Have you ever noticed how much you can learn about people simply by watching them?

A few years back, one of my very best clients called to say that he would be coming into town and that he would like to drop by the office just to say hello.

“Sure,” I said, “It will be great to see you and I’m sure we can catch up on old times.”

I should point out the fact that this particular client, and although he had not been by to see us for some time, paid a lot of our bills. If not our biggest client, he was certainly in the top five.

At that time, I had a young and ambitious guy who pretty much ran my customer service department. He was very effective, but had a penchant for sticking his nose where it didn’t belong. In other words, he was political.

That combination, “political” and “ambitious,” can be quite harmful to start-ups. It’s instead the stuff of corporations. In fact, it’s the kind of stuff that keeps me from growing my companies to the point where they become corporations.

But, you take everyone on balance, and this guy’s contributions were more than enough for me to overlook his blind ambition.

This guy had another talent. He also seemed to be very good at garnering and harboring information. (Part of the package, it seems.) In this case, he had learned in advance that our visitor had also recently been the recipient of a very prestigious award. Neither I nor anyone else in our company knew about this.

Long story short, our young friend went out and had a plaque made. This plaque congratulated my customer on his achievement. And, here’s the best part...the damned thing came from “him,” and not our company. You could imagine my dismay when he made this presentation right in front of a half-dozen of our people. My customer was flattered and grateful, but I could tell he also was having a lot more fun just watching my face.

Observation.

Not long ago, I introduced a “friend” to an individual with whom I was doing business. I made the introduction because this “friend” had asked me for names of people who were working in a particular market niche. The person that I introduced my “friend” to was about to enter into discussions with me and my company; discussions that would likely turn into some significant business for us.

So, when I asked my “friend” why he wanted to talk to this soon-to-be client, his reply was, and generally, that he “just wanted to gain some background information on that market niche.”

In that this individual was more than capable of competing with me in this same niche, I did something I don’t normally do, which was to say to him, “You’re not going to try to ‘back-door’ me with this guy, are you?”

His response was one of absolute shock. “Ron, this is your guy…I wouldn’t even think of doing something like that,” he said.

So, you can imagine my surprise when less than a week later, I called my “friend” on what I thought was his office phone, but actually was his car phone and heard this other person’s voice cut in to say, “Hi, Ron, it’s me.”

(Sometimes you just have to shut off the old speaker phone.)

Observation.

What this transaction taught me about my “friend’s” character was priceless. All I had to do was pay attention.

I tell my students that observation is the absolute cheapest way to garner important market information. For example, let’s say that you’re interested in purchasing a particular restaurant. Sure, you can study the restaurateur’s books (both the ones he gives you and the ones he claims he gives to the IRS). And that is good. There’s a lot of information to be gleaned from one’s books.

But, if you really want to get a feel for the asset you might be purchasing, you’re probably far better off just sitting at a table in that restaurant (or have some confederate do this for you), observing such things as table turnover, size/cost of meal, attitude of wait staff, and time-to-serve.

Another great observational tactic is to plant yourself in the parking lot, and to see just what kinds of cars patronize the place. (This is unfortunately invalid in California, where everybody leases).

Observation is truth.

I don’t know if that’s in the Bible, but it should be.

Ladies are told from the time they are little girls, “Watch how your boyfriend treats his mother, because that’s pretty much the way he will treat you.”

A lifetime of observing this tells me that this is more than just an aphorism. Same thing with mothers and their “little boys,” but I won’t go into this.

Lastly, let me point out just how much you can learn by observing process. Regular readers of these columns know that I’m a big fan of process. The very first night of almost every class I’ve ever taught, I say to my students, “All the world’s a process.”

The trick is to break the process down into what we call process flow. “Process flow” is simply all of the steps, or activities, in an operation. For example, when you wake up in the morning your process flow should have you taking a shower before you get dressed. That would be a huge mistake. For that would “reverse” process flow.

Companies (the good ones anyway) run on good process flow. And, the reason they do is because someone, and somewhere along the way, has separated the “value-added” activities from the “non-value-added” activities.

An activity that adds value (sorry about this) is valuable. Conversely, an activity that does not add value to the overall process is known as waste.

Just as boats acquire barnacles as they sail; good, solid and smooth-flowing processes acquire non-value-added activities. Unfortunately, you will see a lot of this in union environments. Activities that contribute little or nothing to the overall process find their way into the stream. An example of this might be an airline bringing in an entirely different worker to perform a task that the previous worker could also have performed while he or she was already in a position to do so.

Think of an airline such as Southwest. Southwest’s flight attendants are also able to take tickets at the gate. Many unionized airlines have a completely different class of employee doing this. This is inefficient and no value is being added by the worker.

Last fall, the students in our Intro class did a project down in Deep Creek, Maryland. It seems that a non-profit organization down there built a whitewater rafting course (believe it or not) on the top of a mountain. The water is actually “pushed” by some huge turbo-powered jet engines.

My students were instructed to observe the process flow from the time a prospective customer pulled into the parking lot until he or she began riding the waves.

In all, there were something like 75 unique activities in this process. Unfortunately, more than half of them added no value whatsoever. Moreover, they served to confuse/demoralize the customer.

We recommended that these worthless steps be eliminated altogether.

All of this saved a great deal of time and money on behalf of the whitewater facility. Moreover, profits increased and through-put vaulted. All of which occurred because someone merely observed, then charted the activities taking place, and then eliminated the non-value-added activities.

So there you have it. Observation, observation, observation!

You can learn a lot by watching process flow and you can learn just as much by watching how people interact. It costs you very little to do so and the payback can be extraordinary.

Happy observing!