7 Benefits Of Working Consistently On Business Values

Most 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 over 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

Startups Can Be Socially Mindful And Still Make Money

I’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 nonprofits, 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, and Conscious Capitalism® board member, and the Container Store, built by Kip Tindell. Both of these are purpose-driven businesses that boast high growth, high loyalty, and very low employee turnover. You can find dozens 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 principles 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 providing leadership 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 thirty-five 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 nonprofit.

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

9 Distinct Leadership Styles You Find In New Ventures

Entrepreneurs inherently understand that they have to be the initial leader of their startup, but often they don’t have the experience or the training to know where their leadership competencies lie, or how to build a leadership team. For new entrepreneurs, leadership development efforts may be more valuable for achieving startup success than business skills development.

Very few people know their own leadership style, or strengths and weaknesses, despite their many years of living and working in the real world. To assess where you are, and to unlock your full potential, there are many courses available, as well as seminars and gurus, but a good place to start is a book on the subject, like the classic one from John Mattone, “Intelligent Leadership.”

Mattone has a wealth of insights, based on years of helping Fortune 500 leaders overcome their self-imposed limiting leadership habits. He identifies and distinguishes between nine distinct leadership styles that I see in all entrepreneurs to some degree. The most effective entrepreneurs know their own predominant style, and how to build a team with all the rest required:

1. Helper. Mature Helpers are considerate and genuinely the most sensitive and caring of all the leadership types. They are excellent mentors and coaches, but have a strong need to be admired and respected in return. Strengthen this trait by being more conscious of your need to be liked, and don’t be possessive or controlling.

2. Entertainer. Entertainers gain the respect of others with drive, determination, hard work, and the ability to win over people. But they can become fixated with appearing successful, showing more style than substance, or undermine themselves by exaggeration, inflating their importance, or trying to win or one-up all the time.

3. Artist. Artists are perhaps the most creative and innovative leaders. They tend to move people deeply, and bring out the most in people. As they become more mature, they draw less inspiration from themselves, and more from others. Improve your artist side by avoiding negativity, procrastination, and focus on self-discipline.

4. Thinker. Thinkers like to analyze the world around them, and may prefer thinking to doing. Mature Thinkers quickly understand problems, can explain them to others, and make sound and logical decisions. Strengthen this trait by not jumping to conclusions, seeking advice, and working cooperatively with others you trust.

5. Disciple. Disciples are able to form strong and cohesive work groups, but sometimes appear incapable of action without permission of an authority figure or belief system, and don’t seek out leadership positions. This trait can be strengthened by accepting accountability, reducing reaction to stress, and cutting ties to authority.

6. Activist. Activists are good at lifting the spirits of team members and managers, and are usually optimistic and confident. They tend to bury themselves in activities, but can be impulsive and select quantity over quality. Improvement efforts would include listening more to people, thinking about details, and learning to say no.

7. Driver. Drivers are the most openly aggressive leaders, who enjoy taking charge, and can make things better with their immense self-confidence. Unfortunately, they may feel the need to dominate every situation, and make every decision. Mature ones act with more self-restraint, let others win, and work with others.

8. Arbitrator. Arbitrators tend to be the most open of all types. What you see is what you get. They find ways to bring people together, and ways to involve everyone. To be a better Arbitrator, you need to be more assertive, more open, share your feelings, and work on developing your listening skills.

9. Perfectionist. Mature perfectionists are capable of being highly noble leaders, with their deep sense of right and wrong and ethical principles. They are usually highly critical of themselves and others, and often frustrated by reality. To improve, they need to learn to relax, listen to others, and remember that no one is perfect.

In all cases, to reach your highest leadership potential, you have to stay true to yourself, rather than trying to conform to other people’s images of the best you. If you truly commit to learning more about yourself and becoming the best that you can be, while possessing a great attitude, you will discover that all challenges are really the seeds of opportunity.

Most recognized entrepreneur leaders admit that their biggest challenge was to break through their self-imposed limiting thoughts, emotions, and habits, to reach the next level. How many of these leadership traits have you mastered, how many are you working on, and how many of the other strengths have you built into your team to help you? That’s intelligent leadership.

Marty Zwilling

5 Considerations For Driving Growth In A New Business

Some analysts argue that revenue drives growth, while others say user growth drives revenue. Both have worked. Google reached $1B in revenue within five years of incorporation, and now has a market capitalization of over $1 trillion. Twitter showed no focus on revenue in the first five years, but was able to parlay 500M users into a $53B public company, and now growing revenue.

Every startup dreams of achieving that milestone, when they can focus more on scaling the business and enjoying their earnings, rather than fighting for another investment infusion. Most are still confused about the right priority. Should they focus on increasing revenues and profitability, or entice more and more users with “free” services, to increase their valuation.

Traditionally, it was simple. A business only achieved critical mass by becoming cash-flow positive. Revenue growth (top line) then had to be converted into profit growth (bottom line), before a business was deemed to be self-sustaining and worthy of public investment.

It’s only been in the last decade or two, that social media companies, like Facebook and Twitter, have achieved market valuations in billions of dollars (unicorn status), while clearly sacrificing revenue to gain users. In my view, the pendulum is swinging back, with investors looking more for the traditional indications of business integrity, stability, and growth:

1. Some element of organic growth is a good thing. The purest form of capitalism has always meant charging a fair price and making a fair profit. Re-investing profits to grow the business is organic growth. The concept of free goods and services to get you hooked, financed by deep pockets, or advertising, seems marginally ethical to many.

2. Long-term stability requires revenue growth and profit. Most modern investors still look for a business model that embodies a gross margin over 50%, and a net margin in the 20% range. A healthy business, ready to scale, has been doing this for a year or more, with an existing customer set generating a non-trivial and growing revenue stream.

3. High customer loyalty and high team passion. Startup productivity is embodied in key ratios, including low cost of customer acquisition, high retention, and high revenue per employee. High customer churn and lackluster team members are still indicators of a high-risk investment opportunity, to be avoided by both public and private investors.

4. Growing appreciation for the value of the solution provided. These days, you need customer evangelists who see the value and will pull in their friends through viral actions to keep the business growing. Too many of the high user growth startups have been fads, and numbers can go down as fast as they go up, as per Friendster and MySpace.

5. Understanding competitive early mover requirements. First movers in a new space need users more than revenue to maintain market share, so investment pitches need to highlight this priority in requests for funding resources. More complex and defensible businesses should highlight their organic drive to profitability and brand leadership.

Unfortunately, the Internet and heavily funded startups have nurtured a customer expectation of free web services and free smartphone apps. In these domains, it is now difficult to monetize at all until you have a large critical mass of users. In these cases, growth scaling is important, both before and after revenue flow begins. The business plan must reflect both growth phases.

Thus even after a startup has achieved a critical mass of users, the expectation of long-term revenue growth and profitability does not go away. Twitter is facing this challenge right now, as the large majority of public investors expect a near-term financial return on their investment, every quarter of every year.

So a higher focus on user growth may be necessary early, but is never sufficient. If you are in it for the long run, don’t forget the basic business principle that if you lose money on every customer, you can’t make it up in volume.

Martin Zwilling

8 Indicators Of The Innovation Focus In Your Business

Every organization I get asked to help these days seems to realize that innovation is required on their part to survive and thrive in this age of constant change. Their challenge to me is how to integrate innovation into the thinking and process of every team, and measure the “risk versus reward” of resources expended. They also want to know how they stack up to competitors.

Unfortunately, there are other organizations that still don’t see the need to innovate. Typically, these companies are relishing prior successes, as did Blockbuster and Kodak in their heyday, or are totally risk-averse, as is the case with many mature businesses and government entities. I’m convinced these won’t change until the pain level gets high enough, and that may be too late.

I’ve always recommend a self-assessment of where you and your organization are along the innovation spectrum, and I was pleased to see a realistic proficiency scale in a recent book, “Seeing Around Corners,” by Rita McGrath. She is a longtime professor at Columbia Business School, best-selling author, and is considered by many to be an expert on innovation and growth.

Here is a paraphrased summary of the eight-level scale she offers, with my own insights and experience added, for your consideration in starting your own self-assessment and move up:

1. Extreme bias toward status quo as the right way. The focus at this level, primarily in companies that have a long history of success, usually in very stable markets, is to continue sustaining and exploiting existing advantages. Innovation seems risky and unattractive. I see this often in highly regulated markets, and ones driven by bureaucrats.

2. Desire to improve and innovate exists in islands. At this level, I see sporadic efforts by lower level leaders and small groups to introduce some innovative thinking in an otherwise conservative organization. There may be a lot of talk and activity, some initial workshops, boot camps, and visits to Silicon Valley, but there is no sustained support.

3. Episodic innovative activity from a key sponsor. In these companies, you will see more sustained innovative activity, but little organization-wide recognition of innovation as a discipline. Typically efforts are dependent on a key sponsor and are fragile. A change of key executives, a setback, or a challenge in the core business, and they disappear.

4. Opportunistic innovation driven by senior leaders. While innovative practices are still not a central part of the corporate agenda, they are used to go after ideas for growth that are highlighted by competitors and market evolution. Resources are allocated across multiple business units, but the bulk of the organization still prioritizes the “day job.”

5. Sustained executive sponsorship with funding. Here we see the first early-stage corporate governance of innovation, with funding and processes for innovation as separate activities from business as usual. This requires dedicated resources of both time and money. The result is an emerging proficiency, and recognition of the potential.

6. Maturing proficiency with innovation metrics. At this level, innovation becomes an important part of executive compensation and promotion discussions. Here we see an increased utilization of tools, training, and connections across organizational silos, extending to external sources of ideas. Teams have a set of repeatable best practices.

7. Strategic empowered innovation publicly articulated. At this stage, the CEO and executive team declares that innovation is being integrated into the company’s central defining mission. Innovation becomes a basic part of the company culture, and a critical mass of employees recognize their role in the process, and feel empowered to innovate.

   In many cases, this new focus on innovation has the potential to kill your “cash cow.” The former Blackberry CEO, for example, admits that he hesitated on innovation, and is now struggling to remake Blackberry for survival as an enterprise security software company.

8. Organization cited for “best practices” in innovation. Here corporate commitment of innovation at all levels creates a portfolio of wins, as well as cadres of highly skilled practitioners. The organization is heralded as an example for others, and stakeholders reward the growth potential with a higher valuation and increased investment funding.

In all cases, remember that building innovation proficiency and moving up a level or two is an organizational learning endeavor, and learning does not happen instantly. It takes time and effort, and usually requires a painful reminder that something has changed in the market, jeopardizing the business if action is not taken. Your challenge is to see an inflection point before it is too late.

Marty Zwilling

*** First published on Inc.com on 3/10/2023 ***

8 Elements Of Ownership Thinking And Startup Success

If you feel trapped in an unsatisfying and limiting role as a business professional, I urge you to assess your own interest and level of ownership thinking as a means of enhancing your career or growing your own business. I have personally worked as an employee of large businesses, as well as a partner in new ventures, and found the latter to have more potential for satisfaction.

Many business leaders today, including Howard Schultz, didn’t start the businesses they are now known for, but worked their way up the corporate ranks with ownership thinking. Others, including Jeff Bezos, spent time in a big company or two before breaking away to form their own. Jeff Bezos now manages Amazon, which encompasses over 40 subsidiaries and operates worldwide.

There are many components of an ownership thinking strategy, but here are some of the key ones from my own perspective, as a mentor and advisor to aspiring entrepreneurs and new business owners:

1. Willing to take smart risks which lead to long-term growth. Some people expect instant gratification and are stressed out by any risk. Smart business owners realize that no returns occur without some investment and risk. Top performers are constantly looking for new opportunities and are willing to evaluate risk versus reward potential.

2. Count business results as a measure of personal growth. For some people, business is just a job, whereas with ownership thinking, your business health is the real measure of your personal success and growth. Rather than a focus on salary and perks, your focus is on customers, revenue, and operations. Your personal goal is to succeed in business.

3. Seek out a higher purpose for the business and live it. Business owners whose priority is only a financial gain will struggle to find satisfaction and happiness. A better purpose is to be your own boss, or advance a cause that you are passionate about, such as helping the disadvantaged or reducing the negative impact of climate change.

   For example, founder Blake Mycoskie of TOMS shoes inspired everyone by highlighting and effectively communicating the higher purpose from of helping the needy by donating a pair of shoes for every pair sold. The return and satisfaction were greater than the cost.

4. Relish the fun of innovatively shaping the business. As an employee, you only get to execute what others tell you, even if you enjoy the challenge of new requirements and customer feedback. Enjoy the personal learning and growth of new business models, more efficient processes, and existing customers who remain loyal due to your initiatives.

   Amazon and Jeff Bezos credit much of their growth and success to incenting innovative business “experiments.” Bezos believes that if you double the number of experiments you do per year, you’re going to double your agility, and thus grow the business more rapidly.

5. Incent high employee engagement and accountability. Business success, and yours, requires collaboration and accountability at all levels, including vendors, partners, and other constituents. You must focus on nurturing a culture of working together, continuous learning, and constant change to keep up with new customer and market changes.

6. More new, repeat, and loyal customers means career success. Solving customer problems as a first priority is key to ownership thinking. Employee thinking is looking for higher pay and less work per customer. In my experience, the level of customer focus by the whole team is a good barometer of the overall business health, growth, and culture.

7. Use metrics and data to quantify progress and return. Ownership thinking requires tracking progress and seeking feedback on results. Unfortunately, continuing to perform without collecting business data or measuring customer metrics is a recipe for failure. I recommend customer satisfaction as well as financial metrics to track business health.

8. Don’t rely on micro-management for business efficiency. Successful ownership thinking requires an ability to delegate and coach others, rather than a dictatorial level of micro-management. You and the business both win when everyone takes responsibility for their actions, resulting in high productivity, customer satisfaction, and higher returns.

Thus, whether your objective is to rise to the top of your current company, or enjoy the challenge of building your own business, I recommend that you hone your ownership thinking abilities with the strategies outlined here, and related ones. Don’t jeopardize your health or your long-term satisfaction by pushing harder and harder on the wrong work elements, and enjoying it less.

Marty Zwilling

*** First published on Inc.com on 3/8/2023 ***

5 Tactics To Ensure Your Solution Is Customer Driven

Technical entrepreneurs love their technology, and often are driven to launch a startup on the assumption that everyone will buy any solution which highlights this technology. Instead, they need to validate a customer problem and real market need first. Don’t create solutions looking for a problem, since investors ignore these, and customers other than early adopters will be hard to find.

Exciting new technologies these days range from the niche social media software platforms I see almost every month, to new transportation models, like consumer space travel and driverless autos. These founders all seem to be pushing their technology, rather than highlighting their solution to a painful need. I say again, customers buy solutions, not technology.

In fact, outside of those few early adopters, technology by itself has negative value to the majority of potential customers. Most people are wary of change and know that new technologies take time to learn and stabilize, so customers prefer solutions based on tried and tested proven technologies. Smart entrepreneurs build market-driven solutions, per the following principles:

1. Size the opportunity and customer interest first. Your passion isn’t enough to create a market. If there is a growing opportunity, an accredited market research group like Forrester or Gartner will already have data to quantify your excitement, and help make your case. Prototype your solution for customers, and discount friends and family.

2. Look for customer willingness and ability to pay. Just because users support your free trial doesn’t mean they will pay for the solution. Nice to have does not motivate a revenue stream. Technologies that cure world hunger may find that that hungry people don’t have money, and government agencies as customers are a very long sales cycle.

3. Limit the features and complexity. Technologists tend to add more features, just because they can. More features usually means more complexity in operation and support. The best solutions, from a customer perspective, are able to mask the technology with a very simple and usable interface that focuses on their problem only.

4. Take a hard look at alternatives and competitors. New technology does not necessarily make better solutions. If you claim no competition, investors may perceive that you have no market, or you haven’t looked. Neither is positive. Customers may be perfectly happy with existing alternatives and competitors.

5. Work in a familiar domain, on a problem you have experienced. The most successful entrepreneurs tackle problems that have caused them personal pain, in an area they know well. Every business domain looks simpler to outsiders who have no insights into the complexities that increase your risk.

None of these principles is meant to imply that technology is not important in building new solutions. In fact, some technology leaps are so great that they enable a whole new class of products, or a whole new market. These are called disruptive technologies or the next big thing, in the sense that existing markets or economies of scale are disrupted by the scope of change.

Examples of solutions from disruptive technologies include the appearance of personal computers, smartphones, the Internet, and the first social media platforms. Even for these, which did indeed change the world, the aforementioned principles still apply, in conjunction with a couple of additional considerations:

• Time frames for acceptance are longer and the risk is higher. Based on history, the acceptance period for major technology changes is much longer than innovative evolutionary changes – sometimes taking 20 year or more for pervasive acceptance. Investors thus tend to shy away from these startups, meaning you need deeper pockets.

• Disruptive technologies require customer education to create a new market. Customers tend to think linearly, so existing customer feedback is unlikely to lead to, appreciate, or pay quickly for the new solutions from world-changing technology. This means more time and money for viral marketing, product iterations, and promotions.

So the more you emphasize the technology of your offering, the more you need to be prepared for increased costs, reduced investor interest, slow customer acceptance, and a longer wait for any return. On the other hand, the longer-term impact and return of disruptive technologies is likely to be huge, if they survive the early challenges.

My recommendation for first-time entrepreneurs, and the rest of us who don’t have deep pockets, is to focus on customer problems that are causing pain today, and customers who are willing and able to spend real money on a solution.

You will more likely get the investor resources you need, the guidance from existing experts, the opportunity to hone your business skills, and the confidence from success. Then when you sell your first company for several hundred million, you will be ready to tackle that favorite disruptive technology leading to the next big solution to change the world.

Martin Zwilling