Friday, November 28, 2014

Focus On Profits Is Not Enough For A Great Business

people_and_planet It’s always been tough to start a new business, even when the bottom line was just making a profit to stay alive. A few years ago, a second focus of sustainability (“green”) was added as a requirement for respectability. Now I often hear a third mandate of social responsibility. Entrepreneurs are now measured against the “triple bottom line” (TBL or 3BL) of people, planet, and profit.

The real challenge with the triple bottom line is that these three separate accounts cannot be easily added up. It’s difficult to measure the planet and people accounts in any quantifiable terms, compared to profits. How does any entrepreneur define the right balance, and then measure their performance against real metrics?

Lots of people are trying to help, with new twists on the age-old model of free-market capitalism that has driven businesses for the last 500 years. Current examples include the Conscious Capitalism® movement led by John Mackey, The B Team, led by Sir Richard Branson, the 1% for the Planet organization, and the Benefit Corporation (B Corp) now available in 20 States.

In the interest of helping first-time entrepreneurs, as well as existing business executives, keep their sanity as well as their focus, I offer the following pragmatic suggestions for dealing with the triple bottom line requirements:

  1. Sort out your personal definition of success first. Starting and running any business is hard work, so the last thing you need is “success” with no satisfaction. If your primary dream is to help the starving people around the world, or prevent global warming, you might consider a non-profit, academic, on government role, rather be an entrepreneur.

  2. Making a profit does not imply greed. Many young entrepreneurs seem to think that capitalism and making profit are dirty words. The reality is that you can’t help people or the environment, or yourself, if you don’t have any money. Businesses run by ethical people create value and prosperity based on voluntary exchange, while reducing poverty.

  3. Sustainability and social responsibility alone don’t make a viable business. As an Angel investor, I see too many business proposals that are heavy on sustainability, but light on financial realities. Most customers today won’t pay you five times the cost of alternatives, just because yours is “green.”

  4. The whole can be greater than the sum of the parts. The real opportunity for entrepreneurs is to provide solutions that solve a problem better than the competition, while also providing sustainability and social responsibility. Conscious Capitalism, for example, claims 3.2 times the return of other companies over the last 10 years.

  5. Responsibility and integrity are still the key. A responsible entrepreneur promotes both loyalty and responsible consumption by educating consumers so they can make more informed decisions about their purchases, based on ecological footprints, and other sustainability criteria. That’s a win-win business for the customer and the entrepreneur.

  6. Explore new forms of company ownership and profit sharing. There is no rule in capitalism that employees and other stakeholders can’t equitably share in the returns. In fact, there is plenty of evidence that these arrangements, such as with Whole Foods, are easy to implement, and pay big productivity, loyalty, as well as financial dividends.

  7. Begin tracking your positive social and environmental impacts. What you measure is what you get, because what you measure is what you are likely to pay attention to. Tracking can be informal, or you can follow a more formal system, like Global Impact Investing Ratings System (GIIRS). Even informal results can be your best advertising.

It’s a lot more productive and a lot less risky to start early in building your record of the positives on social, environmental, and people responsibility, rather than wait and hope never to be caught in an excessive profits scandal, child labor issue, or poor sustainability practice.

So while the bar for business success continues to go up, because we all now operate on a world stage, the entrepreneur “best practices” haven’t changed. Every entrepreneur needs to start with a strong vision, think long-term, communicate effectively, and always lead with responsibility and integrity. The days of success measured only by monetary returns are over. How does your business stack up against the triple bottom line?

Marty Zwilling


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Wednesday, November 26, 2014

Digital Marketing Is A Great Equalizer For Startups

ALS_Ice_Bucket_Challenge Most technical entrepreneurs cringe when they finally realize that marketing is still king, despite the power of technology, and they are up against competitors who have a hundred times their spending power. Luckily, the digital revolution has been a great equalizer in the marketing world, if used effectively to target the audience, engage the customer, and measure results.

Digital marketing is simply the move to the digital tools and technologies that most people depend on every day, including smartphones, search engines, tablets, video on demand, and the social media channels like Facebook, LinkedIn, Twitter, and YouTube. The cost of entry to market on these is low, and marketing leverage has very little to do with the size of your budget.

The best strategy and tactics to accomplish this digital marketing leverage are detailed in a new book, “Taking Down Goliath,” by Kevin M. Ryan and Rob “Spider” Graham. These industry veterans have been teaching smaller companies how to compete with digital marketing for many years, and have a wealth of case studies to show it really works.

The first step is to create the perfect online marketing message. This message is defined as the knowledge or information that will be retained by customers after they are exposed to your company. The authors reiterate what I often say to business to business (B2B) entrepreneurs, it’s all about selling solutions (not technology) to real customers who have real needs and problems they want solved:

  1. How does this solution solve an existing problem? Every business faces challenges that affect their sales efforts, manufacturing efforts, human resources, and other things that keep them viable and profitable. Not only must the solution benefit the company as a whole, but there can be emotional benefits as well for employees who feel the pain.

  2. How does this solution provide a competitive advantage? Solutions that can turn a threat into an opportunity are especially enticing. In a world where the common scenario is “eat or be eaten,” being able to help companies to be better predators and less likely to be prey will be compelling.

  3. How does this solution make the customer a visionary/market leader? Part of the competitive advantage in the marketplace is being perceived by that market as a leader in some way. Every company is striving to find an identity that highlights its unique selling proposition, to stand out from the crowd as a visionary.

  4. How does this solution enable a significant value exchange? Smart companies are always looking for a return on investment. If they spend time, money, or other resources on a potential solution, then that solution should pay for itself. That’s a value exchange, as are solutions that empower employees to make better use of existing resources.

  5. How does this solution represent an exclusive opportunity? In the business world, exclusivity isn’t just a social ego boost. Companies that have access to, or can sell products and services not available to their competitors, can position themselves better in the marketplace. Like people, businesses need to be known for what sets them apart.

  6. How does this solution increase performance and productivity? Companies that are more efficient in the use of all their resources will be more profitable. Solutions that increase performance include automation tools, equipment upgrades, and new approaches to manufacturing and distribution.

For business to consumer (B2C) audiences, effective marketing messages are also about triggering strong emotional triggers that consumers rely on to make decisions about the value and benefits of the offers they receive. These include a sense of well-being, convenience, security, significance, exclusivity, positive social standing, and others.

In both business and consumer environments, with digital marketing technology, the playing field between big companies, mid-size businesses, and even startups has been leveled tremendously. The new success factor is not the size of your budget, but your skill in crafting the right message, sending it out through the right channels, and tuning the system for maximum results.

Only in this age of digital marketing could a small non-profit, with a very limited budget, reach an audience of millions per month worldwide, with their “ALS Ice Bucket Challenge” marketing message, and achieve results exceeding $100 million. Don’t let big-budget Goliaths trample you merely by the size of their footprint.

Marty Zwilling


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Monday, November 24, 2014

Surround Yourself With People Smarter Than You

smartpeople Helpers do what you say, while good help does what you need, without you saying anything. People who can help you the most are actually smarter than you, at least in their domain. Top entrepreneurs spend more time putting the right team in place to accomplish their objectives than they spend on any other components of their job.

Some entrepreneurs are so in love with themselves (narcissistic) that they insist on answering every question, and making every decision. That’s not only impossible, but also counterproductive. Effective entrepreneurs team with or employ people who can provide the answers directly, pertinent to their particular area of expertise.

True leaders also know how to move out of the way to let others do what they do best. If you’re working too many hours and following up on every detail you may want to look closer at your team to ensure you’ve surrounded yourself with the right people.

In short, if you can find people with more passion, more knowledge, and more desire to succeed than you have, it will push you to be better and take the organization to new levels. Here are some key characteristics to look for:

  1. Gets things done. Smart people know what’s required, or can figure it out, and are confident enough to make decisions without you. Getting things done is crucial to running a business. Often people with advanced degrees have academic smarts, but are not closers. You can’t afford to make every decision, or follow-up on every action item.

  2. Recommend their own ideas. How often do the people around you recommend sound ideas that you never knew were possibilities? If you’re teaming with people who are smarter than you, you should be frequently surprised with their new ideas and solutions. You will be constantly learning from them.

  3. Passionate and positive. The smart people you want are as positive and passionate about your business as you are. They take ownership and responsibility for their actions. They convince you with their actions and questions that they understand the big picture. They speak confidently and deliberately, rather than defensively.

  4. More listening than talking. Look for team members who are active listeners, where you can see yourself seeking them out for answers, rather than always the other way around. It’s great to team with inexperienced people who are growing so fast, that you can envision working for them soon, or having them take the helm of your business.

  5. Avoid the narcissists. Their energy, self-confidence, and charm make them look smart, but they resist accepting suggestions, thinking it will make them appear weak, and they don't believe that others have anything useful to tell them. Narcissists will take credit for all successes, and always find someone to blame for their failures and shortcomings.

One of the most important jobs of every entrepreneur, and definitely one of the toughest, is to find and nurture people who are smarter in their roles than you. Resumes don’t provide much of a picture in this regard. Supplement this with networking input, references, and your own personal interactions.

If you are looking for a potential business partner, count on building a relationship over several months, before you really know the person. The business relationship at that level is just as important as a personal relationship before marrying (no overnight affairs). If you are hiring, make sure you have multiple interviews, and input from multiple people on the team to balance your view.

In my view, one of the most important aspects of being a successful entrepreneur is surrounding yourself with people smarter than you. Don’t let your ego get in the way. It’s the best way for you to grow the business, as well as yourself.

Marty Zwilling


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Sunday, November 23, 2014

Technical Entrepreneurs Often Fail By Early Adopters

DiffusionOfInnovation Every technical entrepreneur is an early adopter of technology, so naturally they build things with people like themselves in mind. Unfortunately, for most solution markets, early adopters represent only 10 to 15 percent of the total opportunity, so it’s easy to get mislead on the real requirements of mainstream customers. Psychologists call this the confirmation bias. I call it failing by early adopters.

The good news is that early adopters are never reluctant to sign up as beta customers and will provide you early feedback on product quality. The bad news is that they are not a good test of basic usability and ease of operation, which are always a key to the much larger market of regular customers. Consider the long market acceptance struggle of digital wallets and home automation.

Listening too much to early adopters often leads to an expensive death spiral, since these users will request more and more features, more precise control of the technology, and more interoperability, all of which increase the complexity of the product, and decrease the usability for the average customer. The result is a bigger and bigger chasm to cross to your real market.

Many in the business world has heard of the old bestseller by Geoffrey A. Moore, “Crossing the Chasm,” but most entrepreneurs don’t realize how much it relates to them. In fact, it’s all about understanding the differences between early adopters and mainstream customers, and managing your own marketing and development efforts to cross this deadly chasm.

Here are the critical points that you must understand for optimal product management and marketing to maximize results from early adopters, as well as maximize your opportunity from the mainstream later adopters as well:

  • Collect feedback across the total range of customers. Early adopters may be the most vocal, and easy to sign up, but your technology assessment panel must include customers from the early majority, late majority, and even technology laggards. These last three groups usually comprise up to 85 percent of your real market.

  • Usability features are as important as function. Features you designed for non-technical users, including wizards for setup, dashboards for overview operation, and simple buttons for complex processes, will get little or no feedback from early adopters. They will request and be more vocal about technically tricky and elegant features.

  • Eliminate interface complexity and clutter. Early adopters are not intimidated by dense user interfaces, with more options to control the technology, and the flexibility to do almost anything. Regular users like to see more white space, and are more impressed with the Amazon patented one-click-buy button, to complete a purchase in one click.

  • Balance your focus on engineering elegance. Many technical entrepreneurs continue to “tune” the system, and add new parameters for users to worry about, simply because they can. At some point, this becomes compulsive engineering, and the tradeoffs in time to market, cost, and user friendliness move the product out of the intended market.

  • Early adopters are cool, so you need them to kick-start word-of-mouth. You certainly can’t afford to ignore early adopters, or antagonize them. They are your early opinion leaders, so they are required to build the image that the rest will follow. The challenge is to attract them with an innovative solution built on great technology, while still keeping it usable, timely, and cost effective for the rest of us.

Early adopters are a critical but small market segment that must be treated with respect. They can be your best evangelists or your biggest critics at that critical point when you are crossing the chasm to the larger mainstream customer segment.

But don’t ever be become complacent due to excitement and passion from your early adopters. You still need the same reaction from your other market segments, and an appropriate marketing strategy for scaling the business into other segments. Ten percent of even a large opportunity can still leave you in the valley of death, rather than the pinnacle of success.

Marty Zwilling

*** First published on Entrepreneur.com on 11/14/2014 ***


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Saturday, November 22, 2014

The Best Business Leaders Are Visible At The Front

SpaceX_factory_Musk_heat_shield True leaders realize that, by definition, the word "leader" places the leader at the front, and not the rear. Yet many, many executives try to lead through fear and intimidation. This isn’t really leading at all. It’s pushing. In all businesses, leading from the front means that you are not afraid to get your hands dirty, pitching in to get the job done.

True entrepreneur leaders see the big picture and recognize that their business is only a small piece of a much bigger community. They lead their own small community to pull together in a way that galvanizes the entire ecosystem of the market into a win for both sides.

For maximum leverage, every leader has to learn how to delegate. Delegation is a great skill to have, but you also have to lead effectively to earn the right to use it. Intimidating or berating other team members from a position of power isn’t delegation or leadership.

In every growing business, people are expected to wear multiple hats, each and every day. An effective leader that wears many hats easily creates loyalty. This is a quality that cannot be bought or bullied. Loyalty must be earned, and business executives who earn it generally do the following:

  • Communicate and demonstrate a clear sense of purpose
  • Provide great coaching, mentoring, and tutoring
  • Encourage, recognize, and reward achievement
  • Ensure credit is given where credit is due
  • Be consistently dependable and knowledgeable
  • Demonstrate accessibility to everyone
  • Treat people fairly
  • Listen well
  • Show patience and humility
  • Helpful and quick to expedite important matters
  • Prove loyalty by standing up for the team, defending them to other constituents, and when necessary, to customers

Funny thing about loyal team members - they respond very well to being led from the front. Your team’s level of motivation and attention to detail is always going to have a fairly direct correlation to your ability to keep things moving forward, despite the cyclone spinning around you.

People will make mistakes, so accept it now - certain tasks, even critical ones, can get lost in the noise. The 100% solution is never attainable - so forget about. Strive for 90% and try to get that part right. The rest will come in time.

Communicate effectively and constantly with your team. No news is not good news in times of crisis. Tell the truth even when it hurts. Don’t be caught stuck to your chair while the storm is swirling around you. You must stay on top of everything and everyone. And guess what, you will miss things, too. Get over it.

Unfortunately, a crisis often drives leaders to retreat behind closed doors instead of advancing to the source of the problem. They withdraw to their desk, get inundated with data, overwhelmed by numbers and lose the connection with their people. If one of your executives fits this mold, you need to get rid of them. Otherwise they will kill you in the end, one way or another.

Leadership is about being visible and setting the right example out front on the firing line, in good times, as well as times of crisis. There is no place for the bully, who fails to take the feelings of others into account and insists on his or her way, and no place for the tyrant, who feels superior and needs to rule the roost.

Now is the opportunity for real leadership, with all the economic challenges around the world, and continuing human suffering. There is a saying in the military that generals who lead troops from the safety of the rear, should have to take it in the rear. That’s not a comfortable position for anyone.

Marty Zwilling


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Friday, November 21, 2014

How Entrepreneurs Must Prepare For The Unthinkable

100506-N-6070S-819 Most entrepreneurs are so convinced that they are the disruptive element, they fail to anticipate that unknown facts or events can and will occur to disrupt their own well-laid plans. While it’s true that there is no way of know specifically what might happen, you need to anticipate the worst, and actually build a Plan B. People who haven’t thought about a Plan B often don’t survive the shock.

In my years of mentoring and working with startups, I’ve seen and read about some amazing disruptions, as well as recoveries, and I’m sure each of you could add your own. For example, you probably didn’t realize that both Facebook and YouTube started out intending to be dating sites, but implemented a Plan B when they found dating had become an over-saturated market.

While thinking about the most common surprises that I have seen with startups, and contemplating how to best prepare for them, I found some good guidance in a new book, “Think Agile,” by successful entrepreneur and startup advisor Taffy Williams. I will key off his list of situations requiring dramatic plan changes, as well as the best ways to plan for these changes:

  • Indispensable people jump ship at the worst possible time. The surprise departure of a key staff member is inevitable, no matter how strong the financial and passion incentive. Every entrepreneur needs a succession plan early on the top three people, with a reshuffle and replacement strategy. Get to know your headhunter or freelancer.

  • Your rollout timetable suffers a big setback. You can’t predict big quality problems, funding shortfalls, and viral events that don’t work. You can and should create realistic time ranges around deadlines, and work up “what if” scenarios around your milestones. Don’t succumb to blind optimism, or pressure from investors to go for broke.

  • A new market opportunity emerges which you can’t ignore. It’s not just undesirable circumstances that require big plan changes. Natural disasters or economic conditions can create new markets, or an offer to partner or merge may materialize suddenly. The agile way to respond is to research for flaws in the opportunity, and test the waters first. .

  • Your biggest or only customer dumps you. This can happen through no fault of your own, or rapid market erosion you didn’t foresee. Your Plan B should always include a diversification plan you can implement quickly, as well as an emergency “right-sizing” plan to weather the gap to some new customers or services.

  • Another disruptive technology trumps yours. What seemed like a winning technology, like RIM with its Blackberry, can quickly be superseded by a new entrant, such as the iPhone from Apple. Every startup needs to build and monitor their list of top competitive risks, and size the cost of a quick direction shift if the worst case happens.

Each of these initiatives has to be led by an entrepreneur who is willing to manage with an open mind, not only during the formative stages of the business, but also during the growth stages. Most entrepreneurs start losing their agility with that first taste of success. The best ones are often viewed as paranoid, since they proactively look for problems well after the first success.

One of the best ways to increase agility is to focus on specific problems and drive them to resolution, rather than instinctively flailing through several problems at the same time at a high level, hoping that one of your many actions will stick. Scientists have shown that the best creative problem-solving consists of these five-steps:

  1. Learn as much as possible personally about the problem.
  2. Engage a qualified and diverse team, staff, and advisors.
  3. Document the ultimate goal, so people can work backward as well as forward.
  4. Ramp up communication to bring in outliers and spark fresh thinking.
  5. Step back for a while to let the creative juices flow before making a decision.

These are turbulent times, as well as time for great opportunities, for the entrepreneurs that are agile, innovative, and open to change. Don’t get stuck in the past, or let some early success lead you to competitive lethargy or crippling indecisiveness. Those are the diseases of too many big business executives. You didn’t decide to be an entrepreneur to be like them.

Marty Zwilling


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Wednesday, November 19, 2014

10 Trust Secrets You Need To Practice In Business

Handshake One of the first harsh realities that every entrepreneur has to learn is that most of the things that are critical to startup success are outside of their direct control. Just because you dream it and build it, doesn’t mean they will come – that encompasses not only customers, but also investors, partners, team members, and even your own family. They won’t come if they don’t trust you.

In my experience, trust is the most powerful tool that an entrepreneur can wield, both inside and outside of his own realm of control. I’ve seen many examples of this in my own business life, and yet I gained a whole new perspective on how it works from a recent book by successful entrepreneur August Turak, titled “Business Secrets of the Trappist Monks.”

Turak first visited the monks for spiritual guidance, but realized as he talked to them about their business, that many of their secrets crossed over all boundaries. I was particularly struck by the lessons he gleaned on how to get and maintain trust. The best entrepreneurs I know seem to have learned every one of these, so start on these now if you want to survive among the best:

  1. Become trustworthy before you start a business. We are hard wired to seek out trustworthy people, and to test others to see who we can trust. But the first step is to be become trustworthy ourselves. Like attracts like, and if you invest early in becoming a person others can trust, business people who you can trust will be attracted to you.

  2. Keep your promises to yourself and others. The surest mark of a trustworthy person is one who keeps promises to others and to oneself, no matter how small or seemingly trivial these may be. Keeping promises to yourself is closely correlated with will power and self-control, and these virtues are essential to being business trustworthy.

  3. Under commit and over deliver. Make sure that you only make business commitments that you know you can keep. Many entrepreneurs over-commit because they are desperate to have business constituents like and respect them, yet the quickest way to lose respect is to fail to keep commitments.

  4. Be willing to make commitments. One of the stratagems of notoriously unreliable people is refusing to make promises in the first place, thinking that making no commitments relieves them of any worry about breaking them. People see through this strategy quickly, and will tag you not reliable and indecisive, as well as not trustworthy.

  5. Protect your personal brand. As a new startup, you the entrepreneur are the brand. Get in the habit of asking yourself, “How will this decision affect my personal brand?” Everything you do or don’t do affects your brand, and in the long run your trustworthiness is your most valuable asset.

  6. Avoid fuzzy commitments. Nothing undermines trust faster than ambiguity or soft commitments, through phrases like “I’ll try” or “I’ll do my best.” These are heard as attempts to stay off the hook, and furnish plausible deniability for anticipated failure. Don’t be afraid to write down what you expect, and what you are willing to commit to.

  7. Formalize business promise keeping. This simply means making it standard practice in your new startup of building a paper trail of contracts (no verbal contracts) between partners and vendors, customer transactions, and internal processes with team performance metrics.

  8. Never make people ask. If you make people hound you about a commitment, you have already lost half of your credibility. Nothing builds trust better than anticipating your obligations and delivering on them without being asked. A debt repaid before it is asked for reaps a huge dividend in trust.

  9. Communicate, communicate, communicate. No one can anticipate all risks and keep all their promises, but there is no excuse for a failure to communicate when contingencies arise, so there are no surprises. Lack of communication leads others to assume that you had no intention of keeping your promise, and were hoping no one would notice.

  10. Aim past the target. It is impossible to be trustworthy in business if you are unreliable in the other aspects of your life. The monks teach that trust is not a business strategy or tactic; it is the natural by-product of living for a higher purpose. If you have no higher purpose as an entrepreneur than to make money, you will most likely fail in your efforts.

In business, as in your personal life, an entrepreneur must offer his own trust before reasonably hoping to have it reciprocated. Don’t try to “game the system,” and don’t expect blind faith to save you. The power of real trust is that if your constituents trust that you can change the world, you probably will. Isn’t that why you signed up for this lifestyle in the first place?

Marty Zwilling


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