Wednesday, May 30, 2012

Innovation to an Existing Business Can Limit Risk

If you are an entrepreneur starting a business for the first time, I recommend that you find a product concept that is already accepted and improve on it, rather than tackling that ultimate disruptive technology. Notice that I’m not suggesting that you steal someone else’s idea, but simply limit your risk by adding innovation to a proven entity.

Evidence of success using this approach is all around us. Look how the Japanese entered the auto industry, or how McDonalds imitated White Castle, or how Wal-Mart “perfected” the low-price high-volume approach. Once you have experience in running a successful startup this way, you may decide that the disruptive technology of your dreams was a bad idea in the first place.

It seems to me that in the startup world, imitation gets a bad rap. People tend to look down on “me too” entrants as inferior, or forced to copy because they have nothing original to offer. I can see many advantages to the imitation with innovation approach, beyond just limiting the risk to changing just one variable rather than many:

  • Avoid initial major R&D cost. Statistically, the costs to the first inventor of a new technology are at least a third higher than to follow-on innovators in the same technology. Of course, the first one gets the patent. But patent disclosure requirements often make imitation easier, and smart technologists can work around most patents anyway.
  • Learn from competitors and early adopters. Market research is more meaningful if there is already a market and real customers. Don’t just copy successful formats and strategies, but learn from what has worked and not worked for your competitors. Hopefully, you can skip some of the costly pivots made by them.
  • Easier to find investors. Even banks, as well as equity investors, look more favorably on a proven business model than a new and unproven one. This is probably why banks will often support a franchise purchase for up to 70%, while they rarely if ever support any investment in startups.

  • Imitation drives progress. If a product or process has already proven its value, more people working on it, determined to be more competitive, will find more and quicker ways to improve the base than if one company maintains a monopoly. Good imitators often disrupt the original innovator.
  • Try a new country or market. Good imitators actively look for a new country or market as the innovation, rather than a new technology. Even though the world is getting smaller and smaller, very few startups can yet afford to patent or even sell their product in all the relevant countries at once. If that’s your home country, jump in first.

Of course, you still have to do your homework and market research. Just because something works in Silicon Valley, doesn’t mean it will work in Peoria. Also, imitations done without the normal operational discipline and strategic planning will fail, just like any other poorly run startup. Don’t assume imitation is reserved for children, animals, and dummies.

Just like apes learned the value of imitation to survive in an ancient hostile jungle, entrepreneurs need to learn the same value in the new business jungle. Fifty years ago, Harvard economist Theodore Levitt observed that the same companies that were serious about innovation often approached imitation in a much more casual manner. That mindset is still too prevalent today.

Thus, the place to start for new entrepreneurs is to look for a successful business (not a failing business) in your domain and think about how you could do it better. Your innovation may be simply a better location, better service, or a better price, or it could be a technology innovation. At minimum, it can give you the money and experience to take your dream step later with less risk. In fact, your imitation with innovation may BE the “next big thing.”

Marty Zwilling


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Tuesday, May 29, 2012

Investors Reject Plans With No Clear Business Model

For survival, the objective of every business should be to bring in revenues which exceed their costs. Even non-profits have to do this to cover overhead costs, unless they rely totally on donations. Yet I continue to see business plans, or even talk to founders, and can’t find the specifics of the business model anywhere.

As Guy Kawasaki says in his book “The Art of the Start,” if you can’t describe your business model in ten words or less, you don’t have a business model. Avoid whatever business jargon is currently hip, like strategic, mission-critical, world-class, synergistic, first-mover, or scalable. Try something like, “the product costs $X, and we sell it for $Y.”

Guy also says and I agree that the smart approach is to copy somebody else. You can innovate in technology, markets, and customers, but inventing a new business model is a bad bet. Try to relate your business model to one that’s already successful and understood. Here is a summary of a half-dozen of the most common models:

  • Facebook model. This is the most often attempted and failed business model today on the Internet – all the services are free, and you make money off the online advertising. This model only works once you have exceeded about one million page-views per month, and spent maybe $50 million to get there.
  • eCommerce model. This was one of the first Internet business models, per Amazon.com, and still a popular one today. It’s the electronic version of a catalog and shopping cart, and today rarely involves any stock of product. Products are usually drop-shipped directly by the manufacturer.
  • Shopkeeper model. This is the most traditional and successful approach in use for centuries. It implies setting up a store in a location where potential customers are likely to be, with products and services on display, being sold at some multiple of cost to cover the overhead and realize a profit.
  • Bricks-and-clicks model. This is a hybrid of the shopkeeper and eCommerce models, in which a company integrates both offline (bricks) and online (clicks) presences. It is also known as click-and-mortar, as well as bricks, clicks and flips, with flips referring to catalogs. It’s great for big companies like Wal-Mart, but I don’t recommend it for startups.
  • Razor-and-blades model. This one has been around for many years now, and is sometimes called the “bait and hook model” or the "tied products model". The premise is offering a basic product at a very low cost, often at a loss (the "bait"), then charging compensatory recurring amounts for refills or associated products or services (the "hook"). I’m sure you can think of many examples.
  • Subscription or licensing model. Here a customer must pay a contracted price to have access to the product or service on a periodic basis (monthly, yearly, or seasonal). The model works online, offline, through magazines, newspapers, and television. The advantage is recurring revenue without finding new customers.

There are many more, with descriptive names like the auction model, direct sales model, value-added reseller model, multi-level marketing model, and the freemium model. Take a look at Wikipedia if you want more details.

The point I am making is – pick one and provide specifics in your business plan. Define clearly who is your customer, what will the customer pay for, how much will he pay, and how much do you expect it to cost for that revenue.

Then as investors, we can argue other equally important parts of the model, like how big is the opportunity, how fast it’s growing, and who are the competitors. Don’t let your business plan be tossed before you are in the game. What are the ten words that define your business model?

Marty Zwilling


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Wednesday, May 23, 2012

10 Concrete Steps to Assure Business Innovation

Continuous innovation is required to survive in all businesses, beginning with a startup, and increasing in importance as your business matures. Technologists often insist that new things can’t be invented on a schedule, but successful companies seem to be able to do it on a regular basis.

Many people have tried to define a process for innovation, but most are too abstract for me. I like the easy to remember approach found in “Robert’s Rules of Innovation: A 10-Step Program for Corporate Survival,” by Robert F. Brands. It seems to be more concrete, and chronicles several decades of practical experience to solidify the principles which together spell INNOVATION:

  1. Inspire. The first and most important step is to identify a leader who can inspire and drive the process. In a startup, that needs to be the founder or CEO, and that person has to be regularly and personally involved. This is an imperative.

  2. No risk, no innovation. Not every idea can, or will, be a winner. Without risk, there can be no innovation. Innovation teams perform best when they trust that failure or a pivot will not result in punitive measures. Fear of failure can kill innovation.

  3. New product development process. A formalized process with timelines and milestones is a must. This should include at least the key elements of idea generation, prioritization, prototyping, commercialization, and measurement.

  4. Ownership. Innovation needs ownership, a champion and team leader within the organization. The champion must have the credibility to convince others to take calculated risks and work outside of one’s comfort zone.

  5. Value creation. Successful innovation turns ideas into money, to enhance customer value, and thus shareholder value. Longer-term, enhanced product value begets superior company valuation through your organization’s intellectual property (IP) portfolio.

  6. Accountability. This is a critical component of the trust equation, even when the process is akin to “herding cats.” Team members need to feel responsibility for on-time delivery. Slippage is the sure way to jeopardize the entire process.

  7. Training and coaching. Proper hiring of people with a natural curiosity, open-mindedness, and ability to see the big picture is the way to create and enhance the right mind-set. Ongoing coaching from the top is essential to maintain the attitude and spirit.

  8. Idea management. Build and manage a pipeline of ideas. From time to time, include customers and sales members in ideation sessions. Make sure all team members have some connection with the product – has either used it, or sold it, or assembled it.

  9. Observe and measure. Tracking results are essential to optimal ROI. Product life cycles keep getting shorter and shorter, which mandates accelerated innovation cycles. Once a new product is launched, a key metric is the ratio of new product sales to overall sales.

  10. Net result and reward. Based on ROI, incentives should be developed for all participants. Reward your people. Frequently, the key motivator is less financial than it is recognition for a job well done. People are your best innovation resource.

Sustainable innovation is really the only sustainable competitive advantage. But innovation is hard, because people by nature resist change, and company cultures are most comfortable with status quo. Yet survival in today’s world of rapid business change requires that you keep one step ahead of your competition. Innovation is what gives life to your business initially, and keeps it alive in the long term. Make sure your business can spell it.

Marty Zwilling


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Tuesday, May 22, 2012

7 Reasons for Entrepreneurs to ‘First Know Thyself’

If you are going to be a real entrepreneur, it’s important that you know yourself well. After all, you won’t have a direct manager charged with giving you feedback, and your team probably will be afraid to tell you what they really think. Entrepreneurs need to recognize their own strengths and limitations.

In any case, your skills, talent, knowledge, personality, and strengths are your best assets as an entrepreneur. I’ve extracted many of the following points about knowing yourself from a book aimed at women professionals, called “Career GPS”, by Ella L. J. Edmondson Bell, Ph. D., but I see them applying equally well to every entrepreneur, man or woman. Let’s see what you think:

  • Self-knowledge builds confidence. Know who you are and make sure you’re comfortable in your own skin. It will help you be a strong, effective leader. But don’t overdo it. We all know people who act supremely sure of themselves, but they are usually trying to hide some deep insecurities or fears.
  • Self-awareness is one cornerstone of effective leadership. Leadership isn’t about how big your role is, or how big you act. Self-aware leaders are able to see the larger picture, the context and purpose. They actively listen and don’t put themselves ahead of others. They allow others to be the best they can be.
  • Being sure of who you are allows you to make sound business decisions. When you are running a startup, having a better sense of who you are and what you want can help you push away things that are not really important, and urge you to go after the things that are really in your heart.
  • Knowing, accepting, and liking who you are encourages others to do the same. Being authentic and genuine makes you attractive to your customers, respected by your team, and effective as a leader. Individuality is the hallmark of a successful and strong entrepreneur.
  • Understanding your wants and needs helps you say “no” when necessary. Startup businesses are very demanding. You’ll be expected to be present just about 24/7 while keeping everything else in your life managed. Knowing your limits – just how far you can stretch before you break – is an important skill.
  • Know all of you - the good, the bad, and the ugly. No one, even the best of us, is all good. The good encompasses the parts of ourselves that are our natural gifts and treasures. The bad are those parts that need work. The ugly parts are generally hidden, especially from ourselves. Use the good, fix the bad, and learn to live with the ugly.
  • Knowing yourself allows you to maximize performance. There’s more to being successful than working hard. You have to be able to create a winning business plan, cultivate relationships, and build your brand. Work smart and focus on results in everything you do. This will reduce stress and increase satisfaction.

When you understand how you work most effectively, you will do a better job of delegation, use of outsourcing, and selection of partners and employees. Figure out what you love to do, and what you can do well, then hire people to complement your abilities.

If you are by nature a big picture person, and have trouble with follow-through, then you need to find a detail task manager to fill in the gaps. On the other hand, if you get bogged down in systems details when you should be working on the long-term strategy, get yourself a mentor to keep you on the right path.

In fact, there has never been a better time or more opportunities for entrepreneurs. The current economic recovery demands a transformation of business processes and cultures, beginning at the startup level. Now is the time to know yourself and believe in yourself – and use this power to win.

Marty Zwilling


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Tuesday, May 15, 2012

Great Businesses Evolve Innovation to a Revolution

Great businesses these days start with innovation, and then take it up a few notches to make it a revolution. An example is Google, who turned a new search technology into a tool that most of us couldn’t live without. As an entrepreneur, how do you know if you have the potential to innovate, and what are the steps to get from innovation to revolution?

While digging into this subject, I came across a recent book by Patrick J. Howie, called “The Evolution of Revolutions,” which makes the points that resonate with my experience. He starts with a discussion of the Big Five personality traits, used to explain individual differences across all walks of life. The following three seem to relate most closely to innovative potential:

  • Openness to experience. Scoring high on openness has been found to be the top predictor of an entrepreneur’s innovativeness. Having a curiosity to learn about all new things increases the likelihood of “seeing” novel solutions.
  • Hardworking and responsible. Innovation is hard work. Good entrepreneurs have to develop sufficient knowledge and enjoy the difficult problem-solving process to achieve real innovation. That requires a high level of commitment, and a high degree of ambition.
  • Desire to communicate. If an entrepreneur creates an innovation but never talks and shares it, then the innovation may never be recognized. An entrepreneur doesn’t have to be a raving extravert, but working with other people and selling are required capabilities.

With the right personality traits, the next step is to follow a productive innovation process. The sad fact is that the vast majority of new products and new companies fail to make it to market or fail to turn a profit. Here the key steps of a process that good entrepreneurs espouse:

  • Problem identification. Useful innovations are ones that solve a real human problem, rather than simply illustrating a capability of a new technology. Many entrepreneurs start with an impressive technology, but forget to relate it to a problem that affects large numbers of potential customers who have the means to buy it.
  • Motivation to inspiration. The germination of an innovation is elusive. Overt attempts to motivate people to be innovative or usually counterproductive. Good entrepreneurs are usually intrinsically motivated by a dream or vision, or even money, or inspired by a personal challenge or opportunity to change the world.
  • The new reality. Entrepreneurs need to critically evaluate their “habits of perception” to come up with new concepts of reality. This is called re-conceptualization, using the innovation they bring to the table. The hard part is bringing customers to that new reality.

The final step to successful innovation is to get it adopted by real customers, rather than simply being the subject of an academic report or technical journal. Patrick calls this “taking an innovation to a revolution.” This involves moving through the following three stages:

  • Overcoming resistance. All new innovations are evaluated against the current option, which may be doing nothing. The reality is that most people have a natural bias against change and innovation, so your challenge is to get them to re-concepualize.
  • Clarification and iteration. Most new products are not conceived or developed perfectly the first time. Thus resistance is a good thing, since it helps the entrepreneur to be more precise as they iterate on the definition, production, and selling of the innovation.
  • Evolution to a revolution. Every innovative product needs continuous follow-on, meaning additional innovation, with a cumulative value much greater than the original. Failure to pass this stage means your innovation is a fad, or a ‘one-trick’ pony.

Notice that none of these elements mentions risk. Traditionally, the level of innovation is aligned with the level of risk, yet many entrepreneurs do not consider themselves to be risk takers at all. If your goal is to spark “the next big thing,” it has to start with innovation, but that is only the beginning. Can you make the evolution from there to a revolution?

Marty Zwilling


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Monday, May 14, 2012

Test Your Business Model Against These 10 Elements

You can’t succeed in business without an operational model that delivers value to customers at a reasonable price, with an underlying cost that allows you to make a profit. There are no “overrides” – for example, businesses don’t thrive just because they offer the latest technology, or because everyone wants to be “green, or because their goal is to reduce world hunger.

I expect that should seem intuitive to all entrepreneurs, but every investor I know has many stories about startup funding requests with major business model elements missing. The most common failures are solutions looking for a problem, lack of a defined market, and giving away the product.

There are dozens of sources to help you construct your business model, and a good example is a recent book by venture capital investor Elizabeth Edwards, simply named “Startup,” which is really designed as a handbook for launching a company for less. I support her assertion that a business model consists of at least the first seven of the following ten basic elements:

  1. Value proposition. What is the need you fill or problem you solve? The value proposition must clearly define the target customer, the customer’s problem and pain, your unique solution, and the net benefit of this solution from the customer's perspective.

  2. Target market. Who are you selling to? A target market is the group of customers that the startup plans to attract through marketing and sales their product or service. This segment should have specific demographics, and the means to buy your product.

  3. Sales/Marketing. How will you reach your customers? Word-of-mouth and viral marketing are popular terms these days, but are rarely adequate to initiate a new business. Be specific on sales channels and marketing initiatives.

  4. Production. How do you produce your product or service? Common choices include manufacturing in-house, outsourcing, off-the-shelf parts. The key issues here are time to market and cost.

  5. Distribution. How do you distribute your product or service? Some products and services can be sold and distributed online, others require multi-level distributors, partners, or value-added resellers. Decide whether the product is local or international.

  6. Revenue model. How do you make money? The key here is to explain to yourself and to investors how your pricing and revenue stream will cover all costs, including overhead and support, and still leave a good return.

  7. Cost structure. What are your costs? New entrepreneurs tend to focus only on product direct costs, and underestimate marketing and sales costs, overhead costs, and support costs. Test your projections against actual published reports from similar companies.

  8. Competition. How many competitors do you have? No competitors probably means there is no market. More than ten competitors indicates a saturated market. Think broadly here, like planes versus trains. Customers always have alternatives.

  9. Unique selling proposition. How will you differentiate your product or service? Investors look for a sustainable competitive advantage. Short-term discounts or promotions are not a unique selling proposition.

  10. Market size, growth, and share. How big is your market in dollars, is it growing or shrinking, and what percent can you capture? Venture capitalists look for a market with double-digit growth, greater than a billion dollars, and a double-digit penetration plan.

Investors will want to understand your business model very well and very early. They don’t want to hear your customer sales pitch, which naturally avoids any discussion of how much money you intend to make, and how many customers you expect to convince. Giving that pitch to investors will only frustrate both you and them.

A viable and investable business model is one of the first things you need to highlight in your business plan. In fact, without a business model, your startup is just a dream.

Marty Zwilling


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Friday, May 11, 2012

10 Tips on the Value of Collaboration in Startups

Any entrepreneur with a vision can postulate a new business, but it takes a collaboration of many people to make it a success. Today the complexity of forces required for success include multi-disciplinary skills, competencies, and experiences in which the whole is greater than the sum of the parts. Entrepreneurs who embrace the “lone wolf” approach usually live to regret it.

I just finished a new book, “The Collaboration Imperative,” by Ron Ricci and Carl Wiese, which makes the case very well for why collaboration matters in every business, as well as startups. Every entrepreneur should heed the following lessons on collaboration derived from the authors work on the culture, process and technology of collaboration in hundreds of companies:

  1. Consensus is the enemy of collaboration. Collaboration leaves everyone with a feeling of “win-win,” while consensus is “win-lose” or even “lose-lose.” Collaboration opens more possibilities, while consensus narrows them to a compromise.

  2. Collaboration has to start at the top. Company culture is not set by words, but by the actions of the founder. That means treating everyone with respect, and providing regular constructive feedback. Trust is required for every successful collaboration.

  3. The biggest barriers to collaboration are not technical. They are cultural and organizational in nature. Startup executives need to first build a culture and processes with communication and shared goals, rather than internal competition and bureaucracy.

  4. Collaboration cannot be deployed – it must be embraced. Executives and managers must be willing participants, modeling collaborative behavior and embracing the technology tools, not just taskmasters. All team members must be committed.

  5. Good ideas come from anywhere, so the more voices the better. These are critical in arriving at a clear idea of what is important, exploring what is possible based on constraints, and coordinating effective actions to produce successful outcomes.

  6. Collaboration enhances personal communication skills. As team members interact and play to their strengths, they learn to be authentic and genuine, which increases their effectiveness as well as their skills. They reach agreement faster and communicate more.

  7. You get out of collaboration what you put in. According to a global study of business conducted by Frost & Sullivan, the return on a collaboration investment progressively improves as better tools are deployed and a collaborative culture takes shape.

  8. Collaboration success means changing both roles and rewards. This means creating processes that allow more perspectives, but make it clear who has decision-making rights. It’s essential to provide incentives to change ingrained behavior.

  9. More interaction opens opportunities to create more value. Within any given startup environment (market, industry structure, competitors, product/service mix, etc.) opportunities exist that are often missed unless everyone is listening and communicating.

  10. The average return on collaboration is four times the initial investment. From the study referenced, measured gains ranged from three to six times. This ROI comes from cost avoidance, cost reductions, business optimization, and faster business decisions.

In today’s highly competitive and unpredictable environment, it’s not enough to do one thing better than your competitors. You need to change your organization so that it can rapidly recognize and adapt to new opportunities and new threats.

Collaboration is the new imperative. It may be the only way to accelerate innovation, improve agility, increase adaptability and cut costs all at once. But building a collaborative culture is not an easy transformation for the traditional fiercely independent entrepreneur. How long has it been since you have taken a hard look at your own startup?

Marty Zwilling


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Tuesday, May 8, 2012

How to Show Your Customers a Little Extra Love

I deal often with early-stage startups, and many of these don’t have any customers yet (but wish they did), so it’s not surprising they still don’t think of customers as their friends. More disturbingly, others do have customers, but the customer service program consists of an informal focus on “problems,” rather than a proactive effort to establish a positive relationship with friends.

The right time to put a formal customer service program in place, with measurements, is before the first sale of your product or service to a customer. You can’t manage what you don’t measure, and customer satisfaction these days is one the most critical success factors to every business.

A while back I saw a great article on the Focus website, titled “12 Lessons From The Best Customer Service Companies”. They summarized some practical lessons that I recommend from companies with the best customer service around - both what to do, and what not to do:

  • Keep it personal. Yes, a certain amount of automation is necessary for efficiency, but customers should never feel like they are at the mercy of machines when all they really want is to talk to a human being.

  • Don't make the customer work. Many companies build friction into their support systems by forcing customer to remember arcane account or customer numbers, e-mail addresses and passwords, before being helped.

  • Foster relationships. When it comes to major, life-changing purchases, simply answering a customer's questions is not enough. To close large sales, a firm's customer service staff needs to build and foster relationships with customers.

  • Go above & beyond. No small amount of customer frustration comes from the perception that companies are doing the bare minimum to satisfy them. Actions clearly above and beyond make the customer feel completely taken care of.

  • Be enthusiastic. Another way to show customers that they're in good hands is to be really, truly, palpably enthusiastic about your products. Customers like to believe that businesses believe in the virtues of their offerings on a level transcending profit.

  • Be helpful without being annoying. The overzealous floor clerk might think he's helping by following you from aisle to aisle, but in truth, he is actually getting in the way. The challenge is to assist customers without stepping on their toes.

  • Even online retailers need phone support. A mistake of online retailers is to assume "since we're online, we don't need a support number." Web retailers typically direct all questions to a form that most people assume will never get answered by anyone.

  • Unabashedly seek to out-serve competitors. Deliberately and un-apologetically striving to out-serve your competitors. Take stock of how the other companies in your industry interact with customers and seek out specific ways to do a better job of it.

  • Be prompt. The reason so many people prefer phone support to online is not that online support is inherently awful, but it’s often treated as less urgent. Let's be frank - who really expects to hear back from "support@someretailer.com" anytime soon?

  • Train rank & file employees in your customer service specifics. Great customer service is not commanded down from the top by written edicts and policies. Every company known for outstanding service has made a conscious decision to train its rank and file employees in how to properly assist their customers.

  • Always innovate. Contrary to some assumptions, customer service isn't all about direct business-to-customer interactions. Even the most courteous and professional staff can't rescue a stagnant company selling the "same old same old" year after year.

  • Create a desire to belong. Finally, among the most powerful customer service techniques is creating a desire to belong. Customers with a desire to belong are fiercely loyal and provide positive testimonials and word-of-mouth advertising money can't buy.

Customer service, like any aspect of business, is a practiced art that takes time and effort to master. Treat your customers like your friends, be ready to show them a little extra love, and your business will always be remembered as the best.

Marty Zwilling


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Monday, May 7, 2012

6 Reasons Why Startup Prototypes Attract Investors

It’s a long way from an entrepreneur’s “idea” to a working product with a real market and paying customers. A necessary intermediate step for proof of concept, credibility with potential investors, and communication with your team, is a working prototype. Building a prototype should be an early and high priority task for every startup.

A prototype doesn’t need to look great, or be built to scale, but it better accurately translate your vision into something real and tangible. For less tangible products, like software, it should simulate the look and feel of the final product on relevant base hardware. Here are some key objectives to keep in mind when designing your prototype to make it attractive to investors:

  1. Validate the customer need and opportunity. I always hate it when I see startups invest millions of dollars in technology before they validate their ideas in the market, only to find that customers seem to be looking for something slightly different. Test your idea early in a form that is easy and inexpensive to modify.

  2. Demonstrate to you and your team that your idea is implementable. No matter how strong your vision and theory, you won’t know for sure until you see it, that it really works. Even the best ideas often fail. Even when it works, key members of your team may not understand it all until they can touch and feel it.

  3. Leverage the technology to change directions as needed. In these days of rapid change, almost every startup has to adapt their solution, business model, or target customer. A pre-production prototype will allow you to be adaptive without dire consequences.

  4. Convince potential investors to take you seriously. Angels and venture capitalists are all about reducing the risk. Per the above points, if you have a validated a working prototype, investment risks are dramatically reduced. These days, if you don’t have a proven prototype, investors probably won’t even talk to you.

  5. Early start on testing performance, materials, and quality. Work with the prototype will help you determine the best materials, like metal versus plastic, to assure acceptable performance and durability. Don’t wait for the final production model to find out that your product has a weak link in one of the common environments.

  6. Basis for working with vendors to finalize costs, manufacturing, and marketing. After the market and product have been validated, the real challenge comes. You need to find vendors who can deliver in less cost and time than competitors, and build distribution and support channels. A prototype is the three-dimensional version of your vision.

There is nothing wrong with starting simple, engaging a friend who does mechanical design, or a student at a local industrial design school. In fact, many universities have expert professors, graduate students, and laboratories in all the key technologies, and they may be happy to do the work for you, if they can use it for class projects and Government Grant applications.

If you are ready for the next stage, it’s easy to find commercial resources on the Internet, like ThomasNet, a one-stop database of 650,000 manufacturers, distributors, and prototype developers, covering every state and country. There are new methods of prototyping, like stereo-lithography, which allow plastic prototypes to be made directly from computer drawings for a few hundred dollars, rather than waiting for injection molding at more than $10,000 per item.

Even at early stages, you can get invention support services from sites like Invention Home in Pittsburg. Just don’t get carried away here, and remember that the invention process is risky, with only a small percentage of inventions or products succeeding on the market. There is no magic, so don’t spend all your money assuming that these companies will guarantee your success.

Don’t skip the prototype stage for all the business reasons listed, and because it is a great way to explore possibilities, and have fun using your creative juices. The prototype is where you really bring your product idea to life, for yourself, as well as for everyone else.

Marty Zwilling


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Tuesday, May 1, 2012

7 Success Maxims from Savvy Business Leaders

Even though I have seen many business leaders succeed, and many that failed, I still struggle with what really makes the difference. It seems like some CEOs are just more tuned in to the market realities, customer dynamics, people interactions, and are better leaders. But what does that really mean?

A while back I found some great business leadership insights in “The Secrets of Tuned In Leaders”, by Craig Stull, Phil Myers & David Meerman Scott. They did a series of interviews with CEOs to understand how technology companies create success, and why most fail. They found many similarities between the companies that are winning in the marketplace and those that are struggling.

But behind the scenes, seven critical success factors emerged. So pragmatic were these “secrets” that most of the CEOs treated them as nothing more significant than looking both ways before crossing the street. But we all know that looking both ways first can save your life.

Here is a summary of seven maxims that I excerpted from their e-book, which you can use in your startup and every entrepreneurial initiative:

  1. Work as a trusted customer advisor. The way today’s leaders create a sustainable, growing, and successful company is to instill a company culture of working as trusted advisors to prospects and customers alike. By first understanding market problems, then building the products people want to buy, and communicating to buyers an understanding of their problems, everything else falls into place.

  2. Build from the market outside-in. Tuned in leaders understand the complete picture of market problems before building products. They develop solutions in the context of the total customer experience. The most important thing they do is to live in the prospect’s world and look at all the touch points that matter.

  3. Simple is smart. The best companies create solutions that are narrow and deep. They organize around a single market problem and solve it completely with a solution that seems simple to the buyer, by obviously and most importantly handling all the related tasks in one easy step. Often, this means specializing in a single vertical market or industry.

  4. Leadership is distributed. Winning companies recognize it is better to distribute leadership and to employ a bottom-up strategic planning process that drives the business forward, than it is for functional senior managers to collaborate on decision making and push new strategies, processes, and plans out to the organization.

  5. Stop being a vendor. Tuned in leaders don’t push solutions at their customers and walk away. Instead, they develop programs to partner with their customers in the process of continuous problem solving. As a result, they garner high customer satisfaction rates. A formal customer relations program is the first step.

  6. Marketing with a big “M.” Leaders focus first on identifying market problems that exist and can be solved with technology, not just promotion and advertising. They organize around both understanding market problems, as well as what is more traditionally defined as outbound marketing (go-to-market strategy).

  7. Measure only what matters. They demand real measurements that help them run the business. Metrics must help answer questions such as: Should you increase spending to build new and innovative products? Should you expand your marketing programs? Develop new channels? Increase or decrease your marketing staff?

Executives and staff at most companies already are convinced that they are tuned-in (market driven). Their opinion, although interesting, is irrelevant. Think hard about how tuned-in you really are to these seven maxims? Looking all seven ways and listening carefully can save your career and the life of your business.

Marty Zwilling


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