Sunday, July 31, 2016

5 Key Factors Of Personal Resilience Lead To Success

Resilience_cycleYou can’t survive as an entrepreneur without resilience, because you are going to fail at least once, maybe multiple times. That’s the nature of trying something that’s never been done before. Resilience means not giving up, and being energized by what you have learned. As Thomas Edison said, "I have not failed. I have just found ten thousand ways that won't work."

If you need more evidence that great entrepreneurs survived through resilience, just look into the backgrounds of more recent entrepreneurs like Steve Jobs, Bill Gates, and Elon Musk. They all experienced multiple setbacks along the way, but they persevered to become some of the most well known and respected entrepreneurs of our time.

In a recent book on the subject, “Stronger: Develop the Resilience You Need to Succeed,” by George Everly, Douglas Strouse, and Dennis McCormack, these experts on the subject of human behavior and resilience outline five key factors of personal resilience, which I believe every aspiring entrepreneur should understand and develop before initiating a startup:

  1. Maintain active optimism. Optimism is the mindset to expect the best outcome from every situation. This gives entrepreneurs the capacity to pivot from a failing tactic, and implement actions to increase success. The key to building active optimism is observing how others were successful in similar situations, and believing you can do the same.

  2. Courage to take decisive action. Decisiveness mitigates adversity, helps you rebound, take responsibility, and promotes growth. Building decisiveness requires eliminating fear, procrastination, and the urge to please everyone. Practice making decisions as a positive learning experience. Understand that any decision is usually better than no decision.

  3. Let a good moral compass guide you. We all need a guiding light when adversity strikes. The four points of honesty, integrity, fidelity, and ethical behavior work best in business and personal life. Solidify your moral compass by setting virtuous goals, keying off the norm of inspiring peers, practicing self-control, and celebrating every successes.

  4. Show relentless tenacity and determination. Decide that giving up is simply not an option. Learn that tenacity is self-sustaining when persevering actions are rewarded. Find tenacious role models, and garner the support of peers and friends. Great entrepreneurs become tenaciously defiant when told they cannot succeed. Then they get it done.

  5. Gain strength from the support of others. Interpersonal support is believed to be the single best driver of human resilience. In business, this means that the people you surround yourself with are crucial – team members, advisors, investors, partners, and peers. Avoid toxic people like the plague. Practice active listening and show appreciation.

Very few entrepreneurs are born with the resilience needed. Yet, it is something any startup founder can acquire as an advantage in the ever-more-competitive business world. A good part of it is fighting the urge to revert back to our comfort zones, and fall back into old habits. From the pain of failure comes wisdom, from fear comes courage, and from struggling comes strength.

Resilience also comes from paying attention to your own needs and feelings. Entrepreneurs need to engage in outside activities that they enjoy and find relaxing, to keep their body and mind fit to deal with the unending challenges of every business. In addition, it’s important to have a higher level purpose in life, such as insanely great design, to guide your resolve and your decisions.

The Steve Jobs story of resilience is a classic example of a higher purpose, woven into the five factors above, ultimately leading to success. His elegant design decisions may have failed him initially at Apple, but he went on to hone them at NeXT and Pixar, and finally won his legacy by coming back to Apple with winning innovative designs for the iMac, iPod, iPhone, and iPad.

Steve never gave up, and that’s the essence of resilience. That’s what I look for as an angel investor in entrepreneurs, and that’s what everyone looks for in a leader. What have you done lately to build and demonstrate your resilience?

Marty Zwilling

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Saturday, July 30, 2016

6 Principles For Proper Use Of Funds From Investors

use-of-fundsEntrepreneurs looking for investor funding often fail to realize that all money comes with strings. For example, if you have watched the Shark Tank TV series, you probably noticed that the Sharks always ask the entrepreneurs for their intended “use of funds.” Those who respond with one of the wrong answers, such as “I want to pay myself a salary,” usually go home empty-handed.

You may think this question is just an artifact of good television, but let me assure you that in my experience as an angel investor, it’s a standard “make or break” inquiry posed to every entrepreneur. Here are some guidelines that will help you with the right answers, not only in closing your next investment, but in planning when and how much money to ask for:

  1. Investors are most interested in helping you scale the business.  That means they normally only invest in startups with a working product that has already been sold to at least one customer for full price (beta tests, giveaways and best friends don’t count). They are willing to cover marketing, inventory and scaling, but not product development.

  2. Make your focus and priorities clear. A long list of everyday expenses is not helpful here. I recommend that you simplify your use to no more than three items or categories, with a percent allocation to each. An example might be 50 percent for marketing, 30 percent for inventory and 20 percent for staffing. Have backup charts for investors wanting more detail.

  3. Funding for founder salaries at this stage is a red flag.  Investors expect you to “bet on the future” with them. You may pay salaries to your team, but your salary should come from earnings, when they occur. Taking your cut before earnings exist implies that you are not willing to take the same risk of no return, as you are asking of investors.

  4. Make sure allocation amounts are reasonable.  These days, even viral marketing requires real money, for events and promotions. Startups whose marketing budget is trivial lose credibility and most likely the investment. Conversely, a huge marketing budget implies an intent to “spray and pray,” in hopes that something works.

  5. Use of funds must be tied to projected cash flow negatives. If you ask for a million dollars, your financial projections better show a negative cash flow approximating that number (with a 20 percent buffer). Investors are not interested in giving you money to keep in the bank for backup, for investing in real estate or a fancy new car.

  6. Tie use of funds to real traction milestones.  A valid milestone might be closing a specific big-name customer or channel, such as Walmart, or it might mean getting your first 100,000 social-media followers, by a given target date. Building a huge inventory before you have a confirmed customer is not a convincing strategy.

If you are really looking for research and development money, and you didn’t sell your last startup for $800 million, professional investors are not the place to start. Hopefully, you can find some friends or a rich uncle who believe in your potential. The other alternative is to find a strategic partner who knows the space well and will benefit from your solution.

Professional investors always look for a proven business model and an existing revenue stream to minimize the risk. Then they look at the people behind the model, the execution status and how they might get their money back. Your proposed use of their funds will be seen in these three contexts. They will look to your business plan for cash flows and specific return on investment projections.

In all cases, your goal must be to explain how the investment will help you scale up the business and become more profitable sooner. You should always be prepared to mention a plan B, if possible, to grow more slowly by reinvesting initial earnings over time. Confessing that you are in survival mode, desperate for money now, will not improve your odds with investors.

Whether it be in the context of a five-minute elevator pitch or a more formal presentation to professional investors, the projected use of funds should be summarized and prioritized into three “chunks.” These must remain focused on scaling the business.

Investors want to be convinced that your use of their money will maximize their returns in the first five years, as well as yours. After that, all you have to do is make it happen. Have fun!

Marty Zwilling

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Friday, July 29, 2016

8 Initiatives To Increase Your Business Growth Curve

pets-com-sock-puppetA common pain of startups after an exhilarating first surge of early adopters is a long and frustrating plateau of slow growth, where it seems like nothing you do will get your business to profitability. Too many entrepreneurs don’t know what to do at this point, largely accounting for that disappointing 50 percent of startups that fail in the first five years, according to Gallup.

Some make big mistakes, such as Webvan expanding too fast with a huge infrastructure, and Pets.com, trying to grow the business with a negative margin, under the mistaken assumption that winning customers is more important than making a profit. Others do far too little, assuming the viral effect and word-of-mouth will soon kick in, and sales will suddenly grow exponentially.

In any case, it’s no fun to be stuck in this stage, struggling to make payroll, and dealing with impatient creditors and unhappy investors. First you need to take consolation from the fact that you are not alone, and more importantly you need to implement an active growth and marketing plan to include the following initiatives:

  1. Ramp-up visibility and strategic alliances. It’s easy to get so pre-occupied with handling the business rollout that you forget to maintain and increase your social media interactions, search engine optimization efforts, and highlighting positive customer reviews on your website. Continually add new marketing and distribution partners.

  2. Real growth always requires real marketing. Word-of-mouth and social media may get you started, but there is no substitute these days for special promotions, webinars, presence at trade shows, and actively calling on decision makers. There is no magic lever for growth, so several initiatives are required, with metrics to assess value returned.

  3. Ask every employee to focus on sales. This starts with multiple messages from the top that growth is now the highest job priority, and key to survival. Openly reward employees who make the extra effort, champion cost-cutting issues, and enhance the sales process. Ask everyone to be an advocate of the business to their friends and connections.

  4. Personally optimize every cash flow transaction. Resist the urge to delegate accounting decisions, under the assumption that incoming revenue takes the pressure off. Now is the time to take advantage of volume discounts and deferred payment plans. Many entrepreneurs forget that the growth phase may be your tightest squeeze on cash.

  5. Increase the pipeline and the conversion rate. Now is the time to formalize lead-generation efforts, and initiate efforts to maximize the conversion rate to sales closure. Real growth requires new and innovative ways to find customers, as well as old-fashioned advertising and email blasts. Shorten the close cycle to grow faster.

  6. Introduce automation consistent with growth rates. Manual processes and people are always the most expensive to scale, so every process needs metrics to determine when automation is appropriate. Some startups hire more people to delay automation, or spend money wildly on new tools for the future. Both are strategies for business failure.

  7. Introduce new products and enhancements every month. One of your best sources of growth is existing customers, who are always looking for more opportunities to buy, and new offerings. Capitalize on competitor weaknesses that you can fill with minimal new investment. Actively listen to customer feedback, and don’t be a one-trick pony.

  8. Aggressively enter new markets and sales channels. If your local market isn’t giving you the growth you expected, it may be time to expedite your expansion to new major cities or export opportunities. If your website isn’t pulling in the growth you need, expand to Amazon and other channels. Growth requires market innovation as well as product.

An entrepreneur who has struggled to fund and build a dream solution may think they can relax when the first wave of customers come in. Unfortunately, the challenges of scaling a business, and making it profitable, often last longer than the product development phase. The good news is these challenges are not rocket science, so anyone can do it. Don’t give up your dream too early.

Marty Zwilling

*** First published on Forbes on 07/22/2016 ***

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Wednesday, July 27, 2016

10 New Leadership Attributes Drive Startup Success

US-ARMY-ROTCThe reigning theory in business has long been that “alpha” leaders make the best entrepreneurs. These are aggressive, results-driven achievers who assert control, and insist on a hierarchical organizational model. Yet I am seeing more and more success from “beta” startup cultures, like Zappos and Amazon, where the emphasis is on collaboration, curation, and communication.

Some argue that this new horizontal culture is being driven by Gen-Y, whose focus has always been more communitarian. Other business culture experts, like Dr. Dana Ardi, in her recent book “The Fall of the Alphas,” argues that the rise of the betas is really part of a broader culture change driven by the Internet, towards communities, instant communication, and collaboration.

Can you imagine the overwhelming growth of Facebook, Wikipedia, and Twitter in a culture dominated by alphas? These would never happen. I agree with Dr. Ardi’s writing, that most successful workplaces of the future need to adopt the following beta characteristics, and align themselves more with the beta leadership model:

  1. Do away with archaic command-and-control models. Winning startups today are horizontal, not hierarchical. Everyone who works there feels they’re part of something, and moreover, that it’s the next big thing. They want to be on the cutting-edge of all the people, places and things that technology is going to propel next.

  2. Leaders of tomorrow need to practice ego management. They should be aware of their own biases, and focus on the present as on the future. They need to manage the egos of team members, by rewarding collaborative behavior. There will always be the need for decisive leadership, particularly in times of crisis, so I’m not suggesting total democracy.

  3. Winning contemporary startups stress innovation. Betas believe that team members need to be given an opportunity to make a difference – to give input into key decisions and to communicate their findings and learnings to one another. Encourage team-members to play to their own strengths so that the entire team and organization leads the competition.

  4. Put a premium on collaboration and teamwork. Instead of knives-out competition, these companies thrive by building a successful community with shared values. Team members are empowered and encouraged to express themselves. The best teams are hired with collaboration in mind. The whole is thus more than the sum of the parts.

  5. In the most winning companies, everyone shares the culture. Leadership is fluid and bend-able. Integrity and character matter a lot. Everyone knows about the culture. Everyone subscribes to the culture. Everyone recognizes both its passion and its nuance. The result looks more like a symphony orchestra and less like an advancing army.

  6. Roles, identities and responsibilities mutate weekly, daily, and even hourly. One of the big mistakes entrepreneurs make is they don’t act quickly enough. Markets and needs change quickly. Now there is a focus on social, global and environmental responsibility. Hierarchies make it hard to adjust positions or redefine roles. The beta culture gets it done.

  7. Temper self-esteem and confidence with empathy and compassion. Mindfulness, of self and others, by boards, executives and employees, may very well be the single most important trait of a successful company. If someone is not a good cultural fit, or is not getting it done, make the change quickly, but with sensitivity. Pain increases over time.

  8. Every individual in the organization is a contributor. The closer everyone in the organization comes to achieving his or her singular potential, the more successful the business will be. Successful cultures encourage their employees to keep refreshing their toolkits, keep flexible, keep their stakes in the stream.

  9. Diversity of thought, style, approach and background is key. Entrepreneurs build teams, not fill positions. Cherry-picking candidates from name-brand universities will do nothing to further an organization and may even work against it. Put aside perfectionism, don’t wait for the perfect person – he or she may not exist. Hire track record and potential.

  10. Everyone need not be a superstar. It’s about company teams, not just the individual. In case you hadn’t noticed, superstars don’t pass the ball, they just shoot it. Not everyone wants to move up; it’s ok to move across. Become their sponsor – onboarding with training and tools is essential. Spend time listening. Give them what they need to succeed.

Savvy entrepreneurs and managers around the world are finding it more effective to lead through influence and collaboration, rather than relying on fear, authority, and competition. I believe beta is rapidly becoming the new paradigm for success in today’s challenging market. Where does your startup fit in with this new model?

Marty Zwilling

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Monday, July 25, 2016

8 Entrepreneur Challenges Founders Don’t Anticipate

Jeff_Bezos'_iconic_laughEvery new entrepreneur who has not spent years in corporate life has the advantage of an unbiased look at business opportunities, but at the same time has the disadvantage of missing critical business experiences that can cost them dearly in their first startup venture. In my experience, building a successful business is more difficult than building an innovative solution.

Fortunately, despite their lack of basic business experience, the destined-to-be-great entrepreneurs never give up, following Bill Gates after his first failure with Traf-O-Data, and Jeff Bezos after early failure with his online auction site. All too many others are so discouraged or financially destroyed by their business learning experiences that they never try again.

Fortunately, I’ve had the opportunity to work and learn for many years in both the corporate environment (IBM), as well as the exploding Silicon Valley startup environment of the 90’s. As an advisor to many startups since that time, here is my list of key business growth challenges that every first-time entrepreneur may not anticipate:

  1. It takes relationships to make a business work. An innovative solution is necessary but not sufficient to build a business. Businesses require people relationships, to find the right team, investors, contract vendors, and attract customers. As an introvert and a techy, I know well the challenges of building relationships in today’s competitive world.

  2. Startups don’t come with formal training courses. New entrepreneurs quickly find that what they learned in business school is no substitute for real-world business experience and training. Larger enterprises let you learn as you go, with minimal risk, and they pay for leadership training, employee management, and new project management tools.

  3. A successful business is a long-term effort. Entrepreneurs are an optimistic and passionate group, who normally expect their idea to go viral soon, and success to follow shortly thereafter. They aren’t mentally prepared for the long-term grind, with repeated tough challenges along the way. It’s a 24/7 job with no time off for vacation or fun.

  4. Managing personal finances separate from the business. Being an entrepreneur is a lifestyle, making it hard to isolate the startup finances from family financial stability and future retirement requirements. Startups don’t come with pension, health, or 401(k) plans included. Startup setbacks can easily cost you your house and credit rating.

  5. Building a startup is more about love than money. People with experience in big businesses have learned that you won’t be happy even if well paid, unless you enjoy the job. Entrepreneurs who love to invent new things, but hate business, need to find the right partners before embarking down the path to a new business.

  6. Not having a predictable income is an ongoing source of stress. People don’t appreciate a regular paycheck until they don’t have one. Entrepreneurs never know when they will be hit by technology advances, new competitors, economic downturns, or loss of a major customer. Early funding is a full-time effort, and it’s no fun for anyone.

  7. Entrepreneurs can be lonely at the top. Once you have formally established a startup with you as the CEO, all former teammates will see you in a different light as the boss. Quickly, it will be difficult to get unbiased input, and everyone will wait for you to make the final decisions. It’s hard to find someone to share your fears and challenges with.

  8. Peer perceptions of entrepreneurs are not always positive. It’s popular today as a young entrepreneur to talk about your dreams and initiatives, and everyone seems to look up to someone running their own business. Later, colleagues with jobs in large corporations may look down on you as a person without job security or a clear career.

In all cases, I recommend to aspiring entrepreneurs that they spend some time first working for another startup, or in a corporate environment, if they aren’t absolutely certain about their lifestyle preferences. Life is too short to spend most of it in stress and pain, handling challenges you never anticipated, even if you are convinced that you can change the world.

 

Marty Zwilling    

 

*** First published on Forbes on 07/18/2016 ***

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Sunday, July 24, 2016

10 Startup Priorities May Negate The Business Plan

business-plan-simpleIf you are one of the new age of entrepreneurs who hates the thought of doing a business plan as a first step in starting your new venture you will love this message. More and more professionals agree that a better strategy is to explore and fine tune your assumptions before declaring a specific plan with financial projections based only on your dream and passion.

In the process, you may save yourself considerable re-work and money, or even decide that your dream needs more time to mature, before you commit your limited resources, or sign up with investors to a painful and unsatisfying plan.

In a recent book on this approach, “Beyond the Business Plan,” Simon Bridge and Cecilia Hegarty outline tradeoffs and recommend ten principles for every new venture explorer. Here is my edited summary of their ten principles, which I like and may convince you that you don’t need a business plan at all, or at the very least will help you write a better one later:

  1. A new venture is a means, not an end. A new enterprise should be pursued primarily to help you achieve your goals, like providing a better life for others, satisfying a passion of yours, or enjoying the benefits of a technology you have invented. In that context, it could be a social enterprise, or even a hobby, and a business plan may not be beneficial.

  2. Don’t start by committing more than you can afford to lose. New ventures are usually exploratory and risky in nature, so don’t let any business plan process convince you to commit more than you can risk as a person, if your exploration fails. Start with an effectual approach, which evaluates risk tolerance, and suggests more affordable means to an end.

  3. Pick a domain where you have some experience and expertise. Don’t handicap yourself by starting something for which you have to build or acquire knowledge, skills, and connections from scratch. No business plan will save you if you are just picking ideas at random, or copying others, just because the story sounds attractive.

  4. Carry out reality checks and make appropriate plans. Before a business plan has any validity, some work is required to validate that your technology works, a real market exists, and your assumptions for cost and price are reasonable. Don’t be totally driven by your own passions, the emotional enthusiasm of friends, or even third-party research.

  5. The only reliable test is a real one. Market research techniques for trying to predict the market’s response to a new venture can be costly and are often unreliable. Testing for real is the assumption behind approaches such as Lean Startup. It is also what explorers do – they go and look, instead of trying to predict from a distance what they will find.

  6. Get started and get some momentum. Too much hesitation will kill any new venture, as markets move quickly and difficulties mount. Getting started helps to generate momentum and the sense of having done something, which provides encouragement, more incentive to keep going, and can carry your startup over obstacles. Early perseverance pays off.

  7. Accept uncertainty as the norm. You will never remove all uncertainties, so accept them, and plan your activities in an incremental fashion. Too often, a business plan is seen as a mechanism for eliminating uncertainty, lulling the Founder into complacency. Eliminate major uncertainties before the plan, and update any plan as you learn.

  8. Look for new and best opportunities. Many useful opportunities are either created by what you do early, or are only revealed once you have started and can see out there. So keep your eyes open and respond to new customers, new markets, and new partnerships. You will also find that looking hard also eliminates opportunities that are not acceptable.

  9. Build and use social capital. Social capital is people and connections. No entrepreneur can survive as an island. Social capital is as important as financial capital for all ventures. As with all capital, you can use only as much as you have acquired to date. If you have no social capital, no business plan will likely get you the financial capital you need.

  10. Acquire the relevant skills. Three basic skill sets are required for successful delivery of almost every venture. These include financial management, marketing and sales, and the appropriate production ability. If you don’t have the relevant skills and knowledge, take the time to build them or find someone to partner with, before you attempt any business plan.

If you do decide after exploring these principles to continue building a conventional business, especially with investors and employees other than yourself, I’m still convinced that a business plan is a valuable exercise. You should do it yourself, to make sure you understand all the elements of the plan, and facilitate communication of the specifics to your team and to investors.

In essence, building a complete and credible plan is the final test of whether your venture has “legs,” meaning that the opportunity matches your resources, skills, opportunity, and a level of risk you are prepared to handle. The entrepreneur lifestyle is all about doing something you enjoy, without undue stress, uncertainty, and risk. Are you having fun in your venture yet?

Marty Zwilling

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Saturday, July 23, 2016

8 Business Professional Types Will Test Every Leader

team-member-typesThe most valuable assets of a new startup are the people on the team, and the most challenging task of the entrepreneur and team leaders is to spend their leadership time and energy productively. Cash isn’t always the scarcest resource startups have to invest – more often it’s the leadership capital of under-experienced and over-stretched entrepreneurs and co-founders.

Most new startup founders start out by assuming they need to spread their leadership efforts evenly across all team members. They soon find that doesn’t work, and they fall back to dedicating their efforts to the performance issue or crisis of the moment. Unfortunately this often makes them enablers of team member bad behavior, and spiraling down to a dysfunctional team.

I just perused a recent book, “Lead Inside the Box: How Smart Leaders Guide Their Teams to Exceptional Results,” by Victor Prince and Mike Figliuolo, two top thought leaders in the field of leadership development. While their experience and focus is more on large organizations, I was struck by how similar the considerations are to my experiences with startup teams.

The authors define a leadership matrix of four behavioral categories and eight team member subtypes. Every entrepreneur needs to take a hard look at their current startup team, based on the nature of each team member’s behavior, and future requirements, to assess their leadership challenge ahead:

  1. Domain masters. One of the most desired team member types for startups is the domain expert who is satisfied with their existing position and leadership. You count on these to deliver ongoing outstanding results. They require your lowest energy investment for the highest output. The challenge is to reward them well and not lose their loyalty.

  2. Rising stars. These team members are the ones who perform well in current roles, with minimum leadership, but they expect leaders to provide them with a stepping stone to larger roles and responsibilities. If they don’t see that happening, they are prone to leave your startup for better opportunities, or revert to a squeaky wheel or even a slacker role.

  3. Squeaky wheels. Team members who are capable of great results, but require an inordinate amount of hand-holding are often called squeaky wheels. An entrepreneur’s challenge with these is to wean them from their dependence on the leader, while continuing to generate solid results. Any other action will drive them to a lower category.

  4. Steamrollers. Some team members may get results, but at the high cost of damaging team morale and destroying the goodwill you and your team have accrued with others. Your challenge is to reduce the friction they are causing, while building their people skills and improving their ability to positively influence others. Their friction is usually toxic.

  5. Joyriders. These team members are always busy, and spend an inordinate amount of time at work, but focus on tasks they want to do, not tasks you need them to do. Your leadership task is to refocus their attention on their core responsibilities, and remove any possible distractions. Make sure they get rewarded for desired results, not time spent.

  6. Stowaways. We all know the team member who expends the bare minimum amount of effort required to keep getting paid. Stowaways need their leaders to engage them on a regular basis, and measure them against peers to make sure they are carrying their own weight. At the least, other members need to see you holding this person accountable.

  7. Square pegs. These are people who simply don’t have the skills they need to do the required job. The leadership challenge is to find the training or mentoring to fill the skill gap, or to find a new role that is a better match for the skills they do have. The leadership capital, and other costs to support square pegs is a huge startup resource drain.

  8. Slackers. At the bottom of the value chain are team members who have the skills to do the job, but lack the drive or motivation. The leadership challenge here is to unlock their motivation to apply themselves to their work, or remove them from your startup before they have drained the drive and energy from the rest of the team.

Effective team leadership, or leadership inside the box, is really only half the challenge that every entrepreneur faces. Equally important is leadership in the marketplace, with customers, outside partners, and industry thought drivers. The time and energy to do both is beyond most mere mortals. It’s time to take a hard look inside your box to see if you are spending leadership capital there that you can’t afford.

Marty Zwilling

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Friday, July 22, 2016

7 Steps To Turning Business-As-Usual Into A Moonshot

Dragon_capsule_and_SpaceXIn this era of accelerating change, business-as-usual is the enemy of every business, new and old. Yet it’s an easy rut to fall into, and a tough one to break out of. Every business needs to “reach for the stars” on a regular basis, in much the same way the President Kennedy challenged a nation to put a man on the moon in an impossible timeframe more than fifty years ago.

Moonshots are simply efforts that demand breakthroughs that are not possible within business-as-usual practices. In reality, that’s the definition of a successful startup these days, so every aspiring entrepreneur should take note, as well as every existing corporate executive. Elon Musk has done it with SpaceX and Tesla, and Steve Jobs did it on a regular basis at Apple.

The challenge is to do it by design like these guys, rather than by exception. I found some good guidance on the required steps in a new book, “The Moonshot Effect: Disrupting Business as Usual,” by Lisa Goldman and Kate Purmal, a couple of consultants who have made it happen. I like their seven step approach, which I have paraphrased here for entrepreneurs as follows:

  1. Pull together a great multi-functional team. Entrepreneurs who prefer to work alone have a hard road ahead. Every moonshot starts with a team of six to eight people, rock stars in their own area, excellent collaboration skills, highly motivated, high energy, and willing to take on challenges. It takes the right people to make a breakthrough happen.

  2. Clearly define and issue the challenge. A dream is not enough. You need to quantify measurable criteria for success, using business metrics. These could include customer penetration, revenue growth, budget guidelines, and industry visibility. For buy-in and commitment, ask for team proposals in a specific timeframe to start the process.

  3. Select the best proposal and announce intent. Visible leadership and commitment is a pre-requisite to real breakthroughs. This is the time to create organizational structure, leader assignments, budget constraints, and timeframe milestones. The breakthrough plan has to be communicated effectively to all constituents.

  4. Validate and quantify the business case. Team members begin by working with industry experts, advisors, and customers to validate assumptions, implementation plans, and financial parameters. If possible, the team should be assigned to a dedicated physical space and set up a “war room” for regular strategy and progress meetings.

  5. Finalize commitment to the plan at all levels. It’s time for the executive team and advisory board to commit the necessary funds and people resources to complete the plan. For startups, this will likely require a funding effort with friends and family, or grants. Patents and other intellectual property must be secured at this point.

  6. Move into full project execution mode. Effective progress requires a detailed project plan, milestones, resource assignments, metrics, and status meetings on a regular schedule. In a startup, the entrepreneur is the executive champion to prevent day-to-day pressures from distracting members of the team.

  7. Announce and launch an operational product. Initial rollout may be a public beta or minimum viable product which demonstrates the solution and tests the market on a limited basis. Even if there is more work to do, it’s time to celebrate the launch both internally and externally to build momentum and commitment.

While these steps may sound familiar to many entrepreneurs, I find the necessary discipline is often missing. Business-as-usual in a startup means everyone is working hard on the latest crisis, but no one knows the status or potential impact of the overall plan. In more mature companies, business-as-usual is a focus on existing products, with only an incidental focus on new initiatives.

In any case, it’s smart to use the moonshot analogy today to disrupt your business or startup from the business-as-usual malady. The world is moving faster and faster, so you need to shoot higher to keep from falling behind. In addition, you will like the exhilaration and satisfaction that comes with a successful moonshot. It’s the best way to change the world and leave a legacy to remember.

Marty Zwilling

*** First published on Forbes on 07/15/2016 ***

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Wednesday, July 20, 2016

7 Ways People Can Make A Big Difference In Startups

people-differenceIn my years of working with entrepreneurs, I have heard many times the promise that their new idea will create the next Amazon or Apple, but I rarely hear the more important promise that the founder will practice all the good habits of winning entrepreneurs like Jeff Bezos and Steve Jobs. You see, I’m convinced that the entrepreneur makes the company, not the other way around.

This seemingly radical concept of people making all the difference in business has been around for a long time, perhaps most visibly in the classic book “The 7 Habits of Highly Effective People,” first published by Stephen R. Covey over 25 years ago. Yet I still see most of the focus in the startup community on creating the best technology and process, rather than practicing the most effective habits.

In that context, I’d like to restate and amplify in business terms the top attributes that I believe every entrepreneur should aspire and commit to, consistent with the seven most effective habits detailed by Covey many years ago:

  1. Be proactive and take the initiative. Being proactive in a new business means starting with a vision of how to do things better, rather than following someone else’s success model. We have enough social network startups. Enlarge your circle of influence, and manage risk as an opportunity, not a negative. Keep commitments, with no excuses.

  2. Make personal life goals drive the business. Begin with the end in mind - your definition of success based on your principles. You won’t be effective centering your life around someone else’s view of success, satisfaction, and happiness. Make sure you have a personal mission statement before you try to define one for your new business.

  3. Willing to work on the business as well as in the business. Many entrepreneurs, especially technologists, relish building the product, and assume the business will build itself. Effective entrepreneurs always put first things first, expect needs to change, and manage with discipline. That means knowing when to delegate, enlist help, and say no.

  4. Strive for win-win relationships and agreements. Successful startups are more about stakeholder win-win relationships than win-lose with competitors and vendors. In the same way, win-win performance agreements make for effective team members, partners, and investors. Win-win puts the responsibility on the entrepreneur to deliver results.

  5. Seek first to understand, then be understood. Communication is one of the most important skills in business. With today’s interactive social media, there is no reason to assume that you know what customers want, or they know what you have. Collect their view and communicate. Don’t be an entrepreneur with a solution looking for a problem.

  6. Build synergistic business relationships. Valuing the differences is the essence of synergy – the physical, mental, and emotional differences that might be used as stepping stones to new business and win-win opportunities. Different points of view, even healthy conflict, is the key to innovative solutions and timely required change.

  7. Practice continuous learning and self-renewal. Renewal is the principle and the process that empowers entrepreneurs to move through an upward spiral of growth, change, and continuous improvement. This is often called sharpening the saw. It facilitates learning, committing, and doing business on an increasingly higher plane.

For many entrepreneurs adopting these habits is a paradigm shift, as challenging as the one from technologist to business professional, but it can be done and has been done by every successful entrepreneur. In addition, the power of a paradigm shift is that it opens up a new level of thinking, and a new level of power. It’s a great new asset, often more important than new funding.

Remember that investors continue to see thousands of e-commerce and computer startups, but only a few new entrepreneurs like Jeff Bezos and Steve Jobs. If you already have the effective habits I have outlined here, make those part of the story you lead with. If you don’t have them yet, now is the time to start.

Marty Zwilling

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Monday, July 18, 2016

10 Indications You Would Make A Great Entrepreneur

stars-entrepreneurAs a startup advisor and investor, I’ve met many aspiring entrepreneurs, and I often get asked the question, “I have a great idea for a startup – do you agree that it real potential?” They don’t know that most experts agree the person is more important than the idea, yet I’ve never been asked, “I have a great idea for a startup – do you agree that I have real potential as an entrepreneur?”

Nevertheless, I’ve given a good bit of thought to some questions I might ask, or you should ask yourself, to get some indication of whether you have the right stuff to succeed and be happy in the entrepreneur lifestyle. Here are ten sample questions that I believe will reveal positive indications of your potential as an entrepreneur, and also indicate that you will select good ideas:

  1. You see creating a business as a fun challenge. Many techies and inventors I know hate the thought of running a business – their fun and challenge comes from creating the innovative solution. For these, I recommend that they find a partner first who is willing and able to run a business. “If we build it, they will come” is not a viable startup strategy.

  2. You tend to ask for forgiveness rather than ask for permission. This attitude indicates that you are comfortable making decisions, and ready to be your own boss - a major prerequisite for succeeding in any entrepreneurial endeavor. Of course, you do need to consider how often that strategy has worked for you, and how often it backfired.

  3. Making big money excites you, but is not your major driver. If you are dreaming of an opportunity to get rich quick, the entrepreneur route is not for you. Most great founders lived on Ramen noodles, without taking a salary, for longer than they like to remember. For them, money is a positive indicator of success, but not an end in itself.

  4. You relish the opportunity to set your own goals and targets. Real entrepreneurs are self-motivated, and hate to be driven by someone else’s deadlines and priorities. Arbitrary rewards, like salary bonuses or vacation perks, seem to just get in the way of achieving really great results. The fun is in the journey, as well as the destination.

  5. You treasure your breadth of interests, rather than your depth. To build a startup, you have to enjoy the broad range of challenges, from technical to marketing to sales to personnel. Big corporations need specialists, which is why most entrepreneurs move on to start their next business when their first startup gets too large.

  6. You enjoy building relationships as well as products. A startup is no place for the Lone Ranger. An entrepreneur has to be as adept at building a team, finding the right external partners, and finding customers, as building the solution. At the very least, you need to nurture a trusting relationship with a complementary partner to get things going.

  7. The perks of a big title and corner office are not important to you. Most startup founders are happy to work out of their garage or home office, where they can dress comfortably, have no set schedule, and interact easily with family and friends. With the Internet and easy global communication, title and offices are not competitive advantages.

  8. You see yourself as more of a do-er than a dreamer. People who pride themselves as the “idea” person most often fail as the lead entrepreneur. Startups are rarely at a loss for ideas, but always need a good problem solver to tackle the latest challenge. Businesses are all about implementation, production, and processes, rather than dreams.

  9. You usually keep your cool, even in tough situations. Entrepreneurs need to be passionate without being too emotional. The realities of starting a business are not all under your control, and partners and competitors with don’t always play fair. Your team and customers need to see you as a stable leader, not an unpredictable tyrant.

  10. Not afraid to actively listen as well as talk. Good entrepreneurs have an ego, but they are able to keep it in check. Selling your idea or product requires an understanding of the view of others, and the willingness to change based on customer feedback. Even the most famous entrepreneurs, such as Bill Gates, has a trusted advisor like Warren Buffett.

If you recognize yourself positively in most of these characterizations, then I recommend the entrepreneur lifestyle for you. There is no better time, with the cost of entry being at an all-time low, and the public image of an entrepreneur at an all-time high. Startup investors and customers alike are waiting to line up behind you. And I’m already sure your idea has great potential.

Marty Zwilling

*** First published on Forbes on 07/11/2016 ***

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Sunday, July 17, 2016

10 Entrepreneur Beliefs Restrict Innovative Thinking

creativity-at-workEvery entrepreneur believes in their heart that their startup is more innovative and creative than their competitors. Yet none knows exactly where creativity comes from within, or how to pick and motivate the most creative people for the team. Most believe and follow one or more of the popular myths on business creativity, even though none of them have much scientific evidence.

Like most people, they think of creativity as something divinely-inspired, unpredictable, and bestowed on only a lucky few. A classic study based on intensive research, “The Myths of Creativity,” by David Burkas tries to demystify the processes and forces that drive innovation.

His research supports what I have always believed, that anyone with a practical and common- sense mindset, grounded in reality, with the proper training, can deliver creative and innovative new ideas, projects, processes, and programs. The first step is to resist the urge to limit your thinking to the following long-standing myths:

  1. Eureka myth. This myth arises from the fact that new ideas can sometimes seem to appear as a flash of insight. Research shows that such insights are actually the result of hard prior work on the problem, usually followed by time to incubate in the subconscious mind as we connect threads, before the ideas pop out as new innovations.

  2. Breed myth. The belief here is that creative ability is a trait inherent in one’s heritage or genes. In fact, the evidence supports just the opposite; there is no creative breed. People who have the confidence in themselves and work the hardest on a problem are the ones most likely to come up with a creative solution.

  3. Originality myth. This myth is fostered by the long-standing emphasis on intellectual property, making a creative idea proprietary to the person who thought of it. The historical record, and empirical research, shows more evidence that new ideas are combinations of older ideas, and sharing those helps generate more innovation.

  4. Expert myth. Many companies rely on a technical expert, or team of experts, to generate a stream of creative ideas. Harder problems call for more knowledgeable experts. Instead, research suggests that particularly tough problems often require an outsider’s new perspective, or people who don’t know all the reasons why something can’t be done.

  5. Incentive myth. The expert myth often leads to another myth, which argues that bigger incentives, monetary or otherwise, will increase motivation and hence increase innovation productivity. Incentives can help, but often they do more harm than good, as people learn to game the system.

  6. Lone Creator myth. This reflects our tendency to rewrite history to attribute breakthrough inventions and striking creative works to a sole person, ignoring supportive work and collaborative preliminary efforts. Creativity is often a team effort, and recent research into creative teams can help leaders build the perfect creative troupe.

  7. Brainstorming myth. Many consultants today preach the concept of brainstorming, or spontaneous group discussions to explore every possible approach, no matter how far out, to yield creative breakthroughs. Unfortunately, there is no evidence that just “throwing ideas around” is enough to consistently produce innovative breakthroughs.

  8. Cohesive myth. Believers in this myth want everyone to get along and work happily together to foster innovations, so we see “zany” companies where employees play foosball and enjoy free lunches together. In fact, many of the most creative companies have found ways to structure dissent and conflict into their process to better push the creative limits.

  9. Constraints myth. Another popular notion is that constraints hinder our creativity, and the most innovative results come from people with “unlimited” resources. Research shows, however, that creativity loves constraints, so perhaps companies should do just the opposite – intentionally apply limits to leverage the creative potential of their people.

  10. Mousetrap myth. Other people falsely believe that once we have a new idea, the work is done. In fact, the world today won’t beat a path to our door, or even find the door, on an idea for a better mousetrap, unless we communicate it to the world, market it, and find the right customers. We all know of at least one “better mousetrap” that is still hidden.

If these are indeed the myths of business creativity, then what are the true components? Teresa Amabile, Director of Research at Harvard, asserts that creativity is really driven by four separate components: domain expertise, a defined creativity methodology, people willing to engage, and company acceptance of new ideas. Where these components overlap is where real creativity happens.

Thus if you believe that your startup success really depends on more creativity and innovation than your competitors, it behooves you to spend the time needed to understand and nurture the components of creativity in your environment, and not blindly following the historic myths. How creatively are you pursuing innovation in your business?

Marty Zwilling

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Saturday, July 16, 2016

10 Reasons Entrepreneurs Need To Market Themselves

Dell Women's Entrepreneur Network event - NYCToo many entrepreneurs I know still believe that that their great idea will carry the startup, and they may even minimize their own value, especially if they have introvert tendencies. Yet most investors agree that the “idea” is worth nothing alone, and it’s the entrepreneur execution that counts. That means that selling yourself is more important than selling your idea.

In the corporate world, experts have recognized for a long time that how people perceive you at work is vital to your career success. No matter how talented you are, it doesn’t matter unless managers can see those talents and think of you as an invaluable employee, or a game-changing manager, or the person whose name is synonymous with success.

In the entrepreneur world, your perception is equally critical, except the “managers” in this world are your investors, customers, vendors, business partners, and team members. Per a classic book by Dan Schawbel, “Promote Yourself: The New Rules For Career Success,” you can maximize these perceptions, which apply equally well to entrepreneurs as well as professionals.

Everyone needs to realize that whether it’s in the workplace or in the startup community, business is a new world today with new rules. Whether you are a new young Gen-Y entrepreneur, or a Baby Boomer who is struggling to stay relevant, here is a quick guide to some of the changes that Schawbel sees in the workplace requiring self-promotion, that I have updated for entrepreneurs:

  1. Your startup “idea” is just the beginning. Your startup idea only scratches the surface of what is required to build a successful business. Use the idea to kick-start your relationships with co-founders, investors, customers and business partners. Your ability to promote yourself and learn from these will determine your ultimate success.

  2. You are going to need a lot of skills you don’t have right now. A recent Department of Education study shows that soft (interpersonal) skills have become more important for success than hard (technical) skills. Entrepreneurs need leadership, teamwork, listening, and coaching skills, which you can learn from advisors and networking with peers.

  3. Your reputation is the single greatest asset you have. Your CEO title might be good for your ego, but in the grand scheme of things, what matters more is how much people trust you, whom you know, who knows about you, and the aura you give off around you. What other people think you can do is more important than what you have done.

  4. Your personal life is now public. With the Internet and social networks, things you do in your personal life can affect your success in a big way. Manage your whole image, rather than ignore it. Even the smallest things, like how you behave, your online presence or lack of it, and whom you associate with can help build your brand or tear it down.

  5. You need to build a positive presence in new media. There are plenty of benefits to new media, if you maintain a positive presence. Your online social networks enable you to build your reputation, connect with people who have interests similar to yours, find educational opportunities, and put you in touch with people who can help your startup.

  6. You will need to work well with people from different generations. Because the combination of economic need and increasing life spans is keeping everyone in the workplace longer, you will need to work well with people of all different ages. Each generation communicates differently, and has a different view of the marketplace.

  7. The one with the most connections wins. We have moved from an information economy to a social one. It’s less about what you know (Google search will help you in seconds), and more about whether you can work with other people to solve problems. If you don’t get and stay connected, you’ll quickly become irrelevant to the marketplace.

  8. All it takes is one person to change your life for the better. Remember the rule of one. All you need is that one investor, that one major customer, or that one distributor to keep you ahead of competitors. It’s up to you to get that key person on board to support your business. Self-promotion in the right way can make all the difference.

  9. Hours are out, accomplishments are in. If you want to grow your business, stop thinking about how many hours you work, and aim for more milestones and traction. Success is more results, not more work. Measure your results and promote them to every constituent. Help them to realize your value.

  10. Your startup is in your hands, not your investors or even customers. Be accountable for your own business success, and take charge of your life. Look for win-win business relationships, since people won’t help you if you are not helping them. If you aren’t learning and growing, you have nothing to promote and aren’t benefitting anyone.

The challenge for all entrepreneurs is to gain visibility and show value without bragging and coming off as self-centered. Take personal credit where credit is due, but also share the successes of the team and the business milestones with everyone. Success leverages success.

Now, how do you start? I like Schawbel’s recommendation to do one thing every day, like add a new skill, or build a new relationship that will advance you. Developing this “one step forward a day” habit will keep you current, make you feel more fulfilled and confident, and increase your ability to promote yourself. Are you promoting yourself today, or demoting your startup by default?

Marty Zwilling

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Friday, July 15, 2016

6 Ways To Start Learning For Aspiring Entrepreneurs

start-learningOne of the simplest questions I get from aspiring entrepreneurs, and ironically one of the hardest, is “How do I start?” I want to tell them to just start anywhere, but I realize that most have no idea where anywhere is. They just aren’t prepared for the life they want, and are really asking me how to learn to be an entrepreneur. It takes more than passion and a course on business basics.

We all come from the era where our society and education prepared us for the labor market, meaning working for someone else as an information professional, factory worker, or retail associate. Now change is driving an opportunity society, where the next step is undefined, and entrepreneurs are in the forefront of the wave of people whose best skill is learning how to learn.

I recently found an interesting book, “America's Moment: Creating Opportunity in the Connected Age,” put together by a group of fifty current leaders from across American life, that points out well some of the tools that can help all of us learn how to learn in this rapidly changing world of new opportunities. I have adapted their key recommendations here for aspiring entrepreneurs:
  1. Business gamification and simulation. Learning doesn’t have to be all work. We know now that people learn from a younger age, and keep coming back for more, from sources that are entertaining and educational (edutainment). With new tools like Thrive15 and GamEffective, people of any age can learn to start or take their business to the next level.

  2. Adaptive business advising and learning. Every business and every entrepreneur is at a different stage, so it’s time to seek out learning tools that can adapt to you, rather than the other way around. Universities and the marketplace are spawning tools like OpenStudy, which is a learning network enabling massively multi-player study groups.

  3. Help entrepreneurs with constant learning. The wealth of online education offerings is a great start, but is not enough. Business advisors need to be ready to help at every stage, and I see it beginning to happen. Yet many new entrepreneurs are hesitant, perhaps out of fear or ego. If you are not constantly learning, you are falling behind.

  4. Mix business learning with doing. Entrepreneurs don’t need to know everything about business before they start. They do need the first few steps, and where to find the next steps. There is no standard course for this, but the answers are accessible online, if you know how to search, follow blogs, and interact with the relevant social media groups.

  5. Business financial aid alternatives. Crowdfunding is just the latest alternative for assistance to entrepreneurs who need help, supplementing the existing alternatives of loans, grants, angel investors, venture capital and many others. These days, if you can’t find money, you haven’t tried hard enough or maybe your idea isn’t a good one.

  6. Utilize business content curators and coaches. Potential resources available to entrepreneurs are enormous, but often under-utilized. The challenge is to find these just-in-time, including community and university startup incubators, accelerators, and advisors. Entrepreneurs should be monitoring online curator platforms and blogs.
In this new opportunity society, the personal traits for success have also changed from the industrial age and the information age. The days of long-term loyalty to an employer and methodically following direction are gone. Now the premium is on creativity, willingness to take a risk, and ability to keep up with change. Persistence and problem solving are sought-after virtues.

Nurturing these traits, and practicing incremental and continuous learning, are the best ways to start the life you want as an entrepreneur. Finally, before you start, you need to define what success means to you. It may include financial gain, but more likely the lasting satisfaction and happiness will result from your legacy of change in technology, or your impact on the social ecology of the world. If you can’t tell me where you want to go, I can’t really tell you how to start.

Marty Zwilling

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Wednesday, July 13, 2016

Think Like An Entrepreneur For Business Longevity

jim_dewald2Every new venture that survives the first five years starts to drift away from their entrepreneurial thinking, and assumes they have achieved the path to longevity. In fact, even within Fortune 100 companies, almost 90 percent have encountered growth stalls or flirted with failure, or worse, in the last 50 years. No company can afford to lose the agility, flexibility, and innovation of a startup.

Examples of great companies that have achieved longevity, by initiating major changes, include American Express (originally express mail), IBM (tabulating and computer hardware), and J.P. Morgan (chemical manufacturing). Others, including Eastman Kodak (film and cameras), Pullman Company (railroads), and RCA Victor (radio) never kept up with change and are gone forever.

The many ways that great firms can slip away from entrepreneurial thinking were highlighted in a new book, “Achieving Longevity,” by Jim Dewald, based on his own experiences as a corporate executive, entrepreneur, and Dean of the Haskayne School of Business. Here are a few of the key challenges he outlines that I have seen as well:

  1. Competitors are easier to quantify than new opportunities. Competitor statistics are the domain of analysts, financiers, and shareholders, so naturally it is attractive for companies to focus on them primarily. Undefined opportunities which may be built from innovation are the stuff of dreams and passion, relegated only to entrepreneurial thinking.

  2. Companies follow each other rather than the market. Change is hard. Businesses firmly ensconced down an existing path find it hard to leave their comfort zone or jeopardize current revenue streams, and tend to prioritize the value of incremental change, even in the face of new markets, technology, or economic conditions.

  3. The future is extrapolated from internal data analysis. Metrics and observations while running the existing business become the primary basis for future projections. This data reinforces what they already know and believe, so a divergent path rarely looks attractive. The result is a self-fulfilling prophecy that often leads to disaster.

  4. Efficiency focus strips away resources from innovation. Through cost-cutting and highly-specialized hiring, firms unintentionally weed out the capacity to innovate and adapt to change. The drive for resource-based advantage can be profitable for big companies, but it is always temporary, never permanent.

  5. Penalties for management learning experiences. In an entrepreneurial venture, errors are expected, and even celebrated when positioned as learning opportunities. In stable corporate ventures, mistakes are seen as a signs of incompetence, and penalized by loss of bonuses or position. As a result, undefined new opportunities are deemed too risky.

  6. Focus on data-driven leadership versus passion. Strong creative views or even arrogance in new realms by entrepreneurs is expected and often revered, as was the case with Steve Jobs at Apple. In corporate boardrooms, a show of hubris or emotion is deeply troubling, and can end careers. Logic and data-driven leadership is the norm.

  7. Intolerance for pivots and failed experiments. Every startup I know has pivoted at least once, and expects failed experiments to lead them to the true market. In corporate environments the cost in time and dollars of a pivot or failed experiment can be huge, like turning a large battleship. Stakeholders and board members alike react very negatively.

What is most ironic is that the inverse of many of these challenges is critical to success in the first five years of a new venture – focus on competitors, generating internal data and analysis, emphasizing data-driven leadership, and creating standardized repeatable processes. Many see these activities as the elimination of entrepreneurial thinking, for stability and endurance.

My message is that the pendulum has to swing in concert with the market and the economy, as well as the maturity of the company. Today’s market is extremely volatile, where unprecedented change is the norm, and entrepreneurial thinking is the only way to assure longevity. Maybe it’s time to take a hard look at the balance in your own mindset and your business.

Marty Zwilling

*** First published on Forbes on 07/06/2016 ***

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Monday, July 11, 2016

Beware Of New Challenges With Services Relationships

sharing-economySelling services has always been about relationships, but the challenges of building relationships with services clients have exploded. Customers today extrapolate their relationships not only from personal contact, but from every aspect of their interface with your company, including web site and social media interactions, access to peer reviews, as well as the actual services experience.

In addition, as every business becomes instantly global via the Internet, it’s virtually impossible for you to touch every customer personally. Thus services experiences and relationships tend to be based more and more on new media and technology. Customers today may actually feel a personal relationship, or an unsatisfying one, without ever interacting with you or your team.

I saw these modern challenges and some positive guidance summarized in a new book, “Service Excellence,” by Ruth N. Bolton, a distinguished Marketing Educator Award winner at the W.P. Carey School of Business. I agree with her focus on six challenging characteristics, both old and new, of every services business:
  1. Intangibility of a customer experience with services. Customer services experiences can’t be seen, felt, tasted, or touched in the same way that people interact with tangible goods. Services experiences are different for each client, so it’s important to customize experiences and timing per customer. If your business doesn’t offer personalized services, don’t expect good relationships.

  2. Relationships are a function of customer culture. For consistency and efficiency, services companies have traditionally minimized personalization. Yet today, people of every culture worldwide expect every relationship to relate to their unique perspective. Companies need service strategies that increase spontaneity to enhance experiences.

  3. Experiences are more visible to other customers. In some cases, such as in a hair salon, services are delivered in view of other customers who may be impacted by your experience. In all cases, experience details are quickly and easily communicated to others via Facebook or Yelp, meaning a relationship will impact many others very quickly.

  4. Services experiences cannot be inventoried. Service organizations must find effective ways to manage capacity and thereby match the supply and timeliness of services with customers’ usage of them. It is very important for service companies to use and market peak load pricing, seasonal, and customer scheduling without impacting relationships.

  5. Infusing technology within the customer experience. Customers now expect services to be more technology-enabled, such as online banking, parcel tracking, transportation on demand, and smart home security. The overall experience and relationship derived are more and more set by the technology interaction, rather than personal interaction.

  6. New media shapes and reflects the customer experience. Unlike traditional media, which is not interactive, social media provides for and customers expect targeted, personalized, and socially responsible communications. These become a key part of your engagement and relationship, and also define community and demographic associations.
The rise of the “sharing economy” has sparked intense interest in services that allow people to co-produce the service in new ways, such as Airbnb for accommodation and Uber for transportation services. Thus your relationship needs to consider ways that customers can participate through spontaneous and discretionary contributions to your services, with variations for each market segment.

It’s time for all services organizations to take a future-oriented view of customer experience and relationships, rather than the traditional retrospective view. Services are no longer a simple people-to-people business. Relationships and experiences are now driven more and more by interactive media and smart technology. If your services business isn’t innovating with the market, it’s falling behind.

Marty Zwilling

*** First published on Forbes on 07/04/2016 ***

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Sunday, July 10, 2016

7 Ways Entrepreneur Consistency Wins In The Long Run

consistency-frequencyMost of the young entrepreneurs I know are classic proof of the old adage that people tend to overestimate what they can do in a short period, and underestimate what they can do over a long period. They become frustrated when they are unable to build their startup in a weekend, and give up way too soon when the path to real success seems to be interminable.

Both problems can be mitigated by learning the power of frequency, as defined in the classic book by Jocelyn K. Glei, “Manage Your Day-to-Day,” which asserts that working consistently and frequently on something makes it possible to accomplish more, with greater originality, than spasmodic bursts of effort. A successful startup needs to be a daily task, with consistent focus.

I suggest that the following key reasons from Glei for how the habit of frequency fosters both productivity and innovation in general, apply especially well to an entrepreneur starting a new business:

  1. Frequency makes starting easier. Getting started is always a challenge. It’s hard to convert an idea into a business, and it’s also hard to get back into the groove with all the distractions of other activities and your “real job.” If you block out time every day to focus on your startup, you keep your momentum going, and start seeing long-term progress.

  2. Frequency keeps insights current. You’re much more likely to spot opportunities for innovation and to see new trends in the marketplace, if your mind is constantly humming with issues related to the startup. Frequent discussions with peers and customers on open questions will keep you from being led astray by your own biases.

  3. Frequency keeps the pressure off. If you’re producing just one page, one blog post, or one sketch a week, you expect it to be good and final, and you start to worry about quality. It’s better to write 100 lines of new code every day, recognizing that you will have to iterate to perfection, rather than expecting a week of work to happen all in one night.

  4. Frequency sparks creativity. You might be thinking, “Having to work frequently, whether or not I feel inspired, will force me to lower my standards.” In my experience, the effect is just the opposite. Creativity arises from a constant churn of ideas, and one of the easiest ways to get results is to keep your mind engaged with your project.

  5. Frequency nurtures frequency. If you develop the habit of working frequently, it becomes much easier to sit down and get something done even when you don’t have a big block of time; you don’t have to take time to acclimate yourself. The real enemy of progress is the procrastination habit, which should be replaced with the frequency habit.

  6. Frequency fosters productivity. It’s no surprise that you’re likely to get more accomplished if you work daily. The very fact of each day’s accomplishment helps the next day’s work come more smoothly and pleasantly. By writing just 500 words a day in a blog, I suddenly realized that I had enough for a book in just a few months.

  7. Frequency is a realistic approach. Frequency is helpful when you’re working on a startup idea on the side, with pressing obligations from a job or your family. It’s easier to carve out an hour a day, than to set all else aside for a week in the early stages of your startup.

Don’t be like many of the people that we all know who feel like they are working at a breakneck pace all day, every day, but have very few tangible results to show for their efforts. Every entrepreneur needs to build a proactive daily routine, while being able to field a barrage of messages, and still carve out the time to do the work that matters.

Another enemy of progress in startups is the curse of perfectionism. Some entrepreneurs never start, waiting for that ideal moment, when there are no distractions. Some are lost in the middle, obsessing over every step, and some never finish, always refining and adding, rather than learning from a minimum viable product. Thus the need to combine frequency with pragmatics.

If you can manage your day-to-day routine with frequency, rather than let reactive chaos manage you, you will find that your creative mind is sharpened, and your focus on the new venture will generate the “change the world” results that attracted you to this lifestyle in the first place.

Marty Zwilling

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Saturday, July 9, 2016

4 Pillars Of Social Capitalism Drive Good Business

Media_Armory_Trader_JoesI’ve noticed that most young entrepreneurs are more socially conscious today than ever before, which is a great trend. Unfortunately, some are so focused on this principle that they forget that every business, even non-profits, have to practice the basic principles of capitalism (build a business model to make money) to cover their costs to do good things another day.

Examples of profitable companies practicing this model include Trader Joe’s, led by Doug Rauch as retired president, now CEO of Conscious Capitalism®, and the Container Store, led by Kip Tindell. Both of these are purpose-driven businesses that boast high growth, high loyalty, and very low employee turnover. You can find a dozen more on the Conscious Capitalism web site.

Of course a profitable model isn’t required if you intend to rely totally on donations, or have deep pockets to fund your socially conscious efforts yourself. Conscious capitalism is the rational alternative approach, dedicated to advancing humanity, while using tried and proven business principles. The idea has four pillars guiding and underlying every business:

  1. Higher purpose. Business can and should be done with a higher purpose in mind, not just with a view to maximizing profits. A compelling sense of purpose creates an extraordinary degree of engagement for all stakeholders and catalyzes tremendous organizational energy.

  2. Stakeholder orientation. Recognizing the interdependent nature of life and the human foundations and business, a business needs to create value with and for its various stakeholders (customers, employees, vendors, investors, communities, etc.). Like the life forms in an ecosystem, healthy stakeholders lead to a healthy business system.

  3. Conscious leadership. Conscious leaders understand and embrace the higher purpose of business and focus on creating value for and harmonizing the human interests of the business stakeholders. They recognize the integral role of culture and purposefully cultivate a conscious culture.

  4. Conscious culture. This is the ethos – the values, principles, practices – underlying the social fabric of a business, which permeates the atmosphere of a business and connects the stakeholders to each other and to the purpose, people and processes that comprise the company.

I see conscious capitalism emerging at just the right time – for young entrepreneurs who are a bit disillusioned with the image of “business” today, but want to be profitable without sacrificing trust, reputation, and credibility with their peers and stakeholders important to them. They want their business potential to support the overall human potential as well.

None of these positives obviate the need for a viable business model, in order to survive. I would expect that to seem intuitive to all entrepreneurs, but every investor I know has many stories about startup funding requests with no clear business model. The most common failures are solutions looking for a problem, lack of a defined market, and giving away the product.

Soon, companies that also want legal recognition of their socially conscious focus will be able to incorporate as a Benefit Corporation (B-Corp). The B-Corp status, already available in eleven states, including New York and California, is meant to reduce investor suits, and gives consumers an easy way to spot genuine social commitment, without assuming it is a non-profit.

Entrepreneurs and startups are all about innovation, in business principles as well as in products and services. I see conscious capitalism as a great innovation to the foundations of capitalism, bringing compassion and collaboration to the heart of value creation. Maybe it’s time to take a hard look at your own startup, and see if you have fully and consciously capitalized on capitalism.

Marty Zwilling

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Friday, July 8, 2016

7 Common Staffing Mistakes That Doom Many Businesses

job-interviewBusiness success is all about having the best team, yet the average entrepreneur has little prior experience with hiring people and building top-notch teams. It’s no wonder that half of startups fail in the first five years, and an even smaller percentage ever see a return for their years of effort. Most new entrepreneurs assume their passion will attract and motivate the right team members.

In reality, motivation and passion are necessary but not sufficient to build a business. Higher motivation does not overcome role mismatches, poor communication, or culture differences. Hiring in any new venture needs to be a structured and high priority task, not the ad hoc informal process I see in many startups that are struggling to grow:

  1. Crisis mode hiring rather than planned team growth. Hiring requirements must be anticipated and implemented with the same precision and tracking as manufacturing volumes, sales leads, and customer service. Crisis mode hires too often get done without due consideration for strategic fit, training requirements, and cultural considerations.

  2. Hiring before organizational structure is defined. The requirements of the desired organization need to be formalized before people are hired. Hiring good people without a strategy and structure invites inefficiency, low morale, and chaos. My recommendation is to hire core executives, and have them define, justify, and build their organizations.

  3. Utilizing unprofessional sources for candidates. Trying to save costs by seeking resumes on the Internet will result in poor quality candidates, more time required for screening and interviews, and high turnover. I’m not suggesting executive search firms for every startup position, but national recruiting organizations will get better results.

  4. Poorly defined and executed hiring process. The best candidates quickly figure out that companies that don’t respond, demonstrate chaos during interviews, or keep delaying a decision are not a good opportunity. Less qualified prospects don’t have alternatives, so they tolerate the frustration, but may return the favor as an employee.

  5. Don’t bother with previous employment follow-ups. Some candidates can talk a great story, but have trouble delivering, or may have team relationship challenges. Your gut-feelings are important, but need to be validated by normal background and reference checks. Candidates with few credentials on paper may be your best growth candidates.

  6. Quick to hire and slow to fire. We all make staffing mistakes, so it’s most important to quickly fix them, before the morale of the whole team is impacted, or your business loses some key customers. I recommend a thirty to ninety-day trial period, defined in writing, where either party can terminate the relationship without recourse. Assigning and measuring early milestones is a must.

  7. Failure to include company culture in the hiring criteria. Every company and team develops a unique culture of work flexibility, personality, and communication that must be matched to every new hire, independent of job qualifications. Thus every serious candidate should be vetted and approved by peers, as well as company executives.

Making the right staffing decisions, and doing it efficiently on a timely basis, is critical to getting entrepreneurs and their startups to the next level. A great team can turn even a mediocre strategy and solution into a successful business. On the other hand, even the best solutions and ideas will fail as a business, if excellence in execution is lacking.

Entrepreneurs who can’t find the time to focus on hiring until it’s a crisis are doing themselves and their business a disservice. Making late or poor choices will cost you time, money, customers, and may cost you your business. You need the very best to maintain a competitive edge, and get the satisfaction you want for you and your team members. It won’t happen by default.

Marty Zwilling

*** First published on Forbes on 07/02/2016 ***

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