7 Rules For Innovations That Produce Dominant Players

Innovation doesn’t always make you a winner in business. In my role as an angel investor in startups, almost every pitch I see highlights some real innovation in technology, business model, or market opportunity. Yet only a few of these get funded, and even fewer become dominant players in their chosen space. The rest fail quickly, or struggle for years to get real traction.

But don’t get me wrong. Innovation is necessary to get you into the game, but even a disruptive technology won’t assure you business success. These days, it’s all about harnessing your innovation to get an advantage in a business. Or as Steven S. Hoffman asserts in his new book, you have to “Make Elephants Fly,” and that requires getting outside of conventional thinking.

Hoffman should know, as an icon in the Silicon Valley, having educated and trained hundreds of startup founders as the CEO of “Founders Space,” designated by Inc.com as one of the top ten incubators and accelerators in the world. I like his list of Seven Unfair Advantages, at least one of which is required to make you a dominant player in your space, which he calls radical innovation:

1. Offer a solution that is exponentially better than any other. If it’s not an order of magnitude better or cheaper, customers usually conclude that the risk and cost of change are simply not worth the potential payback over what they have today. You may attract early adopters, who love everything new, but the mainstream market will be elusive.

2. Create an entirely new market space or new category. If your product or service is so unique and compelling that it’s able to define a whole new category, then you are the winner by default. This isn’t easy to do, but it happens. Just look at Nest, who is leading the IoT wave, and Oculus Rift, the company that put virtual reality on the map.

3. Be the first to disrupt an existing market space. Being first is always important. It’s amazing how many proposals I see that are “me too” with only slight or abstract differentiation from other social media sites, ride sharing, or collaboration tools. Examples of being first include Netflix for movies and TV and Redfin for real estate.

4. Ride the network effect to more users than anyone. The network effect is where the value of your business increases exponentially as your user count goes up. Look at competition for the numbers to beat, but in the consumer space, it usually takes millions to be the dominant player. Users can be advertisers, consumers, sellers, or passengers.

5. Establish exclusivity as a high barrier to entry. Prove exclusivity with whatever methods and relationships you can use, including patents, distribution channels, government support, or name-brand customer contracts. A startup with innovation and high entry barriers is the most attractive candidate for investors and acquisition partners.

6. Lock in customers with loyalty and high cost of change. Billion-dollar businesses are seldom about a single transaction with any customer. They’re about building long-term relationships, where the longer the customers use the product, the harder it is for them to leave. Great companies tend to build great ecosystems to provide added value.

7. Find a pent-up need and build a strong brand early. Brand building is costly and difficult, but making your brand a household name has the power to differentiate your product from everyone else’s. If there is a real need, people pay more for a brand-name, and perceive a higher level of trust and value, as well as an emotional attachment.

The message here is that just because you have an innovative new technology doesn’t mean it will rise above the competition and make money. You have to analyze each innovation early and continuously with a critical eye. Hoffman’s seven rules, paraphrased here, will tell you if you are likely to be become a dominant player. If not, it may pay to pivot now before your money and energy are gone.

Marty Zwilling

*** First published on Inc.com on 11/14/2017 ***

7 Ways To Survive The Retail Customer Shift To Online

In my role as advisor to small businesses, I often hear first-hand the challenges and failures of retail store owners who fear the advantages of online and feel the exodus to eCommerce, led by Amazon and Ebay. Ironically, the most common desire I hear from entrepreneurs selling wholly online, is the need for their entry into retail, as the next step in their growth strategy.

What neither group seems to fully comprehend is that retail needs to fundamentally change to succeed, far beyond the addition of an online component, to meet the experience expectations of today’s generation, an oversupplied global marketplace, and technology for instant pricing and distribution. Many pundits are already talking about a “retail apocalypse” that has already started.

In an effort to learn a bit more about this phenomenon, and how to capitalize on it rather than fight it, I just completed a new book, “Retail’s Seismic Shift,” by Michael Dart, with Robin Lewis. Dart and Lewis should know, since both have over twenty-five years of experience consulting with dozens of retail and consumer product companies, old and new.

Here is my summary of the strategies they recommend for retailers and eCommerce companies alike to meet the challenges ahead and thrive:

1. Demonstrate a willingness to break “business as usual.” Test new things and keep testing in your market for things that work. There is no magic, and things change so fast that you can’t count on things that worked for you in the past. Companies that are constantly looking forward, rather than backward, are going to be victorious.

2. Encourage and reward out-of-the-company thinking. Make sure everyone is curious and open, and not getting stuck with ideas from inside your company. People must be measured in performance reviews against industry best practices, rather than previous results in your business. They may be improving every period, but losing the race.

3. Measure your agility by putting metrics on change. Old views of change rates are no longer competitive. Don’t allow a subjective view to cloud your reality. Count the number of new projects, time and resources required to implement, and measure the return in revenue, customer satisfaction, or cost savings. In other words, stop focusing on meaningless metrics, and instead focus on store execution instead.

4. Abandon the concept of “cookie-cutter” stores. These days, you need different retail layouts and sizes for urban communities versus small neighborhood communities. Some may have no product at all for carry-out, with demonstrations and iPads for ordering and delivery the next day. Others highlight upscale styles, or complement nearby stores.

5. Create a non-online memorable customer experience. Only retail can provide real people relationships, and they better be memorable on the positive side. Find your niche, and it’s probably not competing on price and volume alone. These days, customers expect a focus on a higher cause, such as sustainability or social improvement.

6. Look for growth in emerging global market geographies. Rather than saturating your coverage of a single geography, use technology and the low cost of global manufacturing to cherry-pick new opportunities. There will always be markets where the culture, income levels, or the products don’t lend themselves to online.

7. Build a community with face-to-face between customers. Smart retail stores sponsor live events, peer-help sessions, and customer demonstrations to create great experiences and opportunities for people to feel community with others that they could never find online. Perhaps they need to add a coffee bar, or other entertainment options.

The time to start for new ventures is at the beginning, when you can set the right team culture, and before biases are set. For existing businesses, it’s harder. You have to break things, change people, and build some new habits yourself to be the right role model. The grass may be greener on the other side of the fence, but if you can’t get over the fence quickly, you won’t live to enjoy it.

Marty Zwilling

*** First published on Inc.com on 11/10/2017 ***

What Great Bosses And Great Employees Have In Common

Everyone in business loves to complain about their boss, and a classic Gallup study found that 50 percent of current employees have left at least one job in their career to get away from a bad manager. When asked for clarification, the most common reason seems to be a managers lack of clarity in setting expectations, which is obviously one of the most basic of employee needs.

On the other hand, almost every one of us in business can remember that one special manager in their career who exemplifies the norm, who commanded our trust, and treated us with respect, even in the toughest of business crises. In commemoration of U.S. National Boss’s Day every October, let’s all tip our hat to that unique and rare business person we wish all would emulate.

In an effort to be a better business advisor, and recognizing that the answer is not usually as simple as a single dimension, I have asked my own sample of employees at all levels for a list of key traits or attributes they see in great managers, resulting in the following list of ten top positive traits of a good boss:

1. Clearly communicates performance expectations. Even your best performers don’t like to be surprised after the fact by unknown expectations. One of the easiest ways to avoid surprises is to set deliverable milestone targets for each employee for every period. Then review the performance versus the roadmap and deliverables on a weekly basis.

2. Shows leadership as well as management skills. As Drucker said, "management is doing things right; leadership is doing the right things." Every employee appreciates guidance on both – to do the right thing at the right point in time, towards attainment of the organization’s goals, as well as employee satisfaction and perceived productivity.

3. Demonstrates extensive and current domain knowledge. Good bosses demonstrate relevant expertise and confidence about that knowledge, as well as the common sense to make quick productive decisions. This requires continuous learning, an ability to think outside the box, and the flexibility to change as the market and technology changes.

4. Possesses foresight and skills to plan and delegate. Great managers make it a point to understand the specific strengths of team members, and then scheduling tasks and delegating to the right people to get tasks done within deadlines. The best managers are guides and coaches, with a concrete plan based on goals, not just crisis commanders.

5. Provides positive and timely employee recognition. Most employees are more motivated by recognition than by money. You must immediately recognize team members, formally and informally, when they complete something successfully or show initiative. Over the long-term, make sure they get more positive than negative recognition.

6. Is an active listener, and provides immediate feedback. Listening to what is said, as well as what is not said, is of the utmost importance. It is demoralizing to an employee to be speaking to a supervisor who is interrupted for a phone call. Good managers plan for feedback sessions, and pick a venue that is conducive to discussion and adequate time.

7. Stays cool and calm in tough business situations. A great manager is an effective communicator and a composed individual, with a proven tolerance for ambiguity. He or she never loses their cool, keeps their ego in check, and is able to correct team members without emotional body language or statements. They don’t always have to be right.

8. Shows empathy for individual problems and challenges. This refers to the ability to "walk in another person's shoes", and to have insight into the thoughts, and the emotional reactions of individuals faced with change or the need to change. Empathy is suspending judgment of another's actions or reactions, while treating them with sensitivity.

9. Provides a role model for honesty, integrity, and humility. Simply put, today’s managers live in glass houses. Everything that a manager does is seen by employees. If a manager says one thing and does another, employees broadcast it. Managers must be straightforward in all words and actions, including admitting weaknesses and mistakes.

10. Always displays a positive sense of humor. People of all demographics respond to humor, and respect managers who can find humor even in tough business and personal situations. The majority of people are able to be amused at something funny, and see an irony. One of the most frequently cited attractions to a manager is their sense of humor.

Since most of these traits must seem intuitively obvious, it’s hard for me to understand why so many managers and employees miss on expectations. Perhaps it’s time for employees and team members to adopt and display these traits as well, especially the one about empathy for the challenges that your manager is facing. Only then can it be a win-win relationship for both parties.

Marty Zwilling

*** First published on Inc.com on 11/01/2017 ***

8 Creativity Traits That Will Improve Your Leadership

Starting a new venture is all about being creative, not just in the initial solution, but in tackling the daily challenges of every new and innovative business. In my role as business advisor, I find too many people still looking for the right answers in the back of the book. Most of what you learned in school is already obsolete. The winning answers and strategy has to come from your creativity.

In this new world of constant cultural and technological change, the only source you can trust is your own ability to learn faster and be more creative than your competition. In that context, we all have to deal with a huge information overload, which can stifle creativity, just by the sheer weight of trying to consume all the data bombarding us daily from the Internet, social media, and press.

In fact, according to a recent book, “Too Fast to Think: How to Reclaim Your Creativity in a Hyper-connected Work Culture,” by Chris Lewis, the pressure of this information overload is changing human behavior, and not always in good ways. He should know, based on his years of experience as a media trainer for senior politicians, business people and celebrities.

He sees the information overload as a major source of stress, a feeling of being constantly interrupted and out of control, and reduced focus on creativity. Lewis offers eight steps to reclaiming your creativity that I believe every entrepreneur should adopt:

1. Quiet – creativity speaks quietly and needs concentration. It’s important to schedule some time for thinking each day, away from the noise and clutter, so we can refreshingly experience sounds, smells, touch, and the full senses. The enemies of this are multi-tasking and juggling. If you are concentrating on too many things, creativity will not come.

2. Engage – creativity needs focus and commitment. Take the time to listen fully to the voices that really count, including your team leaders and customers. Also take the time to listen and believe in yourself. Take on and conquer your own fears and challenges, before you face the business challenges which require extra creativity.

3. Dream – creativity needs imagination and free thinking. Research has long suggested links between dreams and creativity. It suggests that the dreams themselves--with their idiosyncratic imagery, colorful extrapolations on the same theme and nonjudgmental stance--model the free thinking that precedes actual creation.

4. Relax – creativity requires patience and will not be forced. Sometimes your “Type A” personality works against you. You may never learn to love the queue or the line, but you can be calm in doing so. Ideas do not arrive by timetable. If you live by the clock, you may not allow creativity to intervene. Practice slowing down your pace once in a while.

5. Release – let go and accept that you can’t do everything. Don’t push off the basics of life in favor of work – schedule and maintain time for sleep, exercise, and healthy eating. Find time for some any of the creative arts to jump-start your creativity – dance, art, non-work relationships, or other hobbies. This new-found creativity will spill over to your work.

6. Repeat – experiments and repetition are the key. Scientists have long known that the best results come from controlled experiments, meaning that just one (or a few) factors are changed at a time, with repetition, while all others are kept constant. With information overload, too much input can lead to random tests with no creativity or analysis.

7. Play – creativity comes from what you enjoy and love. You can’t play or enjoy things when you are constantly rushing. Take the time to explore new ideas and have deep conversations with creative people about things you enjoy. If you don’t enjoy the financial side of your business, find a partner to be creative there, so you can be creative in yours.

8. Teach – people learn more about creativity helping others. The best mentors in business often find themselves learning as much as their mentees. You will find yourself creatively inspired by someone else’s style and ideas, and you can make them your own by improving them, changing them, or personalizing them in some way, and sharing.

Above all, remember that creativity in business is not a solo act. Good leadership is bringing out the best in creativity from all members of the team, through collaboration, customer engagement, incenting change, and publicly recognizing every contribution. To fight the negative impacts of the current information overload, what have you done today to foster your own creativity?

Marty Zwilling

*** First published on Inc.com on 10/23/2017 ***

9 Sources Of Inspiration To Make Your Idea A Winner

Ideas are a dime a dozen, but the inspiration to drive a great business is a lot harder to find. As a mentor to many aspiring entrepreneurs, I often get asked for next sure-fire idea. I have to tell them that anyone can find ideas, but only you as a person can find the passion to transform one into a successful business. That’s why investors talk about investing in the jockey, not the horse.

Elon Musk, Steve Jobs, and other famous entrepreneurs are examples of dedicated people who looked for inspiration, rather than ideas for their next business. From my experience and their feedback, I can summarize the top principles which provide sound inspiration for entrepreneurs, who are then often able to convert even a mundane idea into a satisfying and long-term business:

1. Choose an idea from your heart, rather than someone’s head. Look inside yourself for inspiration and ideas, rather than asking me or anyone else. Only then will you find the passion to persevere through the challenges of a new venture, and actually enjoy the journey, as well as the destination. Do what you love, and it won’t even feel like work.

2. Focus first on changing the world, rather than making money. Great entrepreneurs identify something larger than money to provide purpose and meaning. Happiness does not scale up with income. Studies show that doubling your income increases happiness by less than 10%. The more you focus your efforts on others, the easier it is to do great work.

3. Work to anticipate a future market change and get there first. When attacking a currently known problem, chances are that dozens of others are already working on it. If you can look ahead successfully, you will have more time and fewer competitors to kill your inspiration. In addition, you will be seen and appreciated as a leader with a legacy.

4. Surround yourself with inspired people, and absorb their energy. Find people you respect and admire, who are inspired, and you will find their energies contagious. They will also amplify your inspiration to your customers, and keep it growing in your own mind. These people need to cover the gamut from partners, marketers, suppliers, to customers.

5. Solve a problem based on your own personal knowledge. Stick to domains within your experience, and your business inspiration will be more real and long-lived. Avoid the tendency to see the grass looking greener on the other side of the fence. It’s the things you think you know about a problem that will kill you, as well as what you don’t know.

6. Be inspired by customer value rather than solution features. Customers don't care about your product or service's features. Instead, they want to know how your solution will benefit them, in lower costs, dreams, hopes, and ambitions met. In other words, seek inspiration from your customer’s perception of value, rather than solution features.

7. Create a great customer experience, not just a product. I find that entrepreneur inspiration fades quickly, if not complemented by inspiring customer experiences. These days, customers are inspired by solutions that are easy and fun to find, have satisfying buying experiences, and great support. These get recommended many times to others.

8. Keep it simple by removing features, rather than adding more. Simplicity is the ultimate sophistication of design, according to many studies. Steve Jobs was a master of inspiration from sophisticated designs, from the iPod to iPhone and packaging. Beware of false inspiration from early adopters, who typically ask for more features and options.

9. Practice telling your story to get and keep customers inspired. You can have the most innovative idea in the world, but if you cannot get people excited, it doesn’t matter. The key to storytelling is adapting your message and presentation to match the audience, rather than trying to find one size that fits all. Their inspiration then becomes yours.

Inspiration is what keeps your mind open to new possibilities, and that is certainly critical to business success in this age of rapid change. An idea can be innovative one day, and old news the next. Will your current inspiration and passion carry you to success through the challenges and changes that are normal for a new venture today?

Marty Zwilling

*** First published on Inc.com on 10/20/2017 ***