Training: Running the Business
Lessons from my most recent company training: Running the Business
I enjoy company training and to solidify my learning, I share with my team and write them up here. I will explore my key leaning’s from Running the Business training: the concept of ‘negotiating with yourself’ and hours in the context of an ad agency.
If you are not in the services industry, you will pick up a new understanding of what’s going on within the industry and when I ‘negotiated with myself’. This article will take you six minutes to read.
Running the Business is a training created by BTS for Ad Agencies to improve attendees’ understanding of the advertising business from a leader’s perspective. The training consists of:
- A game simulation of running a team in an ad agency: AdMedia.
- Each team competes with each other by selecting different choices that affect different parts of the business: employee engagement, client satisfaction, hours, revenue, expenses, etc.
- The winning team determined by specific measurement: Operating ratio, which is revenue to EBITA. The team with the highest operating ratio, while not having the lowest employee engagement or client satisfaction wins.
Key lessons I learned from the training
- Negotiating with Yourself
- Hours, hours, hours
As my background is in software, the above topics jumped out at me when running the (simulated) agency.
Ad Force One
The game had ‘names’ for everything, the agency you were running, the client and parent company. We had to give ourselves a name. We chose: Ad Force One. Big shout out to my team: Lina, Vanessa, and Alex for an awesome learning experience.
Negotiating with Yourself
This is a situation from the game:
The client company hired a new Chief Marketing Officer and has never worked with your agency. The brand director has told you that he wants to be ‘wow’-ed and said the old slide deck may not cut it. The brand director has arranged time for you to meet the CMO on short notice. Given these choices, which one do you choose and why?
- use the same slide deck as what got you business before
- saving you time because it’s well put together and well rehearsed
- create a new “experience” to really impress the client
- working with your team extra hours and even on the weekend to make it awesome
Both are valid solutions, which one to pick? Which one is the “right” one? In similar situations, what have you really picked?
Most likely the latter. Why?
The trainer brought up the idea that we usually choose the second one only because we “negotiate with ourselves” into believing the second solution is the far better solution and the first one is unimaginable using the following reasons:
- New stuff is always better than old stuff.
- The new CMO is not impressed with the old stuff (and probably has seen it.)
- A new experience can impress better than a well rehearsed presentation (that got you the business!)
- I need to do the extra work to impress the CMO because that will lead to more business.
- The CMO will appreciate a new ‘experience’ over a slide deck, because I don’t want to see my old slide deck again.
Either way, there are numerous reasons and all justifiable ‘in our head’.
I never considered the difference and automatically justified doing the new (and extra) work over the old work.
The trainer explained this justification of doing new work is: “Negotiating with Yourself”. When I think of other situations, I do this and didn’t even consider other options. Seeing this concept illustrated in this manner, it’s made me rethink my decision process and I want to find out more.
Searching for “Negotiating with Yourself” in this particular context is tricky. I had to go through pages of results to find this article that’s related to this specific topic.
Key points from the article:
- Negotiating with yourself happens easily in a sales situation.
- We are negotiating with ourselves when we proactively give discounts or improve offers before there is an objection.
- Your reaction dictates their response: offer more, they will think of more to ask. Give discount, they will think of how much more to discount.
- “Confidence overcomes most shortcomings except for an ego.”
- “Silence is a beautiful thing.””
A point of Confidence
By negotiating with yourself, you’re already put yourself in a weaker position than the other party. If you are confident in your offering, show it by making the offer and let them decide in silence. Do not negotiating with yourself before they respond and ‘offer more’. It’s a disservice to the effort put into your original offer.
Let the other party find the confidence to counter. Maybe they think it’s a reasonable offer. If not, they will tell you (in one way or another!)
Negotiating with yourself and creating a “pre-counter” only lets the other party think: “How much more can I get?”
Using this knowledge, I will stop “proactively objecting” and let the other party come raise their concerns with the offer. If they raise concerns. that’s when negotiation happens, with them, not with myself.
Even as an engineering manager, I realized I recently negotiated with myself, I was offering more than requested.
The problem is our system needs a status update of what’s going on with an external process. The external process requires humans so this involves working with the support team.
The initial solution was to have email sent, that automatically creates a support ticket on their system.
There were concerns about track-back, clicking update URLs, accuracy, click errors, you know, usual human activities.
I proposed: how about having our system connect directly to their support system. That would solve for the human error part, and provide opportunity for correction without teaching the support team a new tool.
At the end, I realize, even with a direct integration, the only information our system needed for the whole process was the status. It would appear as a little circle and when the process finishes, the circle changes color.
How much engineering effort should go into that dot?
In this case, I negotiated with myself up to offering more (full integration between systems) than requested (simple status update). The offering satisfied the original ask and increased the burden on my team to set up that integration.
Whew - glad I dodged that bullet!
Hours, Hours, Hours
My background is not from an ad agency or service oriented business, so hours are just “hours” to me. I work, I get paid.
In the game, hours have a different meaning. Hours are an important part, with the game board dedicating around half of its space to tracking hours, specifically:
- Billable hours
- Non-billable hours
- Internal hours
Let’s define them:
- Billable hours are hours spent on work specified with the client, the deliverable, the results, agreed upon output.
- Non-billable hours are hours that are necessary for the client work and are not towards the output/deliverable/results. Typical examples: administrative matters with the client like detailed invoices, doing work over again because of an agency oversight, fixing bugs, etc.
- Internal hours are hours that are for the agency, not a particular client: holidays, sick days, preparations for presentation to new clients, putting together/responding to request for proposals, training, etc.
A client will only pay for billed hours, hours applied directly to the specified result. Any extra hours that is not “billable” has to go somewhere, which are non-billable hours or internal hours.
In the game, I found the non-billable and internal hours crept up and affected our profitability. If the client is not paying for those hours, the business owner is paying for them!
As the business owner, what’s the main source of income? The client. The business owner must pay for any hours that isn’t billed to the client. As the client is income to the business, the client is indirectly paying for non-billable and internal hours.
Hence, increased non-billable and internal hours deeply affects profitability.
One key take away from my team member, Lina was changing her view on day-to-day activities. Is what I’m doing “billable”? Is what the client asking a “billable” activity? If not, how can it be? How can I minimize it?
I love the training my company provides. I wondered why there wasn’t a bigger wait-list, or that people would suddenly drop out.
After this training, I realize taking company training is more expensive than increasing Internal Hours, it’s also decreasing Billable hours! A double whammy to the company’s profits.
The AdMedia game taught me the following key lessons:
- Don’t negotiate with yourself. Be confident in your offering.
- Hours are not all equal - internal and non-billable are expensive.
With this mindset, I am thinking more of a business owner and less as an employee. Actions I take have bigger effects on the business and I have better understanding on decision making process.
As for Ad Force One’s result in the game, we didn’t win, which is always a bit sad.
We might not have won the game, but we’ll win the WAR! :-)