Peter Kang

It’s been a year since I read Peter Senge’s The Fifth Discipline and yet, I’ve been reminded almost every single day of the lessons from the book.

My company Barrel recently celebrated 13 years of being in business. My co-founder Sei-Wook and I have been there for all 13 years, and I feel like it’s only been in the past year that the two of us started to take a less reactive approach to running the business and to start being aware of the structures and systems that influence our behaviors and outcomes.

I wanted to mark the milestone of entering our 13th year in business with a re-read of the eleven “Laws of the Fifth Discipline” that Senge outlines in his book and to relate them to our digital agency business.

Law 1: Today’s problems come from yesterday’s “solutions.”

The inability to fully consider the ramifications of certain decisions, especially when they feel like “quick fix” solutions in the moment, can bog an organization down in the future as it causes stress later on either for the people who made the very decision or to other parts of the organization.

At Barrel, I’ve personally been the culprit of many quick-fix schemes that felt great and brilliant in the moment but backfired later on. Of course, there’s nothing more egregious than the “solution” of taking on poorly scoped and poorly defined projects at low budgets to keep cash coming in the short term. The problem? Weeks or months down the line, our team is still stuck working on a project that’s way over-budget with no chance of profit while the client is unhappy that we’re trying to push back on vague scope.

Law 2: The harder you push, the harder the system pushes you back.

Senge describes the concept of compensating feedback: “the more effort you expend trying to improve matters, the more effort seems to be required.”

One very clear case of compensating feedback at Barrel has been instances when we took on too many poorly-priced projects (i.e. we promised to do too much for the allotted budget) in order to win new business and keep cash coming in. The more projects we took on, the more people we needed to hire to get the job done. By hiring more people, our expenses shot up, creating the need for us to land more projects by any means necessary, which meant underbidding on price to win. This would then lead to more low budget projects that needed to get staffed, the vicious cycle continuing. The harder we pushed, the more effort was required.

The challenge with compensating feedback is that it’s largely invisible when it’s happening. Instead, we celebrated the many new business wins, we were excited by the hiring of new talent, and we praised those who put in extra hours and worked around the clock to meet the deadlines of multiple projects. What was hard to spot was that we were merely playing right into the system of our own making.

Law 3: The easy way out usually leads back in.

One of the symptoms of taking on too many poorly-priced projects in the past has been the pressure put on the Producer role at Barrel. Our Producers are the project managers who oversee schedule, budget, and day-to-day communications with our clients. They ensure that projects are on track and are usually the first to address any issues that may come up.

During the times when we were underwater with too many projects, we leaned heavily on the Producers to juggle multiple projects without falling behind. A few of them were able to excel and handle the load, but many faltered and either burned out and quit or were forced out (you can see the carnage in our poor Glassdoor reviews during these times). Our solution to this at the time: just hire better Producers. We instituted more stringent screening requirements and put in various tests to ensure that our Producer hires would be fit for the intense work.

This approach is what Senge says is “pushing harder and harder on familiar solutions” and “a reliable indicator of nonsystemic thinking”. What we would find later is that we lacked proper on-boarding and support for our Producers, especially those who were unfamiliar with our processes. An even bigger revelation was that Producers, charged with running an incredibly tight ship on low budget projects with zero margin for error, were doomed to fail from the start. Their only way of succeeding was to know the ins-and-outs of our complex processes, but without proper training and no buffer to make mistakes, any slip-up would be scrutinized and seen as incompetence.

As we say to remind ourselves nowadays whenever we spot such systemic malfeasance on our part: Failed to set up, set up to fail.

Law 5: The cure can be worse than the disease.

Senge writes: “Sometimes the easy or familiar solution is not only ineffective; sometimes it is addictive and dangerous… The long-term, most insidious consequence of applying nonsystemic solutions is increased need for more and more of the solution.”

Hiring, especially when done to solve a short-term staffing problem and without the proper financial considerations, has been an example of a dangerous solution for us at Barrel. Not only with the Producer role as mentioned above, but across all the disciplines, the automatic reaction to turnover or staffing needs has been to hire with the hope that we would land a transformative individual who can contribute and have positive impact.

And when we do get lucky and land someone who is great, hard-working, and impactful, our dependence on this person grows so much that we end up giving them too much work, which then leads to slips in performance, burn out, and ultimately, attrition. And at this point, we have yet a new gaping hole to fill and a new round of hiring to “solve” the problem.

Having tasted the panacea of a competent hire, we’ve often fallen into the addictive pattern of hiring to solve rather than asking ourselves the tough question of why we need to hire, why we can’t rely on the existing team to step in, and why we can’t develop a pipeline of talent internally by nurturing juniors into more senior roles. In our better moments, we’ve even explored and instituted systems to ensure that work gets done regardless of who is tasked because we’ve put in better guidelines and processes that doesn’t depend on heroic efforts to achieve.

Law 6: Faster is slower.

Systemic changes take time to implement and to see results from those actions. We’ve learned that incremental work at the systems level takes patience but that the work we put in now will have profound impact 3-6 months down the line.

An example: we’ve been working for over six months to hone our Discovery process on new engagements. It’s undergone many iterations, and I’ve sensed frustration from the team at times on its fluid status because we’ve changed many things about it as we’ve gathered feedback from the various test cases. However, because we’ve made incremental progress all this time, we have in place today a much more robust and data-backed system that we can confidently take clients through.

Had we rushed and tried to get it 100% right the first time, we would have been discouraged and perhaps abandoned the effort altogether as we have countless times with other initiatives. An excuse may have been something like: “Clients hate Discovery, it’s impossible to sell, and they never feel good about the outcome.” Instead, because we went in with the mindset that this was a work in progress and that setbacks were fine as long as we could adjust and keep trying again, we’ve learned a great deal while now having an effective way to engage and scope projects collaboratively with clients.

Law 7: Cause and effect are not closely related in time and space.

When problems, the “effects”, manifest, they are the result of “causes” or decisions made weeks or even months ago. When I think back to rough financial moments in our business, we used to solely blame the fact that we lost out on X and Y bids for projects and that’s why we were in a cash crunch when in fact, there were several decisions regarding hiring, staffing, and project management that all factored into the problems. But because these were harder to see, we tended to blame the most visible thing (losing a recent project bid) and also hanging our hopes that winning the next one would bail us out (more immediate cause and effect).

These days, we ask ourselves what we need to do today in order to avoid being in a tough spot the next quarter or six months out. And when it comes to competing for new projects, we try our best only to actively pursue those that we feel we have a front-runner position to win, and for those that seem like long shots, we typically pass on them altogether or submit a very stock proposal (that takes no time to produce) with zero expectations of winning. Taking one more step back, we don’t obsess much over individual opportunities but take greater notice of the volume of opportunities on a weekly and monthly basis along with the aggregate value of proposed work in our pipeline vs. those that make it into contract stage. This way, we can better spot trends and sense a slowdown or pickup in business activity much sooner.

Law 8: Small changes can produce big results–but the areas of highest leverage are often the least obvious.

Senge writes: “Tackling a difficult problem is often a matter of seeing where the high leverage lies, a change which–with a minimum of effort–would lead to lasting, significant improvement.”

I wish I could highlight a really impressive and memorable small change that led to a big result. The truth is, there are numerous small changes that we make on a daily and weekly basis. Some of these lead to incremental improvements while others are quickly forgotten. I’ll have to keep my eye out for a good one to report back on in the future, but my corollary to this law would be that, because areas of high leverage are not obvious, the ability to quickly and efficiently make many small changes improves the chances for a high leverage change to hit.

Law 9: You can have your cake and eat it too–but not at once.

Senge illustrates this law by describing the example of American manufacturers and their dilemma of choosing between low cost and high quality. What they didn’t consider was that adhering to high quality could help avoid costly rework and reduce customer complaints, allowing brand loyalty to become greater while bringing down customer acquisition costs, which in turn could allow for products to be priced lower. However, going for quality requires upfront investment and costs may go up before they come down.

This is a dilemma not too different than one we’ve grappled with. We’ve wanted to create websites for clients that were of high quality but would be easier for our team to produce (and also at lower prices for the clients). This is still a work in progress, but we’ve found that investing in building base modules and creating design systems and processes to streamline certain aspects of projects can help lower our hours spent on the most basic parts of projects, freeing the team up to focus on more value-add elements all while staying within budget. However, the discipline to commit to working on something that won’t see immediate results is always tough.

Law 10: Dividing an elephant in half does not produce two small elephants.

Senge writes: “What makes this principle difficult to practice is the way organizations are designed to keep people from seeing important interactions.”

Earlier this year, our company went through a workshop with AgencyAgile, a training organization that teaches digital agencies a framework to improve team and client communications while giving them the tools to accurately scope and estimate projects. This was an excellent investment for us as it has allowed us to land projects at higher rates all while raising both team and client satisfaction.

Senge also shares a Sufi tale about three blind men who touch different parts of an elephant and all describe it very differently. They are all correct about what they feel, but on their own, they cannot guess that it is an elephant. Likewise, what AgencyAgile helped us to see was that when our approach of having the new business team lock in scope with the client and toss the statement of work over to the project team to execute was akin to having a blind man touch the elephant’s leg and tell people that we’re dealing with a thick pillar.

After the AgencyAgile training, we’ve adopted an approach where members of the project team–the designers, developers, producers, and whoever else–play an active role in asking questions, bringing up potential risks, and learning together about the nature of the project with the opportunity to reshape scope and approach. This has allowed us to capture value in the interactions that take place between the disciplines. The collaborative creation of the scope, in the form of a roadmap, has also been great in demonstrating our thoroughness with clients.

Law 11: There is no blame.

We’re all part of a single system and we all play a role in how things turn out. Once we accept this, it’s much easier to work in a manner where we continually find points of leverage and tweak the system to work in our favor.

We are far from having figured things out. However, I’ve enjoyed myself quite a bit and even though I’ve worked on the same company for what seems like a long time, the game itself feels very different and there are so many more levels to go.

I’ve found myself recently repeating a few different rules to in my head as reminders on ways I should be operating, whether it’s in day-to-day behaviors, in occasional decision-making, or interactions with others. Sometimes, when I’m distracted, emotionally incensed, or completely in mindless mode, I’ll forget these rules and behave in regretful ways. But one thing I’ve noticed is that as I’ve grown older, I’ve come to embrace the upside to slowing down and considering these rules and therefore have minimized situations where I’ve completely abandoned them.

I thought it would be a worthwhile exercise to write some of these rules down and then revisit later to see what’s been added, revised, and culled.

Get the unpleasant thing out of the way sooner than later

Whether it’s washing the dishes or having a tough conversation with an employee at work, I’m of the mind that it’s best to get the unpleasant thing addressed as quickly as possible. There’s a tax to pay when you have unpleasant things lingering on your mind. It causes distraction and stress, which can have downstream impact on the your wellbeing. I try to remind myself whenever something comes up–for example, a disgruntled client who’s expressed concerns; an employee who’s had trouble following through on assignments; an insurance issue that needs to be taken care of–that it’s in my best interest to take them head on as soon as possible, endure the momentary discomfort, and move on.

Very few things are worth getting worked up over

This is a tough one to follow at times because it’s so easy to blow things out of proportion and become a drama lover. But I do think age and experience has mellowed me out a bit. There are rarely any issues at work that really come as absolute surprises anymore. Most are variations on miscommunication and mismanaged expectations. And I’ve seen enough of these situations to know that things will either take care of themselves or blow over. With that in mind, there’s absolutely little reason to get a hot head. One mechanism that I could probably do without: I sometimes engage in a playful, pretend state of being worked up that usually ends in a wink-wink and a laugh with those involved, but to those on the outside, it might be indistinguishable and therefore, not a good look.

At home, getting worked up about something is usually a function of how tired and irritable I am, so I try to keep this in mind whenever I find myself extra sensitive to something my wife says or if I find myself veering toward negative thoughts. The best antidote for this is to get some sleep.

There’s no need to have the last word

In any argument or heated debate, I’ve seldom felt satisfaction or optimism even after I’ve emphatically made my point and had the last word. I think the outcome to strive towards is one where everyone involved has had the opportunity to make their point while feeling like perhaps there’s some validity or value to the other points. So much of this is captured in the way people feel after an intense interaction. As someone who grew up loving the feeling of “winning” and “domination”, I need to continually remind myself that the true win is one in which I’ve helped to facilitate a productive conversation where all sides involved come away with a positive outlook on next steps. Hard to do, but a valuable approach to keep in mind.

There’s no rush, stick to a pace that works for me

Part of owning an independent small business is that it’s easier for me and my partners to dictate the pace of our company’s growth. There was a time when the breathtaking pace of growth for peer agencies and even those in the adjacent tech and startup worlds used to make me stress about the need to keep up. After experiencing many years of ups and downs and surviving through it all, I’ve learned that it’s a lot more calming and less distracting to ignore the measures of others and to focus solely on our own progress. Our only benchmark is what we’ve done in the past and what we hope to do in the future. We try to set realistic, reasonable goals so that we can actually hit them and celebrate, giving us a sense of momentum.

The same has applied to my personal pursuits in various activities. When it came to running, I focused solely on gradually improving my own times and paid no attention to the times of friends or others in my age group. As long as I could show incremental progress, that was good enough for me. Same with lifting weights or increasing flexibility–I only care about where I am today and what I can do to make myself a little bit better tomorrow.

I hope that in parenting, I can continue to observe this rule and find a happy pace that works for our son as he grows and develops.

Just listen, no need to provide advice

This is a relationship rule staple, but it’s applicable in so many situations. As someone who loves to solve problems, it’s hard not to dispense advice to “help” the other person with their issue. However, in most instances, the helpful thing is to listen, ask good questions, and acknowledge the issues/challenges the other person is experiencing. I catch myself going into advice-giver mode too often, so this is a rule that I try to keep as top of mind as possible whenever I go into a conversation where I know someone will want to share something in-depth.

Play offense, not defense

As clichéd as this rule may sound, it’s something that comes up again and again on a regular basis. A big part of it is recognizing the patterns of behavior that result in us being in a defensive position. A common example for me at work is when a client continually bombards us with questions and demands, forcing us to scramble in order to keep up. Playing offense in this situation would be something like clearly setting expectations upfront, aligning with the client on proper protocol and cadence for communication, and being proactive about updating the client on the progress of outstanding items before the client even has the urge to check in.

I always think about football when this rule comes up. Offense requires more scripting and coordination when it comes to execution since every player has to know exactly where he’s going. Defense, on the other hand, can only try its best to anticipate what’s coming and leverage schemes that disrupt the flow of the offense or minimize the gains the offense can make (contain). The offense has the advantage of dictating the terms and pace of the engagement provided they can execute well. When it comes to interactions with people, I think playing offense, while requiring more upfront work, provides greater sense of control and predictability.

Things I will never regret: time spent writing, time spent with family and friends, time spent on exercise, and time spent on sleep

Time, as we know, is our most valuable resource. And yet, it’s something that I find myself spilling like a rice bag with a gaping hole. Most of the spillage comes in the form of mindless activities like checking email, watching dumb videos, reading pointless and forgettable articles, and exchanging silly texts with friends. However, I’ve found it useful to remind myself to continue spending time on the handful of things that really matter and orienting my schedule to maximize for these activities:

• Writing: when I take the time to think, construct sentences, and edit, I am helping myself to formulate ideas and to retain knowledge. I have never felt like time spent on writing was ever wasteful, even if it’s a draft blog post nobody will ever see or in my journal notebook. However, writing is not the easiest activity and it’s often hard to sit down even for 15 minutes after a long day of work to gather my thoughts and find the words.
• Family & friends: the importance of making plans and putting in the effort to spend time with loved ones cannot be overstated. When looking back on my life, the time I spent with family and friends will most likely be the thing I cherish the most. With that in mind, it’s imperative to be mindful and present when I’m with others and to proactive create new memories with them.
• Exercise: after committing to a 5-times-a-week routine, it’s really hard to imagine a life with much less exercise. Even if it’s a 15-20 minute burst of jump rope or running, I think the ability to stress the body, generate sweat, and get different parts moving has such profound effects on overall health. I hope to continue to invest more into making exercise a big part of my daily life.
• Sleep: nothing regenerates the body like sleep, and so it’s important for me to remember that staying up late is rarely worth it. I also remind myself that being primed for good sleep is important, so any eating and drinking needs to be done well in advance of sleep along with minimal caffeine intake after a certain time.

Fight hard to keep my calendar as open as possible

I was struck by a clip on YouTube in which Bill Gates mentions what he learned from Warren Buffett about his schedule. Gates talked about how his calendar was usually booked solid every hour of the day whereas Buffett carried around a calendar planner that, for the most part, looked fairly blank and empty. Buffett prioritized having time to read and think, and in having a calendar that was fairly open (by saying “no” to so many things), he was able to give himself plenty of time to do so.  This also reminded me of a line attributed to management guru Peter Drucker that I came across in the book Stealing Fire: “Tell me what you value and I might believe you, but show me your calendar and your bank statement, and I’ll show you what you really value.”

I’ve told myself that my time at work would be best spent if I could focus on the design of the business (i.e. processes and systems) and the coaching of key team members who can help us scale various departments and activities. This will only ring true if I can say “no” to meetings that don’t really need me and to continue delegating tasks that can be done just as effectively by someone else.

Outside of work, I like the idea of making plans with family and friends but also being careful about not overcommitting to social occasions that I don’t absolutely want to be at and to keep a good number of weekends wide open and flexible to allow for relaxation, reading, and time with Mel and Grant.

I last wrote about my personal finance “stack” in the summer of 2017. A lot has changed since then, so I want to make this an annual activity and use it as an opportunity to examine how I’m managing my money. Without going into any absolute figures, I’ll share how I organize my money, what types of investments I’ve made, and the services and tools I use. Money is something that’s still a tough topic to freely discuss with friends and family, but I think there’s a lot to gain by sharing different approaches and methods. If you have any tips or approaches to share, feel free to email me!

Main Sources of Income

My primary source of income comes from Barrel. I receive a deposit every two weeks. We follow a business finance framework called Profit First (check out the book) where owner’s comp is determined as a percentage of the receivables collected during the past two weeks. This number fluctuates depending on the company’s performance and its ability to collect, so I have to make sure I keep a bit of buffer in my checking account for leaner months. I also receive a quarterly profit distribution, which typically goes right into some kind of investment.

My other sources of income are mainly from my investments. I get dividend income from my stock holdings as well as from my real estate investments. In 2018, my total dividends added up to nearly 3-weeks’ worth of salary (if I took an average of my Barrel income), which I used to invest in more opportunities.

My only other major income source was on the sale of a West Philly real estate property that I invested in with friends. It netted a nice 30% return for what was less than a 6-month period to buy, lightly renovated, and flip a house.

Expenses

I went back and looked at all my bank account transactions from 2018, and I was surprised to see that for every $1 I had in expenses, I put $2 to work in investments. I was convinced for a while that I was spending way too much going out and buying stuff, but I felt a lot better after looking at the hard numbers.

My biggest expense for the year was the mortgage plus the maintenance fee on my parents’ co-op in Sunset Park, which, from a quality of life perspective, is one of the best uses of money I’ve made in my life. Having my Mom and Dad live just a 10-minute drive away, especially now that Mel and I have a baby, is incredibly helpful and priceless. Plus, our son will be able to grow up with his grandparents nearby.

My personal credit card statements were fairly predictable month-to-month: dining out, books, gym and streaming subscriptions, and ride sharing. I bought a few articles of clothing and shoes throughout the year as well and also spent a fair amount on wine and liquors, both for myself and as gifts.

I contribute a monthly amount to a joint family account that I share with Mel (roughly 20% of my monthly income). We use it to pay our utility and cable bills, life insurance premiums, home supplies, and groceries. We’ll also use it occasionally to book travel although we usually have to supplement with our personal credit cards. It’s a lean account that typically has a balance closer to zero towards the end of the month after everything’s been paid up.

Investments & Savings

Here’s a breakdown of how I allocated my money in 2018:

• Private equity in startups: 35%
• Real estate: 25%
• Stocks: 23%
• Cash: 16%
• Crypto: 1%

Startups

In 2018, I made 4 investments in startups. Three were early stage but I got to know the founders and thought they were very promising. The fourth one was in a well-known startup that I hope has a successful IPO in 2019. I don’t think I’ll be as aggressive in allocating so much of my personal funds to startups in the future, but it was an interesting experience and a chance to observe and participate in the investing process (I invested with a group of friends for all of these). It became super clear to me that, especially for early-stage startups, so much hinged on pre-existing relationships with the founder and the belief in that founder’s abilities and track record vs. anything substantial or concrete about the venture itself. Hopefully these companies start taking more solid shape and gaining traction.

Real Estate

I love real estate. It’s not glamorous, but it provides a real need (housing) and offers both cash flow and tax advantages. A big, big shoutout to my buddy Welton for being the driver and mover behind almost all real estate deals that I participate in. In 2018, I invested in two more West Philly projects. One was a 5-unit gut renovation project that, by mid-2019, should become an income-generating property. The other was the flip that I mentioned above, which happened at lightening speed and returned all my capital plus a sizable gain in less than half a year.

I also had the opportunity to invest a small amount in a Brooklyn property. It’s actually a building that’s just a couple avenues over from my own apartment, and I pass by it every time I go running at Prospect Park.

Towards the end of 2018, I started to up my recurring monthly investments in Fundrise (disclosure: if you sign up using this link, I get a referral bonus, which basically waives my fees for 90 days), an online real estate investment platform. I had put in $1,000 a couple of years ago just to test it out and noticed that it had already returned 20%+ during that time in quarterly dividends. I took a closer look at the various mix of projects, which span all over the United States, and thought it’d be an easy way to diversify my real estate investments. Fees-wise, Fundrise takes 1% annually, 0.15% of it for “investment advice”, which is basically the use of their online platform, and 0.85% for the actual asset management costs. There’s also a 0-2% “Asset Origination/Acquisition” fee that they levy for putting their portfolios together. For my plan, I’ve selected the Balanced Investing approach, which promises both dividend income and a good amount of property appreciation. My Fundrise account should be growing significantly in 2019 now that I have automatic investments enabled, so I’ll be able to report back on its performance in 2020.

Stocks

We all know how poorly 2018 ended in terms of the public markets. One big shift happened for me in 2018–I stopped picking and buying single stocks and decided to focus solely on index funds. I do have a small recurring amount that goes to a basket of tech and e-commerce stocks on Motif (disclosure: another referral link that gets me a free month on Motif), but I began allocating larger chunks to index funds. I figured that since index funds already reflect winning stocks and rebalance as companies come in and out of the S&P 500 or whatever other formula the portfolio manager is using, there’s no need to handpick “winners” on my own and load up on risk. Plus, I have way too much exposure to a handful of tech stocks right now that I thought it was a good moment to change course. The ironic thing is that a big chunk of these index funds right now are driven by the big tech stocks, namely Apple, Microsoft, and Amazon, but I’m buying into the index funds with every intention of holding for the next few decades, so it’ll be a case of “set it and forget it”.

In terms of the specifics, I been buying two index funds, both with Fidelity. The first is their FZROX Total Market Index Fund, which tracks 2,500+ stocks and is supposed to be broader in terms of exposure to mid and small cap companies in the US. The attractive thing about this index fund was the zero fees. I also bought FXIAX, which is Fidelity’s version of the S&P 500 index fund. It’s got a low 0.015% expense ratio, which is better than Vanguard’s 0.14% expense ratio for their S&P 500 index fund. I’ve been putting away about 25% of my income into these for the past 6 months. If I don’t end up investing as much into startups this year, I’ll probably buy even more.

One more thing I should note – I’ve been using Acorns (disclosure: referral link) for over 2 years now and it’s still taking $5/day from my bank account as well as any “round-ups” from my credit card transactions (e.g. if I paid $2.81 for coffee, Acorns would take $0.19) and investing it into a mix of index funds and ETFs. If you’ve never bought stocks or saved much in the way of investments, I’d highly recommend just putting a few bucks away per day into Acorns–it’s super easy to set up and it’s got a beautiful intuitive interface. I’ve had friends and family get on this and it’s been great to see them get in the habit of saving and investing.

Cash

With rising interest rates on savings accounts, I opened up a banking account with Citizens Access to take advantage of their rates (2.25% as of this writing). I’ve typically held very little in cash, preferring to plow it into stocks or other investments. However, with the market down, I’ve decided not to sell any of my stocks (while hoping they’ll bounce back at some point in the future), and so that’s limited a source of capital that was so handy during a bull market. For example, in 2017, I remember selling some of my stocks to help pay for the down payment on my parents’ co-op. Within a month of having sold stock, the market had continued its frenzied rally and left my portfolio higher than before I had sold any shares, effectively giving me a “free” down payment (of course, nothing is ever free, especially if there are capital gains and tax implications, but it was a nice feeling!). With such rallies a thing of the past in this bearish market, I’ve decided to squirrel away chunks of cash so that I’ll have the flexibility to invest when opportunities present themselves.

Having cash earning 2.25% per year is pretty nice, especially knowing that it’s instantly available when needed. I have a small $500/month recurring deposit on but I’ve been able to contribute bigger chunks on an ad hoc basis.

Crypto

This wasn’t even worth mentioning, especially since 2018 was a year of seeing all my crypto holdings go to negative. The total sum of my allocation for crypto was in January 2018, when prices were just coming off their 2017 high. I left on my recurring purchases on Coinbase for too long and so the purchases got made before I noticed and turned it off. I haven’t sold anything (in fact, I ended up buying a little bit of ETH the other day just because it looked so cheap), but I consider my holdings in crypto to be purely speculative and have no expectations. To me, it’s akin to walking up to a roulette table at a casino and putting a few chips on a number. I like the momentary feeling, but after it lands on another number, I shrug and walk away.

Money Philosophy

Once my son’s social security number comes through, I’ll be setting up a 529 plan for him. That’ll be another type of investment which I’ll gladly contribute to over the next 18 years. With the cost of education continually on the rise, it’ll probably be a good idea to start saving as early as possible. I lucked out in that being from a low-income household made me eligible for various grants, which in turn allowed me to escape with relatively small student loans (about $20k total) that I was able to pay back within 5 years of graduating college.

I know that my investment approach will continue to evolve over time as my risk tolerance changes and as my income level fluctuates. However, I think there are some timeless principles that I’ve learned over the years that have become clearer and clearer to me as I’ve given the topic of money more thought. Here they are:

Live Below My Means

I’m not a penny-pincher by any means and I don’t consider myself a frugal shopper. I drink that $6 iced matcha if I’m in the mood. I’m a satisficer in that I’ll immediately buy the first thing that fulfills my base criteria whenever I’m shopping, prices be damned. However, I’ve tried my best to adhere to a lifestyle where it doesn’t really cost all that much. A nice meal out once a week perhaps, a few book purchases a month, a nice bottle of wine or whiskey every now and then, and a handful of annual vacations–my pleasures are fairly simple and are the same things I was doing when I made a third of what I make now. Lifestyle creep ain’t got nothing on me. Living below my means is a superpower in that it allows for greater savings and flexibility in the long run. If I need to make a bigger purchase later on, perhaps a home renovation or a really elaborate family vacation, I’ll be in a much better place to afford it and minimize (or downright avoid) any need for debt.

Know Where the Money Is Going

I’m not in a position to give any advice on asset allocation and how best to diversify, but what I’ve found incredibly helpful is to understand how money flows in and out of my various accounts and to have a snapshot of my different assets. Mint has been a great tool for this. I’m not the type to review my credit card statements every month, but I do like going into my various brokerage accounts a few times a month to see how my holdings are performing and to see how many dividends have come in. I also keep a spreadsheet to account for any assets that are not easily tracked through Mint. I’ve made it a habit to do these periodic checks and it’s been a great way to revisit some of my investment decisions from time to time and to get a sense of what’s working and not working. Occasionally, I’ll notice that my credit card bill is too high and cut back the next few months or I’ll spot a charge on a subscription I no longer need and cancel it (I use Trim to get alerts on charges, which is nice).

It sounds so simple and obvious, but for most of my twenties, I barely paid attention to my finances and lived paycheck to paycheck, only looking to see if I had enough to pay off three things: rent, my credit card bill, and my student loan payment. These days, I’m more attuned to the flow of money across my dozen or so banking and investment accounts, and treat it much like I treat my own body–feed it well, don’t do things I’ll regret, and put it to work.

Keep Learning

Personal finance and investing, like other disciplines, are deep subjects with incredible degrees of complexity and nuance. The more I uncover from reading about these topics, the more I learn that there are things I know very little about. I’m eager to continue my education, especially when it comes to being a more knowledgeable investor. Whether it’s the world of angel or venture capital investing or snapping up and assembling a group of cash-generating small businesses, there are endless possibilities. The most important thing is to stay curious, continue absorbing new information, and to admit that I know very little.

That’s it, it’s just those three very simple principles that I keep in mind when it comes to money. I always tell myself that money is not the same thing as success, happiness, and wealth. Money is a means, a tool, that can enable some of the things that lead to success, happiness, and wealth, but it can also be a source of discontent, jealousy, and inadequacy. This is why it’s more important than ever to embrace the on-going education and continue learning how to handle money as a tool.

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 Services Mentioned in this Post and Others I Use

• E*Trade – this is my primary brokerage account for single stocks, which I’ve stopped purchasing; I’ve decided to mainly leave this account alone except to move dividends out every few months so I can reinvest those elsewhere
• Fundrise – real estate investment platform; I have a recurring monthly investment here
• Motif – you can create your own ETF / basket of stocks; I have a recurring monthly investment in three baskets of stocks mainly focused on tech and Chinese tech/e-comm; Motif lets you buy partial shares through your own basket of stocks, so you can create a basket with say Amazon, Netflix, Microsoft, and Google and buy $100 worth each month, accruing partial shares in each
• Fidelity – this is my primary retirement account but I also opened up an investment account to buy index funds (FZROX and FXIAX)
• Acorns – where I put in $5/day plus some change that goes into an investment portfolio of low-cost index funds; highly recommended for first-time investors who’re unsure about committing large amounts to stocks
• Citizens Access – I park my cash in here in order to take advantage of their above-market savings interest rate (2.25% as of this writing)
• Coinbase – what I used to buy cryptocurrencies, mainly Bitcoin and Ethereum
• Trim – nifty tool for getting SMS alerts on charges; it also helps you save on various bills but I haven’t utilized that part at all

2018 was a good year for experimentation. I tried out a lot of different approaches to cultivating or switching up my habits . Some ended up sticking and many were abandoned. I’m grateful that I’ve had the luxury of time, energy, and resources to continually mold my daily routines freely. I know that this won’t always be the case, especially when new responsibilities (e.g. parenthood) emerge, but I hope that the past few years of consciously thinking about habits and designing a life of interlocking habits allows me to leverage the power of habits in new life situations.

2018 New Habits

Working Out 3+ Times a Week

I mentioned last year that I joined a Crunch gym that opened up literally across the street from our apartment. I can see if someone is on the squat rack and get myself there in less than 2 min, it’s that close. Earlier this year, I had become pretty good about lifting at least twice a week, which was initially my goal. However, I wanted to up the intensity and rigor of my workouts, so I decided to sign up for Athlean-X, a fitness training program put on by sports physical therapist/strength trainer and popular YouTube personality Jeff Cavaliere.

I had been watching Cavaliere’s Athlean-X videos for more than a year on YouTube. He has some really good content that helps viewers understand the mechanics of the body and the exercises that develop the body both functionally and aesthetically. I decided to pay the $99 for the Athlean-X intro program, which was a content-rich 90-day course with 5 workouts per week.

On average, I was able to do at least 3 exercises per week and on some weeks I was able to keep up with all five workouts. It took me about 120 days to finish the entire program. The workouts were intense and sometimes very difficult, but by sticking with the program, even on my slower timetable, I was able to see progress.

One way to objectively get a sense of my progress was the Athlean-X 400 Challenge, which would happen every few weeks to diagnose my strength and conditioning. The 400 Challenge consists of 100 push-ups, 100 body-weight squats, 100 inverted rows, and 100 sit-ups, split however I wanted and timed. My approach was to do 10 at a time for 10 sets, cycling through all four exercises on each set. My initial effort at the start of the program took me 7 minutes and 35 seconds. By the end, I was able to get it done in 6 minutes and 53 seconds and I was really pleased to see that by the 9th and 10th sets, the inverted rows that gave me so much trouble were not as hard as they had been some months earlier.

I’ve really enjoyed working my way through the Athlean-X program. After the initial program concluded, I bought the next 90-day course (“Athlean Extreme”) and just wrapped up my first month. I’ve developed a ritual of changing into my gym clothes, watching the day’s workout instruction video, writing the exercises on a Post-It, and then jogging across the street to the gym. I start with 5 minutes of jump rope to warm up and then dive right into the exercises. The nice thing is that most exercises take no more than 30 minutes. With stretching at the end, I’m usually back home within 40-45 minutes, making it easy to get a workout in before work or right before dinnertime.

I’ve come to really appreciate the type of functional and strength training that’s embodied in a program like Athlean-X. It reminds me very much of my days in high school when I played football and ran track. I had practice five times a week and one day for games/meets. Every day, I experienced a battery of functional movement exercises (e.g. jumping, backpedalling, skipping, shuffling, hurdling, etc.)  as well as strength training in the weight room. I remember the confidence of feeling “in shape” and being fit back then. It wasn’t just the types of exercises but also the fact that it happened almost daily. This year, I’ve found myself at the gym more times than I’ve ever been since I graduated high school (nearly two decades ago!). The result is a similar feeling of confidence as my body feels strong, flexible, and durable.

Intermittent Fasting

This is a habit I picked up in the later part of 2018, but it’s one that’s made a big difference. Intermittent fasting is not a diet but rather a pattern of eating. Whenever you eat, your insulin level spikes up and the body has to spend its efforts breaking down the food you’ve eaten. By fasting for a prolonged period of time, the body goes into a state where its able to start burning stored fat. Here’s a pretty good article about intermittent fasting if you’d like more details.

I listened to a few podcasts that mentioned intermittent fasting and decided to give it a go. The toughest part was giving up my breakfast because I always enjoyed my blueberries and cereal in the morning, but after a few days, I was able to quickly acclimate. My fasting schedule goes something like this: I don’t eat anything until 3PM every day and my feeding period is between 3PM and 10PM. After 10PM, I’ll not eat anything again until 3PM the next day, a 17-hour period of non-eating.

At work, intermittent fasting has been really easy. I’m usually busy in meetings or calls most of the day, so rather than do the usual stuff-my-face-for-10-minutes at lunch around 12PM, I abstain from food until 3PM, when I take out some nuts and berries that I’ll snack on along with maybe an English muffing with peanut butter. It’s been a bit tougher on weekends, when I sometimes count down the hours until 3PM and usually have something lined up to eat when the minute hand strikes the hour.

While it has been a bit of an adjustment, what keeps me going are the benefits: I’ve felt really good both from an energy level and from a digestive level. I’ve also lost a good amount of fat from around my midsection, which no amount of exercise seemed to be helping. Because it’s not a diet that restricts or changes what I eat, I think intermittent fasting is a habit that’ll stay fairly sticky for me. I can foresee a time when my feeding period changes (and even compresses), perhaps from 1PM to 7PM vs. 3PM to 10PM, but I’m fairly confident I’ll continue to employee this eating pattern.

Monthly Dinner with My Parents

Last year, I put a recurring event on my calendar to have dinner with my parents on the last Thursday of every month. This was fairly easy to keep, and it’s been a pleasure to see my Mom and Dad in a relaxed setting with good food. With a grandson on the way, I know I’ll be seeing them a lot more. Proximity is such a luxury, especially when it comes to family, and I’m forever grateful that they’re just a 10-minute drive away.

Black & White iPhone Screen

Last January, I came across an NY Times article about turning your phone grayscale in order to make it less stimulating. Since then, I’ve kept my phone on grayscale mode. I’ve switched back to color perhaps 3 times total and only for a few minutes in order to show people some photos in color. Other than that, I gladly welcomed any method that would make my phone less attractive to use. With social media apps already gone, my phone usage had been mostly limited to the Kindle app, Podcast app, NY Times app, and YouTube. And on YouTube, I’ve mainly only watched videos on sports and exercise. It’s not appealing to watch trailers or fun clips in black and white.

While I upgraded to the iPhone Max XS with its huge screen and amazing color, I don’t feel bad keeping it in grayscale. I’m still able to take full color photos that I’ll sometimes look at later on Google Photos using my laptop. I know that I’m still addicted to my phone in various ways, checking every now and then for email, text messages, and new ESPN.com articles, but I’ll continue to experiment with ways to reduce mindless screentime.

What Happened to Habits I Picked Up in 2017?

Here’s how my new habits from 2017 fared in 2018:

Journal Writing

I’ve kept up the practice of writing in my journal almost every weekday. I started a fresh new notebook in September, so that now gives me 3 volumes of journals. It’s always a treat to look back and read about some of the things that were on my mind even just a few months ago.

Daily Mobility Exercises

Because I haven’t gone running as much this year and also because there is a mobility and stretching component to my gym sessions, I’ve largely skipped my daily mobility routine. However, on days I don’t work out, I will typically do the couch stretch and some mobility exercises with the lacrosse ball at home.

Tea Instead of Coffee

I’ve kept going with this, drinking only black and green teas. My only cheat is on Sundays when I’ll have coffee to help me focus for the 3-4 hours of work I typically do to plan for the week. If you’ve ever watched the movie Limitless starring Bradley Cooper, coffee serves like an NZT-48 drug that gets me super dialed in to the work. It’s a nice superpower and it only works because I’ve limited my caffeine intake quite a bit.

Weekly Newsletter and Writing Blog Posts

I was less consistent with sending newsletters and writing blog posts this year. I averaged a little less than 2 newsletters and blog posts per month, which isn’t bad but not nearly as productive as I would’ve liked. I don’t know if I’ll continue doing the same Consumed / Created format in 2019, but I hope to continue getting myself to reflect on books I’ve read.

Habits for 2019

My life will be drastically different in 2019 as my wife Melanie and I welcome our first child. I know that I’ll have to adjust my routines and incorporate new activities. I’m going into this process without any set expectations. I want to get the lay of the land and then experiment with various frameworks that will help me feel like I’ve somewhat got a handle on things. Until then, I’ll leave things open-ended for 2019.

I hope to continue with my workouts and my intermittent fasting. I’ll also try to devote more time to reading and writing while watching less TV, always never-ending struggle. And most of all, I hope to spend a good amount of time with family and friends, always conscious that our time together is finite and quickly fleeting. Happy New Year!

See previous:

• 2015: Habits That Stuck
• 2016: Habits That Stuck
• 2017: Habits That Stuck

 

I’ve thought and written a lot about habits over the past few years. However, after reading Atomic Habits by James Clear, I realized that I was still lacking awareness when it came to understanding how habits formed and stuck around. While many of the ideas, examples, and concepts in the book were very familiar to me (e.g. cognitive biases, small wins / reinforcing feedback loops, tracking, etc.), it was really nice to see everything come together in an organized manner in an easy-to-digest framework.

Book Overview

These two highlights from the opening chapter of Atomic Habits paints the picture on how Clear positions the framework:

Habits are the compound interest of self-improvement. The same way that money multiplies through compound interest, the effects of your habits multiply as you repeat them. They seem to make little difference on any given day and yet the impact they deliver over the months and years can be enormous. It is only when looking back two, five, or perhaps ten years later that the value of good habits and the cost of bad ones becomes strikingly apparent.

Habits are like the atoms of our lives. Each one is a fundamental unit that contributes to your overall improvement. At first, these tiny routines seem insignificant, but soon they build on each other and fuel bigger wins that multiply to a degree that far outweighs the cost of their initial investment. They are both small and mighty. This is the meaning of the phrase atomic habits—a regular practice or routine that is not only small and easy to do, but also the source of incredible power; a component of the system of compound growth.

Clear is a big proponent of systems and believes that it is a much more effective way to achieve the results you want versus focusing on setting goals (“winners and losers have the same goals”). The framework he provides for building a “system of compound growth” follows four laws regarding habits that make up the bulk of the book. The laws are:

• The 1st Law: Make It Obvious
  • e.g. Becoming aware of your current habits; designing your environment to make good habits obvious and visible.
• The 2nd Law: Make It Attractive
  • e.g. Bundling habits so that you’re rewarded with a “temptation” habit whenever you do a good habit.
• The 3rd Law: Make It Easy
  • e.g. Downscaling habits so they can be done in two minutes or less, increasing the likelihood they’ll be done again.
• The 4th Law: Make It Satisfying
  • e.g. Create a habit tracker a start a streak that you won’t want to break.

Clear goes into each of the laws and how they can be used to not only create good habits but also to break bad ones. As I was reading the book, I couldn’t help but think of all the bad habits I still adhered to no matter how aware I may have been, and likewise, I thought about all the good habits that failed to stick because I hadn’t created the right environment or framed it in a way that would let it succeed. I also thought hard about all the potential applications of the lessons in this book on the work I do at Barrel, not only from a personal performance perspective but also as an organization and how easily we as a team can fall into bad habits or find it hard to embrace good ones.

The following are some of my favorite highlights and some thoughts on how they’ve either challenged my thinking or spurred me into action.

Fighting Negativity

Negative thoughts compound. The more you think of yourself as worthless, stupid, or ugly, the more you condition yourself to interpret life that way. You get trapped in a thought loop. The same is true for how you think about others. Once you fall into the habit of seeing people as angry, unjust, or selfish, you see those kind of people everywhere.

Every now and then, I catch myself falling into a spiral of negativity. It may stem from a string of unfavorable results at work along with a feeling of fatigue or pressure. This is the classic “glass half empty” perspective where it’s so easy to be critical of myself and others and view everything and everyone as unworthy and incompetent. This is where a system of good habits–sleep, exercise, nutrition, time for gratitude, etc.–can be a deterrent against negativity. I’ve found that a combination of good sleep (6+ hours after being well-digested, no caffeine since morning, and minimal to no alcohol) and 5-10 minutes writing in my journal sets me in a fairly positive mood to start the day.

Behavior Change Starts with Identity

Behavior that is incongruent with the self will not last. You may want more money, but if your identity is someone who consumes rather than creates, then you’ll continue to be pulled toward spending rather than earning. You may want better health, but if you continue to prioritize comfort over accomplishment, you’ll be drawn to relaxing rather than training. It’s hard to change your habits if you never change the underlying beliefs that led to your past behavior. You have a new goal and a new plan, but you haven’t changed who you are.

True behavior change is identity change. You might start a habit because of motivation, but the only reason you’ll stick with one is that it becomes part of your identity.

Many people walk through life in a cognitive slumber, blindly following the norms attached to their identity.

I’ve thought long and hard about this section. It’s fascinating how identity is so tightly tied to behavior. In business, I think about the identity we’ve always embraced–that of scrappy, hustling underdogs who’ll do what it takes to win new business and keep the company alive. This has served us well in many respects, but when it comes to exploring new approaches to business, like say, positioning ourselves as industry leaders or as a more premium, higher-priced option, I sometimes see my defenses going up automatically, overly skeptical of any new approach or making a case for the status quo because it’s what has worked for us before.

I like to think of myself as someone who’s open to trying new things, but when I reflect on certain conversations I’ve had, it’s really surprising how unaware I am of the defense mechanisms that kick in whenever someone suggests that I change my behavior, something that my subconscious must perceive as incongruent or even a threat to my identity.

Designing the Environment for Success

Most people live in a world others have created for them. But you can alter the spaces where you live and work to increase your exposure to positive cues and reduce your exposure to negative ones. Environment design allows you to take back control and become the architect of your life. Be the designer of your world and not merely the consumer of it.

The people with the best self-control are typically the ones who need to use it the least. It’s easier to practice self-restraint when you don’t have to use it very often. So, yes, perseverance, grit, and willpower are essential to success, but the way to improve these qualities is not by wishing you were a more disciplined person, but by creating a more disciplined environment.

I’ve taken this lesson to heart and began noticing how powerful it could be to make even the smallest changes to my environment. One example is to just hide something so that it doesn’t come to mind. I noticed one week that I kept consuming Irish whiskey after work to wind down, more so than the usual number of times in a week. I realized it was because my liquor cabinet was full and as a result, I left the bottle on the kitchen counter, making it plainly visible and serving as a cue whenever it was time for me to relax after a long day. Once I became aware, I threw out some stuff I would never use again and made room in the liquor cabinet. My frequency of consumption immediately went down.

I find that the same is the case for things like sweets or unnecessary snacks. Having things out of sight is often the best way to break a bad habit. Likewise, making something very visible and attractive can help. For example, I’ve been wanting to read more fiction every night. I found that the ideal place to read is on one side of my couch under a lamp, where it’s comfortable and bright. It’s also where I can sit while our dog Sidney rests on my lap, a nice touch especially during colder months. I began to put my book on the coffee table right in front of that spot, serving as a visual reminder of what awaits when I take time out each evening to read for leisure.

The Two-Minute Rule

Even when you know you should start small, it’s easy to start too big. When you dream about making a change, excitement inevitably takes over and you end up trying to do too much too soon. The most effective way I know to counteract this tendency is to use the Two-Minute Rule, which states, ‘When you start a new habit, it should take less than two minutes to do.’

Nearly any larger life goal can be transformed into a two-minute behavior. I want to live a healthy and long life > I need to stay in shape > I need to exercise > I need to change into my workout clothes. I want to have a happy marriage > I need to be a good partner > I should do something each day to make my partner’s life easier > I should meal plan for next week.

I found this approach of breaking down habits into a two-minute activity very useful. It’s one way I’ve been able to do my Couch Stretches every single day. I found myself having difficulty adhering to a lengthier 20-minute stretching routine in the mornings, so I just promised myself to do the Couch Stretch, which I time for 2 minutes on each leg. While it ends up being a 4-minute activity, the principle still applies–it’s short enough that I can easily commit to the 4 minutes on a daily basis without much trouble and the excuses that might come with a 20-minute activity are hard to justify when it takes only 4 minutes.

I know it’s probably not exactly what Clear had in mind with his two-minute rule, but one takeaway for me was to actually leverage a minimum threshold of time as a way to build a new habit. So rather than breaking an activity down until it takes less than 2 minutes to do, I’ve taken two habits I want to build–writing and reading–and assigned them a mandatory daily serving of 10 and 15 minutes each, respectively. I use a timer to count up for each of these activities. Oftentimes, I easily surpass and end up writing or reading for 20 or 40 minutes. Other times, especially when I’m tired or distracted, I’m relieved when I get to the minimum thresholds. But these are small enough numbers that I haven’t had much trouble completing them, and if I know I’m going to be out late or busy with social activities, I’ll plan ahead and try to get these things in earlier in the day.

Consistency & Being a Pro

Professionals stick to the schedule; amateurs let life get in the way. Professionals know what is important to them and work toward it with purpose; amateurs get pulled off course by the urgencies of life.

I’ve noticed that as I’ve improved at managing my schedule and habits both at home and at work, a predictable consistency has set into my weeks. There may be a few variables and wild cards from week to week, but on the whole, they don’t affect the overall cadence and rhythm of my life. I find a way to get my to do’s done, I find time to work out, I find time to get enough sleep, and I find time to hang out and spend time with family and friends. And these things all add up to better performance at work and a better feeling about life in general.

While I can’t make a blanket statement about everyone at our company, I’ve noticed, in my capacity as employer, that those who proactively manage their schedules both at home and at work (understanding how to prioritize what’s important and putting in intense efforts with minimal distraction) are more likely to handle stressors like last-minute deadlines or family emergencies with calm and finesse. They also exhibit remarkable consistency and a focus that’s very apparent. I’ve also observed those who lack this quality and how the slightest of variability in conditions can precipitate in anxiety, a sense of being overwhelmed, and heroic one-time efforts that inevitably lead to burnout. It’s always easier to find success in a team that’s full of professionals. This is why talent or natural gifts get you only so far–it lacks the power of compounding that consistency in good habits can unlock.

In writing this post, I wanted to make a reminder for myself about the continually evolving nature of how I’ve viewed talent and hiring, and how it’s possible that my views will continue to change in the future.

When we first started Barrel, Sei-Wook and I were essentially a couple of freelancers who said yes to enough work that we needed to hire people to help us. We used Craigslist and that was the start of our journey as employers (not counting brief stints by close friends as part-time help). We lucked out as some of our hires turned out to be very talented and instrumental in our growth. In fact, one of our Craigslist pickups is a Partner at Barrel today and one of our best leaders.

The hurdle for hiring back then was fairly low – we were grateful that people with skills would want to work for us, even though we couldn’t afford to pay much. We didn’t screen much for things like professionalism, communication skills, or teamwork. In fact, we lacked such attributes ourselves as we were fairly inexperienced. We were, after all, just hitting our mid-twenties and high on being our own bosses.

Over time, as we began to professionalize and put in more processes, we put in a bit more structure. We interviewed for multiple rounds and did reference checks. Some hires have worked out really well. Others have not. I’ve learned to accept that nobody, even the ones that are amazing as candidates, are a sure bet. Until you’ve worked closely and observed how they perform in a variety of situations, it’s tough to truly gauge how good they’ll be.

However, one thing is certain–when we do hit jackpot on a really great employee, it makes a world of a difference. Nothing improves team morale and business momentum than really talented people doing excellent work. A great hire can instantly bring new energy to the team and elevate the output of the entire company. It’s truly a beautiful thing to see.

We’ve been working hard to mitigate the risk in the hiring bets we make. We’ve introduced a range of skills tests to accompany our interviews. Some of these tests are designed to help us gauge someone’s level of attention to detail, their ability to think on their feet, and their ability to present. I used to think these were too basic, but then I’m reminded of tests that athletes have to do for scouts at pre-draft workouts or for anyone trying out for a spot on the practice squad–they’re often subjected to skills tests that test their fundamentals as well as intangibles like in-game awareness and ability to synthesize information. A while ago, I had written about the fundamentals of knowledge workers, but it took our company a good year before we codified many of these skills into measurable tests in our hiring process.

I don’t think the testing of fundamentals satisfies everything. There’s still a great deal of work to be done to mitigate hiring risk. And it’s also important to not think of hiring solely from a risk perspective–then it’s too much of a focus on downside and not enough on potential. This is where outbound recruitment, scouting, and junior talent becomes important to an organization. Rather than solely relying on inbound applications to hopefully find our next gem of a candidate, it’s critical that we build infrastructure to proactively recruit and find talent that will represent upgrades for our team.

This could come in the form of working with an outside recruiter for specific roles or building our own in-house recruiting practice to identify and go after talent at other firms. I used to be allergic to the idea of paying recruiters, but knowing the impact that a great hire can make to the culture as well as the bottom line, I think recruitment is a very worthwhile investment. It’s no different than building up a very strong new business pipeline–when you have a strong talent pipeline, the chances of landing the next difference-maker will go up. This practice extends not only to proactively going after talented people looking to move laterally to our company, but also in building up a very strong “farm league” of junior talent.

I’m inspired by the Core Four, the legendary Yankees players (Jeter, Pettitte, Posada, and Rivera) that were signed as amateurs by the Yankees in the early 90s, developed in their minor league system, and eventually became the foundation of the dynasty that yielded five World Series Championships for the franchise. I love the idea of having a robust system of young talent–interns and juniors–who join us right out of school or not too far removed from it, and eventually emerge as superstars. The challenge for us has been the perceived overhead and required investment in overseeing such talent development. Oftentimes, we convince ourselves that it’s easier to hire someone “more experienced” and forgo the work required in nurturing talent. However, I think this line of thinking comes from being reactive to resourcing challenges and focusing too much on solving a short-term problem. If we’re to develop a truly valuable system, it means investing in interns and juniors and bringing them up in a way that allows them to make mistakes and learn. It also means being open to having a good number of such employees at once, which then means freeing up the time of seniors and managers to ensure they can provide guidance.

None of this is easy or without some trade-offs. If I was to succinctly summarize my evolving stance on talent and hiring that I’ve sketched out above, it’d be this: invest in reaching more talent; push through a greater volume of talent through our qualification process; invest in building a hiring and talent development framework that will ensure that the strongest and most impactful employees are selected and nurtured. Let’s see how this holds in the coming months and years.

 

At Barrel, a segment of our clients (and prospective clients who contact us) are growing e-commerce businesses doing anywhere between $500k to $5 million in sales. They are typically run by small teams (usually less than 10 people, often just 2-5 people) and have either been bootstrapped (funded with the founder’s savings plus the profits of the business) or with a small seed investment from friends and family. Drawing from my observations and experience reviewing dozens of such e-commerce businesses over the years, I thought it’d be a useful exercise to share some the most common opportunities we’ve come across and identified for these companies.

Here’s a quick overview in bulleted list form:

• Google Analytics Setup & Campaign Tracking
• Email Automations
• Product Photography
• Image Size / Website Speed
• Product Organization
• Product Recommendations

Google Analytics Setup & Campaign Tracking

One of the most common issues I’ve seen over and over again is the overall neglect of the company’s Google Analytics account. Google Analytics helps you track traffic, user behavior, and e-commerce performance. It’s a great way to gauge the performance of the website and to see what kinds of marketing activities and traffic sources generate the most revenues. However, if not set up properly, data can get muddied and the analytics will become less useful.

A very specific common issue is the lack of organization when it comes to campaign tracking. Campaign tracking is achieved through UTM parameters. UTMs, or Urchin Tracking Module parameters, are “five variants of URL parameters used by marketers to track the effectiveness of online marketing campaigns across traffic sources and publishing media” (source: Wikipedia). Here’s an example in which I’m utilizing three of the parameters:

• https://www.peterkang.com/?utm_source=newsletter&utm_medium=email&utm_campaign=welcome-email

As you can see, the source is “newsletter”, the medium is “email”, and the campaign is “welcome-email”, which signifies that I am tracking the traffic coming from my welcome email newsletter that automatically gets sent when someone subscribes to my list.

What I often see are various campaigns labeled willy-nilly, spawning different names for the same marketing activities. For example, I’ve seen traffic coming from paid Facebook ad campaigns as “facebook / cpm”, “paidsocial / fb”, “fb / paid”, etc. for the source and medium parameters. This creates issues on the Google Analytics side as it splits up the campaign traffic into several different items on the list. This then has downstream impact as it requires tinkering with Google’s Default Channel Grouping setup extensively in order to properly categorize different campaigns into the right channel types. One way to quickly see if your campaign tracking is a mess is to view Acquisition >> All Traffic >> Channels. If you happen to have quite a bit of traffic under (Other), then you’ll know right away that marketing activities are not being categorized into the proper channels.

One way to prevent this is to keep an organized system for producing UTM links. We’ve introduced many of our clients to a spreadsheet as a way to centralize and keep track of their UTM links. Here’s a Google Sheets template for anyone who needs to shore up their campaign tracking.

In addition to the campaign tracking issues, here are some common Google Analytics account issues we often see:

• No Goals set up for newsletter sign-ups or e-commerce transactions. Goals are helpful for visualizing the funnel and seeing where users drop off. It’s fairly easy to set up but just requires testing to make sure it’s working properly.
• Site search tracking not turned on.  For sites that carry many products and have a search function that’s widely used by customers, it’s essential that you have site search tracking turned on so you can see analytics on search terms and usage.
• Lack of annotations. This is less of a setup issue and more of an on-going practice. We encourage our clients to always put in annotations whenever significant PR and marketing events occur. For example, if the company is mentioned in a prominent magazine or on TV, it’s important to note it in the annotations box because a lot of traffic will actually be classified under direct and organic search and the annotation will be one way to remember that it accounted for the bump in visitors that day.

There are a number of other setup details that we see missing, like stripping URLs of query parameters to avoid splintered pageview stats, setting up proper audience definitions, and getting Google Tag Manager set up properly so events like button clicks or scroll depth can be measured. These all represent some quick-win opportunities for a company that’s looking to make better use of analytics to make informed decisions about marketing and website performance.

Email Automations

For most e-commerce businesses, email is still the highest performing marketing channel. This is not surprising. The email list represents a group of people who’ve self-selected to receive marketing messages from the company. They are the ones most likely to buy or buy again. Understanding this, an obvious opportunity is to make sure that these email list subscribers are hit with relevant emails at the right times. Email automation is a feature that’s available on almost all email service providers (ESP). Two of the most common ESPs we use are MailChimp and Klaviyo. They have fairly robust email automation tools.

At its core, email automation is about sending timed emails to a specific audience based on pre-set triggers.  There are countless varieties you can put together and sophisticated e-commerce businesses have incredibly complex automations. For many growing e-commerce businesses, I often see even the most basic automations missing. When we implement these, our clients often see thousands of dollars easily convert in the course of a few months. The advantage of email automations is that once they’re set up, they run on their own.

Here are a few of the most common ones:

• Welcome flow for new email list subscribers. When someone signs up for the list, it’s an opportunity to send one or a series of emails that introduces the brand, the products, and the story behind them. Incentivizing a new email subscriber with a promo code or some kind of incentive (e.g. free shipping, free sample) can be an effective way to convert someone into a first-time customer.
• First time purchase. For someone who’s converted as a paying customer for the first time, it’s an opportunity to thank them and engage them with content relevant to the product or something that makes them smile. This automation can also include a follow-up some weeks later asking the customer to leave a review of the product.
• Replenishment reminder. If the product is one that runs out or naturally wears with use (e.g. a skincare product, apparel, beverage, etc.), an automation that sends a reminder email at the optimal time can bring a customer back for a repeat purchase. Even for businesses that offer subscriptions, a replenishment email for non-subscription customers can result in repeat purchases.
• Winback. An automation that sends a promo email to customers who have not engaged with the company in several months is one way to win them back. The timing depends on how you classify a dormant customer. For some products, it could be as short as 60 days and for others it can be 6 months.
• Birthday. By collecting a list subscriber’s birthdate, you can set up an automation to send a special discount code to that person on their birthday. It’s a simple yet often effective way to generate sales throughout the year. As the list gets larger, this automation becomes more and more useful.

Product Photography

For many e-commerce businesses, displaying the product in an attractive can mean the difference between mediocre sales and great sales. Of course, there are other factors like the quality and look of the packaging or the form factor of the product itself, all decisions that are made before the product makes its way online. However, there are various opportunities to improve the presentation of the product on the website through strong photography.

These are some common recommendations we’ve made to clients when reviewing their product photography. Not all are going to be relevant for every type of product.

• High-resolution and crisp quality on zoom. Every now and then, we still see product photography that’s low-res and fuzzy and looks awful on zoom, making it hard for customers to make out certain details.
• Showing multiple angles of the product on a clean background. Another way to accomplish this is by using 360-degree capture and embedding a draggable view onto the page, but this can be overkill for many products. Depending on the product, showing a few different angles can give the customer more confidence in making the purchase.
• Showing the product in action. For products that are better understood in context of their environment (e.g. furniture to show sense of scale or how it looks in a particular room) or through use cases (e.g. a kitchen appliance that can perform multiple functions), a photo of the product in action can help the customer visualize owning it. In some cases, showing these situations in video format can be quite effective as well. These images are useful on product pages as well as across the website on various landing pages like home and product listing pages.
• Showing everything that you’ll get with the purchase. For products that come with several components (e.g. an electronic device with a charger and other accessories), having a photo of all the pieces that come in the package ensures that the customer is clear about what’s included and not included. In some cases, this photo can reduce unnecessary customer service inquiries.

Investing in product photography is seldom a mistake. In fact, having a great deal of product photography can be a valuable asset as it gives you additional opportunities to use them in social media posts and various paid marketing campaigns.

Image Size / Website Speed

This is a simple one we can spot typically spot by running the website through a tool like Webpagetest.org. Oftentimes, we see images that have not been properly compressed or saved at a reasonable size, and so rather than loading a 150kb JPG, a 3MB PNG might be in place, forcing longer load times and slowing down the website. Sizing down images and using a compression tool like TinyPNG across the entire website can improve website speed quite a bit.

Product Organization

Product organization is more of an issue for businesses with large product catalogs. For example, apparel or beauty companies that have more than 100 or even 1,000 products will need to be strategic about the taxonomy of the products, ensuring that the classification of different product types is intuitive for users browsing on the website.  Here are a few common issues that we come across which can be addressed by revisiting how products are organized into different categories and attributes:

• Categories are too general and can go deeper. The original categories are not specific enough and, over time, have too many products that may require users to browse irrelevant products. An example is if an apparel brand has a category called Shirts and has a plethora of t-shirts, button-down shirts, and polo shirts. It would benefit the user if the website had one more layer of categories.
• Categories/attributes are too specific and fragment product lists unnecessarily. On the flip side, the categories are too specific without a unifying top-level category, fragmenting the product browsing experience and frustrating the user who just wants to get a quick view of all the related products. This is also an issue when it comes to attributes and there is a Product Listing Page that has too many options. For example, on a site selling jackets, rather than having a list of the most popular colors, there are two or three dozen color combinations (e.g. red/grey, red/dark grey, red/green, etc.) with 1 or 2 results each. Unless customers are known to be very specific about certain color combinations, this can work against making it easy for them to find what they need.
• Website needs product organization hygiene work. The product catalog has experienced an overhaul but the website does not quite reflect this. For example, a beauty brand may have phased out a certain collection of products (e.g. products that help treat acne) but the navigation still has a link to an empty collection page. We often find that websites can go many months without a general clean-up of the navigation, leading users to dead ends.

Product Recommendations

The ability to intelligently recommend products while a user browses through a website is something that doesn’t get taken advantage of enough by most e-commerce websites. This is an area where we often have a great deal of discussions with clients and where lots of opportunities to increase both conversion rates and average order values can come about. Here are some common opportunities:

• Bestsellers. This sounds like a no-brainer, especially for sites with larger product catalogs, but we often come across websites that do not take advantage of the draw that a listing of the bestselling products can have on users. Of course, not all brands may find a bestseller recommendation appropriate, especially those with a limited number of products or those that may not find a bestseller listing compatible with the brand (e.g. ultra luxury brands that would rather not put their iconic bestseller under a “Bestseller” listing).
• Pairs well with / Works well with. For any brands selling complementary products, we often see opportunities to push the recommendation in a number of ways. This can be done through a section on the Product Detail Page, a pop-up when one of the products is added to cart asking if the user would like to also add the complementary product, or during the cart and checkout process. Done well and in a manner that adds value for the customer (rather than obnoxiously trying to get them to buy something they don’t need), this can be a powerful type of recommendation.
• Also purchased with / You may also like. This is similar to the pairs well with / works well with recommendation but the products recommended here may not necessarily be complementary products. Using data from past customer purchases or using a personalization engine (there are dozens of companies claiming artificial intelligence / machine learning capabilities in recommending super relevant products–not all are created equal, so you’ll have to do your due diligence), the website can display products that may appeal to someone who has been looking exclusively at a certain category. For example, think of a parent who’s only looked at high-end strollers on a baby product site getting recommendations for other high-end baby strollers and high-end accessories for the stroller.

Just Scratching the Surface

The common opportunities presented above are often the “low hanging fruit” that we can quickly act on to see some results. The harder work comes in the form of diving deeper in the analytics, drawing out insights, and designing tests we can run to see whether or not we can gain improvements. This is often not the glamorous work of fresh redesigns but incremental improvements like shaving off a second from mobile load times through code refactoring, testing out the copy on certain call to action buttons across different pages, or making sure we’re setting up proper canonical URLs for categories and collections that go by multiple names but carry the same products.

When it comes to running an e-commerce business, a great deal of the success we’ve observed in our clients at Barrel comes from the relentless work of rolling out continual improvements and the ability for brands to connect meaningfully with customers. These two types of activities go hand in hand and are often intertwined. For example, a brand that communicates often and effectively with fans through owned social channels will benefit greatly by having effective landing pages that give engaged fans an easy way to purchase or to sign up to get emails. There may be spikes every now and then with new product launches or a chance mention by a big-time influencer, but it’s often the sustained effort and dedication to the process of learning, planning, and improving that accumulates into results in the long run.

Most e-commerce businesses are a slow grind that takes patience and grit, and as more and more companies come into existence trying to make their mark online, I know many will fizzle out and fade away. For those that are willing to tough it out, our team at Barrel is eager to join you for the ride.

I recently signed up for an online fitness program called Athlean-X. It’s a 3-month plan that requires 5 days of workouts with 2 days of rest and recovery. I haven’t been able to keep up day-for-day with the plan, especially as I like to fit in basketball and running on some of the days, but I’ve tried my best to fit the 5 workouts every 8-9 days.

The workouts themselves are not overly difficult or long. If I’m efficient, I can get some of the workouts done in 30 minutes. I’m lucky that my gym is literally across the street from the apartment, which means 30 seconds to and fro in addition to the 30 minutes, perfect for a session before or after work.

What I’ve found is that the power of a program like this is the fact that it gets me exercising almost daily. I’m hitting various muscle groups and doing all kinds of movements day in and day out, and this starts to build up–the “gains” that programs like this advertise really do start to show.

I thought about the last time I put my body through such varied daily exercises and it was probably during the summer before my senior year of high school when I had two full months of daily lifting, running, and skills work in preparation for football season. That was nearly half a lifetime ago! The intensity and duration of my workouts are nowhere near what it was back then, but the fact that it happens daily makes it that much more impactful.

Daily Commitments Are a Superpower

I hesitate to call my exercise routine a daily habit. I’ve started to think of the term “habit” as an activity that, with repetition and the right trigger & reward incentive, becomes a near-automatic behavior, like drinking a glass of water in the morning or flossing before sleep.

For an activity like working out, I like to think of it as a daily commitment. It requires overcoming various forms of resistance–fatigue, distractions, dread–and going through the necessary motions to make it happen (e.g. changing, going to the gym, warming up, etc.). When seen through this lens and knowing that daily commitments lead to progress that eventually compound over time, it’s easy to see that the ability to have productive daily commitments are a superpower. The potential to achieve great things is quite amazing. Here are just a few things:

• Learning a new language (e.g. 10+ straight weeks of daily language study for 30-45 minutes)
• Writing a book (e.g. 30-40 straight weeks of writing for 45-60 minutes a day and another 10 or so weeks of editing for 30-40 minutes a day)
• Building a side online business (e.g. 20-30 straight weeks of carrying out various tasks for 45-60 minutes a day)
• Becoming a triathlete (e.g. 12 straight weeks of 45-60 minute daily workouts)

Of course, there’s so much more. It’s possible to pick up new topics and gain some degree of mastery, like math, physics, carpentry, drawing, playing an instrument, and investing. Sure, committing to more than an hour will accelerate the learning and deepen the mastery, but given that many of us have full-time jobs, relationships, and other obligations, I’d imagine a daily commitment of more than an hour on one thing may be challenging (although not impossible if you really want it).

The sad truth is that even with this clear understanding in the power of daily commitments, I know that there are just too many entrenched habits and resistance factors that get in the way. The desire to relax and veg out after work, an alcoholic beverage in hand. The mindless tendency to scroll through YouTube videos and social media feeds. The insatiable curiosity to consume empty calorie content like news, sports scores, and celebrity gossip. Even when it comes to work, I find myself refreshing my email and filling my time with work that can easily wait, like responding to a non-critical inquiry.

Breaking Down the Resistance

When I reflect on the multiple times that my daily commitment to writing has failed, it’s been because a few stressful days at work made me immediately averse to the idea of sitting down and reflecting deeply about anything. Usually, I would want to go out or engage in a mindless activity that would require very little brainpower. Luckily for me, I’ve categorized working out as a distraction from work-related stress, so I welcome the opportunity to go lift weights or run as a way to relieve the stress. This got me thinking about how certain commitments need the right conditions in order to succeed.

When I think about an activity such as writing, I think it needs to happen when my mind is clearest. If I were to commit to writing daily every morning for 30-45 minutes, it would mean waking up early enough and giving my mind the space to focus. The biggest resistance at this point would be the grogginess I feel in the morning, which can be overcome with a better sleeping habit–going to bed earlier and avoiding excessive eating and drinking. A good night’s sleep, waking up early, and a clear mind–if I can string 4 to 5 of these a week and get my writing sessions in, then the results will start to pile up quickly.

Of course, it’s easier said than done, but it’s a worthwhile exercise to explore. I’d like to think that I can develop a framework in which I identify a concrete goal (e.g. learn a language, write 100 blog posts, pick up Python, etc.) and then design the conditions that will lower resistance and allow a daily commitment to flourish.

 

Sig had developed a theory—a hypothesis, to be exact—about undersized ballplayers, after so many years of watching Jed Lowrie and José Altuve, and now Alex Bregman. Most players with their skills but traditional pro bodies had lived their entire lives without having ever been told no and often without suffering any setbacks. So, when faced with the prospect of failing at a critical moment, they didn’t know how to handle it, because they’d never had to do so before. Nothing was easy for a small player, and nothing was given to him. Bregman had lived on the brink of baseball failure all his life, and he no longer feared it. “He’s probably already been failure-proofed,” Sig said. That was what the scouts meant when they said Alex Bregman, allegedly six feet tall, didn’t give a shit.

Astroball: Astroball: The New Way to Win It All by Ben Reiter chronicles the turnaround of the Houston Astros under the leadership of GM Jeff Luhnow and Director of Decision Sciences Sig Mejdal. Their systematic overhaul of the roster, their melding of quantitative and qualitative data, and the way things played out (World Series winners in 2017) reads like Moneyball 2.0.

There are many lessons I took away from the book and things that got me really excited. One of themes that Reiter emphasizes throughout the book is the growth mindset–Luhnow and Mejdal prized the growth mindset of their players because it meant that they were open to feedback and willing to learn from the data and make necessary adjustments to their style of play. A big part of the Astro’s success is the collective growth mindset of the team and their ability to adjust in tough situations.

As I read the book, I kept thinking to myself–how do you screen for an employee with a growth mindset? How do you separate them from those who have a fixed mindset? It made me reminisce a number of interviews I’ve had in the past with people applying to Barrel. If you ever ask anyone whether or not they like to learn new things and grow, you will get, 100% of the time, an affirmative answer. However, that doesn’t mean the person truly embodies a growth mindset. One thing we’ve tried to look for in candidates at Barrel are extra-curricular activities–what do people do in their free time and does it align with the skills they need to develop at work? Usually, those with the strongest growth mindsets, from our experience, have shown an insatiable appetite to expand their work-related skillsets outside of work, either through classes, a side hustle, or personal experiments.

Back to the book: a big thing that stuck with me was the characterization in the quote above about undersized ballplayers whose setbacks made them “failure-proof”. I love this bit because A) I’m of under-average height as well at 5’8″ and B) I whole-heartedly believe in the value of setbacks.

My height doesn’t have the significant bearing on my professional success as it does for major league ballplayers, but setbacks are all too common in my line of work. However, with experience–as in, the experience of living through numerous setbacks over the years–it’s been easier and easier to overcome new setbacks. What used to be debilitating things that “happened” to us is now seen more as an expected bump on the long path of running a business. The response is less panic and fear and more process-driven responses and soft self-reminders to stick with our process.

What the story of the undersized players in Astroball illustrates is a bigger theme that’s repeated throughout the book. The Astros front office, in embracing a growth mindset and learning to overcome their own setbacks, were able to stop “giving a shit” about what others thought. They avoided succumbing to the pressures and anxieties that plagued those who’ve only experienced long stretches of success only to hit the rare rough patch that completely derails them. The Astros stuck with their process and continued to refine it on their own terms.

As I think about the organization we continue to build at Barrel, I’d love to see us continue to embrace and absorb setbacks like wooden logs that fuel our fire. As Reiter notes in the book, it took the Astros thousands of decisions, many of them correctly in their favor, for them to turn around a last place team into a World Series champion. While we may not have a clear-cut championship to play for, I know that as an organization, we, too, make hundreds if not thousands of decisions that impact our own scorecard. I know that like the Astros, the use of quantitative and qualitative data will be useful, as well as the implementation of key technology, in helping us make better decisions. And supporting all this needs to be an organizational commitment to a growth mindset and a belief in a process for making smarter decisions.

I’ve compiled some additional thoughts on Off the Clock: Feel Less Busy While Getting More Done by Laura Vanderkam. You can read about my time diary experiment here.

Progress is motivational, and makes time feel expansive. In the time-perception survey, people who strongly agreed with the statement “Yesterday, I made progress toward my personal or professional goals” were 20 percent more likely than the average survey respondent to believe that they generally had enough time for the things they wanted to do.

Time is elastic. It stretches to accommodate what we choose to put into it. Investing in your happiness might mean going for a walk on a beautiful spring morning, even if it means you start work a little later. Generally, the work gets done because it has to get done, but in one world you’ve started your day with a bit of bliss, while in the normal version of life you haven’t. It can mean making space for a hobby or a regular get-together with friends. Even bits of time can be used for bits of joy, like reading via the Kindle app on your phone rather than checking email. You will eventually answer the emails that require answers. You always do. But if there’s anything else you want to do, happiness comes from doing it first.

Vanderkam highlights the importance of making time to do the things that make us happy first, before the other things. It reminded me of the Eisenhower Matrix that prioritizes the Important-Urgent and the Important Non-Urgent over all other types of activities, but Vanderkam suggests that most Important-Urgent work eventually gets done so why not spend a little time on the things that can energize and motivate you?

I tend to agree with the view. I’ve found that no matter how much work has piled up and no matter how daunting a deadline may be, I’ve never regretted taking a little bit of time to go for a run, get a lift in, play around with Sidney, or grab a bite with my wife. And even when I’m in the midst of cranking on a pile of proposals or working out some messy issue from work, Vanderkam suggests that part of the key to happiness is learning to “enjoy while enduring”:

While your time is, mostly, a choice, parts of life aren’t going to be blissful. Sometimes this is because of past choices, or choices made about the future. Sometimes it’s pure circumstance. Dark moments are inevitable. On some days, time’s eternal ticking can be a blessing. Nothing lasts forever. But if it is possible to flip the switch from enduring to enjoying, or enjoying while enduring, this can change the experience of time. To do so one must become, for lack of a better phrase, good at suffering.

She uses endurance athlete Amelia Boone as an example of someone who, while toughing it through 24 hours of intense and painful obstacle courses, finds the time to enjoy the sunrise and the camaraderie with fellow athletes. This example reminded me of the few Spartan races that I endured with my friends and how, between the discomforts and physically taxing obstacles, there were many moments of joy when we reached a fueling station for water and snacks or when the sun would come out and warm us after we had been freezing from a muddy obstacle. A more daily example is my commute to work and how it’s possible to switch from enduring to enjoying as I accept the crowded subway cars and unexpected delays while losing myself in a good book or being productive in jotting down ideas for an upcoming meeting.

The ability to enjoy while enduring is a really useful skill that can lessen the trauma of a poor experience. I recall an instance when my Barrel partners and I were stranded at LAX for several hours due to plane delays. While we were unhappy about the situation, we made the best of it and had ourselves a little airport picnic with some leftovers we had packed up from the restaurant the night before. We made makeshift plates out of coffee cup covers and had ourselves a fancy gourmet picnic. It helped to pass the time, and we had a good laugh about it.

Thoughtful people naturally construct stories to make sense of their lives. It takes real work to keep one unpleasant aspect of your life from becoming your entire narrative. Many intelligent people can’t muster themselves to do this work; hence, the tendency to brood.

Similar to the importance of enjoying while enduring, the ability to understand and be aware that life is so much more than a singular, negative experience or circumstance is an important key to happiness. I remember when I had greater difficulty with this, letting stresses like money, someone else’s relative success, or a perceived slight really cloud my mind and keep me in a funk. These days, I’ve become better at letting go and moving on to the next thing, understanding that there’s no real upside in being preoccupied with negative thoughts.

The discipline of joy requires holding in the mind simultaneously that this too shall pass and that this too is good. This alchemy of mind isn’t easy, but the good life is not always the easy life. Happiness requires effort. It is not just bestowed; it is the earned interest on what you choose to pay in.

I absolutely love this concept–that joy takes work, focus, and discipline. And in the context of time, joy requires the acceptance and appreciation that time is limited and that good moments come and go. This is why I think it’s so important to continually make plans to spend time with people I love, endure a little hassle to experience things that I’ll enjoy and remember, and keep the mind sharp and nimble so that I remember to savor what’s been good, deal with what needs dealing, and discard or ignore the things that ultimately don’t matter.

In Off the Clock: Feel Less Busy While Getting More Done by Laura Vanderkam, the author writes about her study of over 900 participants in which she surveys them on how they spent a Monday in March hour by hour and how they felt both about that day and about time in general. She writes:

First, people who feel like they have enough time are exceedingly mindful of their time. They know where the time goes. They accept ownership of their lives and think through their days and weeks ahead of time. They also reflect on their lives, figuring out what worked and what didn’t.

They build adventures into their lives. They do this even on a normal March Monday, knowing that rich memories can expand time both as they are being created and in the rearview mirror.

They scrub their lives of anything that does not belong there. This includes self-imposed time burdens, such as constant connectivity, that clog time for no good reason. Indeed, one of the most striking findings of my survey was the gap in estimated phone checks per hour between people who felt relaxed about time and those who felt anxious.

People who feel like they have enough time know how to linger in moments that deserve their attention; they can stretch the present when the present is worth being stretched.

They spend their resources to maximize happiness, yet when unpleasantness cannot be avoided, they figure out how to cope with and even savor time that others might wish away.

They let go of expectations of perfection and big results in the short run. Instead, they decide that good enough is good enough, knowing that steady progress over the long run is unstoppable. Finally, they know that people are a good use of time. I found that people who spent quality time with friends and family on that March Monday were more likely than people who spent that March Monday watching TV to feel like they had enough time for the things they wanted to do.

These paragraphs sum up nicely what Vanderkam details throughout the book. She provides more examples on how to be mindful with time, the importance of building quality memories, “investing” in different approaches to time that free up schedules for valuable activities, and more. It’s a quick read with a great deal of actionable advice.

My big takeaway from this book was the use of a time diary to record what happens throughout the day. Vanderkam talks about how her time diary was instrumental in showing her that, despite raising four kids, she found that she had time for a number of activities, including exercise, entertainment, and work. I was eager to get some data insights into how I spent my own time and if there were opportunities for improvements.

Over 7 weeks ago, I began to keep a time diary, recording my life in 30-minute increments (Vanderkam suggests either 30 or 15-min intervals; I found the 15-min one a bit too difficult). I built out my own spreadsheet with my own list of categories and have been diligently keeping it updated. I came up with 35 specific sub-categories that roll up to 7 broader categories: Work, Fitness, Personal Time, Eating, In Transit, Life’s Necessities, and Sleep. Looking at 5 weeks’ worth of data (the first one was incomplete and this last week isn’t finished yet), here are some averages per category:

• Work: 48.3 hours/week, 6.9 hours/day
• Fitness: 5.4 hours/week, 0.8 hours/day
• Personal Time: 26.9 hours/week, 3.8 hours/day
• Eating: 12.1 hours/week, 1.7 hours/day
• In Transit: 17.7 hours/week, 2.5 hours/day
• Life’s Necessities: 8 hours/week, 1.1 hours/day
• Sleep: 49.6 hours/week, 7.1 hours/day

I haven’t come across any major new insights or takeaways, but it’s nice to be able to reflect back on how I’ve spent my time. There are a few observations worth noting:

• Many activities don’t take up the full 30 minutes. I feel like the 15-minute increment would’ve been much more accurate, but if I happen to do a few different activities within the 30-minute block, I might credit whichever took the longest. If they’re all roughly equal, I might just randomly pick an activity and hope it all evens out in the end. But I’m not too concerned about this time diary being perfect–I think the rough outlines of my activities are good enough.
• The “In Transit” category includes both my daily commutes to work and any travel. During these five weeks, I flew to Seattle and to Los Angeles on separate occasions, so the numbers may be higher than what’s typical. One thing that doesn’t come through when categorizing a 30-min block under In Transit is the time spent listening to podcasts, reading books and articles, and responding to emails and texts. I feel like a good deal of my weekly reading is done on the subway, which doesn’t really get reflected.
• 51% of my Personal Time I categorized under “Chilling” (about 1.9 hours/day) but it seems to be a mix of hanging out with Mel or my friends, texting with buddies, watching YouTube, and mindlessly surfing the web. What doesn’t get reflected here is that I tend to check my emails and text about work to my partners during this time. But since I’m in a deliberately “relaxed” mindset during this time, those interactions don’t feel much like work.
• Life’s Necessities, in case you’re wondering, includes things like washing up, getting ready for bed, haircuts, grocery shopping, and dog walking (a necessity for my dog’s life). Walking the dog takes up about 30% of this category and it’s when I get a good chunk of audiobook and podcast-listening done.
• I put in a good 4-6 hours of work in each Sunday, and even with that, I’ve been averaging about 7 hours of work per day. The goal is to reduce the amount of time spent on Sundays and to be more efficient with my time on weekdays. During the week, the majority of my time (55%) was spent in meetings, either with clients or with team members, and on calls with clients or prospective clients. Beyond the emails I’ll check and respond to on the fly throughout the day, I spent an additional 0.9 hours/day of more focused time trying to keep up with my inbox.
• It’s hard to escape the close to 50 hours of sleep per week. I had days when I would get by on 5-6 hours of sleep, but this would mean that I’d probably need an 8-10 hour night later in the week to compensate. If I want to have more time on the weekend, I’ve been forcing myself to get more sleep during the week.
• I was pretty happy about the amount of time spent with family and my friends during this period. I formed lots of valuable memories and shared a great deal of laughs. Most of these were reflected in the Personal Time and Eating.

Reflecting on the data, I can see that there are definitely opportunities for improvement. A few that I spot right away are:

• TV: I spent 7.9 hours/week on average watching shows. This could probably be closer to 5. With the rest of the time, I should be reading or writing more.
• Book reading: It’s hard to say what the aggregate number is because I do try to read when I’m commuting or waiting for something, but in terms of dedicated time blocks to reading, I average just 1.7 hours/week. Would love to see this rise to 5 hours/week. I’m tempted to start buying more physical copies of books because I tend to read for longer with those in hand.
• Writing: I only averaged 1 hour a week of writing for the 5 weeks. And whenever I look back, I always feel like whatever time I spent writing was worthwhile, even if it’s just thoughts that I might never share with anyone. The disadvantage of the 30-minute increments in the time diary means that none of my journal writing (about 5 to 15 minutes on average) gets captured. I write between 4-5 times a week, so I probably get at least 30 minutes there. Still not anywhere near where I’d like to be. Ideally, I can devote a good 3-4 hours to writing each week and then keep growing from there.

The time diary exercise not only gave me some data, it also made me reflect more often about how I wanted to spend my time. Week after week, I realized that I have 168 hours at my disposal. If I plan far enough in advance, a lot of that can be controlled. I can choose not to take certain meetings at work, I can choose to spend more time with family and friends, and I can choose to get more sleep. Day-to-day, the 30-minute increments move incredibly fast and I often have to take some time at the end of the day to recall all the things I did and categorize them appropriately.

When I first started, I was uncertain how likely it was for me to keep up. I was afraid it would grow to become too much of a hassle and a couple of missed days would lead me to abandon it altogether. However, seven weeks in, I can’t imagine not filling out the time diary. There’s a sense of satisfaction to the activity and also a feeling of clarity about the decisions I’ve made. Also, if I am to believe that time is truly life’s most valuable resource, then it feels good to know that I’m treating it in a mindful way.

Managing the Professional Service Firm by David H. Maister is a must-read book for anyone running a professional services business. For too long, I thought that a digital creative firm like Barrel was somehow special and played by different rules than consulting, legal, accounting, or architecture/design businesses. Wrong.

It became quickly apparent in the first few pages of the book that Barrel operates in the same way as any other professional service firm and that core concepts such as client satisfaction, skill building, productivity, and getting better business were 100% applicable to the work that we do day in and day out.

Marketing to Existing Clients

One section that I found myself re-reading a few times was the chapter on “Marketing to Existing Clients”. Maister mentions how too many professional firms, while acknowledging that existing clients represent the best source of new business, devote more attention and resources to chasing brand new clients. While it is important to add new clients in order to bring fresh challenges and new contacts, Maister points out a few reasons why winning work from existing clients is very valuable:

1. Existing clients represent higher-probability prospects because they already trust and know the firm.
2. The marketing costs to win new business is lower since the firm doesn’t need to spend as much time and resources researching the client or partaking in time-consuming activities to win the new client over.
3. “Follow-on” work from existing clients are often more profitable than first-time engagements from new clients. (This I’ve seen time and time again at Barrel, where the first project is often at break-even or even a loss but the follow-on work is where we recoup.)
4. There is a higher probability that the firm can, over time, integrate more junior talent into the delivery of services to the client by building up the client’s acceptance of the juniors, thereby allowing the firm to achieve higher profitability through greater leverage (Maister defines “leverage” in this book as the ratio of junior to senior professional staff–if a firm can have a greater number of juniors while still billing at high rates, then the firm has greater leverage.)

I can confirm that each of the four reasons above have been very true at Barrel. However, as Maister notes, it’s important to “focus and target one’s efforts on the best opportunities” when marketing to existing clients. Rather than trying to win anything from any of our existing accounts, Maister suggests picking prospects where “(a) there are additional client needs that the firm can serve, and (b) the relationship is good enough to raise the probability that a marketing effort will pay off.”

The Tactics

Once we know who the existing client targets are, Maister provides three tables that, together, act like a playbook for winning new work. Listing the three tables reveals a 3-step strategy:

1. Making the Client Disposed to Use the Firm Again
2. Increasing the Firm’s Capabilities to Serve this Client
3. Finding and Pursuing the Next Engagement

Below are the tables written out in full (for my own future reference more than anything else):

TABLE 9-1: Making the Client Disposed to Use the Firm Again

1. Going the extra mile on the current engagement
   Use new business budget to fund extra analysis
   Use budget to improve turnaround time, service
   Improve quality of presentation
   More documentation, explanations, accessibility
2. Increasing the amount of client contact
   Telephone regularly
   Visit at every opportunity
   Schedule business meetings near mealtime
   Invite to firm offices
   Introduce one’s partners
   Get firm leaders involved
3. Building the business relationship
   Help client with contacts
   Put on special seminars for client’s staff
   Volunteer to attend client’s internal meetings
   Offer free day of counseling on nonproject matters
   Send client useful articles
   If possible, refer business to client
4. Building the personal relationship
   Social activities
   Remember personal, family anniversaries
   Obtain scarce tickets
   Provide home telephone number
   Offer use of firm’s facilities

Table 9-2: Increasing the Firm’s Capabilities to Serve the Client

1. Increasing knowledge of client’s industry
   Study industry magazine/newsletters thoroughly
   Attend industry meetings with client
   Conduct proprietary studies
2. Increasing knowledge of client’s business
   Read all client’s brochures, annual reports, other public documents
   Ask to see strategic plan
   Volunteer to critique internal studies
   Conduct reverse seminar
3. Increasing knowledge of client’s organization
   Ask for organization chart
   Ask who client deals with most
   Ask about the client’s boss
   Ask about power structure
   Arrange to meet other executives
   Spend time with client’s juniors
4. Increasing knowledge of client
   Find out precisely how client is evaluated inside his or her company
   Find out what he or she is unhappy with

Table 9-3: Finding and Pursuing the Next Engagement

1. Creating opportunities to demonstrate initiative and competence
   Volunteer services of one’s partners
   Arrange meetings with one’s partners
2. Digging out new intelligence on new needs
   Use entire project team to gather info
   Get invited to their meetings
   Arrange to meet other executives
   Spend time with client staff at all levels
3. Assembling evidence of new need
   Conduct additional analysis
   If possible, conduct additional interviews
   Conduct special studies
4. Creating awareness of new need
   Bring problem areas to client’s attention early (Find ways to worry client)
   Document evidence of problems
   Compare client company’s statistics to others
   Share results of work done for other clients
5. Finding sponsor/friend/coach in client organization
   Figure out who wants change
6. Asking for new engagement at the right time
   “Point out” opportunities early and often, with no “hard sell”
   Concrete proposal only when confident it will be accepted

I was fairly pleased that none of these were mind-blowingly new to me. In fact, I felt that we regularly engage in a number of these activities with some of our key clients. However, these tables do make clear to me that there’s always room for improvement and that we can be very methodical and organized about how we engage in some of these tactics.

My task will be not only to figure out how I can spend more time engaging in some of these activities, but to train and hire talent that can help our team to scale in our efforts to market more effectively to our existing clients. If we can smartly scale our ability to deliver great work, build trust, and continually expand our capabilities to serve our clients, we’ll be headed in the right direction.

Melanie and I celebrated our 7th wedding anniversary with a trip to Washington. We spent a couple of days in Seattle meeting up with friends and doing touristy stuff around the city. We then drove north a couple of hours to Lummi Island and stayed overnight at The Willows Inn.

We enjoyed an excellent dinner at The Willows Inn, enjoyed the amazing view from our beachfront room, and woke up the next morning to an amazing breakfast back at the inn. We then did a hike up the Baker Preserve and got a spectacular view of the surrounding islands, including the San Juan islands, from the overlook. Lucky for us, the weather during the two days on Lummi Island was perfect – sunny and in the seventies.

I thought it’d be fun to post some pics from our stay there, especially the fantastic meal that we had there.

Lummi Island is a 9.25 sq. mile island in the Puget Sound and belongs to Whatcom County, Washington. To get there, you have to take a 6-minute ferry from Gooseberry Point. It’s probably the quickest ferry ride I’ve ever taken.

The first thing I did once we got settled in was to go for a quick run. I ran on the very quiet main road where no more than half a dozen cars passed me during the forty minutes I was jogging.

The island is pristine and I was struck by how empty it was. Maybe it’s because we were there right before July 4th and perhaps it gets more crowded as the weather gets warmer. I was told that summer in the Pacific Northwest really begins after Independence Day.

We stayed in a unit of The Willows Inn called High Tide (the top level one). It’s about half a mile down from the restaurant/inn base and right on the water. We had a fantastic view of the water from our bed.

We went over to the restaurant at 5PM for cocktails. We sat outside and enjoyed the view of the water.

I enjoyed a couple of very herbal concoctions, one which featured cynar and another that had acquavit. Mel enjoyed a non-alcoholic mocktail. Around 6PM, the food started coming out. These were “pre-meal snacks” to get our appetites going.

Once we enjoyed our snacks, we made our way into the dining room inside and the dishes began to come out one by one.

The menu was very seafood forward with fruits, herbs, and vegetables all being sourced from the island. The wine pairing, save the dessert wine, was all white wines (and 1 rosé), which made sense with all the fish and shellfish.

One of the servers showed us the halibut and the turnips as a preview of the ingredients that would be used in the main course.

I was actually hoping for a more generous cut of halibut, but the dish itself was quite good. The turnips had a nice wasabi-like kick to them.

After the main course, we made our way back out to the deck where we started to see the sun begin its descent. We also enjoyed a few different desserts. The most memorable one was the candied pine cone with a pine-flavored ice cream served on a pine tree branch. I thought it was interesting. Melanie really didn’t like it.

The sunset was beautiful. And this was around 9:30PM, which made the day feel incredibly long.

At 10PM, there was still a good amount of light. It made me wish we could have extended days like this back on the East Coast.

The next morning, we went right back to the restaurant for breakfast. We started off with some yogurt and then came a really nice spread featuring buckwheat crepes.

I also really enjoyed the freshly pressed apple juice they served us throughout breakfast.

After the meal, we packed up, checked out, and headed for Baker Preserve where we took a leisurely hike up about 1,000 feet and close to 2 miles in distance to the overlook. The thing I love about the Pacific Northwest are the incredibly tall trees. You just don’t see trees like this back in New York.

We saw only 6 or so other people the entire time we were on the trail and when we got to the overlook, we were able to enjoy it privately as another couple left just as we got there.

Happy anniversary to my wife, Melanie! So grateful we got to spend such a memorable time together.

I was fortunate that a friend told me about Lummi Island, otherwise I never would have found out about it. I highly recommend it as it was very easy to get to from Seattle. I wouldn’t have minded staying an extra day there to go on a bike ride or check out some other trails, but beyond The Willows Inn, the food options there seem very limited and their lone grocery store is pretty understocked. Then again, you can always take the 6-minute ferry and go buy stuff on the mainland and come right back.

One of my favorite parts of The Fifth Discipline by Peter Senge is the topic of systems thinking and how so many of the problems inherent in organizations (and even personal behaviors) stem from being unaware of the various systems at play and how these systems, when undetected and untouched, can control and determine outcomes, often in ways contrary to what you may have intended.

In such situations, we’re likely to blame external forces for our problems, but Senge explains that this misses out on a bigger picture:

Systems thinking is a discipline for seeing wholes. It is a framework for seeing interrelationships rather than things, for seeing patterns of change rather than static “snapshots.”

…Systems thinking is a discipline for seeing the “structures” that underlie complex situations, and for discerning high from low leverage change. That is, by seeing wholes we learn how to foster health.

Senge illustrates systems thinking through systems archetypes, simple yet powerful examples that distill many of the systems at play in organizations and everyday life.

I’ve been thinking a lot about these examples in the context of running a business and the experience I’ve had at Barrel. In the appendix of the book, Senge lists out each of the archetypes. Below, I went through the exercise of listing each one and then coming up with a corresponding example inspired by the challenges and issues we’ve run into at Barrel over the years.

It’s been helpful to borrow some vocabulary and a new lens through which to view the way business works. In many of the scenarios below, I’m reminded of the dangers of short-term thinking and “quick fix” solutions that only exacerbate the underlying problems in the long-run.

Balancing Process with Delay

A person, a group, or an organization, acting toward a goal, adjusts their behavior in response to delayed feedback. If they are not conscious of the delay, they end up taking more corrective action than needed, or (sometimes) just giving up because they cannot see that any progress is being made.

Digital agency example: A spike in new business and requests from existing accounts puts strain on the resources of the entire team as engineers, designers, strategists, and project managers all seem have very heavy workloads. In response, the team goes on a massive hiring spree and increases headcount by 30%. During that time, some of the projects that were slated to start are postponed to a later time and other projects fall through. The original team is able to handle all the work while there’s not enough work to go around to the newly hired employees, creating a drag on the company’s finances.

Limits to Growth

A process feeds on itself to produce a period of accelerating growth or expansion. Then the growth begins to slow (often inexplicably to the participants in the system) and eventually comes to a halt, and may even reverse itself and begin an accelerating collapse.

The growth phase is caused by a reinforcing feedback process (or by several reinforcing feedback processes). The slowing arises due to a balancing process brought into play as a “limit” is approached. The limit can be a resource constraint, or an external or internal response to growth. The accelerating collapse (when it occurs) arises from the reinforcing process operating in reverse, to generate more and more contraction.

Digital agency example: After very slow growth the first few years, the agency went from 4 to 24 people in a span of 18 months due to some award-winning work and some bigger-than-usual opportunities that all closed at the same time. The rapid growth was a strain as the company lacked formal organization and issues such as resource management, quality control, and client communication began to fall apart. This led to unhappy clients, a build-up of poor reputation, and low morale among employees who were stressed by the lack of structure and process. Eventually, both clients and top employees began to flee and the company experienced not only flattening growth but a decline in revenues.

Shifting the Burden

A short-term “solution” is used to correct a problem, with seemingly positive immediate results. As this correction is used more and more, more fundamental long-term corrective measures are used less and less. Over time, the capabilities for the fundamental solution may atrophy or become disabled, leading to even greater reliance on the symptomatic solution.

Digital agency example: Relatively inexperienced project managers are assigned to lead projects, which results in mistakes that irk or worry clients. The senior members of the team step in to “resolve” the mistakes while berating the project managers for their errors. The next time, when a project manager makes a mistake, the default behavior is to seek out a senior team member to “make things right”. This becomes a drag on the senior team members, who’re constantly brought in to resolve even the smallest of errors.

The entire situation becomes a missed opportunity in which the company never puts in a process to properly train the project managers and to provide guidance and mentoring that may allow them to resolve issues on their own.

This example corresponds more to the special case of “Shifting the Burden to the Intervenor” as discussed in The Fifth Discipline.

Eroding Goals

A shifting the burden type of structure in which the short-term solution involves letting a long-term fundamental goal decline.

Digital agency example: Project managers are told to closely monitor their hours on website build projects. The hours are based on a profitable hourly rate. However, as the project progresses and the work drags at a pace slower than anticipated, the hours quickly add up and are on the verge of going over. Because the client will not approve budget increases, the firm’s partners and the project managers decide to lower the hourly rate incrementally to “free up some more hours”, although this is just an illusion and an erosion of the profit margin. Weeks go by again, and when more hours are needed, the rate is lowered once again. The cycle continues until the rate is so low that it’s not enough to cover the basic cost of the project and the firm would have been better off not having taken on the project at all.

Escalation

Two people or organizations each see their welfare as depending on a relative advantage over the other. Whenever one side gets ahead, the other is more threatened, leading it to act more aggressively to reestablish its advantage, which threatens the first, increasing its aggressiveness, and so on. Often each side sees its own aggressive behavior as a defensive response to the other’s aggression; but each side acting “in defense” results in a buildup that goes far beyond either side’s desires.

Digital agency example: The engineers are annoyed that the QA team seems extra nit-picky about the website’s cross-browser compatibility and its performance on mobile and don’t appreciate the number of tickets. They decide to cut corners on the code since “we’ll catch in QA anyway” and rely on the QA team to point out the egregious mistakes that they’ll get to later. The QA team feels overwhelmed by the number of tickets they’re having to write and unhappy that the website is coming to them in such a poor condition. In response, the QA team asks and receives more resources to generate an even greater number of tickets. The engineers are further annoyed and continue to produce hacky, half-finished website code for QA. The cycle continues while dragging out timelines and impacting the overall ability of the agency to deliver for their clients.

Success to the Successful

Two activities compete for limited support or resources. The more successful one becomes, the more support it gains, thereby starving the other.

Digital agency example: One designer does a stand-out job on a project and shows the leadership team that she’s an excellent presenter. She’s given the opportunity to work on a high-profile client project and also has the chance to work closely with the creative director, who mentors her and teaches her new ways to approach projects. Another designer, whose work was not as well-received by the client, is assigned to more repetitive assignments and hops around from account to account filling in for whatever resource gaps the team has. The designer has very little one-on-one time with the creative director and his skills grow at a much slower rate.

Tragedy of the Commons

Individuals use a commonly available but limited resource solely on the basis of individual need. At first they are reward for using it; eventually, they get diminishing returns, which causes them to intensify their efforts. Eventually, the resource is either significantly depleted, eroded, or entirely used up.

Digital agency example: The agency finds a very talented freelance web developer with a very favorable hourly rate who can get things done quickly and effectively. A couple of project managers have great success with him and are able to successfully complete their websites on time. As word spreads, the agency’s project managers all want him on intense, last-minute assignments and vie for his time, inundating him with communication and requests. At first, the web developer is able to handle most requests, but slowly, he becomes overwhelmed and can’t juggle all the tasks, sometimes leading to missed deadlines. Eventually, he asks that he cut back his hours and only work on 1 project at a time with the agency.

Fixes That Fail

A fix, effective in the short term, has unforeseen long-term consequences which may require even more use of the same fix.

Digital agency example: To make up for lost time on a web project, the team decides to hardcode most of the content that was supposed to be editable using a content management system (CMS). After the website is launched, the client asks for a content update of a major section with a very tight deadline which would have been possible using the CMS but must now be hardcoded again in order to make the deadline. Eventually, so much of the website has been hardcoded that the effort to put in the CMS has become very expensive.

Growth and Underinvestment

Growth approaches a limit which can be eliminated or pushed into the future if the firm, or individual, invests in additional “capacity.” But the investment must be aggressive and sufficiently rapid to forestall reduced growth, or else it will never get made. Oftentimes, key goals or performance standards are lowered to justify underinvestment. When this happens, there is a self-fulfilling prophecy where lower goals lead to lower expectations, which are then borne out by poor performance caused by underinvestment.

Digital agency example: With the rapid increase in business, the agency goes out and hires a number of junior-level talent, believing that more bodies will solve the issue of understaffing and resourcing constraints. The agency doesn’t want to take the risk of hiring more senior-level managers who aren’t immediately billable and whose work will primarily by in supervising and training junior-level team members. They decide to push forward and postpone such investments for a later time. The influx of junior talent temporarily alleviates the staffing issues, but then quickly gives rise of quality issues and unhappy clients who complain about the mistakes and lack of experience.

As in the Limits to Growth example, unhappy clients eventually lead to the loss of both reputation and new business as well as employee attrition as nobody wants to be a part of a sinking ship.

Organizations learn only through individuals who learn. Individual learning does not guarantee organizational learning. But without it no organizational learning occurs.

In Peter Senge’s The Fifth Discipline, one of the five disciplines is personal mastery (the others being systems thinking, mental models, building shared vision, and team learning). Senge equates personal mastery with personal growth and learning, espoused by those who “are continually expanding their ability to create the results in life they truly seek.”

As much as I’d like to think that I care about personal growth and learning, I sometimes wonder if I’m really as serious as I can be. Reading this section made me realize that there are some gaps for me to cross in order to get closer to personal mastery.

People with a high level of personal mastery share several basic characteristics. They have a special sense of purpose that lies behind their visions and goals. For such a person, a vision is a calling rather than simply a good idea. They see current reality as an ally, not an enemy. They have learned how to perceive and work with forces of change rather than resist those forces. They are deeply inquisitive, committed to continually seeing reality more and more accurately. They feel connected to others and to life itself. Yet they sacrifice none of their uniqueness. They feel as if they are part of a larger creative process, which they can influence but cannot unilaterally control.

People with a high level of personal mastery live in a continual learning mode. They never “arrive.” Sometimes, language, such as the term “personal mastery,” creates a misleading sense of definiteness, of black and white. But personal mastery is not something you possess. It is a process. It is a lifelong discipline. People with a high level of personal mastery are acutely aware of their ignorance, their incompetence, their growth areas. And they are deeply self-confident. Paradoxical? Only for those who do not see that “the journey is the reward.”

There’s a lot to unpack in these two paragraphs. What jumps out at me is the ability to see the world as it is and to embrace the resistant forces and constraints, seeing them as opportunities to be creative. I found the concept of personal mastery to be a very spiritual one as it entails a never-ending journey that is, in itself, the reward.

“Another and equally important reason why we encourage our people in this quest is the impact which full personal development can have on individual happiness. To seek personal fulfillment only outside of work and to ignore the significant portion of our lives which we spend working, would be to limit our opportunities to be happy and complete human beings.”

Senge quotes Bill O’Brien, former president of Hanover Insurance, who fervently believed in having managers with personal mastery and the role of the organization in fostering personal growth among its employees. This is a good reminder for me that hiring the right team members with a yearning for personal growth and investing in resources and providing opportunities for continued development will lead to happier people.

Imagine a rubber band, stretched between your vision and current reality. When stretched, the rubber band creates tension, representing the tension between vision and current reality. What does tension seek? Resolution or release. There are only two possible ways for the tension to resolve itself: pull reality toward the vision or pull the vision toward reality. Which occurs will depend on whether we hold steady to the vision.

Senge introduces the concept of creative tension which is the gap between vision and current reality that is also a source of energy. Vision is a “specific destination, a picture of a desired future” that is supported by a purpose, “a direction, a general heading.” Our ability to persevere and to embrace the constraints and challenges presented by our current reality on our path towards achieving our vision is what characterizes mastery of creative tension, and therefore, personal mastery.

Mastery of creative tension transforms the way one views “failure.” Failure is, simply, a shortfall, evidence of the gap between vision and current reality. Failure is an opportunity for learning—about inaccurate pictures of current reality, about strategies that didn’t work as expected, about the clarity of the vision. Failures are not about our unworthiness or powerlessness.

I love this point about failure. Oftentimes, we let failures consume us and push us into compromising on our vision or eroding our goals. But when failures are embraced as opportunities to learn and a data point to use for reconfiguring our strategic approach to life, we become less afraid of facing reality as it is.

Commitment to the truth does not mean seeking the Truth, the absolute final word or ultimate cause. Rather, it means a relentless willingness to root out the ways we limit or deceive ourselves from seeing what is, and to continually challenge our theories of why things are the way they are. It means continually broadening our awareness, just as the great athlete with extraordinary peripheral vision keeps trying to see more of the playing field. It also means continually deepening our understanding of the structures underlying current events. Specifically, people with high levels of personal mastery see more of the structural conflicts underlying their own behavior.

Reading this paragraph reminded me of this post by Ramit Sethi on stories we tell ourselves that may not even be true anymore but have become a crutch that shields us from facing reality and attempting change. I’ve deceived myself over the years in many ways, and it’s been an uncomfortable undertaking to identify these “structural conflicts underlying [my] own behavior.” In fact, it’s still an on-going process that never ends. I find myself blaming external circumstances (e.g. “Why did so and so mess up on this so badly?”) or placing artificial constraints on my own abilities (e.g. “I’m not good at math, so I’ll ask someone else to figure this out”) when I could be digging deeper to find structural barriers that are the root cause of many problems.

What then can leaders intent on fostering personal mastery do? They can work relentlessly to foster a climate in which the principles of personal mastery are practiced in daily life. That means building an organization where it is safe for people to create visions, where inquiry and commitment to the truth are the norm, and where challenging the status quo is expected—especially when the status quo includes obscuring aspects of current reality that people seek to avoid.

…

The core leadership strategy is simple: be a model. Commit yourself to your own personal mastery. Talking about personal mastery may open people’s minds somewhat, but actions always speak louder than words. There’s nothing more powerful you can do to encourage others in their quest for personal mastery than to be serious in your own quest. And keep reminding yourself, in the words of MIT Sloan School professor Edgard Schein, that organizations are by their nature “coercive systems.”

This had me thinking about QBQ! The Question Behind the Question, a book which preaches the importance of personal accountability and how, especially in an organizational setting, I ought to focus on myself and model the behavior I want to see.

These days, one big roadblock to personal mastery–perhaps the nature of the structure I find myself stuck in–is the lack of time taken to reflect and properly face current reality. I’ve been guilty of defaulting to routines, and when I do have a free moment, I’m usually putting my mind on autopilot through podcasts, audiobooks, and television. The few moments of meditating and journalling just aren’t substantial enough. I think this is an opportunity to develop a habit that places a premium on time spent separate from my immediate work and focused on exploring the many ways I can better define my vision and propelling myself towards that vision.

In Peter Senge’s The Fifth Discipline, he introduces seven learning disabilities that largely go undetected in organizations. Only by identifying these, he writes, can an organization take the necessary steps to cure them and become a learning organization.

The Seven Learning Disabilities

It is no accident that most organizations learn poorly. The way they are designed and managed, the way people’s jobs are defined, and, most importantly, the way we have all been taught to think and interact (not only in organizations but more broadly) create fundamental learning disabilities. These disabilities operate despite the best efforts of bright, committed people. Often the harder they try to solve problems, the worse the results. What learning does occur takes place despite these learning disabilities—for they pervade all organizations to some degree.

1. “I Am My Position”
2. “The Enemy is Out There”
3. The Illusion of Taking Charge
4. The Fixation on Events
5. The Parable of the Boiled Frog
6. The Delusion of Learning from Experience
7. The Myth of the Management Team

I’ve excerpted certain lines from the section on the seven disabilities along with some commentary on what I’ve seen and felt while running my company Barrel.

1. “I Am My Position”

When asked what they do for a living, most people describe the tasks they perform every day, not the purpose of the greater enterprise in which they take part. Most see themselves within a system over which they have little or no influence. They do their job, put in their time, and try to cope with the forces outside of their control. Consequently, they tend to see their responsibilities as limited to the boundaries of their position.

When people in organizations focus only on their position, they have little sense of responsibility for the results produced when all positions interact. Moreover, when results are disappointing, it can be very difficult to know why. All you can do is assume that “someone screwed up.”

Senge is writing about the lack of a shared vision and institutional structures that strip away a sense of ownership and purpose. This got me thinking about how team members at Barrel describe what they do for a living to other people. I can imagine things like “I code websites” or “I design websites” or “I put together reports for clients”. Not very inspiring stuff and most definitely a focus on the position. I do hope that many team members will talk about helping clients and working with team members to solve problems for cool brands.

I myself need to master the articulation and belief in the purpose and vision of the organization. Too many times, I’ve described my job as “I oversee this and that” or “I work on a lot of new business and hire for certain positions”.

Earlier this year, our leadership team came up with “client success through creativity and collaboration” as the way to articulate our organization’s purpose, but I don’t think we’ve done a good job in sharing this with the team.

2. “The Enemy is Out There”

The “enemy is out there” syndrome is actually a by-product of “I am my position,” and the nonsystemic ways of looking at the world that it fosters. When we focus only on our position, we do not see how our own actions extend beyond the boundary of that position. When those actions have consequences that come back to hurt us, we misperceive these new problems as externally caused. Like the person being chased by his own shadow, we cannot seem to shake them.

I think one of the most pleasing things I’ve seen at Barrel, especially over the past few years, has been the widespread sense of ownership at the company. We’ve been very good about squashing an us versus them mentality when it comes to clients and instead, framed it as “how can we be of the greatest benefit and resource to our clients”. I’ve observed team members going above and beyond to answer questions, troubleshoot issues, and work on complex challenges with patience all in order to help our clients hit their goals and look good to their bosses.

And when it comes to mistakes or screw-ups that cause issues, we’ve made it an organizational habit to own up to the error and then to unpack what happened in order to learn. A big part of this has been to create an environment in which making mistakes doesn’t result in public embarrassment or an immediate loss of trust. Everyone feels bad whenever they make a mistake, but that’s because they’re disappointed in themselves and feel they should’ve done better rather than out of fear of reprisals.

3. The Illusion of Taking Charge

Being “proactive” is in vogue. Managers frequently proclaim the need for taking charge in facing difficult problems. What is typically meant by this is that we should face up to difficult issues, stop waiting for someone else to do something, and solve problems before they grow into crises. In particular, being proactive is frequently seen as an antidote to being “reactive”—waiting until a situation gets out of hand before taking a step. But is taking aggressive action against an external enemy really synonymous with being proactive?

…All too often, proactiveness is reactiveness in disguise. Whether in business or politics, if we simply become more aggressive fighting the “enemy out there,” we are reacting—regardless of what we call it. True proactiveness comes from seeing how we contribute to our own problems. It is a product of our way of thinking, not our emotional state.

This impulse to be “proactive” in the face of difficult challenges is something we try to spot and combat. Oftentimes, it comes in the form of what seems like a “quick-fix” solution or a very prescriptive top-down “new rule” to enforce certain behaviors. In most cases, these measures are absolutely reactive and do not have lasting impact.

What this disability calls for is a deeper understanding of the various forces at play in any problematic situation and the discipline to peel back the layers until we’ve uncovered what the underlying, unseen cause may be. Only then, can we craft effective solutions. This is a skill that’s still a big work in progress for us, but I’m glad we’re at least gaining awareness around it.

4. The Fixation on Events

Generative learning cannot be sustained in an organization if people’s thinking is dominated by short-term events. If we focus on events, the best we can ever do is predict an event before it happens so that we can react optimally. But we cannot learn to create.

“We lost on too many deals this quarter so that is why we are not doing well financially right now” is a linear thought I’ve had one too many times over the years. Of course, this fixation on short-term events is a real handicap and often leads to reactive behavior, like trying desperately to take on whatever new business we can to keep the business going.

Thinking about our various activities on a longer time horizon and shifting away from a linear view of why things are the way they are can open up a lot of new possibilities. This is a big part of what Senge writes about later on in the book with systems thinking.

5. The Parable of the Boiled Frog

If you place a frog in a pot of boiling water, it will immediately try to scramble out. But if you place the frog in room temperature water, and don’t scare him, he’ll stay put. Now, if the pot sits on a heat source, and if you gradually turn up the temperature, something very interesting happens. As the temperature rises from 70 to 80 degrees F., the frog will do nothing. In fact, he will show every sign of enjoying himself. As the temperature gradually increases, the frog will become groggier and groggier, until he is unable to climb out of the pot. Though there is nothing restraining him, the frog will sit there and boil. Why? Because the frog’s internal apparatus for sensing threats to survival is geared to sudden changes in his environment, not to slow, gradual changes.

…Learning to see slow, gradual processes requires slowing down our frenetic pace and paying attention to the subtle as well as the dramatic.

Similar to The Fixation on Events, this learning disability emphasizes the challenge in spotting the gradual forces that quickly shape the fate of an organization. Things like client satisfaction across all of our accounts and team engagement and morale are hard to take stock immediately and the shifts in each may be gradual so that if we’re not paying attention, we could find ourselves in a tough spot. This is why it’s so critical for us to carefully examine, have check-in conversations, and be brutally honest with ourselves on how things are going.

6. The Delusion of Learning from Experience

When our actions have consequences beyond our learning horizon, it becomes impossible to learn from direct experience.

This one I felt was a bit repetitive, especially since it’s not too different from The Fixation on Events and The Parable of the Boiled Frog. I think Senge is noting that we put too much value in learning from direct experience but oftentimes, we can’t even assess the actions we took accurately since it may be many months or even years before the consequences become clear.

This reminds me of a case in which we took on a client on very disadvantageous terms: severely discounted rate, an almost impossible timeline for the initial project, and a client team that seemed dysfunctional in their internal communications. We pulled through and delivered, with much difficulty, on the project. The client didn’t seem all that happy but also not disappointed. Internally, we wondered whether the takeaway should’ve been to never take on such work again (saying “no”). Lo and behold, some years later, this client has become a significant account and we’ve developed a great relationship with them. What’s the lesson then? That sometimes we have to bite the bullet and be patient to see if something special can emerge? See, the challenge is that even today, I don’t know if I’ve learned from the experience much.

7. The Myth of the Management Team

Striding forward to do battle with these dilemmas and disabilities is “the management team,” the collection of savvy, experienced managers who represent the organization’s different functions and areas of expertise. Together, they are supposed to sort out the complex cross-functional issues that are critical to the organization. What confidence do we have, really, that typical management teams can surmount these learning disabilities?

Senge writes about how managers often care more about protecting their turf and their egos and default into a stance that make it hard for organizations to learn. I worry about this because I sometimes do think that I’d rather seem like I know the answers and express a measure of certainty with everything I say, especially with our team. Senge writes later on about how reflection and inquiry are key behaviors to overcoming this protective stance. I know that before I expect anyone else to be open and inquisitive in the face of uncertainty, I need to work on this for myself.

I’ve been giving a lot of thought to how we can best get a sense of the health of our business at Barrel. There are the usual metrics like inbound leads, deals in the pipeline, and expected revenue from signed clients. There are also in-project metrics like profitability and how we’re tracking towards meeting milestones and deadlines. But the more I’ve explored this, the more I am convinced that the most important metric is one that measures client satisfaction: how pleased are they with our service and how likely are they to recommend us to someone else?

In The Fifth Discipline by Peter Senge, there’s a fictional case study about a company called WonderTech, an electronics maker that releases a high-end computer. The company grows rapidly the first three years only to decline and fall into bankruptcy not too long afterwards. When closely examined, it’s possible to see that even with strong demand, the inability for the company to deliver its products on time led to dissatisfied customers and a loss in reputation. They were never able to fully recover from this, and subsequent sales and marketing efforts became harder and harder.

The following is a “worst case” scenario of the WonderTech case study as applied to Barrel. We’ve lived variations of this over the years and I don’t think I really understood what was going on except stuff just wasn’t clicking.

• We started small and scrappy, taking on whatever work we could. We did our best for each one, happy to be given the opportunity.
• Little by little, we would gain momentum by doing good work for clients, which would lead to more work through word of mouth and the quality of the work we produced.
• Not only would the client give us more work, but we would entertain many new opportunities and take on several new clients. When this happened, it would soon be hard to keep up with the demand.
• Our team members would be pushed to their limits, often working late nights to meet deadlines and juggling multiple projects.
• We would take some shortcuts in hiring and find whoever fit the job description with little regard given to their cultural fit or their concrete skillsets.
• Over time, things might slip here and there. Our long-time clients, fed up with our mistakes or inattentiveness, might reduce their spend with us or take the entire business elsewhere.
• Faced with a loss in revenue, we would panic and seek out new clients, taking on any new engagement as long as it provided cashflow. We often ignored how difficult the client was or how the work didn’t align with what we were trying to be known for as a company.
• This in turn would lead to less desirable projects and work that we wouldn’t be proud to showcase to prospective clients, making it harder to strengthen our reputation and land more clients.
• Even worse, we’d lose talented team members who were not happy working on such client engagements, putting even more pressure on those who were left and also forcing us to use junior talent that then would make mistakes to further disappoint our clients.
• And of course, all this time, the leadership team is in react mode, putting out fires and not spending an ounce of time trying to think strategically for our clients.
• The vicious cycle results in stagnant or falling revenues, diminished profitability, and overall low morale.

It’s a tough place to be in, and one that could have been avoided. The allure of fast growth and increased headcount often deluded us into thinking that we could scale linearly and avoid growing pains. A more prudent thing would have been to weigh the opportunities for growth with what it took to keep our existing clients happy. If we felt that our existing clients, due to budget limitations or misalignment in the type of work we were doing for them, would no longer be treated with the same level of care as new clients, we should have proactively helped them transition to another agency rather than trying to hold on to them in a half-assed way. This way, we could make way for the new clients to be properly staffed and taken care of or make the conscious decision to turn down new business and focus on growing existing accounts.

It all sounds like common sense when I write it out, but in practice, it’s deceptively subtle and the gradual way in which the problem manifests makes it hard to realize when we are making the decisions that will ultimately come back and bite us.

So this is why I feel that a measure for client satisfaction, taken each week, is a proactive measure for ensuring that we don’t make decisions that will hamper us in the long run and fool us into thinking we can handle rapid growth. One approach I’ve been tossing around internally is to ask ourselves: “If asked today, would a client provide us with a positive testimonial that we could publish publicly?” If the answer is yes, then we are doing what we are supposed to do. If the answer is less certain, then we know we have our work cut out for us. If the answer is no, then we need to move on from the account and learn how we messed up so we don’t repeat the mistakes again. The goal of the game is to ensure that we can maintain a roster of clients that would, on a dime, gladly provide us with a glowing testimonial showering us with praise on the way we work and the impact we’ve had on their business. If we can’t maintain this standard for everyone, then we are in trouble.

When a client is satisfied, the vicious cycle I explored above, reverses itself:

• The client tells others about us, bringing us warm leads that convert into new business.
• We do a great job for the new clients, which then leads to more warm leads.
• We’re selective in who we take on and only take on the number of clients we can absolutely do a great job for.
• This self-imposed limit to growth allows us to land even better clients who give us the most interesting projects with budgets that allow us to do our best work.
• Our team feels incredibly motivated and produces their best work. Their happiness and quality of work is a magnet for even more talent, feeding the team with a steady stream of great team members.
• Talented team members require less oversight and projects are completed efficiently and effectively, allowing the company to profit even while compensating the team members very well.

Even when reading through this virtuous cycle, I can see how easily things can derail. All it takes are a string of bad decisions before things spiral into a vicious cycle. Perhaps the leadership team feels ambitious and wants to grow revenues by X% and decides to loosen standards on client satisfaction. What seemed unstoppable can quickly erode.

When I think about the actions that help prop up client satisfaction, a few come immediately to mind:

• The speed of our response and communications.
• The ability to provide useful guidance and information that make the client’s life easier.
• To ask thoughtful questions that help the client clarify their thinking and planning.
• To challenge the client, to the degree our expertise backs us, when they’re making questionable decisions.
• To be on top of our subject domain and be confident in talking about what we’re supposed to know.
• To proactively identify and present opportunities that the client might not be aware of.

There are countless other details that I think would be useful for me and the Barrel team to explore and breakdown ourselves, but the ones above cover a great deal. Beyond this, there is the hard work of truly understanding the goals of our clients and finding the ways in which we can deliver maximum value again and again. I think this is a challenge that any business in the world shares, and one that, if done right, can lead to tremendous success.

I turned 35 today.

I spent the day watching some TV, going for a run, doing the laundry, catching up on work, and eating delicious meals cooked by my wife Mel. It was a peaceful and restful Sunday, just what I wanted.

Throughout the day, I found myself thinking about how I’ve hit the mid-point of my thirties. I was reminded of a blog post I wrote 5 years ago, Three Things to Consider for My Thirties. In it, I wrote about wanting to be a better son and brother, about gaining depth in an area of expertise, and having more patience.

Reflecting on the progress I’ve made in the past 5 years, I feel pretty good about where things are today.

I’m very grateful that I’ve been able to see my parents and sister more often now that they all live in Brooklyn. I’ve also prioritized spending time with Melanie and my closest friends, and this has made life much more enriching and satisfying. As with anything, you get into it what you put in, and relationships are such that making the time and the plans will go a long way in creating meaningful memories.

I’ve become more focused on gaining depth in my role as business owner and as a marketing consultant. The books, the hands-on experience on dozens of projects, and active learning from various experts have all helped me to gain confidence in my knowledge and armed me with skills to provide value to our Barrel employees and clients. I’ve never been more pumped about learning and the possibilities that going deeper presents.

When it comes to having more patience, there will always be room for improvement. I am, however, quite happy that I got into distance running and daily meditation. These two habits have helped me to concentrate for longer periods of time, stay in the present, and not get rattled too easily. I find that the things that stressed me out in the past for prolonged periods of time (e.g. an upset client, issues with an employee, external forces that cause inconvenience, etc.) have become less anxiety-inducing. In fact, more and more, I see issues and problems not as crises to react to right away but as opportunities to learn and create better systems and processes to prevent in the future. And for any issues that are out of my control, I accept that there’s not much I can do and proactively shift my focus to something that is within my control.

As I look ahead to the next 5 years and beyond, I know there will be all kinds of twists and turns. There may be very big life changes that’ll require me to adapt and revisit some of my priorities. And as these things happen, I hope that I’ll have the right mindset to embrace the challenges and continue to appreciate the privilege of being alive.

Pricing Creativity: A Guide to Profit Beyond the Billable Hour is a book that provides rules and tactics to help creative professionals charge more for new work and run a more profitable business. It’s by Blair Enns, the founder of Win Without Pitching, a training program that helps creative professionals win more business.

I’ve been a follower of Enns for some years, having paid for access to his materials, enrolling in his online course, signing up for his webinars, and listening to his podcast. I really enjoyed reading this book and found myself texting excerpts to my partners at Barrel, insisting that we ought to try X and Y approach the very next day.

Enns references quite a bit of the popular psychology terms that’s all the rage in business books these days, especially the different types of cognitive biases that shape our behavior. What I appreciated was how he tied these concepts to the everyday situations that creative professionals face when working with prospects and clients, and how, by understanding their biases, we can influence them into making decisions that can improve our outcomes.

This post isn’t a summary or a detailed overview of the book but thoughts on some of the takeaways that I found immediately applicable to my work at Barrel. Enns presents 6 “Rules” that make up something of a framework for pricing based on value and not by selling time. Five of those rules are represented in my takeaways below.

There’s a great deal of detail and practical advice that I don’t discuss here, including the emphasis Enns puts on “mastering the value conversation.” If you are in the creative services profession, I would highly recommend investing in the book, which you need to buy off of the website. One successful application of his tactics might net you 10X+ what you spend on the book.

Lesson 1: Price the Client and Not the Job

A principle of price negotiation is that the sooner in the sale you offer a price, the lower it is likely to be. Understanding the client’s context, and therefore your potential for value creation, takes time. If you find yourself offering prices early, you’re almost certainly short-circuiting the patient information-gathering that needs to happen in order to price based on value.

This wasn’t a revelation for us at Barrel, but it was a good reminder that taking the time during the information-gathering process to deeply understand the client and their business would help us form better ideas on the value of our services to the client.

In fact, when I think about one of the more significant changes a Barrel over the past 2-3 years, it’s been the shift away from seeing a new client as another project and instead, viewing them as a new relationship with the potential for several projects that may span from website redesigns to analytics and advertising work.

Lesson 2: Present Options in Your Proposals

One of the biggest pricing mistakes that creative professionals make is to put a proposal in front of the client that contains only one option. In such a take-it-or-leave-it proposition there are only two outcomes, 50% of which are positive and 50% of which are negative.

If you resolve from hereon to always put three options in your proposals, you will increase the percentage of positive outcomes by half.

Presenting options changes the question you are asking the client from, “Does this proposal represent good value?” to a better question, “Which of these proposals is the best value?” The brain is wired to answer the second question. In fact, it is incapable of answering the first question without first answering the second.

I’ve seen this work when it comes to our support & maintenance packages. It’s something we’ve been rolling out in more and more of our proposals.

I can recall so many conversations where I presented just a single price and the client, wanting a point of comparison, would go out and shop around only to get flustered because the prices were so vastly different from each other as was the understanding of what was and wasn’t included.

Lesson 3: Anchor with a High-Priced Option

“Anchoring is the tendency to rely too heavily on the first piece of information received,” Enns writes. Combined with the lesson above on presenting options in our proposals, I really like the idea of having an anchor option that pegs the value of an engagement very high in the prospect’s mind.

For a client with a budget of $20k, for example, it might make sense to begin with a $100k case study, allowing the firm to show the depth and breadth of its work while leveraging a high anchor. By comparison, a second case study at the $50k investment level will look reasonable, and a $30k option might look like a bargain.

A lazy mistake we’ve made over the years is to find out a client’s budget and to craft an option at exactly that level or perhaps a little bit higher, hoping the depth of the proposal’s details would impress and encourage more spending. This, of course, rarely happened.

What I’d like to see us doing more, per Enns’s advice, is to anchor with something high that equates to a “deluxe / the works” version, have a floor at the client’s budget that achieves the bare minimum, and present a middle tier that inspires the client to spend more while also getting more.

In terms of coming up with an anchor price, I really liked the question Enns poses in this highlight:

Whatever your answer to this question of, “What would we do, and charge, if money were no object?” it’s a great anchor option. When you present your proposal, beginning with this priciest option, you can easily explain, “We began thinking about solutions with a hypothetical exercise of what we would do if you were not budget constrained. Indulge us for a minute while we share what we came up with. It might inspire some ideas.”

Lesson 4: Say a Price Before You Show a Price

By forcing yourself to state a price before you show it, you are committing to talking about money before you retreat to write a proposal. By offering pricing guidance in the forms we’ve already discussed in the previous chapter, you allow the client to become conditioned to the investment you will ask her to make and you create the opportunity to discuss any price objections that may exist.

The key principle of handling objections, of price or any other kind, is that early objections are your friends and late objections are your enemies.

I absolutely love this simple yet effective approach. I’ve been trying it out on certain prospects and it’s helped to surface price objections much earlier in the process. It’s especially useful for prospects that don’t want to reveal their budgets. They’ll typically say something along the lines of: “We’re not sure yet, we haven’t discussed our budget / we’re still exploring options.” But when you let them know that you’ll be exploring proposal options from the $Y to $X range (Enns recommends writing/saying high to low when talking about price), there’s often a reaction that sheds more insights. “Oh, $Y is crazy, no way we can afford that, maybe half of that at most…”

Lesson 5: Keep Your Proposal to One Page

Enns recommends coming up with a one-page proposal format that presents the pricing tiers and is less of a submitted doc and more of a guiding document used in closing conversations. I know that for certain types of engagements, we need to be a bit more in-depth with our proposals especially if the prospect is dead-set on having a committee review multiple proposals side-by-side (a situation we try to avoid participating in as much as possible), but I’ve been testing a one-page format for various prospects where I know I can get on a phone call or meet in person to walk them through the options and reinforce themes about value and process that we’ve had in prior discussions.

Lesson 6: Invoke Policies

We run into policies all the time when negotiating with clients, and when they use them, we always back down. Anytime a client invokes a policy, they seem to win. But we shouldn’t let them, not always. We lose because we come into the negotiation backed by preferences and inclinations. Policies trump wants every time. We need to use more policies in our negotiations, and we need to meet policy with policy when a client uses one.

My partners and I found this one very amusing but also so true. We’ve actually been more and more eager to invoke policies, especially when there are requests or demands that are at odds with putting our team in the best position to perform well. Some policy thoughts we’ve dreamed up or actually used recently include:

• It’s our policy not to participate in spec work unless we are able to publish it publicly and use it in our portfolio.
• It’s our policy not to kick off the engagement without first reviewing proper intake materials from your team.
• It’s our policy not to launch websites on a Friday.
• It’s our policy not to start work until the initial payment has been received.
• It’s our policy not to disclose our private financial information.

Lesson 7: Leverage Social Influence to Position Yourself as an Expert Practioner

Occasionally, you’ll be asked to sell to a prospect with requests like, “Tell me why we should hire you.” An expert practitioner should never accept such an invitation. Instead, counter with something like, “How about instead of trying to convince you, I tell you why our current clients hire us, and you can see if those reasons make sense for you?” By refusing the invitation to relegate yourself to vendor status, and instead, bringing your clients’ peers into the room, you have effectively swapped your own self-serving bias for your prospect’s bias to be influenced by others.

Oh boy, how many times have I accepted such an invitation only to fight an uphill battle? I really like the response Enns has written here, and it’s something that would play well to our strengths in most instances. In situations where I had the awareness to point at our body of work and to call out specific clients, the outcome was much more positive. When a prospect hears that you’ve successfully achieved something for a brand that they admire or have at least studied, they’re more likely to see you as capable and experienced.

I recently paid for an online course called The Art of Focus (unfortunately, it’s no longer open to new students). It’s a series of videos and exercises designed to help increase my capacity for deep, focused work. In the introductory video, one of the topics is about Deliberate Practice. Here’s an excerpt:

In the early 1990s, K. Anders Ericsson, a professor at Florida State University, studied experts and amateurs in an attempt to discern why they were different. Ericsson came to the stark realization that we can improve performance. What distinguishes the great from the normal is a function of applied effort in the same direction. In his words, to become an expert, requires a “life-long period of deliberate effort to improve performance in a specific domain.” There are two components to this worth noting. The first is “specific domain,” which means we’re applying our effort not to 100 things but one subject.

Think about learning to play the violin. Have you ever watched someone practice an instrument at a high level, or done so yourself? They don’t alternate playing a scale with returning emails. They don’t alternate practicing difficult passages with checking Facebook. They sit and focus, letting their entire mind and body work on the task at hand. That is kind of focus you need to seek, because it’s the only thing that works. The second notable component here is the term “deliberate practice.” If we want to master any cognitively demanding field, it’s not enough to practice. We need to practice deliberately.

…Deliberate practice is designed to improve performance. Deliberate practice isn’t fun. It requires (1) focused attention on a specific skill; (2) immediate feedback; (3) rest. If it’s not something where feedback is obvious and immediate, we often need a coach or mentor to help guide us. In fact, even when feedback is obvious and immediate, a coach can often point out things we can’t see. 

I’ve been thinking about the areas, the specific domain, in which I can focus and improve my performance through deliberate practice. There are two that I really think are important.

Deliberate Practice #1: Making Presentations

The first is the skill of making presentations, especially with the use of a Keynote/PowerPoint deck. In my line of work, there are numerous instances where I have to make a presentation and hope that it goes well. Some are with prospective clients evaluating Barrel as a potential agency partner. Some are with existing clients who want to know what we’ve done for them lately or are expecting fresh new ideas. And others are with our internal team either in group communication settings (e.g. the monthly team meeting) or in one-on-one training sessions. It’s not uncommon to have a handful of presentations each week. So, why not deliberately practice and get better?

One thing I’ve been doing to pay focused attention on the skill of making presentations is to read books on the topic. One book that’s been really helpful is Beyond Bullet Points by Cliff Atkinson. It provides step by step guidance on how to put together and present impactful PowerPoint presentations. An immediate takeaway for me was to spend more time developing the structure and headlines of my presentation rather than jumping right into creating each of the slides. Once I began to understand Atkinson’s methodology, it made me cringe at the moments when I stuffed text onto a slide and read them out loud in front of my client or employees.

I think when it comes to getting immediate feedback, making presentations is a great skill to pursue because it’s possible to get usable feedback right away. Without even asking, it’s possible to gauge audience engagement and attention throughout a presentation. With prospective clients and existing clients, I may have to go by on this. With our internal team, however, I can simply ask an employee or one of my partners for their sincere thoughts and get some data on areas I need to improve.

Deliberate Practice #2: Pricing & Closing Deals

I’m almost finished with Pricing Creativity, a book by Blair Enns, which teaches (and preaches) value-based pricing for creative firms. It’s an exciting read for me as it touches upon a lot of the things I experience on a daily basis. I’ve been live texting my partners with excerpts as I come across insights that I think are “must-try” tactics for the business. It’ll take a great deal of effort and learning to master value-based pricing (the concept of pricing not based on our effort/number of hours but charging clients based on the value we add to their business through our work; e.g. if we add $1 million of business to their bottom line, then we should price for at least 20% of that and get compensated $200,000).

The idea of focusing on pricing and closing deals as a skill makes a lot of sense. This includes a few different components: mastering conversations with prospective (and even existing) clients, persistently testing out the value-based pricing approach (not all client engagements/projects will be appropriate for this), and ultimately closing the deal, which may include the submission of a proposal and negotiation of contracts. In other words, I want to deliberately practice the art of sales with pricing as a priority concern.

Each week, I have a handful of conversations that put me in position to practice (Sei-Wook, who handles most of our inbound sales inquires, is in position to practice at least a half dozen times a week). The key will be to put in more preparation work, to consciously note the flow of the conversations, and to put into practice some of the tactics I’ve learned from reading various sources. The feedback will be quite immediate if I’m careful to pick up on the prospect’s responses. I know I’m bound to make some mistakes and lose some opportunities as I push certain conversations towards value-based pricing, but it’s something I’m very keen to try out and learn from.

The other side of making sales a deliberate practice is to carve out time to develop smarter proposals. Pricing Creativity urges firms to create one-page proposals with multiple options. This is something we don’t do regularly, so I’ll have to devote some deep work time to writing out one-page proposals that prospects find acceptable. I actually think such a format, in the long run, will prove quite successful. The challenge is making the time to explore this new format and being persistent about sticking with it even when the first few prospects might reject or give negative feedback about it.

It’s All About Communication

Overall, I’m pretty excited about the idea of focusing on these two areas in the coming months and seeing how far I can take them. Because I am not a performer in the traditional sense–it’s hard to define and measure my contributions and output like you would a basketball player or even an actor–I find that the skill sets I can focus on revolve around my ability to communicate. When it comes to selling, managing employees, making presentations, etc., what I’m doing ultimately boils down to communications. So in order to be the most effective I can be at my job, my deliberate practice opportunities, however I label them, will most likely be tied closely to communications. There are a some other areas I have my eyes on, but for now, let’s start there.