About a year ago, I wrote how PowerPoint-based presentations are a sales killer, and recently an incident in the sports world reinforced my claim. In my post last year, I argued PowerPoints were counter-productive because rather than encouraging a dialogue they presented only what you felt your audience wanted to hear.
Even Kobe Bryant fails with PowerPoints
This summer, Kobe Bryant and the LA Lakers learned about the shortcomings of PowerPoints that I described (I’m a little shocked Kobe is not reading my blog regularly, but I guess he was busy rehabilitating). Kobe and the Lakers were trying to entice free agent LaMarcus Aldridge, who was being pursued by multiple NBA teams, to sign with the Lakers. When they met with Aldridge, they put on a beautiful presentation on the benefits of playing with the Lakers and playing in Los Angeles.
In reality, Aldridge considered it a disaster because the Lakers did not convince him how the team would become a championship contender. He felt the presentation focused too much on outside opportunities, not on basketball. Aldridge subsequently signed with the San Antonio Spurs. Continue reading “Why PowerPoints are often awful”
I find it surprising when investors, particularly Wall Street, cheer a company for reducing head count because it is usually not a good business decision. I am not making a moral statement; it is about the underlying business reasons. While reducing head count does immediately reduce the cost side of your business (outside of redundancy expenses), it usually has a greater impact over time on revenue.
People create revenue
Your team is how your company creates revenue. They build the products customers pay money to purchase. They provide support so customers return and continue spending with your company. They market the product so people learn about the product and buy it. At the root of business, companies employ people because they make money for the company. The logical extension of this argument is that if you reduce the number of people, you will have less people generating revenue.
Julian Simon trumps Malthus
Malthus and Julian Simon were two economists of different eras but more importantly different philosophies, and history has proven Simon correct. Malthus lived in a time when people had a short life span and had to spend most of their time on difficult work. He theorized that as the population grew, the situation would get worse as there would be less food, more disease and overall fewer resources to go around.
Julian Simon, conversely, argued that people were incredibly resourceful and always came up with more efficient ways to use resources. Thus, as the population grows, there would actually be more to go around and people would live better. When people argued that oil would run out or we would not have enough food to feed ourselves, he argued that these would not be problem’s due to human intellect.
Simon famously bet Robert Ehrlich, a Malthusian economist, to pick any five metals and Simon argued the price would decrease over time. Simon won the bet. Continue reading “Why reducing headcount hurts profits”
Most people in the game industry are always looking at the next great technology that will drive a new wave of demand for social (and core) games but we are missing the biggest opportunity. At every tradeshow, there is debate and predictions about the next seismic shift in gaming. Some people argue it is VR (virtual reality), others feel it is phablets, some think it is 3D casino, while others are already in line for the iPhone 7+. While these platforms all could potentially drive sales, the least sexy opportunity is probably the best.
While most companies acknowledge the importance of recruiting, they often neglect the complementary principle that you need to put as much effort in keeping your existing team satisfied. Just as increasing user acquisition costs intensifies the value of retaining existing players, the increasing difficulty in finding great employees intensifies the need to minimize employee churn. There are multiple costs of replacing a good employee
The hard costs of recruiting a new employee. This can be payments to a recruiter, referral fees to employees, travel costs to attend recruiting, travel costs to bring candidates in for interviews, etc.
The lost time spent evaluating candidates. The time you and your team spend reviewing resumes/CVs, interviewing candidates and discussing options. These days, almost all candidates go through multiple rounds of interviews before being offered a position. Each of those interviews takes 30 minutes or more of someone’s time, if you value that time based on the interviewer’s salary, you quickly get into the thousands of dollars (even more for a senior candidate who meets with leadership).
Training costs. These are both direct and indirect. You may have to send the new employee to various external training courses to prepare him for the job. More likely you will need to spend you time or your colleagues will training the new person on how the company works, practical issues (i.e. where the bathroom is), systems, interactions with other teams and what they need to perform their tasks optimally. Again, there is a cost for every minute that you and colleagues spend getting a new hire up to speed. When you break out salaries by how much the person earns per hour, this training cost often runs into the thousands of dollars.
The lost productivity in losing a high performer. You should never consider replacing an employee as an upgrade. If there are better people on the market, you need to recruit them proactively and replace weak team members. Assuming you adhere to this principle, if someone leaves voluntary, it means their replacement is not likely to be as good as the existing team member. The cost can range from minimal to huge in having somebody not as good performing a role on your team.
Less output. If you employ somebody, they should be providing a valuable service (or else you should proactively have eliminated the position). When you lose somebody, that task either does not get done until a replacement is in place or you must take other people off of their tasks (which again are worthwhile or you should not having them doing it). In either case, the overall output of your organization decreases.
Stronger competitors. When a good employee leaves, by definition they go somewhere else. That somewhere else is often a competitor, so not only are you losing their services but a competitor is likely improving. If Messi were to leave Barcelona for Real Madrid, the loss to Barcelona would be magnified by the improvement of their arch competitor.
Higher risk. Regardless of how rigorous your recruitment process, there is always risk that you make a bad hire. Many people interview above their actual competence, while others may just not be a good fit for your organization and processes. Thus, you have the risk that not only will the new hire be slightly weaker, they may prove incapable of doing the job and themselves have to be replaced. Then you have both an extended period of the job not getting done (or people being pulled off other tasks) and a repeat of the costs above.