Sunday, July 23, 2017

4 Startup Survival Lessons Lead To Business Success

Panthera_onca_predatorThe good news is that the rate of new entrepreneurship leveled off a bit last year, although it is still rising, according to the latest Kauffman Index of startup activity. The bad news is that it’s back to pre-recession highs, the opportunity for change is huge, and the cost of entry is at an all-time low. It’s a jungle fight for survival for aspiring entrepreneurs of all ages and demographics.

In this context, it’s time for every business, not only startups, to take a fresh look at the basics of business success. Jamie Gerdsen, in his classic book of lessons on business change, creatively titled “Squirrels, Boats, and Thoroughbreds,” aims first at existing businesses, but I believe that most of his points, like his laws of the jungle, can be rewritten for startups, as follows:

  1. If you want to eat... I don’t believe in greed, but we all need to make enough money to eat. This means building a revenue stream, and tuning your business model to produce margins in the 50 percent range or above. I support being socially and environmentally conscious, but you can’t help anyone else if you don’t eat.

  2. If you want to survive... Survival means growth and scaling. Once you have a proven business model, you need to scale the business up quickly to stay ahead of competitors. These days, doubling your business volumes every year is the “norm” that investors and potential acquirers are looking for.

  3. If you want to be feared... Every startup needs a sustainable competitive advantage. In the jungle, it might be the strongest jaws, but in startups it’s more likely the strongest intellectual property. With no competitive advantage, startups with new ideas gaining traction are never feared, and are usually eaten for lunch as sleeping giants wake up.

  4. If you want to mate... In the business world, we call this finding the right strategic alliances. That means you have to stand out above the crowd, and aggressively pursue those candidates that can help you breed even more presence and power in the marketplace. Sitting quietly on the sidelines, waiting to be found, is a lonely world.

Every startup in the business jungle begins with a limited amount of three precious commodities – time, talent, and treasures. The smart ones have a plan for how they intend to spend these resources, and measure themselves against the plan. Otherwise they will likely look back later, and find that one or more of the laws of the jungle have been compromised:

  • Time – Start with a timeline of how much runway you have, with objectives and milestones mapped against the timeline. Time management is an art. Don’t waste precious time on the “crisis of the day,” in favor of strategically critical tasks. The best entrepreneurs work on making better time management a top objective.

  • Talent – Every startup needs talents to give the company value. In the beginning, the entrepreneur has to cover all talents, which is made more possible these days by the wealth of information available on the Internet, as well as books and online courses. Talent can also be outsourced, but surviving in the business jungle without talent is unlikely.

  • Treasure – Most entrepreneurs assume that treasure means funding. In reality, more important treasures often include intellectual property, the ability to innovate, and well-defined processes that can deliver great products and reach new customers more efficiently and effectively than competitors. Money is no substitute for these other treasures.

In summary, whether you are running a startup, a family business, or a famous brand like IBM, you are all part of the jungle. You can be a small tiger with big teeth, or an aging dinosaur. The laws of the jungle apply to all. It really is a world of survival for the fittest.

The jungle framework is a great one to set the right perspective. Startups which prosper and succeed learn the rules of the jungle early, don’t make excuses, and don’t look for any entitlements. Does your startup have an understanding of reality, a real sense of urgency, and the overwhelming drive to innovation to make you the king of the jungle any time soon?

Marty Zwilling

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Saturday, July 22, 2017

8 Leadership Lapses Every Business Owner Must Avoid

leadership-lapsesEven entrepreneurs who have built many startups, or sold their last one for millions of dollars, know they make occasional people leadership mistakes. They know leadership is all about managing their own complicated, illogical, and fallible human foibles, as well as the people they depend on. These can trip up even the best, often at the cost of more than a good night’s sleep.

Thankfully, most mistakes won’t be as spectacular as the America Online merger with Time Warner for $350 billion, back in 2000, engineered by then superstar entrepreneurs Stephen M. Case and Gerald M. Levin. They apparently ignored all conventional wisdom and advisors, and struck a deal which crashed both companies, now a case study in many business schools.

By most accounts, this case exhibits almost all the lapses identified in a classic book by Dr. Nicole Lipkin, “What Keeps Leaders Up At Night.” She provides some great guidance, based on coaching experience and a doctorate in clinical psychology, on recognizing and resolving the most troubling management issues for leaders in all stages of an organization:

  1. I’m a good leader. So why do I sometimes act like a bad one? According to the evidence, good bosses go bad (temporarily versus the chronically horrible), for three overarching reasons – too busy to win, to proud to see, or too afraid to lose. Every leader needs to check and enhance his self-awareness to recognize and avoid these.

  2. Why don’t people heed my sage advice? Many people use the terms influence, persuasion, and manipulation interchangeably. But each carries its own specific meaning. Influence requires winning minds and hearts to inspire action. Persuasion intellectually stimulates a person to action. Manipulation is seen as insincerity, and it gets non-action.

  3. Why do I lose my cool in hot situations? Stress comes in two distinct forms: good stress and bad stress (distress). Managed effectively, stress is a good thing, leading to survival. But chronic stress and distress results in overreaction to non-life-threatening events. Schedule an on-going reality check with trusted advisors to know the difference.

  4. Why does a good fight sometimes go bad? A good fight in business is called healthy competition. Unfortunately, feelings of envy and inferiority can quickly turn healthy competition into a knock-down, drag-out fight between people and companies, turning a win-win situation into a lose-lose one. Check all your emotions at the gate.

  5. Why can ambition sabotage success? Every leader needs to balance ambition with humility, restrain one’s ego, treat others with respect, create positive impressions, and adopt a long-term perspective of success. Don’t let a “nearsighted” view cloud the “big-picture” view; success in the best interests of all. Contemplate your legacy to others.

  6. Why do people resist change? The brain’s hard wiring pre-disposes us to habitual behavior and decision making. We let biases influence our reaction to change and our ability to make decisions that cause change. To thrive you need to become more aware of biases and psychology behind your own and your people’s responses to change.

  7. Why do good teams go bad? Humans have always affiliated with groups and teams in order to survive and thrive. Group dynamics are not always good, including “us” versus “them” mentality, group conformity, social loafing, and emotional contagion. Leaders need to manage these dynamics to keep from falling prey to negative group behaviors.

  8. What causes a star to fade? When start performers fade, it’s almost always a failure to remain engaged with the people and the job. Smart leaders must constantly monitor the four essential elements of engagement: social connection, leadership excellence, aligned culture, and meaningful work and life. Engagement drives performance and satisfaction.

These questions should all be contemplated and understood by every entrepreneur and startup founder, starting on day one of their quest. Remember, we are all human, and we will make mistakes. The challenge is to learn from these, and just as importantly, learn from others who have been there before you.

So when you find yourself losing sleep at night, don’t get mired in the quicksand of self-pity and self-destruction. Every personal admonition of “What was I thinking?” should be followed with some objective analysis, maybe some help from a trusted ally, and a determination to get back on track and have fun. Being an entrepreneur is a lifestyle you must enjoy to be successful.

Marty Zwilling

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Friday, July 21, 2017

6 Steps To Saying No At Work To Your Boss And Peers

just-say-noEvery dedicated business professional I know can’t find enough hours in a day to do their best work, and yet they often find themselves saying yes to new requests from the people around them. In some cases it may be fear of retribution by the boss, but more often they just hate to disappoint others, and end up instead with high stress and low credibility in the crisis to deliver.

In addition to saying yes too often, professionals under pressure often say no poorly, by attacking the requestor or by avoiding any definitive response. Either of these approaches usually makes a stressful situation worse, often leading to guilt, burnout, and continuing accommodation.

The solution to this problem is part of a bigger challenge – taking back control of your work life, and regaining a sense of freedom and influence, as described in a new book, “Work-Life Brilliance: Tools to Break Stress and Create the Life and Health You Crave,” by Denise R. Green, a noted executive coach, speaker, and CEO of Brilliance, Inc.

A key part of her message that resonated with me, as a mentor to entrepreneurs, is her guidance on how to deal with the constant demands and requests that every business founder faces. She provides pragmatic advice for dealing with the three pains of the brain (social, status, and priorities) that erode your control and your satisfaction with work that you really love to do.

Specifically, here are six steps to declining requests without actually saying no, that she and I both recommend, when your plate is full or your priorities need to be elsewhere:

  1. Create a pause before responding. Did you ever notice how a yes can slip out of your mouth or get sent in an email before you even think about it? It’s tough to undo that yes without hard feelings or guilt. Before you respond, at least take a deep breath, or better yet, buy some time with language like “Let me give this some thought, and I’ll get back to you by the end of the day.” Be sure to follow-up as promised, to maintain your credibility.

  1. Clearly decline without using the word no. Skip the “maybes” or “I’ll try.” Make sure your response is clear and concise, with wording such as “I wish I could but I’m already over-committed,” “I’m just not able right now to do the job you need,” or “Anything new this week with my schedule is out of the question.” Be sure to keep a smile on your face.
  1. Share a credible reason for declining. Resist the urge to complain about being over-worked and under-appreciated, and share an honest explanation that you think is most credible with the requestor. For example, “I have another commitment at the same time that I can’t move,” or “This isn’t my area of expertise, so I’m just not the best person.”
  1. Offer sincere gratitude (as relevant). Ending with gratitude can soften the decline. It may sound like, “Thank you for considering me,” or “I’m pleased that you would trust me with such an important request.” Research shows that people pay more attention to endings, rather than beginnings, but you may choose to start with the thank-you.
  1. Make an offer that serves both your needs. Do not make an offer simply to make yourself feel better. A good offer might be, “Here is the contact info for the perfect person for this task,” or “I can recommend a new tool which will solve that problem with minimal effort by anyone.” The objective is to get the job done, and stave off future requests.
  1. Drop the guilt. Most times, guilt is just a bad habit – the result of trying to live up to unrealistic, unattainable standards. If you feel guilt, ask yourself, “Have I harmed someone or acted in conflict with my values?” If yes, apologize, then do better. Otherwise don’t let guilt trick you into thinking you are actually doing something productive for you.

Remember, you don’t have to be viewed as a yes person to be viewed as a leader. In fact, if you look at the leaders and most respected people around you, they are clear but selective in what they support and agree to do. They have learned the art of controlling their priorities, and they feel less stressed and more productive as a result. That’s the best way to enjoy work and life.

Marty Zwilling

*** First published on Huffington Post on 07/20/2017 ***

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Wednesday, July 19, 2017

5 Stages of Technology Adoption Compared To Grieving

mobile-phone-sad-faceHow many times have investors heard startups start their pitch by touting that their technology is “disruptive?” What entrepreneurs forget or don’t realize is that most customers are wary of all technology, educating the market on new technology is expensive, takes a long time, and people buy problem solutions rather than technology. Investors will likely wait for more traction.

The concept of disruptive technology was first introduced by Clayton M. Christensen in “The Innovator’s Dilemma” way back in 1995. Such technologies, like the digital camera and mobile phones, introduce such novel concepts that they displace existing technology quickly by societal standards. Unfortunately this “quickly” may be too slowly to save initial startups in the space.

In this time of rapid change, it’s easy to conclude that everyone is an early adopter, and we all tend to forget quickly the time and stages we go through while adapting to new technologies, and then loving them. It’s time to review the classic article on HBR “The Five Stages of Disruption Denial,” by Grant McCracken, comparing technology adoption to Kubler-Ross’ five stages of grief:

  1. Confusion. We don't quite get it. We sign up for the new app, or buy one of the new devices after we see our cool friends using it. We give it a whirl, and quickly complain that things were easier the old way. By this time, gurus are reassuring us that it is the greatest thing ever. But that doesn't help. We decide to wait another year for the next version.

  2. Repudiation. There are many people who don't get the new technology, and now social life is a little like a competition to show that we're not "falling for it." At this point, there can more social capital in saying that we don't like the technology than that we do. We all hear snappy one-liners like, "Twitter. What could I possibly say in 140 characters?"

  3. Shaming. This is when we are so persuaded that we're right and the new innovation is wrong that we are prepared to make fun of the credulous among us. "This Twitter thing. It's just a fad. Give it a couple of months and it will go away." We heard a lot of this sort of thing about Pinterest in the early days. Now it's valued at $12 billion.

  4. Acceptance. By this time, the innovation is taking off. The middle adopters are signing on. It is clear now even to late adopters (the great majority) that there is at least one useful aspect of the new technology, and it’s here to stay. Confronted by accomplished, irrefutable fact, the rest of us cave in, sign up, and brag about how modern we are.

  5. Forgetting. This is where we destroy the evidence, even in our own mind. Now we are inclined to act as if we always understood and approved of a world instilled with new innovation. One minute, we are too smart to be fooled by Twitter. The next we are fully on board. It's a like high school. We are captives of what Mark Earls calls "the herd."

In the old days, it typically took 20 years for this process to happen. Now it happens much faster, but it still takes longer that the survival lifetime of a struggling startup. Smartphone acceptance is now approaching 80 percent, only ten years after the first Apple iPhone was introduced. There is other evidence that may be the new norm, and will be soon beaten.

Marketing guru Seth Godin mentioned in an article a while back that “it takes about six years of hard work to become an overnight success.” Mark Zuckerberg spent about 7 years and $150 million before Facebook became cash-flow positive. MySpace and several others, who arguably pioneered the disruptive social media technology, never really survived to enjoy it.

Too many of the entrepreneurs I know who highlighted their disruptive technology early ultimately ran out of money and had to shut down for being “ahead of their time.” They did everything right, but the market just wasn't ready. Sometimes this is just an excuse for other problems, but don’t forget the old investor saying: "being early is the same as being wrong."

Overall, I think more startups do fail by being too early to market than fail by being too late. This is probably a hard message to swallow, but it’s usually the second mouse that gets the cheese. What are you doing to avoid this trap with your disruptive technology?

Marty Zwilling

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Monday, July 17, 2017

Startups Need Employees Who React Like Entrepreneurs

think-like-an-entrepreneurEvery startup lucky enough to get some traction gets to the point where they decide to hire some “regular employees” for sales, marketing, and administrative tasks. Then they are surprised to see productivity and creativity take a big dip. What they should be doing is hiring only “entrepreneurs,” meaning people who think and act as if this is their own business.

This commitment to hire people who think like entrepreneurs, or instill an “owner’s mindset” in every employee, should be a high priority in every business. It’s what every customer looks for in every transaction. Most people will tell you this is impossible, but I found a classic book, “Army of Entrepreneurs,” by Jennifer Prosek, where she seems to have actually accomplished this.

I like how she was able to motivate, train, and reward employees, including the implementation of an incentive program to get every member of the team actively involved in generating new business. She also identifies the typical myths against using this approach, and describes how to overcome each one:

  1. “Entrepreneurs are born, not made.” The reality is that all entrepreneurial skills are learnable skills. The entrepreneurial mindset is a function of motivation, priorities, and risk versus reward, all of which you set or enable by your leadership and example. Hire employees who have strong skills, with the motivation to learn new ones.

  2. “Employees will care only about work they create.” This is really an issue of the quality of the people you hire rather than the management or compensation system. The key is to hire people with the right mindset, and communicate it daily to your whole team, by your actions as well as your words.

  3. “Junior people shouldn’t be involved in new business.” This is the platitude of an obsolete corporate culture where you had to “pay your dues” in menial jobs before adding creativity or making decisions. In today’s marketplace, junior staffers are often the most intimately connected to the market, technology, and the customer network.

  4. “Employees will lose focus on their work.” Old management models encourage employees to optimize their own task, often at the expense of the overall company objectives. There is new evidence that people want to understand the bigger picture, and business growth financial incentives will increase productivity, rather than lower it.

  5. “Sales will be the organization’s sole focus.” Again, you get what you demand and reward. If sales are the only way to get rewarded in your organization, then sales will take precedence over other activities. Motivate for a spectrum of entrepreneurial behaviors, and you will see results.

  6. “We don’t need to reward lead generation.” For a startup, you don’t have a recognized brand to bring in the leads. All businesses need to proactively seek leads, rather than simply attract them, with the creativity and initiatives of every employee rewarded for every contribution.

  7. “There is too much risk associated with decentralized decision making.” When you have to move and change quickly to survive, centralized decision making is too slow. You become the bottleneck. If you train people properly, empower them, trust them, and they understand the business, your evolving business can become a revolution.

Every large company wishes they could harness the power of a thousand entrepreneurs within their employee ranks to re-create the exceptional business growth they once knew. Instead, for growth, most have resigned themselves to buying startups that exhibit these characteristics.

Thus, the last thing you need as a growing startup is a “regular employee.” Hire entrepreneurs like you, grow like an entrepreneurial company, and stand above competitors in the acquisition process to carry that fire forward. That’s a win-win for everyone in this new culture and new economy.

Marty Zwilling

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Sunday, July 16, 2017

How to Pick a Partner Who Will Amplify Your Efforts

google-cofoundersAs a long-time business advisor and angel investor, I’m a believer that “two heads are better than one” in building a new business. Very few entrepreneurs have the range of skills and experience to be the solution creator as well as business creator, or operational as well as sales leader. The challenge is to recognize and recruit that ideal partner match early with minimal cost and risk.

In fact, I would broaden the definition of partner from co-founder to “business partner.” The reason is that good attributes apply equally well to “external” partners, as they do to internal partners, like a co-founder or CTO. A good overall example is the synergy between Google co-Founders Sergey Brin and Larry Page, as well as Executive Chairman Eric Schmidt.

In all cases, the challenge is the same, of finding people that you can work with and enjoy in the business relationship. The relationship has to have trust, communication, and respect in order to work. Otherwise, like a marriage, it will be doomed to constant conflict, second guessing, and unhappiness. So the following traits have to apply to both sides of the partnership to work:

  1. Capable of working collaboratively. Some people are too independent to be partner material. If they or you find it hard to trust others, love to work alone, always have to be in control, or insist on micro-managing, it may be time for change or looking elsewhere.

  2. Neither partner needs to be managed. Good partners are people who are confident in their own abilities, and willing and able to make decisions, take responsibility for their actions, and able to provide leadership, rather than require leadership.

  3. All partners have compatible work styles. Most entrepreneurs work long hours and weekends to get the job done. If you team with a partner who likes to sleep late, and reserves the weekend for other activities, the partnership will likely not work.

  4. Agree on a common vision and commitment. It doesn’t take long to sense someone’s real commitment, or vision and desired outcome of a joint project. Is your project seen by both as an end in itself, or a means to another end? Conflicting visions won’t work.

  5. Believe in similar values and goals. If one of your core values is exceeding your customer expectations for quality and service, and your potential partner ascribes to the low cost, high profit mantra, a successful partnership is highly unlikely over the long-term.

  6. Operate with a comparable level of integrity. High levels of integrity are important in business, but more important is your level of comfort with your partner’s integrity. This is a critical element of a good relationship, but a tough one. This is probably the best place to apply your “gut” feeling.

  7. Brings complementary skills and experience. If both of you are experts at software development, even though one loves design and the other loves coding, that still won’t get the marketing done. Look at the big picture first of development, finance, and marketing/sales.

  8. Feels a real passion and love for their role. The passion has to be in the business context – meaning results oriented, customer oriented, and sensitive to competition. In many cases, experts with academic or research credentials are not good partners for a business venture.

  9. Believe in the same ethical and diversity boundaries. How the leaders of your company handle adherence to the spirit as well as the letter of the law will be seen by all employees, customers, and investors. Ethics and the view of personal boundaries should be explored fully.

  10. Carry minimal historical baggage. Partner decisions are more important than team member hiring decisions. Thus you should do the same or more due diligence on educational background, previous work, and references. Look impartially from all angles and do the follow-up on all relevant previous roles.

Beyond the core team of two or three startup partners, every startup should seek to “outsource” the rest of their strategic requirements to external business partners. It’s faster and cheaper than building a large team in-house, and usually more effective.

By using this checklist, you should be able to objectively match potential partners with your own needs and expectations. Then, as I always recommend, it’s time to establish a formal agreement or contract to cement the partnership. With that, you will have a strong foundation for success, as well as a great working relationship for the next thirty years.

Marty Zwilling

*** First published on Huffington Post on 07/15/2017 ***

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Saturday, July 15, 2017

10 Business Idea Assertions Mask The Real Challenge

idea-plan-actionMost people think innovation is all about ideas, when in fact it is more about delivery, people, and process. Entrepreneurs looking to innovate need to understand the execution challenge if they expect their startup to carve out a profitable niche in the marketplace, and keep innovating to build and maintain a sustainable competitive advantage.

Everyone thinks they know how to make innovation happen, but I can’t find much real research on the subject. At the same time, myths about innovation are commonplace in business. Vijay Govindarajan and Chris Trimble, in their classic book “The Other Side of Innovation: Solving the Execution Challenge” have done some good work on this subject.

They take you step-by-step through the innovation execution process, in the context the ten most common myths about innovation, which I think makes their approach particularly instructive:

  1. Innovation is all about ideas. While it is true that you can’t get started without an idea, the importance of the Big Hunt is vastly overrated. Ideas are only beginnings. Without the necessary focus, discipline, and resources on execution, nothing happens.

  2. A great leader never fails at innovation. When it comes to innovation, there is nothing simple about execution. The inherent conflicts between innovation and ongoing operations are simply too fundamental and too powerful for one person to tackle alone.

  3. Effective innovation leaders are subversives fighting the system. Effective innovation leaders are not necessarily the biggest risk takers, mavericks, and rebels. The primary virtue of an effective innovation leader is humility. What you want is integration with real world operations, not an undisciplined and chaotic mess.

  4. Everyone can be an innovator. Ideation is everyone’s job, as are small improvements in each employee’s direct sphere of responsibility. Yet most team members don’t have the bandwidth or interest to do their existing job, and well as address major innovations.

  5. Real innovation happens bottoms-up. Innovation initiatives of any appreciable scale require a formal, intentional resource commitment. That requires the focus and resources from top executives to sustain, even initiate, relevant efforts.

  6. Innovation can be embedded inside an established organization. Some forms of innovation can be imbedded, like continuous product improvement, but discontinuous innovation is basically incompatible with ongoing operations.

  7. Initiating innovation requires wholesale organizational change. Innovation requires only targeted change. The first principle is to do no harm to existing operations. A common approach that works is to use dedicated teams to structure innovative efforts.

  8. Innovation can only happen in skunk works. Innovation should not be isolated from ongoing operations. There must be engagement between the two. Nearly every worthwhile innovation initiative needs to leverage existing assets and capabilities.

  9. Innovation is unmanageable chaos. Unfortunately, best practices for generating ideas have almost nothing to do with best practices for moving them forward. Innovation must be closely and carefully managed, during the 99% of the journey that is execution.

  10. Only startups can innovate. Luckily for entrepreneurs, many large companies are convinced that they must leave innovation to startups. Yet research suggests that many of the world’s biggest problems can only be solved by large, established corporations.

Everyone agrees that the goal of innovation is positive change, to make someone or something better. Entrepreneurs need it to start, and established companies need it to survive. The front end of innovation, or “ideating” is the energizing and glamorous part. Execution seems like behind-the-scenes dirty work.

But without the reality of execution, innovative ideas really have no value. Customers are interested in solutions, and investors want to see the money. Your real challenge as an entrepreneur is to create an innovative business, not an innovative idea.

Marty Zwilling

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