Persuasion Pointers

The founder of the Private Equity firm I used to work for hugely favoured backing CEOs who had, at some point in their career, worked in sales.  Why?  Because he recognised being able to persuade people of an idea being a winning one is critical to entrepreneurial success.   Entrepreneurs who are comfortable with selling have a head-start; they better understand persuasion techniques and how to use them.   So if you are an entrepreneur and you don’t have sales in your arsenal (and especially if the idea of selling makes you wince) then you should do something about it.

Start here with this amusing quote from How to Win Friends and Influence People, the very famous book on persuasion by Dale Carnegie, “Question: why do people like dogs? Answer: because dogs are always happy to see them.”   Follow this advice!  Feign happiness if you have to, just don’t be grumpy in a meeting where you need to persuade people!

I’m glad you are now happy, but no doubt you are still uncertain as to how to be persuasive, so here are some thoughts for you:

Consider starting by emphasizing what the person (investor or potential client or customer) would miss out on by not embracing your idea.  Academic research has identified we are wired to feel the pain of a loss more acutely than the pleasure of a gain, so let them know what they are missing.  I recently read there is evidence this is a more persuasive starting point than stressing the benefits of your new idea, so it is definitely worth a try.

Can you have the audience experience the benefits of your idea? We all know about telling them the benefits, but accord­ing to a psy­cho­log­i­cal con­cept called the endow­ment effect” we tend to val­ue some­thing more once it is in our pos­ses­sion.  This is the motivation behind giving things away for free – especially the time-limited free subscriptions to media services – as it is harder to give something up once it’s been yours and you’ve enjoyed it.

Finally, tell them how others are already delighted with your product or service.  People tend to make decisions based on the behaviour of those around them, after all, many businesses, including the likes of TripAdvisor and RatedPeople – to name just two – were founded on this insight.  So secure some easy wins, get influencers on board, bandy around some names (they must be genuine – lying is stupidly risky) and be confident.

Your audience is very likely to go and check you out, so you must convey the same messages in the rest of your marketing materials.   All your hard work can be easily negated by simple and basic mistakes.  Let’s suggest you’ve successfully conveyed scale in your meeting, but you’ll straightaway ruin this if you have your own voice on the main office answering machine or use your email address for general enquiries, for instance.   Your website must belie that you are a tiny firm – there really isn’t any alternative – and it must persuade by using the vision, words and images consistent with your sales pitch.

All too often we are dismissive because we feel sales just isn’t in our DNA, but this doesn’t fly if you want to be a successful entrepreneur – you must learn how to be persuasive.  Meet this challenge head-on and yes, some people are naturally better at this, but good salespeople work at their craft, so you can too.

See https://www.activecampaign.com/blog/best-books-on-persuasion/ for more.

 

 

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Stress & the CEO: What role for the NED?

There’s no doubt its a tough job being a CEO, but it goes stratospheric when you have to manage a game-changing situation that has the potential to destroy or seriously damage the size and shape of your organisation.  Take the challenge of access to capital for instance, as it is one of the top concerns for scale-up entrepreneurs and SME CEOs and consequently one of the top stresses. Which is hardly surprising when its quite usual for the process of raising finance to be more lengthy, more onerous, more incomprehensible and less within the CEO’s control than anyone had forethought.

I read recently that some financing professionals claim the rigorous and stressful process of raising capital ensures that only the best companies (i.e., those most likely to succeed) receive funding. There may be some truth in this, as I’ve certainly seen companies produce clearer, more thorough and more strategically robust business and financial plans as a response to external scrutiny and criticism. But, if only it’s a perfect world, as for every good outcome of the process of raising capital, I’ve also seen a bad one:  spurious demands for data, reports and analysis; legal documents full of irrelevant clauses (only inserted to be negotiated out); and, worst of all, processes that seem to be going swimmingly only to be derailed just when nearing the finish line. Go figure that persistence and resilience are considered the most vital qualities needed by CEOs of companies trying to raise capital.

It also means that money, or the lack of it, becomes the focus of conversation around the Board table and, consequently, as the CEO bears responsibility for raising capital, they face mounting pressure. We also expect them to shield employees from this pressure and to retain a calm, positive and contained exterior for fear that otherwise others in the company will get stressed and performance will go downhill.

Crikey, who’d take on that job?

This is a good reminder to NEDs: the CEO is only human and more than likely the situation is causing them extreme frustration, irritation and disappointment to the extent that they are probably wondering what possessed them not to take the sensible job which was on offer at Google. So allowing the CEO time to vent is imperative, especially because those who hold the power over the investment cheque can make unexplained decisions perceived as unjust and unfair. Its elementary human psychology to want to be listened to, and so it is crucial that Non-Execs don’t just jump in with ‘solutions’. Neither should they suggest inane actions that have already been pursued, nor should they express opinions such as “if only the CEO had spoken to so-and-so” if they themselves have not offered any practical help to introduce the CEO to this seemingly very important person known to them.

So once the gripes and frustrations have been aired, the team needs to constructively turn their attention to “if not this, then how else?” and when the leader of the company is experiencing significant stress, NED’s need to be allies not critics. Studies have shown that to build resilience, you need to buffer collective stress and support is essential for stress management within groups. While you don’t need to be the best friend of everyone around the Board table, you do have to work together and cultivate a collective belonging and belief in the talents of the team to get through this crisis.

The good NED then brings perspective, experience, wisdom, clear thinking and contacts. We all know the importance of being forced to pause and reflect when in the thick of a fight and this is where intervention from the NEDs can be so helpful, using the clarity that comes from not being in the day-to-day miasma. They can identify strengths that may be being overlooked, focus the executive team on being data-driven (as the enemy of anxiety is good information) and offer practical help. NEDs should deliver a dose of realism, but they should not be unduly negative as openly reflecting on the dire nature of the situation and being a harbinger of doom helps no-one.

Adding to some CEOs stress is, of course, the underlying concern that the Chairman of the Board can ultimately sack them. Believe me, though, it also adds to the Board’s heightened anxiety that the CEO ultimately can resign! Either way, you will always find pundits who want to introduce someone new to boost the chances of improving a business’s fortunes.  Realistically, finding a CEO replacement at short notice for a company that is strapped for cash is nigh-on impossible, but introducing additional firepower is certainly an option that everyone involved should entertain as anything that helps the company live to fight another day is worthy of being explored.

Times like these are extraordinary so they call for an ‘all hands to the pump’ mentality.  This will help a business raise the capital. For instance, NEDs can introduce possible new investors from their networks or behind the scenes they can use their influence with the external decision makers or, just simply, they can add credibility to the plan by publically voicing their support for the CEO and executive team.  The stress on the CEO will only be worse, and the outcome less favourable, if the resources around the Board table aren’t used and this stress can become toxic and highly unproductive so the absolute last thing your CEO needs in this circumstance is a ritual beating.

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Of course, I hope all the CEOs out this predicament weather the crisis, but realistically there are times when it just doesn’t work out.  In these cases, having NEDs on your Board who have experienced it before can help with the practicalities of winding up a company, but when they also have the capacity to be phlegmatic, reflective and supportive it could be the difference between giving up your entrepreneurial dreams or trying again.