Archive for March, 2008

Emailing Bad News…The Sandwich Approach

Wednesday, March 26th, 2008

I’ve previously written that communication in writing is the worst way to communicate. But what if you have to communicate that way and on top of that, you have bad news to deliver? Whether in a letter or an email, one technique can make the bad news a little less disheartening.

Write your message like a sandwich. Put the bad news in the middle. If you can find some good news to start with, and end with a positive tone, then it makes the bad news easier to consume.

This method isn’t the only way to deliver bad news in writing. Another way is as an open-faced sandwich, with the bad news in the beginning, but with positive reinforcement thereafter. Here’s an example of that approach, in a rejection letter to a candidate for a law clerkship:

“Although I am unable to offer you a position, I very much appreciate the interest you expressed in a clerkship with me. Your talent is evident, and I regret that demands on my time precluded an interview with you.

With best wishes for a rewarding career in the law….”

Securities Offerings on the Internet

Wednesday, March 19th, 2008

In the 1990s, my colleague, Lou Turilli,* and I wrote an article for The National Law Journal about how the Internet might shape securities offerings. I followed that up with an article for Wall Street Lawyer, Securities Offerings Online By Small, Nonpublic Businesses. It specifically focused on whether small companies could viably offer and sell securities on their own via the Internet. I concluded that, “Clearly, selling securities online is a viable concept. Yet until fundamental issues such as the problem of gaining visibility, the lack of secondary markets, the arbitrary pricing and the disinterest of established investment bankers each are addressed, the opportunity for small businesses to raise capital in cyberspace will hold great promise as an idea, but be of limited practicality in the real world.”

I don’t think that my conclusion has changed. Distribution and pricing remain key obstacles for companies that want to promote their own online offerings. Marketing the securities is still a serious issue, and there are credibility concerns for the companies as well. Thus, serious companies will continue to pursue the traditional route.

* Lou and I practiced law together at Day, Berry & Howard. She recently was Vice President and General Counsel of Ryerson.

Crafting a Message That Sticks

Wednesday, March 12th, 2008

I like what Chip Heath, Professor of Organization Behavior at Stanford, has to say about communication in The McKinsey Quarterly.* In this interview, he discusses “sticky ideas,” ones that people remember and that change something about the way they think or act.

Professor Heath states that the best advice is to make messages more concrete. Keeping them simple and credible, emotional and unexpected-with surprises-are other basic traits of sticky ideas. Finally, telling a story makes a message more effective, as “[s]tories act as a kind of mental flight simulator, preparing us to respond more quickly and effectively.”** Good stuff.

* registration is free.

** As a junior lawyer, I had to draft a securities filing for a complicated transaction. I was working with a seasoned attorney in our firm and his advice was to “tell a story.” The point was to make it easier for those reading it (i.e., the regulators at the SEC) to understand. I don’t remember much else about the transaction, but this stuck with me.

Sam Walton’s 10 Rules for Success

Thursday, March 6th, 2008

In 1962, Sam Walton founded Wal-Mart. He built it into the largest retail company in the world. He had 10 rules for success….

Rule #1
Commit to your business. Believe in it more than anything else. If you love your work, you’ll be out there every day trying to do the best you can, and pretty soon everybody around will catch the passion from you – like a fever.

Rule #2
Share your profits with all your associates, and treat them as partners. In turn, they will treat you as a partner, and together you will all perform beyond your wildest expectations.

Rule #3
Motivate your partners. Money and ownership aren’t enough. Set high goals, encourage competition and then keep score. Make bets with outrageous payoffs.

Rule #4
Communicate everything you possibly can to your partners. The more they know, the more they’ll understand. The more they understand, the more they’ll care. Once they care, there’s no stopping them. Information is power, and the gain you get from empowering your associates more than offsets the risk of informing your competitors.

Rule #5
Appreciate everything your associates do for the business. Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They’re absolutely free and worth a fortune.

Rule #6
Celebrate your success and find humour in your failures. Don’t take yourself so seriously. Loosen up and everyone around you will loosen up. Have fun and always show enthusiasm. When all else fails put on a costume and sing a silly song.

Rule #7
Listen to everyone in your company, and figure out ways to get them talking. The folks on the front line – the ones who actually talk to customers – are the only ones who really know what’s going on out there. You’d better find out what they know.

Rule #8
Exceed your customer’s expectations. If you do they’ll come back over and over. Give them what they want – and a little more. Let them know you appreciate them. Make good on all your mistakes, and don’t make excuses – apologize. Stand behind everything you do. ‘Satisfaction guaranteed’ will make all the difference.

Rule #9
Control your expenses better than your competition. This is where you can always find the competitive advantage. You can make a lot of mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you’re too inefficient.

Rule #10
Swim upstream. Go the other way. Ignore the conventional wisdom. If everybody is doing it one way, there’s a good chance you can find your niche by going exactly in the opposite direction.

Fundamental and Technical Analysis

Sunday, March 2nd, 2008

Two analytical models exist to determine the appropriate price of an equity security.

Fundamental analysis focuses on analyzing a company’s financial statements and condition, its management, and its markets and competitive position.

Technical analysis focuses on studying a company’s market action via the supply of and demand for its securities in order to estimate future price trends. Michael Kahn writes for Barron’s Magazine and has an excellent blog, Behind the Headlines, that concentrates on the techinical analysis of securities and markets.