Sunday, January 31, 2016

10 Creativity Barriers To Overcome In Your Business

wall-barrier-overcomeSuccessful entrepreneurs are the ones who think the most creatively, not only in their initial product or service, but more importantly all through the stages of growth from startup to maturity. But even the best of them can easily slip into some bad decision habits that limit or hurt their business, due to natural human tendencies and the pressures of business challenges.

Obviously, the business of business has been around a long time, with many “best practices” well-defined and well documented, so creativity that ignores these is usually not a good thing. Thus every entrepreneur struggles to achieve that balance between methodically following “proven” processes, versus a new and creative approach which may be a real differentiator.

In my experience as a mentor, I find that keeping creative thinking in the balance is a challenge for every startup, due to the natural employee tendency to resist change. I agree with the classic book by Ros Taylor, “Creativity at Work: Supercharge Your Brain and Make Your Ideas Stick,” which outlines some key psychological impediments to creative business thinking and change:
  1. Just use the data metrics. Shocking statistics, like unexpected losses last quarter, can generate a knee-jerk cost cutting decision, when further analysis and creative thinking might better close the gap with new revenue sources. Using data metrics alone for decisions, without seeking the root problem and alternative solutions, kills creativity.

  2. Let’s just be optimistic. Optimism is essential for long-term success, but it can delay or cloud short-term decision requirements. Entrepreneurs have to be careful not to look too hard for evidence that confirms their passion and positive perspective. Be a realist when making a decision and an optimist when implanting it.

  3. The way we do things. It’s human nature to believe that the way we have first learned and long done things is the best way, and other ways won’t work as well. It stops us from having to learn anything new. One of the reasons change is hard is that people have to unlearn the old way first, which is twice as hard as just learning something new.

  4. Tricked by recency. We tend to remember the first and the last things we hear – the primacy and recency effect. Sales people tend to remember the latest product when selling to clients, not the one best for that customer. So when decisions are to be made, we tend to remember recent information and issues. Not always to good effect.

  5. Group think will give the best results. Group results are often dominated by an autocratic leader, or represent assimilation of the lowest common denominator. Most people tend to be compliant, rather than risk conflict. Creative ideas are the outliers, and tend to be eliminated first, rather than evaluated fully. Diversity challenges group think.

  6. Low appetite for risk. With humans as well as with animals, you tend to get what you reward. If you reward ‘right first time behavior,’ you might get fewer mistakes but you will also get fewer attempts at trying new things. ‘Fast failure’ and ‘minimum viable product’ are startup concepts geared to facilitate creativity while still mitigating risk.

  7. Polarized thinking. Early failures tend to swing later decisions entirely in the opposite direction, which can have equally traumatic results. Some people tend to manage challenges with “either/or” thinking, rather than creative “both/and” thinking to try to solve the problem. If there are polar opposites, look for the positives on both ends.

  8. Generate more stress. The more critical a problem becomes, the less creative our decision making will be. Concentration is impaired by stress, judgment and logical thinking deteriorates, we tend not to communicate well, we tend to stop gathering data, and we tend to make quick, impulsive, short-term decisions. Work on reducing stress.

  9. No feedback or results analysis. Every decision needs review and continuous feedback from constituents for validation and tuning. In the world of business today, the only constant is change. Even good decisions today will require adjustments as the environment or customers change. Avoid the tendency to fix blame and look for excuses.

  10. Failure to learn. Experience is inevitable; learning is not. Review and measuring decision results facilitates learning, just like sales metrics facilitate a better understanding of sales. Creativity without learning will be short-lived and ineffective. Learning required effective listening, and creative thinking to make sense out of tough experiences.
It’s time to get past the myths and mystery about creativity. Creative people don’t have to have eccentric personalities, work in the arts, or work in isolation, to achieve results. It is possible to be creative on demand, and to demand creativity in your startup. In fact, if you don’t, your startup will too quickly join the ranks of the corporate world that you love to hate. Think about that one.

Marty Zwilling

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Saturday, January 30, 2016

8 Essential Attributes of a Successful Mindset

42-34359416It’s easy to declare yourself an entrepreneur, but it’s not so easy to convince investors, your team and customers that you are that special one to fund and follow. If you don’t consistently display the right entrepreneur mindset traits, people won’t follow and business success will likely elude you. And don’t even think you can fake the important attributes once the going gets tough.

Business success begins in the mind of the startup founder and the team. A winning startup is built by an entrepreneur as an embodiment of who you really are rather than an artificial façade built on the myths around Steve Jobs and Mark Zuckerberg. As a startup investor and mentor, I look beyond the façade to find these eight keys traits in the mindset of every entrepreneur.
  1. Vision of providing real customer and social value. I still see too many startups driven by founders who have a solution looking for a problem. It’s not enough to invent a new technology because you can, want to be your own boss or see an opportunity to get rich, unless these are preceded by an innovative vision of solving some real-world problem.

  2. Confidence substantiated by desire, preparation and experience. A strong success motivation is a good starting point, but I want to see evidence of an ability to execute. Everyone knows of a dreamer who can display passion but doesn’t have the mindset of discipline and skill building to traverse the long journey from idea to business success.

  3. Sets realistic goals with milestones and metrics to gauge progress. Building a new business is essentially turning a vision into a financially self-sustaining operation that provides satisfaction and value to both the customer and the entrepreneur. That requires quantifiable objectives with measurements to assure forward progress and completion.

  4. Willing to endure personal sacrifice to make it happen. Aspiring entrepreneurs with a success mindset are willing to commit personal funds and time and give up other enjoyable activities in the interest of assuring the completion and success of the new venture. Investors call this a willingness to put “skin in the game," and they won’t invest without it.

  5. Effectively builds relationships inside and outside the company. No entrepreneur can succeed as the Lone Ranger. Relationships with others are required to build a team, nurture customers and complement individual strengths. The best relationships are based on personal integrity, good communication and giving more than receiving.

  6. Demonstrates the ability and determination to overcome obstacles. People see this persistence and problem solving ability as a sign of commitment and as an indicator of long-term success. The best entrepreneurs recognize that a new business is a journey, not a destination, and they get satisfaction from conquering challenges along the way.

  7. Accepts full responsibility and accountability. Too many entrepreneurs are quick to make excuses, look for shortcuts, and refuse to acknowledge the many risks. As a startup founder, you need to realize that the “buck stops with you,” even if the economy falters, the market changes or a major competitor appears at the worst possible moment.

  8. Clearly enjoys the work, the challenges and the people. Entrepreneurs who are seen to be rarely having fun are rarely successful. The best are clearly comfortable with their chosen business domain, the team around them and their customers. They also find time to balance their work against family expectations and outside relaxation activities.
Most experts agree that we all possess the right traits at some level, but a few may be buried deep in the subconscious, or blocked by insecurity, negative thoughts and lack of confidence. The first step in unblocking and highlighting these attributes is to understand what people are looking for as attributes that lead to business success.

Successful entrepreneurs possess many of the desired attributes, developed to phenomenal levels -- far beyond those of the average person. So before you decide to start a new business, take a hard look at your own mindset. You may profit most from surfacing and strengthening your winning mindset first before starting on the business.

Marty Zwilling

*** First published on Entrepreneur.com on 01/20/2016 ***

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Friday, January 29, 2016

7 Counter-Intuitive Insights On How To Get Things Done

the-productivity-projectIn business, the only thing that counts is results, not how hard people work or how many hours they put in. Have you noticed in your startup or around your office that some people are always at work and busy, but others seems to consistently get more done? Studies of software teams, for example, show differences as great as ten to one in productivity between working team members.

Much has been written about the external influences of office environments, motivation, and personal health impacts, but I see evidence that there are personal productivity tactics that contribute just as much. Along these lines, I just finished a new book, “The Productivity Project,” by Chris Bailey, who conducted dozens of interesting personal productivity projects on himself.

His conclusions validated much of the conventional productivity data, but also highlighted several additional factors to increase productivity that may not be intuitive to most business professionals:
  1. Slow down and work more deliberately. For most people, trying to work faster means trying to do multiple things concurrently. Research shows the result of multitasking is a focus on what’s in front of us only 50 percent of the time. Constant task switching kills efficiency, and usually more than offsets the value of multitasking. Slow down and focus.

  2. Schedule less time for important tasks. When you limit how much time you spend on an important task, you create urgency around the task, overcome your urge to procrastinate, and dive in with more energy and focus. The result should also be fewer total hours at work, improved health, as well as improved productivity and attitude.

  3. Define more activities as unimportant. All business tasks are not created equal. Yet many business people continue to be distracted by the crisis of the moment or a peer request for help, rather than focus on work more critical to their success or the business. This classification of activities requires an overt effort, but pays back in productivity.

  4. Prioritize daily only the top three results required. Thinking in threes allows you to keep important activities on top of mind, and better manage your time, energy, and attention. Trying to create and manage a long list of priorities, in concert with daily distractions, leads to mental thrashing, fatigue, and lower productivity on all items.

  5. Strive for imperfection on key activities. Perfection is not an affordable target on most business tasks. Yet many people continue to work well beyond the point where they are “good enough.” The most productive follow the Pareto Principle, which asserts that 80 percent of the results comes from 20 percent of the effort. Don’t be a perfectionist.

  6. Keep potential distractions at least 20 seconds away. This 20 second rule, studied by psychologist Shawn Achor, asserts that if we move more than 20 seconds away from snacks, cell phones, or peer questions, our focus will remain on critical tasks and efficiency will increase. Distractions are the enemy of productivity. Move away from them.

  7. Eliminate unproductive procrastination. Productive procrastination is doing some lower priority activity to keep busy while avoiding what really needs doing. Unproductive procrastination is wasting time and effort, pretending to be busy, organizing your desk, checking email, surfing the internet, or taking another break. Reduce procrastination.
The value of increased productivity in business is self-evident. It reduces your costs, increases competitiveness, and generally improves the morale and payback to employees. For businesses that depend on people, high productivity can mean the difference between success and failure.

As a result, every entrepreneur and professional I’ve met in business wants and needs to be more productive, but finding the approach that works for them can be elusive. I think you will find the techniques presented here well worth adding to your work ethic.

Marty Zwilling

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Wednesday, January 27, 2016

Getting A Software Patent Is Valuable But Frustrating

US_Patent_coverFor a software startup, a patent can be the intellectual property providing the key competitive advantage, or it can be an expensive non-defensible bureaucratic nightmare -- or both. I still generally advise software startups to file a patent as a barrier to entry from competitors and to increase their valuation by investors, but every entrepreneur needs to understand the tradeoffs.

Most experts agree that the software patent process is in disarray, and you can find a long Wikipedia article on the debate, as well as many strong views from key industry players. Some argue to simply eliminate software patents, while others put their hopes in U.S. patent reform legislation and an international Patent Cooperation Treaty to mitigate the challenges.

  1. Every business is global, but patent rules differ around the world. There is no such thing as a world-wide patent. There are at least five major international jurisdictions, and the protection you receive in each depends on meeting the unique required rules and on whether that jurisdiction has any meaningful enforcement mechanism or intent.

  2. The patent application and approval process is expensive and slow. Even if you start with the U.S. and the European Union to cover the largest opportunities, startups who can’t do the work themselves should count on spending $10,000 per patent per area and up to four years for final approval. That’s more than a lifetime in today’s technology.

  3. Patent offices can’t keep up with software technology. It’s impossible for any patent jurisdiction to keep staff up to speed and qualified to validate significant innovations in a complex and rapidly changing technology, where trivial innovations are not obvious. The standard issue patent duration is 20 years, which is far too long in the software business.

  4. The patent application process has become a legal negotiation. The reason that lawyers get large fees for patent filings is that legal negotiation and strategy have become more important than technical merit. Patent lawyers know how to frame claims broadly, with legal wording, to negotiate the success of some at the expense of others.

  5. Patents can become a commodity for buying and selling. Some companies called patent trolls purchase or license software patents to build a portfolio that they can sell to the highest bidder or use to hold startups hostage due to limited resources through royalties and litigation. Rather than protection, this can be seen as a tax on innovation.

  6. Patents are counter to open source initiatives and free software. The free and growing open source software community, which covers most mobile and web apps, oppose software patents as impeding or prohibiting the distribution of free software. By definition, patents limit the commercialization rate and range for a new innovation.

  7. All patents require public disclosure. This is positive, in educating the public by making them aware of an unknown or non-obvious software invention. On the other hand, it can be negative to an entrepreneur inventor who needs more time to capitalize on a competitive advantage or wants to benefit from licensing or sale of the patent.

  8. Unlike hardware, software is already covered by copyright. Copyright intellectual property protection is already given automatically and immediately without the need to register the copyright with a government. Copyright, on the other hand, only protects expression which can be reworked substantially to hide theft without changing function.

In any case, I believe maximum protection for your intellectual property should always be sought by entrepreneurs to increase their sustainable competitive advantage and increase their valuation to investors and potential acquirers.

The smart ones continue to judiciously apply for patents but only in the jurisdictions where the opportunity is greatest, using their own resources to keep the costs down and limiting their claims to only the most defensible and valuable. It pays to understand the tradeoffs, but it doesn’t pay to let an emotional debate stand in the way of your business success.

Marty Zwilling

*** First published on Entrepreneur.com on 01/15/2016 ***

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Monday, January 25, 2016

8 Initiatives To Make Your Customers Loyal Advocates

customer-advocatesIf you can’t provide a memorable customer experience, your startup won’t survive very long these days. According to many observers, we can thank or blame technology for these higher expectations, providing information at the speed of light, leading everyone to expect more. You now need more than loyalty from your customers -- they need to be your best advocates.

In case you don’t understand the urgency, just be aware that according to a recent Forrester report, nearly 95 percent of your competitors are saying that providing a good customer experience is their top strategic priority. The bar is being raised, so every entrepreneur needs new initiatives just to stay in the ballgame. Here are some key ideas to get you started:
  1. It all starts with the right people on your team. Make sure you only hire top-notch employees who can relate to the demographics of your customers, and make sure they share your vision and expectations. The days of pushing new and marginal performers into customer service are gone. Every job on your team drives your customer experience.

  2. Personally listen and interact with customers regularly. Some entrepreneurs are so focused on their technology, they assume their customers think the same way. If you and key members of your team haven’t talked to a real customer this month, you have missed some evolving needs and shifting expectations. Lost customers provide the best input.

  3. Promote by example a superior customer experience mindset. A mission of superior customer service is more than words in the board room or words in front of customers. It must be written down, with measurable team objectives, validated by metrics and compared against competition. Most importantly, your actions speak louder than words.

  4. Be a visible role model for customer urgency versus emergency. Many startup founders are great at putting out fires at the expense of urgent customer priorities. Customer-centric leaders display a calm but visible urgency for improving the customer experience during all stages of business evolution and growth. Culture growth follows the leader.

  5. Aim your customer experience at their hearts. Emotional connections are often more valuable than money in building loyalty, differentiation and an exceptional customer experience. Move from customer friendliness to customer charisma. A business with charisma gives the customer something very special, and they want to tell others about it.

  6. Make your customer experience fun for all constituents. A business that is not employee-friendly will not be customer-friendly. All processes need regular updates, so a non-punitive feedback mechanism is important. One approach is to give frequent rewards to your team and special discounts and exclusive promotions to your best customers.

  7. Provide coaching and mentoring as well as training. Formal training for the team is just the beginning, not the end. Customer-centric founders have found that interactive coaching and mentoring by experienced peers is more effective and positive in keeping everyone up to speed on trends, competition, customer demands and technology.

  8. Give team members and customers incentives to improve the experience. Engage team members in creating the experience as well as fixing problems. Encourage and motivate them with the freedom to do their jobs by providing bonuses and giving credit along the way for every contribution. Engage your best customers in the process as well.
Maybe you still remember the days when competitive advantage was all about economies of scale, advertising power and service versus price. Today, with instant low price search, ordering via smart phones and unfiltered online reviews everywhere, the advantage has shifted to companies who can make the whole customer experience positive.

If you wait for poor experience reports before you start, it’s probably too late to recover.

Marty Zwilling

*** First published on Entrepreneur.com on 01/14/2016 ***

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Sunday, January 24, 2016

7 Writing Rules Eliminate Any Failure To Communicate

What-we-got-here-is-01Even in this age of videos and text messages, the quickest way to kill your startup dream with investors, business partners, or even customers, is embarrassingly poor writing. Being very visible in the startup community, I still get an amazing number of badly written emails, rambling executive summaries, and business plans with one paragraph per chapter.

In the competitive realm of business, you only get one chance to make a great first impression. You have to be able to communicate effectively in all the common forms, including business writing, as well as talking, presenting, and producing videos. Lack of the requisite skills or discipline will get you branded as a poor business risk before the message is even considered.

Business writing is not a skill that anyone is born with, but one that everyone can learn. Since we all lose when an entrepreneur with a great idea is held back by a failure to communicate, I would like to offer a quick summary of business writing basic principles. Keep these in mind as you look for others to join you in supporting your idea to change the world:
  1. Get to the point in the first sentence. In this age of data overload, everyone has learned to tune out if they can’t quickly decipher a relevant purpose and focus for your message. That context needs to be set before your sales pitch or background story makes any sense. Before you start, make sure you understand your own objective.

  2. Plan the message flow to a logical conclusion. Random thoughts or lists of facts do not constitute effective business writing. Most commonly, your message is informational or meant to persuade, so every element should be consistent with that intent. Always include the key document elements of an opening, main body, and a conclusion.

  3. Key points should be highlighted and positive. Action items should be underlined, or separated into bullets to provide visual recognition in a quick scan. Positive messages have more impact, so keep negative and emotional statements to a minimum. Avoid flowery language and excessive use of adjectives. Tight wording clarifies the message.

  4. End with a clear call to action. If you are looking for an investor, a partner, or a customer, make sure the next step is clearly stated, and not just implied. Contact information should always be included. Ending with “May I ask for an hour on your schedule next week to discuss details?” is better than “Don’t miss this opportunity.”

  5. Talk uniquely to each recipient. Generic messages aimed at groups of people do not make a good first impression, especially if the greeting is non-specific and email is directed to a long list of addresses. Smart business people tailor their conversations to each recipient, and the same consideration should be applied to written messages.

  6. Use professional formatting. A badly formatted document, in all caps, mixed fonts, or all one paragraph will destroy even the best message. If you are asking for a million dollars, don’t send your message in smartphone or texting shorthand, ignoring spelling errors. Show your recipients professional respect, and you will get respect in return.

  7. Keep your writing voice friendly and courteous. If your writing tone is angry, cynical, or arrogant, don’t expect any reader to be open to what you have to say. Tune your use of language to the reading level of the recipient or below. Trying to impress or intimidate the reader with technical terms or acronyms doesn’t work with confident professionals.
As a general rule, text messages or emails from a smartphone should never be used for business purposes with someone you don’t know well. Emails are acceptable, if kept to one page, with minimal attachments, addressed to a single recipient, with a relevant subject line, and professionally formatted.

If the business criticality is high, or the subject is sensitive or easily misinterpreted, skip the written communication entirely, in favor of a phone discussion or a personal meeting. Written communication can never convey emotions and body language effectively, which may be fifty percent or more of the message.

Every entrepreneur needs to remember that they are selling themselves in every written communication, even more than they are selling their idea or funding request. Poor use of the writing technology generally available, including formatting tools and spell checkers, will be read as an inconsiderate or risky partnership. You can’t afford that competitive disadvantage.

Martin Zwilling

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Saturday, January 23, 2016

10 Proactive Ways to Build Engagement From Your Team

team-engagedEvery business wishes that all their employees were star performers, but wishing doesn’t make it happen. Some coaches and leaders seem to have the magic for bringing out the best in everyone. Research has shown that it isn’t magic, but a focus on engaging people in their work, so that their work triggers the same emotions as play does for you.

Some of you cynics may think that such a thing isn’t possible, but Shawn Kent Hayashi, who has worked for years with entrepreneurs as well as Fortune 500 giants, argues otherwise. In her classic book “Conversations for Creating Star Performers,” she offers ten strategies I believe will leverage work activities into game-changing moments for team members and your company:
  1. Build awareness of expectations. Conversations about what effective performance looks and sounds like are an obvious strategy, but too often found missing. No team member knows what they don’t know, so regular communication from leaders is key.

  2. Understand individual motivators. Star performers are always people who have aligned their work to their values so that they are passionate about what they are doing, and the work will feel like play. Great leaders align the values of work to their team.

  3. Capitalize on the strengths of each team member. When hiring or inheriting new team members, it’s important to discuss their strengths, development areas, and blind spots early. Always try to align people’s roles to their natural talents and interests.

  4. Help team members develop a plan for their future. Take the time to develop individualized development plans for every team member, as a joint effort. Focus should be on current strengths, blind spots, where they want to go, and how to get there.

  5. Make new skill development an ongoing priority.  Survival in today’s fast-moving business world requires continuous learning and broadening of your skills. You will need to be inspiring and connect the dots to show the benefits of new abilities.

  6. Get people unstuck and back on track. People don’t get back on track unless they know there is a problem. It’s up to you to give the tough feedback, without emotion, while keeping it in context. Then, with clarity, provide the next steps to get back on track.

  7. Support team members in being accountable.  Communicate the measurable results expected, and get a commitment for specific action steps and timeframes. Remember that you must role model and reward accountability to get it from your team.

  8. Provide real feedback on their performance. Performance feedback works and is appreciated when it is done often, and in the context of specific accountable actions. Once per year discussions, only when there is a problem, don’t work.

  9. Celebrate successes and even small steps. Always affirm and reward team members often, and criticize infrequently. Experts say it takes five positive interactions to dilute one negative, if we want the relationship to thrive. Create a positive emotional wake.

  10. Develop future leaders early. Successful competition in the marketplace is correlated to a company’s ability to attract, retain, and develop talent. Develop a deep talent pool and it’s never too early for succession planning. This forces you to think about how team members can grow to satisfy their long-term objectives and yours.
A strong and positive business culture is instrumental in bringing out and retaining stars. Top executives and leaders set the culture, but every manager’s actions and interactions with top performers and every team member solidify and drive that culture.

During the recession a few years ago, it was easy to conclude that you have other priorities, and team members would perform at their best to keep their jobs. But keeping a job and top performance at the job are two different things. Now, as business confidence builds, it’s time to double-check how you’re treating all your potential star performers. They will love it or leave it.

Marty Zwilling

*** Published on IvyExec.com on 01/20/2016 ***

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Friday, January 22, 2016

8 Practices To Galvanize Innovation In Your Startup

advancing-innovationEntrepreneurs and startups are big believers in innovation, but sometimes they forget that innovation must be continual to assure long-term success, rather than the one big-bang idea that initiated their journey. By default, innovation in every business decreases over time, and continuous innovation requires ongoing initiatives and measures of customer perceived value.

The old rule of thumb that most companies have ten years between significant disruptions has already been reset to five years, according to many experts like Larry Downes and Paul Nunes. From an insider perspective, 37 percent of CFOs now see the required target as a significant innovation every one-to-three years, according to the results of a 2015 IMA innovation survey.

Getting innovation to happen this regularly requires some real disciple and processes. I just finished a new book, “Advancing Innovation: Galvanizing, Enabling & Measuring for Innovation Value!” by Patrick J. Stroh, which details the principles and metrics to follow for fostering innovation in any organization. Here are his key recommendations from my perspective:
  1. Surround yourself with a great team. Get the right players on board and enable them to do great things. Don’t wait too long to swap out players that don’t fit from a skill standpoint or a cultural perspective. Hire slowly and fire fast. Build trust and motivation in your teams consistently, and prepare to be surprised at the speed of innovation.

  2. Ensure that you have good advisors. Every entrepreneur, no matter how experienced, will benefit from a personal board of directors or advisors to guide them in facets of their business. Good advisors will tell you what you need to hear, while friends will tell you what you want to hear. You need both in business, with the insight to tell the difference.

  3. Recognize that customers care about the whole experience. People pay for a great user experience, in finding the right product, buying it, using it, and getting support. Today they demand it or walk to competitors, who are not far away. When is the last time you listened to customers and clients directly, and acted on their feedback immediately?

  4. Target a portfolio of solutions, not just one product. A startup may start with a focus on one solution, but long-term growth and success requires a range of solutions, with annual innovations on every one. Sometimes the hardest thing for companies to do is to retire a cash cow product, before its declining market is reinvigorated by a competitor.

  5. Incent everyone on the team to be an innovator. Normally the best innovations come from the people on the front line, rather than a top manager or designer. Yet most of the people who count are often paid to make things work the way they have always worked. Remove fear of failure, then demand and measure innovation as key to job performance.

  6. Give customers what they want, even if they don’t know they want it. Good people listen intently to customers, apply a knowledge of the industry, and imagine a better experience, based on insights and talent applied to unspoken customer needs. Great innovations always seem obvious and simple to customers, after the fact.

  7. Align the interests of partners and other constituents. In many cases, those that appear to be your competitors can actually be your allies, and through partnerships (co-opetition) and agreements you can create more value together than you can achieve separately. Aligning interests fosters growth and innovation from all constituents.

  8. You can’t improve something if you can’t measure it. Use the Innovation Value Score® approach described in the above book, or any relevant yardstick, to measure and compare with other companies and achieve more innovation value. It’s all about results, benchmarked against strategic plans and a vision of what is possible.
As the pace of change in the marketplace increases, innovation is required at a faster pace in every organization, old and new, to stay competitive. According to a 2015 McKinsey poll, 94 percent of existing company executives said they were dissatisfied with their company’s innovation performance, compared to competitors.

That fact should convince you that galvanizing innovation only gets harder as your company grows and matures. Thus it behooves every new startup to build the suggested innovation practices into their culture and organization from the beginning. Catching up later is not a viable strategy for survival.

Marty Zwilling

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Wednesday, January 20, 2016

6 Ways To Prevent Disastrous Outsourcing Decisions

outsource-services-cubiclesIf you have a software development background like mine, I’m sure you often get questions about when to outsource, versus building the solution in-house. The same applies to manufacturing and almost any process these days. Outsourcing is defined as contracting the work to another company, usually located in a developing country, like India, China, or Eastern Europe.

This alternative has been around for several decades, with the generally accepted advantage of reducing costs. Recently, I’ve seen a lot of discussion about bringing the work back home, since costs have gone up in less-developed countries, there are issues with intellectual property, and time zone and language differences make management difficult.

In reality, the considerations haven’t changed all that much over the years, and are worth repeating for those of you who haven’t previously faced this decision. So before you decide to move your manufacturing, software development, or call center out of town, make sure you understand the following considerations:
  1. Don’t give someone else control of your competitive advantage. If your software or your manufacturing process is your “secret sauce,” you need to keep the work in-house. Saving cost won’t help you if you can’t make the daily innovations required to stay competitive. Let someone else do the ancillary processes where you have no economies of scale, like accounting and support.

  2. Keep intellectual property keys in-house. Despite some recent advances, there are still some cultures which have less regard for patents and other intellectual property. For example, it is no secret that software pirating is still very common in China, Vietnam, and other cultures. Don’t count on contracts and non-disclosure agreements to save you.

  3. Don’t let leading edge become bleeding edge. Leading edge technology software and manufacturing require constant course corrections and iterative restarts. These can’t happen with outsourcing, without long time delays and excessive rework. Results on commodities, including mature software maintenance, adapt well to low-cost contracting.

  4. Factor in all the cost elements. It’s easy to find companies in certain countries that will quote cost reductions up to 75 percent. Your challenge is to factor in the right additional costs for these deals including contract negotiation, increased project management, and extensive travel. Apparent cost reductions can quickly evaporate into increased costs.

  5. Look at internal services versus external services. Customer-facing services, like call centers, should rarely be outsourced. You can’t isolate your customers from language idiosyncrasies and empowerment issues, per reduced customer satisfaction highlighted a while back by the Wall Street Journal. Internal services, like marketing and accounting, are more manageable and have less customer visibility.

  6. Focus on operational processes, rather than innovative new ones. It’s hard to write a detailed specification on an evolving new service, process, or product that embodies your core competency. Don’t expect a contract company, either offshore, onshore, or near-shore, to implement a vision that is still in your head. You need to capture the learning in your own team from the evolution.
In any case, before you select a specific outsourcing or contract alternative, there is no substitute for doing thorough due diligence. Visit the contract location, investigate their skill level, training, and quality of their facilities. Spend time building relationships, ask for referrals, and follow up. Make sure the chemistry, values, and culture of the owners is compatible with yours.

After the contract is signed, make sure that both you and they have strong project management skills in place to prevent scope creep, incomplete specifications, and lack of acceptance criteria. If you are a typical startup operation, consisting of an unpaid founder and co-founder, both working part-time, outsourcing is not likely the solution to your resource constraints.

Overall, I believe the utility for outsourcing is going up, rather than going away. The world is becoming a smaller place, and more homogeneous. Startups are often distributed entities, so adding and managing freelancers, contractors, and outsourcing firms is not a big step. But customers are not looking yet another homogeneous product or service, so be careful.

Marty Zwilling

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Monday, January 18, 2016

7 Ways Due Diligence Helps Before Final Commitment

due-diligence-investment-reviewMost entrepreneurs work long and hard to get a handshake agreement from an investor, and then tend to relax and wait for the check to clear. What they don’t realize is that about half the investment deals fail to close at this stage, including mergers and acquisitions, during the due-diligence process. The same is true of Dragon’s Den and Shark Tank investments you see on TV.

Remember that investors at this stage have heard primarily from the founder, and only reviewed written business plans and collateral. Due diligence is going the next step, to meet and interview all key members of the team, visit the business location and follow-up with early customers and advisors. Everyone expects a few flaws, but serious undisclosed issues will likely kill the deal.

For entrepreneurs, due diligence may seem like a mysterious process, with secret formulas and tricky questions, to give investors leverage. In fact, it’s really just an in-depth common-sense analysis of key success parameters of any startup to assess the risk before final commitment. Here are seven key elements of the business that are typically included in the evaluation.

  1. Team synergies, commitment and depth. A dysfunctional team will jeopardize even the best of plans. A smart investor will normally interview all key team members and look for evidence of commitment to the same goals, depth of skills and experience and respect for all constituents. Undisclosed skill gaps or agendas can stall your investment.

  2. Customer and market interaction. Investors will test your relationship with real customers, based on the data you provide. Existing and potential customers echoing your passion can be your best support, while no customer interaction or interest can likewise be a huge negative. It’s smart to contact and prep all customers before investors call.

  3. Solution readiness and quality. This element is usually called technical due diligence and typically consists of a day with your engineering and marketing team led by internal team leaders. This is really an assessment of the team and internal processes as well as the product. Related discussions include intellectual property status and plans.

  4. Competitive positioning and barriers to entry. For this element, investors normally look for an outside expert to validate your analysis of competitors and positioning. Again, you need to head off any surprises by making sure you have mentioned all key competitors and thoroughly prepped the investor team on your strategy and direction.

  5. Business structure and financial risks. Be prepared to present a detailed cap table, identifying by percentage all owners, investors and debtors. Any unusual financial risks, including contingencies, large contracts, recent bankruptcies or credit denials on the part of any owners must be disclosed. The business structure should be clear and simple.

  6. Track record of setting and meeting milestones. Investors have found that results to-date in a startup are very indicative of future results. Entrepreneurs who set milestones for their team, and consistently meet or exceed the commitments are much more likely to do the same with invested funds. No milestones set or most not met is a huge red flag.

  7. Skeletons in the closet. No investor likes to be surprised in their due diligence by non-disclosed individual or startup tax problems, regulatory issues or negative publicity, either currently or in the last five years. Your best defense to any negative is early full disclosure, followed by a credible explanation, no excuses and many positives since.

Based on my own experience as an angel investor, I’m convinced that surprises rarely are any intent by the entrepreneur to defraud or even mislead potential investors. More often, it’s simply an innocent lack of disclosure of current relationship and operational issues which could raise investor qualms about the health of the business, despite a huge opportunity and a great product.

The best entrepreneur strategy for due diligence is to be as open and transparent as possible. Current issues and shortcomings should be disclosed in the most positive way to investors, before issues are exposed as surprises during the diligence process. Even one negative surprise implies others waiting to be found and will kill your integrity as well as sour the deal.

It’s always fair to ask the comparable questions of an investor to avoid surprises in that direction. Taking on an investor for a startup is a long-term partnership or marriage, so both sides need the same level of trust and commitment. It’s nice to start with a little mystery in a relationship, but neither side likes surprises during the honeymoon or later.

Marty Zwilling

*** First published on Entrepreneur.com on 01/08/2016 ***

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Sunday, January 17, 2016

Is Your Startup Growing Too Quickly For Cash Flow?

The_J-Curve_PEIn the new business world, many entrepreneurs are so excited with large initial orders that they don’t anticipate the cash flow challenges that can quickly kill their startup. According to the D&B Small Business website, 90% of small business failures are caused by poor cash flow. Cash is king when it comes to the financial management of a growing company, so diligence is required.

Good cash flow management, in simple terms, means understanding every inflow and outflow of cash, and never delegating this function. In principle, you must delay every outlay of cash as long as possible, while incenting everyone who owes you money to pay it as rapidly as possible. Surprises are unanticipated lags between these two events, as well as unplanned cash outlays.

Over the years, I have identified ten key principles and disciplines that every entrepreneur must understand and practice to minimize surprises and failures in this area:
  1. Failure to document cash flow projections is a disaster. No matter how small your company is today, there are more moving financial parts than you can manage dynamically in your head. Of course, you can’t predict everything, but writing down what you know will identify existing problems sooner, and allow other team members to help.

  2. You can be on budget, and still run out of cash. In the real world, spending seems to happen fast, and money coming in happens slowly. Thus your monthly budget may balance, but if planned income comes later than planned expenses, you have a short-term cash flow surprise shortage. Neither banks nor investors will help you on this one.

  3. Your startup may be profitable, but broke. Profits don’t necessarily translate into cash. You can make profits without making any money, since the first priority of most startups is to reinvest everything back into the business for growth. There are lots of accounting tricks to make you profitable, but it takes real cash to pay the bills.

  4. Seasonal sales fluctuations eat cash. Fluctuating sales means more inventory is required to cover the ups and downs. Every dollar in inventory is a dollar less in cash available, maybe even two dollars less if your gross margin is 50%. If you try to vary the number of employees to match, that costs even more cash for hiring, firing, and layoffs.

  5. Unanticipated expenses and emergencies drain cash. The chance of unanticipated expenses, in my experience, is close to 100%. It could be a natural disaster, like a flood or wind storm, or loss of key personnel, equipment failure, or a major customer complaint on the Internet. Every startup has an unplanned pivot, and these all drain cash.

  6. New businesses don’t get “normal” terms. It’s easy to forget that your new office rent asks for first, last, and security; new utilities require an escrow account; and new vendors want immediate payment for the first couple of months, before they offer the normal net 30 terms. On the other side, your new customers expect a free trial period.

  7. Sales volumes are still ramping up while marketing expenses are at max. In the early days of a new business, and every time you make changes, sales volumes slip just when you need them most to cover the extra marketing expenses and new infrastructure. Your old “cash cows” are dying, while the new ones are still being fed heavily.

  8. Even good customers don’t always pay on time. The Kauffman Foundation reports that late payments are among the biggest challenges facing startups. According to FundBox, 64 percent of small businesses wait well beyond their contracted terms for payments. If they are dealing with distributors, that wait can easily be four or five months. One way to defer some of these costs, as outlined by ProOpinion, is to provide alternative compensation methods (equity or compensation based) to your new employees.

  9. Higher than anticipated growth has put you in cash flow hell. The faster you grow, the more cash you need, to build product, facilities, staff, and service. These are “up front” costs that can’t wait the four or five months before the sales and revenue catch up. If you can’t deliver to match the growth, your house of cards comes tumbling down.

  10. Bankers and investors hate negative surprises. If your execution doesn’t include the expected cash flow management, investments can get withheld, and executives lose their jobs. I recommend that you buffer your initial requests for funding by 25%, and then add a line of credit, to cover contingencies and minimize the chance for negative surprises.
Then there are the founders that overreact. They pay just the smallest bills and let the rest slide. Or they stretch out all payments until vendors complain, reduce your discount, or eliminate your credit. If payroll is late, morale and confidence go down, the good people leave, and your startup spirals into the ground. For all these reasons, it’s worth your focus to temper your growth and prevent cash flow surprises.

Marty Zwilling

 Disclosure: This blog entry was sponsored by ProOpinion and I received compensation for my time, but the views expressed here are solely mine.

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Saturday, January 16, 2016

When Will Siri Make That Dinner Reservation for You?

romantic-dinner-for-twoEvery time I use Apple Siri or Microsoft Cortana, I’m frustrated by how little these services provide as the personal assistants they claim to be. Answering simple information questions is a start, but I expect a personal assistant to make an airline reservation, book a table at my favorite restaurant or even order a gift online that my wife would like. Why are these things so difficult?

This idea was first formalized about 15 years ago by Tim Berners-Lee, the man who (really) invented the World Wide Web. He called his dream the Semantic Web (or Web 3.0), meaning that it could learn and interpret the user context just as human personal assistants do. Natural language processing tools, such as Siri, need these capabilities to make them viable assistants.

Of course, you have to trust a personal assistant not to share user context and personal data with the wrong people. Yet I don’t see many users worrying about the wrong people accessing their smartphone personal text messages online or someone stealing their dinner reservation.

Certainly there is a risk, and everyone needs to make their own risk versus reward tradeoffs.In trying to understand why this huge entrepreneurial opportunity seems to be technically challenging or difficult to sell in the market, I have assembled the following list of five key requirements that are relevant to the realm of online virtual personal assistants:
  1. Easy and effective communication ability. In order to carry out requested tasks, a personal assistant has to first understand what is requested, both written and verbal, in the context and language of the requestor. According to a recent article, current tools still miss around 8 percent of spoken words and do very poorly on the context.

  2. Display an engaging and intelligent personality. All personal assistants realize that requestors have different moods and personalities, so they need to be respectful, courteous and sometimes assertive. I still find the current tools to be unintelligent, flat, boring and way behind the technology and marketing curve of what is possible today.

  3. Environment and context savvy. A good assistant constantly improves their knowledge of the world around the requestor, so they know quickly what is really being requested and what the acceptable outcomes might be in the requestor context. This is where all current tools fail -- by not honing a local database to learn from and frame each request.

  4. High value-added skills and productivity. Today’s personal assistants seem focused on expediting the Internet search process and simplifying text-intensive device control commands on your smartphone or tablet. The real value from personal assistants comes from being able to complete outside tasks like ordering products or making reservations.

  5. Provide convincing integrity, security and privacy. This seems to be a big hurdle in user acceptance, but I haven’t yet heard of Siri or Cortana sharing any personal search requests with outsiders. I believe the standards work now implemented for the exchange and protection of medical and personal health information should mitigate this concern.
According to Gartner, less than 40 percent of American consumers today use the free personal assistant services on their smartphones on a regular basis, and the best projections are that this could double by the end of 2016. To me, that suggests a major opportunity for additional products, free and fee, incorporating a new level of focus on the principles outlined above.

I do see a few startups edging into this space, including Assistant, HER and Alfred. To date, most of these are highly focused on one task, like trip planning or maintaining your calendar. Thus you would need dozens of these assistants, all with their own personality and limitations, to keep up with one human personal assistant. It’s no wonder that customers see no solution yet.

Hopefully you can now imagine all the fertile ground this opens for aspiring entrepreneurs. If you are looking for that magic million dollar idea, it may be time to build a plan around this one. But don’t wait too long, because the din for a virtual personal assistant on the Web and on your device is getting louder and louder. Catch the wave soon, or get drowned when it hits!

Marty Zwilling

*** First published on Entrepreneur.com on 01/06/2016 ***

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Friday, January 15, 2016

8 Ways To Make Your Venture A Company That Matters

Apple_Headquarters_in_CupertinoMore than ever before, people want to buy from, work for, and invest in companies that matter. Whether you are an entrepreneur starting a new business, or a corporate executive seeking to revitalize a mature business, the challenge is the same – to become the obvious choice within the hearts and minds of your customers, your employees, and your chosen communities.

It is no longer enough to just have a great product or service. Your company and team members have to be seen as going above and beyond to solve the problems of internal and external customers. How to do this right is illustrated well in a new book, “Matter: Move Beyond the Competition, Create More Value, and Become the Obvious Choice,” by Peter Sheahan and Julie Williamson, PhD. I can paraphrase their eight key recommendations here as follows:
  1. First define where you uniquely can add the most customer value. This is your edge of disruption, where your courage, capabilities, and optimism allow you to bring more value to key customer problems than any other company. Prioritize likely industry change and disruption over the next five years, and structure your business to lead the way.

  2. Assemble the best team to assimilate and design what is needed. Your company can’t be a leader without establishing an elevated perspective, based on realistic market needs, and demonstrating an ability to execute. These insights must come from tapping the right people inside and outside your organization, with real customer interaction.

  3. Be known for your expertise by broadly sharing the message. Every customer is looking for provocative thought leaders, such as Steve Jobs and Elon Musk, who are able to challenge the status quo with alternatives of substantive value. The willingness to share what you know even with potential competitors is critical for credibility and visibility.

  4. Seek out only the best potential partners and customer leaders. For real influence, you need to elevate your customer and partner relationships, focus on high-potential ones that meet your point of maximum value, and say no to others. Be ruthlessly honest with yourself in building the right relationships and eliminating misaligned behaviors.

  5. Build trusted and open partner relationships, with aligned incentives. This is engaging like you mean it, which is the only way to create mutually beneficial joint solutions to challenging problems. Start with a market segment that you need to understand more deeply, and invest in the success of your joint customers.

  6. Connect with the bigger picture of the market and society. Companies that matter focus beyond the buy/sell transaction view of the world. They recognize and contribute to the interconnectedness of all moving parts of the market as it evolves in real life. It’s about relationships, communication, thought leadership, and social value contribution.

  7. Be the disruptor, rather than a reactor and hindrance to change. It takes a degree of courage and commitment to convert perspective and relationships into impact. It requires that you lean into complexity to proactively align people, processes, and systems to deliver on new opportunities, often at the expense of current and comfortable ones.

  8. Live the role of a company that cares, aspiring to be one that matters. It is important to do work that inspires others to follow, that makes a difference, and contributes to more than your bottom line. Companies that matter take a long-term view, are extremely ambitious and optimistic about their future, and value the future of their customers.
If your company consistently finds ways to add more value and drive higher-order customer outcomes, it will become the obvious choice in your targeted markets. In addition, it will attract the best talent, the most customer loyalty, and provide greater personal satisfaction to you, the entrepreneur.

Thus it doesn’t matter whether your business is a startup or a mature operation, since the principles that make the difference don’t change with size. In fact, these principles are best implemented during the initial formative period of the business, rather than wait to be driven by a painful business transformation later. Too many businesses never survive the transition.

Marty Zwilling

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Wednesday, January 13, 2016

9 Actions Make You A Leader People Want to Follow

Wildrose_Leader_Danielle_SmithStartups provide business leadership with new products, services, and new revenue models, but leadership startups can only be built by entrepreneurs who are leaders themselves, and incent leadership in the team around them. Leadership which incents other people to be leaders is called “contagious leadership.”

John Hersey, in his classic book “Creating Contagious Leadership,” describes nine required skills or habits for inspiring a contagious leadership culture within a startup, as well as within other types of businesses, or even life in general. He and I believe that leaders have to make the overt decision to acquire these skills, and don’t have to be born or trained into them:
  1. Spotlight leadership acts of others. This is the habit of focusing attention, directly or indirectly, on leadership efforts and accomplishments of another team member or group. For managers and non-contagious leaders (contained leaders), the spotlight seems to always be on themselves.

  2. Cultivate positive character qualities. Contagious leaders have a habit of highlighting effective choices about “how” things were accomplished, and not just “what” was accomplished. It’s not just about the numbers, but how character played a role, and who made the right decisions along the way.

  3. Provide in-depth recognition. Don’t just articulate specific actions that deserve praise. Contagious leaders tell Harry why and how he did a good job, whereas managers and contained leaders just say “Good job, Harry.”

  4. Emphasize strengths, leading to greatness. Conventional managers focus on people’s shortcomings and point them out as often as possible. Contagious leaders nurture the habit of recognizing others strengths, and help them extrapolate these to greatness.

  5. Communicate often and effectively. The habit of constantly exchanging information, thoughts and feelings openly and honestly builds morale, enhances productivity, and fosters contagious leadership. Too many managers “tell ‘em only what they need to know and not a moment before they need to know it.”

  6. Provide an unobstructed vision. Contagious leaders foster the habit of focusing actions on a clear and sensory-rich picture of the desired result. Managers tend to have only a vague picture of where the company is going, so they are unable to share a coherent vision with others.

  7. Really touch people’s lives. Nurture the habit of truly knowing your most valuable asset – people. Managers avoid any real, deep involvement. Most don’t know if the people reporting to them are married or single, or anything about them. Contagious leaders know their people personally and do things for them, not because it’s good for business, but because they truly care.

  8. Passionately support your people. Managers are always controlled, rather than being fully committed and willing to take a risk. Contagious leaders are quick to support their team, and always stick up for them, even in the face of adversity.

  9. Mentor a permission mentality. Contagious leaders mentor their team to always assume they have permission to do things their way. They try to extend the concept of contagious leadership, rather than constrain it. Managers want a staff of imitators and followers. They want people to do what they want, and to do it their way.
In summary, leaders are not the same as managers. Managers focus on the process, while leaders focus on the people. Leaders influence people to make things happen, rather than tell people to make things happen. Contagious leaders create a culture that inspires everyone to be fully engaged in the startup. The result is that your whole startup will be a leader.

Marty Zwilling

*** Published on IvyExec.com on 01/12/2016 ***

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Monday, January 11, 2016

6 Prerequisites For Turning Your Passion Into Profits

passion-into-profitsI meet many entrepreneurs with a real passion for their new idea, but unfortunately they don’t all realize that passion is necessary but not sufficient fuel to turn their idea into a successful business. The result is that far too few really great innovations ever get implemented -- or last more than a moment in the marketplace.

First of all, passion needs to be surrounded by a host of other personal attributes necessary to survive the rigors of the long, hard journey to success. These include confidence, commitment and a determination to succeed. In addition, there is a key set of execution principles that consistently separate the wannabe entrepreneurs from the Mark Zuckerbergs of the world.
  1. Reality check your potential for building a business. Some people are passionate inventors or idea generators but really have no interest, skills or money for a business. Take an honest look at your motivation, resources and relationships before initiating a startup. The best use of passion may be finding someone else to build the business.

  2. Seek evidence of market opportunity to balance your passion. Just because you believe everyone needs what you have doesn’t mean it’s true. These days, there are over 150 credible market-research companies online sizing opportunities, including Nielsen and Gartner. If none of them mention your idea, it may not be a business.

  3. Double check the arithmetic on your business model. Put aside the rose-colored glasses of your passion, and ask a financial expert to validate the total costs required to build the business as well as realistic sales volumes and growth. It helps to document a total business plan rather than rely on your total recollection of all essential elements.

  4. Buffer your resource estimates by at least 20 percent. No amount of passion and startup planning will make everything work exactly right the first time. Assume you will need multiple iterations and multiple pivots costing more money and time than you anticipated. More passion may mean more opportunity, but it also means more risk.

  5. Interact with real customers to validate passion in their feedback. Use social media and live customers to eliminate any reality distortion in your internal perception of value. Develop marketing content and communicate with trusted advisors and employees to make sure the right message can be delivered with clarity and integrity.

  6. Plan for an extended effort, continued learning and personal balance. A business is a journey -- not a quick sprint. Don’t set up such a frenzied schedule that you will burn out after a few weeks or even a few months. The average overnight success for a startup takes six years, say marketing expert Seth Godin. And he is an optimist.
According to a recent analysis, entrepreneurs around the world have visions for over 300 million companies per year, but only a third ever get started. Other U.S. Labor Statistics data suggests that half of the ones actually started are gone in five years. Just imagine the potential impact of millions of unrealized innovations -- if only these execution principles were diligently followed.

Of course, an even more important driver of passion than success is happiness and satisfaction with the lifestyle. Despite the failure of many entrepreneur initiatives, other data continues to indicate that entrepreneurs as a whole are the happiest and most satisfied business people on the planet -- well ahead of corporate professionals who make more money and have bigger titles.

Thus, passion is a good thing, and it can be your competitive advantage, but only if you don’t let it lead to a self-reinforcing spiral of choices and actions that result in critical business miscalculations and missteps. Don’t wait until it’s too late to recover -- or realize after the fact that you didn’t even see it coming.

Marty Zwilling

*** First published on Entrepreneur.com on 01/01/2016 ***

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Sunday, January 10, 2016

6 Ways Startups Are Fooled By Prior Business Models

webvan-truckAs an entrepreneur mentor and startup investor, I see with sadness the 50 to 90 percent that fail. If you ask them for a reason, most will insist that they couldn’t get funding, or they ran out of money too early. But I’m not convinced that it’s as simple as that. Many are just not facing the reality that their passion had a critical business flaw.

As I was reading a recent book “Dead Companies Walking,” by Scott Fearon, who runs a hedge fund that profits from businesses headed toward bankruptcy, I realized that his insights on the common ways that mature companies often doom themselves apply equally well to startups. Every business, young or old, needs to avoid the following six mistakes that he outlines:
  1. Anticipating success based on the recent past. This fallacy, often called historical myopia, essentially involves extrapolating only from recent positive events, and ignoring the reality that markets saturate or evaporate. With the success of Facebook and Twitter, I still see new social media startups almost every day, with most destined to fail.

  2. Relying on an old formula for success. The fallacy of formulas that “can’t fail,” and holding on to troubled ventures, is alive and well in startups. It’s tempting to believe that one more new platform will win for crowd funding or video games, like Indiegogo and Wii. Actually, great new customer solutions lead to great platforms, not the other way around.

  3. Extrapolating you as the target customer. Never mix up what you like with what your customers will buy. Just because you would have loved to have your groceries picked out and delivered, doesn’t mean the mainstream customer was ready for Webvan in 1999. Or ask PlanetRx, an online service for prescriptions, before the Internet was pervasive.

  4. Falling victim to a magical mania or bubble. Perhaps the most famous bubble for startups was the dot.com craze that crashed 15 years ago, where the highest valuations were given to companies with massive user growth, but minimal revenue or profit. This one may be back, and due for another crash. See point #1 or watch history repeat.

  5. Failing to adapt to tectonic shifts in the market. Blockbuster failed to recognize that their industry had fundamentally and permanently changed, and even NetFlix has suffered from the same issue, as video streaming takes over. Things happen fast these days, so don’t get caught re-arranging deck chairs on the Titanic. Fail fast and pivot.

  6. Physically or emotionally moving yourself above the business. More than one smart entrepreneur has been caught in the lofty lifestyle of big money investors, viral growth, and movie star status. Startups can go down many times faster than they go up. Just ask MySpace, eToys, and Pets.com. Never take your eye off the ball in business.
Of course, there are many other common reasons for startup failure, including inexperienced teams, inadequate marketing, no intellectual property, business model doesn’t work, or just giving up too early. Every startup is a step into the unknown, making it a higher risk of failure, so there is no room for complacency or assumption.

In reality, failure is not a bad thing. In a healthy economy, capital markets and discriminating customers fuel growth and new ventures by handsomely rewarding well-executed ideas, and ruthlessly starving out even long-running ventures that refuse to adapt and innovate. A smart entrepreneur learns to embrace failure as a badge of learning that provides a competitive edge.

The lesson here is that even the most promising startups and experienced teams can be misled by sticking with business models that worked in the past, and market opportunities that may no longer exist. While there should be no stigma for failure, there is no joy in being a dead business walking. The quicker you heed these messages, the sooner you will be able to enjoy and celebrate the entrepreneur lifestyle.

Marty Zwilling

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Saturday, January 9, 2016

7 Skills to Thrive, Not Just Survive, in Any Career

thrive-not-just-surviveCareer growth in today’s fast moving environment requires all the skills that we normally ascribe only to entrepreneurs -- ability to adapt, change, be innovative, resilient and stay in constant learning mode. The days are gone when you were able to focus on a specific skill set in school and hone that expertise into a satisfying career for the rest of your working life.

Business career growth and success now requires thinking like an independent entrepreneur, even if you have chosen to climb the corporate ladder. Here is my list of critical skills that are second-nature to every successful entrepreneur and I believe are equally valuable to corporate professionals and executives today.
  1. Accept change as the only constant in business. Conforming to the way things have always been done in a company is a career killer as well as a company killer. For entrepreneurs, change is the door to opportunity, so be proactive and make it happen. Assume your role needs to change every couple of years, or you are falling behind.

  2. Develop and continually refine your competitive advantage. Entrepreneurs know that no competitive advantage means failure. Corporate professionals don’t realize that peers are their career competitors, so they get annoyed if another one is treated as ahead of the pack. Always be working to learn and demonstrate a clear skill lead in your domain.

  3. Demonstrate an ongoing sense of urgency on every task. It’s easy for professionals in a large organization to become complacent. Entrepreneurs understand that every aspect of customer satisfaction and business requires a sense of urgency to win. Change in a corporate environment can also happen quickly, so always keep a sense of urgency.

  4. Don’t be hesitant to take calculated risks. In the world of an entrepreneur, taking no risk is the riskiest thing you can do. Too many corporate professionals believe that taking no risk is the smartest thing to do. No risk means no gain in today’s world. Calculated risks are those with a low downside potential, but offer a large opportunity on the upside.

  5. Proactively seek out new career opportunities. Many professionals feel that if they do a good job, someone above them will seek them out for a better position. Entrepreneurs know that even the best new businesses don’t get found without effective marketing, testimonials and positioning work. Smart corporate professionals make their own luck.

  6. Build more and better relationships outside your domain. Good entrepreneurs know that who you know is often more important than what you know, especially as you look for new opportunities. Entrepreneurs continually expand their network of advisors and experts. Professionals trying to win on a solo basis are destined to be lost in the shuffle.

  7. Approach your career as an unfinished work in progress. Approach each day as an opportunity to learn new things, and grow into a changing role. Entrepreneurs know that their current solution is really a beta for the next one, and if that change takes too long, the business fails. Smart professionals never get comfortable with the status quo.
In every case, entrepreneurs understand that their success depends on a successful interaction with the environment around them, including economic, cultural and social issues. Corporate professionals often see themselves in a narrow tower, and become less sensitive to any outside forces. Everyone needs to think purposefully about how and where they choose to live and work.

I’m convinced that all members of the human species were originally born as entrepreneurs, and the skills and instincts that served them well to be survivors are still valuable today, whether you are managing a business or managing a career. If career growth and job satisfaction are your objectives, just pretend that you are an entrepreneur and your career is your business.

Your real challenge is to thrive -- not just survive.

Marty Zwilling

*** First published on Entrepreneur.com on 12/30/2015 ***

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Friday, January 8, 2016

Your Success At Work Depends On Peer Relationships

work-relationships-peersMost entrepreneurs, and members of any small team, naively assume that the key to their success is hard work, dedication, and long hours in the business. In reality, their effectiveness is usually more related to how well they develop their work relationships with peers and business leaders. First they need to decipher correctly every relationship as a workship, friendship, or foe.

Workships, according to workplace expert Dr. Jan Yager, refers to those workplace relationships that haven’t yet developed into full-blown friendships, but are closer than mere acquaintances. In her classic book on this subject, “Who’s That Sitting at My Desk?” she explains the importance of mastering work relationships, and provides specific guidance on building the right ones.

It behooves all entrepreneurs and team members to recognize the positives and negatives of each type of relationship. More importantly, we all need to develop the right relationships, and actively avoid those types that are not right for the business, or not right for our career at a particular point in time. Here are the key ones I have experienced, as paraphrased from her book:
  1. Acquaintanceship. Every business relationship, peer-to-peer, or inside to outside, starts as an introduction and formal recognition of roles. Too many relationships never advance beyond this stage, resulting in poor communication, no cooperation, low trust, and low shared productivity. Moving forward to a workship is critical to the business.

  2. Workship - Mentor. This is a productive working relationship where one party, more knowledgeable and/or experienced, takes an active role in fostering the advance of the other. When both parties contribute, it’s a powerful and positive relationship that benefits both careers, as well as the business.

  3. Workship - Advocate. Unlike the mentor, who is a coach and teacher, the advocate inspires you to be the best that you can be. The best advocates do this because they care about you as a person, not because of personal aspirations. Your business will benefit from the increased productivity, high morale, and skill growth.

  4. Workship - Trailblazer. The trailblazer is not overly competitive, but always is a few steps ahead and enjoys setting an example that you are inspired by, or motivated to follow. As a result, you are incented to be a trailblazer for others, which leads to stronger relationships throughout the team, and a stronger startup.

  5. Workship - Communicator. The communicator is always researching the latest info, and keeps you in the loop on what’s happening in the business and why. Unlike the office gossip, information is always shared in a positive way, thus helping you to do your best at work and in your career. What goes around almost always comes around.

  6. Friendship. There are three conditions that accompany the transition from a workship to a more intimate friendship; a shared wish to move to the next level, expanding the work-based relationship to non-work experiences; and sharing on issues requiring trust and discretion. Contrary to popular opinion, friendships are not inherently bad for business.

  7. Romantic. When the relationship is appropriate, condoned by the company, and welcomed by both parties, it can be positive from a personal and even a work perspective. On the other hand, it can cause enormous emotional and legal problems, not to mention pain, suffering, and business failure. Proceed to this level with caution.

  8. Foe. A foe relationship between two startup team members is always toxic to the business, so quick action from the top is required to save the business. Some foe relationships can be turned around to a productive workship or friendship, but all require first a shared wish by both parties to change. Workships and friendships can’t be forced.
In summary, entrepreneurs need to be especially perceptive and sensitive to business and personal relationships, since they normally work with small, closely-knit teams, on innovative and highly unstructured environments. The quality of relationships with customers, investors, partners, and suppliers can easily be their sustainable competitive advantage, or their death knell.

In my experience, even the best technology and business model won’t succeed without successful relationships. That’s why investors say they invest in people, not ideas. Starting from the top, make sure your startup has the right people, and the right relationships with each other. If you don’t, you too may soon find someone else sitting at your desk.

Marty Zwilling

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