the signs are more subtle and easily dismissed.

A key employee leaves. “Well, she never really fit in here.”
A large customer pulls its business. “Sure, he was upset. But you know, we really couldn’t help what happened. It was just one of those things.”
A contract bid comes up short. “Look, if you haven’t lost; you haven’t played.”

Make no mistake, each of the above situations is a storm of one degree or another. Are they all Category 5’s? Of course not, but some are. The sooner you recognize them for what they are the better off you will be when the next one appears on the horizon.

The question then becomes, what are you going to do now to make sure that, from a business perspective, you’re not one of those people in the Giant the night before wishing you had arrived earlier?

"The Face of the Organization"

Eliot Wagonheim — Tue, 23 Oct 2012 12:18:55 -0400

On January 10, 2000, AOL announced its agreement to purchase Time Warner for $164 billion. This event, more than any other, demonstrated the economic power of the internet and the arrival of the so-called “new economy.” The importance and economic power of communication and human connection had, as of that moment if not before, supplanted that of traditional, old line companies.

What does that have to do with employees?

The short answer is “everything.”

Companies no longer have the luxury of selecting “the face of the organization.” In the age of social media, where “connections” are counted, courted, and labeled by degree, everyone is a front line employee. Every employee is in business development. Business operations are not only transparent, but they are broadcast to virtually anyone willing to watch. Trade secrets are becoming so difficult to protect as to almost rise to the level of a contradiction in terms. And competitors, looking for an edge, need often look no further than the Facebook post of one isolated employee having a figurative bad hair day.

It is, for this reason, that the notion of an at-will employee carries more risks for the employer than ever before. Employment contracts may restrict an employer’s options to a certain extent, but they can also be incredibly useful tool when it comes to preventing valuable assets and relationships from walking out the door.

After all, when it comes to legal protection, it is much better to have it and not need it, than to need it and not have it.

I don't mean to pry, but...

Eliot Wagonheim — Tue, 16 Oct 2012 12:24:43 -0400

The year was 1992, and, as befitting one of the firm’s junior attorneys, I was the only one in the office on a Sunday afternoon. I wandered into the library when I noticed the computer monitor come to life. It seemed that one of the firm’s partners was accessing the network from home.

I didn’t think anything of it and continued my research, when I happened to look over at the screen to see that the partner was methodically checking into each employee’s e-mail account and reviewing recent incoming and outgoing messages. He was, not to put too fine a point on it, reading our mail.

Maryland law is unchanged from that day to this in that the question of whether an employer is within his or her right to do this hangs on the employee’s reasonable expectation of privacy. Here, the e-mail address, domain, and computer network belonged to the employer. As an employee, I did not have a reasonable expectation that my e-mail would remain confidential from my employer. I may have been morally troubled by this, but I could not take offense from a legal standpoint.

Now, more than ever, the issue of privacy rights in the age of social media and all forms of electronic communication is front and center for all employers. There is no such thing as a whisper anymore, when it seems as if every half-formed thought is broadcast online or to an inbox. Employers are rightly concerned about their reputations, trade secrets, and relationships.

Recognizing the concern as an employer, however, doesn’t get you there. What gets you there is (1) well-formed, clearly communicated policy; (2) the creation of a climate of accountability; and (3) real-life consequences for ill-advised actions.

If you, as an employer, have not taken steps to address the most glaring threat to security since Vidkun Quisling (click the link, it’s fun and educational), the first step is to formulate your social media, e-mail, and communication policies. The second step is to provide them to everyone in the company – employee and independent contractor alike. Don’t forget to give real consideration to the “what if” questions and spell out specific remedies the company may consider in addressing a breach.

Mark Twain once said that a lie can get halfway around the world before the truth ever gets its boots on. No policy can prevent someone from saying something unpleasant, damaging, or untrue online or in an e-mail. In view of that, your best move to protect yourself is simply to start lacing up your boots now…just in case.

The Conundrum that is Mike McQueary

Eliot Wagonheim — Tue, 09 Oct 2012 17:12:06 -0400

Former Penn State assistant football coach Mike McQueary filed a whistleblower lawsuit against the university. McQueary alleges that, rather than having been invited to interview to succeed Joe Paterno as Penn State’s head football coach, he was first placed on administrative leave and then summarily shown the door. McQueary is seeking $4 million dollars in compensatory damages which, he alleges, equates to what he would earn in a professional lifetime as a Penn State football coach.

It seems likely that McQueary will be found to qualify as a “whistleblower.” McQueary testified before a grand jury that he witnessed what he believed to have been a sexual encounter between Jerry Sandusky and boy in the Penn State locker room showers. Distressed and shaken by what he saw, McQueary reported the incident, first to his father and then directly to Joe Paterno.

It is McQueary’s belief, embodied in his lawsuit, that his act of stepping forward and setting in motion some (perhaps all) of the events which would eventually lead to Paterno’s downfall, Sandusky’s conviction, the shaming of a university, and the NCAA imposition of a near death penalty for Penn State football was the proximate cause of his dismissal. He argues, perhaps correctly, that the Penn State scandal has marked him in such a way that he will never be able to find a job in coaching.

The basis of his suit lies in federal and state statutory protection of whisteblowers, based and expanding upon the Whistleblower Protection Act of 1989 (5 U.S.C. Section 1201). These whistleblower statutes provide protection for employees who report abuse, statutory violations, and criminal actions from being penalized by their employer for doing so. An employer who retaliates against a so-called whistleblower by taking adverse actions such as demotion, curtailment of responsibilities, or termination can be found liable for back wages, prospective wages, and attorney’s fees.

The problem now being faced by Penn State (one of the many) is that McQueary may, indeed, have been a whistleblower…but they had to fire him anyway. Can you imagine the fallout if Mike McQueary, a central figure in the Sandusky child abuse scandal that nearly brought down the university, became the weekly face of that university every Saturday afternoon from September through December? How could Penn State ever hope to distance itself from the scandal when, every week, one of the prime actors was patrolling the sidelines?

Now, don’t get me wrong. I’m not saying that Mike McQueary participated or is, in any way, guilty of the horrible crimes for which Jerry Sandusky has been convicted. I am, however, saying that the back-breaking baggage McQueary must carry around is the widespread belief that he failed those children who later became Sandusky’s victims. Many believe that, having witnessed something so disturbing, so horrible, and so shocking, that a reasonable person could not have stopped at reporting it to one person…even if that person was Joe Paterno. Many believe, and I happen to be one of them, that McQueary’s responsibility to the children overrode everything, even his chain of command. There came a time, after all, when he knew that no action had been taken and yet, he continued to work daily in order to build a fatally flawed program.

What his lawsuit misses is that Penn State has made a determination that it must, going forward, embrace the value of the greater good even at the expense of present image, power, and structure. For whatever reason, McQueary did not make that assessment. He blew the whistle and then stood silent.

So here stands McQueary. Damaged, to be sure. Out of work, and not just for the short term. Denied his chosen profession without having committed a criminal act or broken the law in any respect whatsoever.

And on the other sideline stands Penn State. Shamed and sullied, but determined to start now to exemplify the values it claims to champion. The two cannot co-exist – not on the same field. McQueary had to go. And because of that, Penn State found itself between a rock and a hard place. It had to fire a whistleblower.

In the end, barring the release of facts we do not now know, the university will have to pay the man. The alternative would have been worse.

If you don't, why should I?

Eliot Wagonheim — Tue, 02 Oct 2012 15:37:49 -0400

Over the past six weeks, I have been teaching a graduate level business law course for the Johns Hopkins University Carey School of Business. For three hours each Monday evening, I find myself explaining to 31 graduate students the legal and business concepts that form the foundation of the services we offer our clients as a firm.

Over and over again, I have returned to the question: “if you don’t, why should I?” in order to illustrate one of the key points about business and asset protection. Take, for example, the question of corporate formalities. Many businesses fail to keep and maintain corporate minutes and some business owners even commingle their personal and business funds on a regular basis.

In each instance, the owner things to himself, “why does it matter?” “After all,” the rationalization goes,“ I own the company, so it’s my money anyway. What’s it matter if the company buys me dinner or pays for my gas? It’s all the same in the end. Similarly, many business owners view corporate minutes as a waste of time. They’re drafted, perhaps accompanied by an attorney’s invoice, and then gather dust, unexamined in a drawer or minute book – all seemingly to authorize something you already did and nobody questioned.

But here’s where the judge comes in. When a business owner finds himself standing before a judge, it is often with the hope that the personal asset protection promised by a corporation or LLC holds up. After all, that’s why the owner formed the corporation or LLC in the first place – to protect his or her personal assets. The protection, however, is not inviolate or by any means guaranteed. In non-technical terms, the corporation must look, act, and feel like a corporation. If not…if corporate and personal funds are commingled and if corporate formalities were not observed, the court may find that the corporate protections just aren’t there.

In other words, the business owner may hear those dreaded words from the bench: “If you haven’t treated the business like a real corporation, why should I?”

The same holds true for trade secrets and intellectual property such as trademarks and copyrights. Protections are available to the vigilant business owner, but they are not inviolate and are not guaranteed to be there if called upon. If the business owner is cavalier with his or her trade secrets by failing to take reasonable measures to protect them, chances are s/he will be unable to convince a judge that the secrets are worthy of protection when it matters. As in the previous example, the business owner may very well hear a judge ask the well-reasoned question: “If you haven’t treated these items as trade secrets, why should I?”

It’s a good question. You may want to take steps now to make sure it’s one you never have to answer.

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The NFL's Pact with the Devil

Eliot Wagonheim — Tue, 25 Sep 2012 10:55:47 -0400

“What do you think the devil looks like? Do you think he’s crimson with horns, a forked tongue, and a pointy tail? You’d see that guy coming a mile away.”

-- Albert Brooks to Holly Hunter in Broadcast News

The devil, Albert Brooks explained, looks like everyone else. You don’t know him just by looking. But he’s that guy that gets you to compromise…just a little. He gets you to walk away from the things you believe in just a touch. It is under his influence that you move away just a bit from the things that matter to you. Until one day you don’t recognize yourself anymore.

This football season began with a labor impasse between the National Football League and the referees union. Replacement officials culled from teams typically assigned to Division II contests and arena football have been placed in a position of acting as final arbiters of an immensely intricate rule book in a contest between men of incredible size, speed, and will, with every call dissected by television talking heads and scrutinized by millions of fans.

The dispute comes down to money. And as a litigator friend from Texas once told me:

“I’ve never seen a pancake made so thin it still didn’t have two sides.”

It is not my purpose here to opine on the merits of either side. Both sides have merits and each side is dug in. But only the NFL is dancing with the devil. And by “devil,” I don’t mean the referees union. I mean the dispute itself.

This labor dispute, in which the key issues all concern money, is moving the NFL away from those things it has identified as its core – player safety and respect for the game. Because of this dispute, the NFL feels compelled to allow a shift away from values. The dispute has compromised what the NFL has proclaimed itself to stand for. The NFL believes it is controlling this dispute. It is, in reality, the dispute that is controlling the NFL.

Watching this spectacle, I can’t help but empathize with Roger Goodell and the NFL. Is it possible to have arrived at adulthood – particularly after having assumed a leadership role in business – without having at some point dug in past all reason? Hasn’t every leader experienced a time when logic dictates a retreat but you retrench anyway?

Is it ego – the win-at-all-costs, I’m-right-you’re-wrong mentality that starves all hope of a reasoned solution? Maybe. But like most things, I doubt it’s that simple. I think the NFL is actually looking closely at the problem and examining each issue with the consideration it merits.

The problem, I suspect, is that the actual talking points in the dispute between the NFL and the referees’ union have become irrelevant. This is no longer a problem to be resolved by examination of the individual sticking points. This is a 10,000 foot view problem. It is a situation in which the NFL has to back away from the minutia, place ego and even logic on hold, and grasp the total picture.

The NFL, like so many businesses large and small before it, has found itself grappling with a dispute in which it wrongfully perceives the other party as the problem. The other party – the union in this case – is not the problem. It may have started out that way, but that’s no longer the case. The dispute is the problem. And as a trial lawyer, I can tell you that few things are harder for business people to understand than the fact that there sometimes comes a point where, for the larger good, who’s right no longer matters.

That’s where the NFL finds itself today. The dispute is pulling the NFL away from those things it champions. It thinks it’s just grappling with a dispute. What it is actually doing is dancing with the devil. And the problem is you can’t see that thing a mile away. The devil, sometimes, looks like everybody else.

The First Rule of Improv

Eliot Wagonheim — Wed, 19 Sep 2012 12:39:43 -0400

According to Malcolm Gladwell, the first rule of improvisational comedy is: always accept your partner’s suggestions. In order for an improvised scene to be successful, the improvisers involved must work together responsively to define the parameters and action of the scene, in a process of co-creation.

With each spoken word or action in the scene, an improviser makes an offer, meaning that he or she defines some element of the reality of the scene. It is the responsibility of the other players to accept the offer so that the scene moves forward. If, for example, a player points at an invisible asteroid in the distance hurtling toward earth, the others must react accordingly.

Infinite possibilities for the scene exist when the other players accept the premise. A “yes” opens up doors. On the other hand, the scene comes to a dead stop as soon as someone gazes toward the horizon and says “I don’t see anything.”

It’s taken me a long time to realize this, but I don’t think anything prepares a person more for litigation, business meetings, negotiations, or everyday life than would a study of improvisational comedy. Picture the following scenarios:

A business owner on the other side of the table announces: “I just don’t think the performance of your company justifies the price you’re asking.”
A judge says: “I do not believe that I’m compelled to follow the caselaw you cited in your argument.”
A prospective customer says: “I could get a lower price from one of your competitors.”

In each case, the speaker has gone off script by expressing a sentiment the other person did not want to hear. This is the decision point. The response could either be based on a contradiction – “I respectfully disagree because…” – or the offer can be accepted as in “well, let’s explore that…”

The would-be purchaser is not going to change his mind about the value of the company at Closing. Even if the seller disagreed, the negotiations can move forward if the buyer’s truth is accepted for the moment. Doors open up. The parties could agree to the buyer’s figure at closing with future payments if, after closing, the company outperforms the buyer’s expectations.
The judge won’t be argued or cajoled to change her reading of the law. But she could be shown how you still win even if her reading of this particular caselaw is correct.
The customer will remain convinced that you’re not the cheapest guy in town. But he may be persuaded that your products or services bring greater value.

Too often, I see discussions devolve into a contest of wills fueled by ego and an unwillingness to be out-negotiated or, God-forbid, be proven wrong. But if one follows the first rule of improv, those situations are immediately defused as each side shows a willingness to accept the other’s truth.

As Stephen Colbert once said in his commencement address to Knox College:

Well, you are about to start the greatest improvisation of all. With no script. No idea what's going to happen, often with people and places you have never seen before. And you are not in control. So say "yes." And if you're lucky, you'll find people who will say "yes" back.