Monday, December 31, 2018

5 Strategies For Business Growth Many People Forget

arrows-business-growthIn this age of constant market evolution and new technology, there is no such thing as a static business that is self-sustaining. The traditional approach of implementing stable and repeatable processes, so that your business can run itself, no longer works. Just ask former big brand companies, like Blockbuster, Kodak, Lehman Brothers, and Sears, what happened to them.

As a small business advisor, I always recommend that being “self-sustaining” requires taking frequent and aggressive measures to step out ahead of the pack, including yourself, before you start feeling the pain of change and new competitors around you. Specific measures that go beyond the traditional linear thinking include the following:

  1. Develop new products for your existing segment. Rather than enhancing the offering you have, develop and offer new products that capitalize on the customers that you already know well. Competitors tend to focus on price and other variations to existing offerings. Too many businesses only think of new products when in crisis mode.

    For example, Facebook added WhatsApp as a cross-platform messaging and Voice over IP (VoIP) service to enhance the self-sustaining growth their social media platform before any downturn. WhatsApp alone now has a user base of over one and a half billion users.

  2. Introduce disruptive technologies to this domain. Rather than rely only on linear thinking, the best entrepreneurs are always looking to offer in parallel a more dramatic new alternative. Since these usually require a large investment, and more time, including customer education, they need to be started while your current business is still healthy.

    Apple did this with the introduction of the smartphone, which altered the value chain for computers, video, and software, which were already staples that they knew well. Richard Branson is doing it with Virgin Galactic space rides, without impacting his Virgin Airlines.

  3. Populating new domains to sustain your market. If your product is already unique, then new domains would include adding online to enhance store fronts, and alternatives for business to complement consumer offerings. These allow you to get new growth without fighting existing competitors. Defining new domains is even more powerful.

    Elon Musk is doing both of these, first by expanding his Tesla electric vehicle initiatives beyond cars, into self-driving taxis and trucks, and secondly by entering new domains of transportation with SpaceX and Hyperloop. He entertains no sense of a static business.

  4. Redefine your product to reach a new category. This strategy, often called breakaway positioning, has the intent of expanding your product opportunity into a previously unreachable category. It also has the advantage over competitors of retaining existing customers, while at the same time attracting new customers from another category.

    For example, Swatch was able through marketing to define their watches as fashion accessories, as well as timepieces, greatly expanding their segment. Uber added UberLUX, with stylish high-end cars, to declare access to the limousine category.

  5. Implement a plan of regular strategic acquisitions. Unlike a total reliance on internal innovation and organic growth, growth through acquisition or merger is generally faster and can be self-sustaining as a process. Further, acquisition offers other advantages such as easier financing, instant economies of scale, and new market penetration.

    For example, even the giant Amazon acquired Whole Foods as a growth entryway into the competitive grocery and food industry. Apple acquired Shazam to quickly boost Apple Music by letting users identify songs, movies, and commercials from short audio clips.

The reality is that you can never stop changing your business, and still be self-sustaining. The strategies outlined here may seem intuitively obvious, but they require real effort and discipline to implement, perhaps why so few companies consistently outperform the market. Change is the only constant in business, so now is the time for making your plan for regular change a priority.

Marty Zwilling

*** First published on Inc.com on 12/18/2018 ***

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Sunday, December 30, 2018

How The Best Entrepreneurs Do Better Than Anyone Else

best-entrepreneurAt some point in their life, hopefully everyone strives to be the best in their chosen profession. Most people think that being the best requires more intelligence, more training, and more experience. In reality, in business or even in sports, the evidence is conclusive that it is as much about how you think, as what you do.

I saw this illustrated a while back in the classic sports book, “Training Camp: What the Best Do Better Than Everyone Else”, by Jon Gordon. His evidence and real life stories conclude that top performers in all professions have the same key traits listed below. I agree they certainly apply to the great entrepreneurs I have known. You need to think about how they apply to you.

  1. The best know what they truly want. At some point in their lives, the best have a "Eureka!" moment when their vision becomes clear. Suddenly they realize what they really, truly want to achieve. They find their passion. When that happens they are ready to strive for greatness. They are ready to pay the price.

  2. The best want it more. We all want to be great. The best don't just think about their desire for greatness; they act on it. They have a high capacity for work. They do the things that others won't do, and they spend more time doing it. When everyone else is sleeping, the best are practicing and thinking and improving.

  3. The best are always striving to get better. They are always looking for ways to learn, apply, improve, and grow. They stay humble and hungry. They are lifelong learners. They never think they have "arrived"—because they know that once they think that, they'll start sliding back to the place from which they came.

  4. The best do ordinary things better than everyone else. For all their greatness, the best aren't that much better than the others. They are simply a little better at a lot of things. Everyone thinks that success is complicated, but it's really simple. In fact, the best don't do anything different. They just do the ordinary things better.

  5. The best zoom focus. Success is all about the fundamentals, and the fundamentals are little and ordinary and often boring. It's not just about practice, but focused practice. It's not just about taking action, but taking zoom-focused action. It's about practicing and perfecting the fundamentals.

  6. The best are mentally stronger. Today's world is no longer a sprint or a marathon. You're not just running; you are getting hit along the way. The best are able to respond to and overcome all of this with mental and emotional toughness. They are able to tune out the distractions and stay calm, focused, and energized when it counts.

  7. The best overcome their fear. Everyone has fears. The best of the best all have fear, but they overcome it. To beat your enemy, you must know your enemy. Average people shy away from their fears. They either ignore them or hide from them. However, the best seek them out and face them with the intent of conquering them.

  8. The best seize the moment. When the best are in the middle of their performance, they are not thinking "What if I win?" or "What if I lose?" They are not interested in what the moment produces but are concerned only with what they produce in the moment. As a result, the best define the moment rather than letting the moment define them.

  9. The best tap into a power greater than themselves. The best are conductors, not resistors. They don't generate their own power, but act as conduits for the greatest power source in the world. You can't talk about greatness without talking about a higher force. It would be like talking about breathing without mentioning the importance of air.

  10. The best leave a legacy. The best live and work with a bigger purpose. They leave a legacy by making their lives about more than them. This larger purpose is what inspires them to be the best and strive for greatness over the long term. It helps them move from success to significance.

  11. The best make everyone around them better. They do this through their own pursuit of excellence and in the excellence they inspire in others. One person in pursuit of excellence raises the standards of everyone around them. It's in the striving where you find greatness, not in the outcome.

Jon is convinced that people are not born with these traits, they must be learned by everyone. He talks about staying mentally strong, and maintaining a big-picture vision while taking focused action. So if you aspire to be the next Elon Musk or Steve Jobs, focus on your attitude as much as your business plan.

Marty Zwilling

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Saturday, December 29, 2018

An Old Style Of Leadership Is Winning In New Ventures

entrepreneur-with-servant-leaderStartups provide leadership in the market. Entrepreneurs provide leadership to their startup. There are many styles of leadership, like dictatorial, laissez-faire, and democratic. One that I hear discussed more these days, in this age of relationships, is called “servant” leadership.

What is servant leadership? The servant leader serves the people they lead through mentoring, direct assistance, listening, and acting on their employees input. It’s the opposite of self-serving, domineering leadership, and makes those in charge think harder about how to respect, value and motivate people reporting to them.

The concept was developed by Robert K. Greenleaf way back in 1970. Servant leaders are felt to be effective because the needs of followers are so looked after that everyone reaches their full potential, hence perform at their best, individually and as a team.

Greenleaf says that Martin Luther King, Gandhi, and Jesus were good examples of servant leadership. What do you have in common with them? If you recognize yourself in most of the following questions, you may not be another Gandhi, but you are well on your way to becoming a servant leader:

  • Do team members believe that you want to hear their ideas and will value them?
  • Does your team believe that you have a strong awareness of what is going on and why?
  • Does everyone follow your direction because they want to, as opposed to because they “have to”?
  • Do others on your team communicate their ideas and vision for the organization when you are around?
  • Do people believe that you are committed to helping them develop and grow?
  • Do people come to you when the chips are down, or when something traumatic has happened in their lives?
  • Does everyone have confidence in your ability to anticipate the future and its consequences?
  • Does the team believe you are leading the organization to make a real difference in the world?
  • Do people believe that you are willing to sacrifice your own self-interest for the good of the team?
  • Does everyone feel a strong sense of community in the company you lead?

Some of the characteristics implied in these questions come more naturally to some people than others. Experts argue that some are inherent, and are difficult to learn. But characteristics such as listening, awareness, persuasion, and building community are all learnable skills.

You should reflect and thoughtfully assess the degree to which you have what it takes to be a servant leader. If you are committed to being the best servant leader than you can be, I urge you to continuously work to develop these characteristics.

For some executives, serving people's needs creates the image of being slavish or subservient, not a very positive image. In addition, leaders need to serve the needs of customers and stakeholders, as well as those of team members, so a sense of balance is required.

For comparison purposes, autocratic leaders tend to make decisions without consulting their teams. Laissez-faire and democratic leaders normally allow people within the team to make most of the decisions, based on consensus. In reality, the very best leaders are those who can use a variety of leadership styles effectively, and use the right style for each situation.

I encourage you to take a look in the mirror, and check your leadership style. Just to make sure you are not looking through rose-colored glasses, ask a few of your most trusted associates what they see. If the answers surprise you, it may be time to find a leadership mentor.

Marty Zwilling

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Friday, December 28, 2018

Funding Alternatives Change As Your New Venture Grows

money-source-new-ventureSome entrepreneurs start polling venture capitalists for that multi-million dollar investment before they even have a business plan. That’s like trying to sell part of something to a stranger for big money when you haven’t fully defined it yet. It won’t work, it costs time and money, and hurts your credibility when you need them later.

Every entrepreneur needs help and support along the way, from developing the initial idea, to selling off the successful business (exit strategy). The challenge is finding and using qualified affordable support organizations for each stage. Don’t waste your resources on the wrong ones.

It’s helpful to think of startups as proceeding through several stages, which I have defined some time ago from a funding perspective. Let’s take a look here some similar stages from a support perspective:

  • Idea stage. The first step toward a business with any idea is to write it down, and build a business plan around it. If you need help at this stage, look for a local university teaching online courses on entrepreneurship, or how to build a business plan. The alternative is to work with an innovation institute to evaluate your technology, or hire a consultant. If you need money now, is has to come from friends and family.
  • Early or embryonic stage. The most common support organization at this level is called a startup incubator or accelerator, and these exist in most countries, usually sponsored by a university, local government organization, or even local individuals. Usually these will not give you money, but will provide inexpensive expert mentoring and office services.

    Their real value is your access to senior advisors with experience, and other startups in the same stage. Sometimes these will ask for 5%-15% of your equity for their support services. They are not trying to make money, but simply to recoup their costs over time.

    Separately at this stage, you may look for small funding amounts from angel investors, called seed investments. Funding of $25,000-$250,000 may be available from angels, who are private individuals spending their own money. The incubator organization can help you find them, or show you how to apply for a government grant.

  • Funding or rollout stage. This is the time for you to step out on your own, find office space, and open your business. Once you have some traction, you can approach venture capital organizations, with funding amounts of $1-10 million for the real rollout, often referred to as the “A-round,” or first institutional funding.

    Support organizations at this stage are usually professional financial advisors, or investment banks, which have nurtured relationships with institutional investors. These usually charge you a fixed fee up front, and then perhaps a small percentage of the raise.

  • Growth and exit stage. Companies at this stage must have a large market, good traction, and be focused on scaling infrastructure and market adoption. This normally means more than 30 employees, and more than $1 million in revenue. Support organizations are investment banks, similar to the preceding stage.

As startups pass through each stage, they need to use support resources wisely to minimize costs, wasted time, and maintain credibility to support movement to the next stage. Typically, they must also change and tune their executive team, to keep up with the increasing demands of a growing company on process discipline and sustainable success.

Obviously, if you bootstrap your business, you can avoid all the investment implications, but you still need a business plan and professional support. Otherwise, not paying attention to the expectations associated with each stage will likely jeopardize your business success. Do it right and enjoy real progress in each step of the journey.

Marty Zwilling

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Wednesday, December 26, 2018

10 Questions To Test Your Aptitude As An Entrepreneur

career-entrepreneurCurrently there is no professional certification, or standardized testing, as there is for accountants and lawyers, to see if you are ready to tackle the rigors of starting a new business. In fact, some pundits argue that the best entrepreneurs, including Bill Gates and Mark Zuckerberg, actually dropped out of school early to start their businesses, implying a negative relationship to training.

Based on my own experience in working with many entrepreneurs, including Bill Gates, I’m convinced that the requirements for success may indeed be not so much academic, but more a mindset of confidence, commitment, perseverance, and constant learning. In fact, these mindset elements are best gauged by your own honest self-assessment against the following questions:

  1. How strong is your drive and ambition? If you are contemplating starting a business as a way to get rich quick, or as a way to work less, you should try another road. On the other hand, if you are passionate that you can solve a compelling need better than anyone else, I’m convinced that I and everyone else will line up behind you to help.

  2. Are you happy to make your own decisions? This isn’t about not having a boss. All entrepreneurs have multiple masters to serve, including customers, investors, and your own team. The key is a willingness and a conviction that you know what has to be done, are willing to communicate and charge down your path, even when others are in doubt.

  3. Do you enjoy working and learning from others? Building a new business is not a solo exercise. Every good business is a positive collaboration between many people with different skills and objectives, with an effective leader to bring their efforts together. You need to enjoy working and learning from all the people around you, including customers.

  4. Can you accept the fact that the buck stops with you? The responsibility of a business is much the same as raising your children. It hovers over your head 24 hours a day, 7 days every week. There are no excuses when the economy or the market changes. The success or failure of your business will impact your family and your future.

  5. Do you have a baseline of relevant skills and experience? Starting a new business in an industry you know nothing about is fraught with risk. Experience managing projects, people, and finances is as important as deep technical product development skills. Working as an executive in a big company does not prepare you to run a startup.

  6. Have you built relationships with people who can help? The right connections in business can make all the difference – in finding advisors, investors, experts, vendors, and even customers. As the business matures, your relationships need to change and expand, so you need to enjoy the process as well as the learning from each.

  7. How do you feel about the value of money in business? Some social entrepreneurs I know are so passionate about their cause that they don’t even want to think about money or profit, and they often fail. I would assert from experience that it takes money to do the right thing, and you can’t help anyone for very long without a sustainable business model.

  8. Do you have a positive and stable personality? Every new business is a roller-coaster ride of ups and downs, which are accentuated by your own highs and lows. In addition, you must be the role model for your team and your customers in selling your vision, and the value of your offering. People expect their leader to be strong and above reproach.

  9. Have you really analyzed the market and competitors? Too many aspiring entrepreneurs I know are so enamored with their new idea, and they charge ahead, without first doing the homework on the size of the opportunity, market restraints, and competitor alternatives. Passion is necessary, but not sufficient, to drive a business.

  10. Can you deal with the need for change and innovation? The market and customer needs change quickly and regularly these days. You need to be able to innovate quickly as the initial dream no longer satisfies the market. What worked yesterday may not work tomorrow, so you always need to be thinking and planning for the next generation

If you can answer most of these questions with a resounding yes, then I encourage you to pursue that dream of starting and running your own business. Otherwise, you may be smart to work for a startup or other company for a while to validate your mindset and build your confidence. Not everyone is cut out to be an entrepreneur, and that is a good thing.

Marty Zwilling

*** First published on CayenneConsulting on 12/07/2018 ***

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Monday, December 24, 2018

Business Lessons Often Ignored In The Heat Of Passion

bicycles-building-carsMost aspiring entrepreneurs are convinced that their idea and passion are so great that failure is not a possibility. They relate quickly to one of the big successes out there today, including Facebook, Airbnb, or Snap, and can give you a dozen reasons that they are in the same category. It’s a good way to get some inspiration, but not an accurate representation of reality.

As a startup advisor and angel investor, I tend to focus on the much longer list of ways your startup can fail, based on my own experience and inside knowledge from peers who you will never see highlighted on the Internet. I’m convinced that you can learn more from failure than success, so it pays to take these as lessons to improve your success odds before you start:

  1. Creating a new technology doesn’t make a business. Based on my experience, creating a new business is at least as difficult as creating an innovative solution, and it takes a knowledge of finance, operations, customers and the marketplace. If you don’t have all these interests and skills, even your most “disruptive” products will likely fail.

    For example, the personal motorized scooter Segway was announced as disruptive technology way back in 2002, but is still not a successful business. Despite the technology, the fears of pedestrians and government regulations strangled the business.

  2. If there is no competition, there is likely not a market. Every potentially successful product has competition, or an alternative, or customers with no interest in change. If you really believe your idea has no competition, perhaps you haven’t looked, or there is no real business. Competitors arrive rapidly these days, so make sure you look often.

    I often hear funding pitches on “nice to have” products, combining the features of several known winners, such as Facebook and Twitter. In fact, there are no competitors for this combination, but people rarely pay real money or incur change for nice-to-have solutions.

  3. Focus on doing one thing well rather than many things. Don’t try to be all things to all people. You will likely confuse your target customers, and do everything poorly, because of the limited resources of a startup. Later, as you scale the business, is the time to add products or service offerings that customers demand to make the business more robust.

    For example, Uber built their initial success by simply connecting people looking for intra-city car rides via a smartphone app. Only later did they expand this offering to multiple classes of cars, Uber for business use, package delivery, and even freight hauling.

  4. Plan to and assemble the right team, including co-founders. Building and running a business is not a solo operation. You need skills in finance, operations, and marketing to supplement product development, and more hours of work than one person can manage. A team with the right skills, chemistry, and culture makes all the difference in business.

    I find that most investors invest in the team, more often then they invest in an idea. If you have the right team, you will be able to execute effectively, multiply the impact of your solution by an order of magnitude, and build relationships with customers quickly.

  5. Calculate your projected costs, and double the amount. Both the business and your solution will take more time and money to develop than you expect. Entrepreneurs always assume everything will go right the first time, and it never happens. Count on at least one required pivot, and several crises that you could never anticipate.

    Can you believe that Facebook, for example, required an investment of nearly $350 million before turning cash-flow positive? Even the best entrepreneurs tend to underestimate their requirements, and finding emergency funding is very costly.

There are many more lessons to be learned by listening to advisors, and peers who have gone before you. Even if you fail on your first startup, you should wear it as a badge of courage and lesson learned, rather than be devastated. Both Bill Gates and Steve Jobs experienced early failures, but obviously never gave up. Your legacy will be how far you have traveled, rather than where you started.

Marty Zwilling

*** First published on Inc.com on 12/11/2018 ***

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Sunday, December 23, 2018

Fear Of Failure Makes It A Self-Fulfilling Prophecy

fear-of-failurePeople with a victim mentality should never be entrepreneurs. We all know the role of starting and running a business is unpredictable, and has a high risk of failure. For people with a victim mentality, this fear of failure alone will almost certainly make it a self-fulfilling prophecy.

I’m sure you all know someone who is the perennial victim. The problem is that most of these people aren’t likely to accept your assessment, so it’s hard to help them. They don’t see themselves as others see them, and many simply refuse to accept the reality of the world in general.

According to a classic article by Karl Perera, called “Victim Mentality - You Don't Have to Suffer!” there are many indications of a victim mentality in a person’s thought process. Here are some key ones he mentioned, applied to the entrepreneurial environment:

  1. “When things don’t work, I secretly believe I’m the cause.” Victims act as though each business setback is a catastrophe and create stress for themselves. These people feel more importance and ego when relating problems rather than successes.

    A survivor believes that bad things are an anomaly to be brushed off, or just another challenge to overcome. In fact, they look forward to the challenges, and get their most satisfaction from declaring success.

  2. “When I talk to myself, I never have a positive discussion.” Second-guessing every decision affects mood, behavior, and happiness, and is likely to cause or intensify a victim mentality. If you are negative, you cannot see reality, leading to more bad decisions, confirming you are indeed a victim.

    Survivors continually relive their positives, and see themselves as miracle workers. They live in the present or the future, and rarely dwell on mistakes of the past. They have faith in themselves, and life as a whole.

  3. “When others put me down, I‘m wounded to the soul.” Negative comments from others are devastating to a victim. Offensive behavior towards you actually says more about the other person. But if you have a negative mentality you will just take what they say or do at face value, and believe that you deserve to be the victim.

    The survivor always stands up and fights negative comments, and usually turns the blame back on the deliverer. He is quick to counter with all his positives. He builds boundaries around negative or toxic people, and avoids them at all costs.

  4. “I believe in fate, even though it’s unfair.” If you succumb to fate, then you think you are responsible for all the bad things that happen to your business. The victim feels that he or she has been treated unfairly but is trapped. There seems to be no way out.

    Survivors believe that they can make things happen, rather than let things happen to them. They accept random turns in their life as new opportunities, rather than unfair punishment.

  5. “Everyone is punished for a reason.” Religious beliefs can have a positive or negative affect on your life. If you believe in a Supreme Being who is responsible for everything, it’s easy to believe that your pain and misery is punishment for something you did wrong.

    Survivors obviously take it the other way. They enjoy a personal relationship with the Supreme Being of their understanding, and feel a gratitude for everything positive in their life. They may ask their Supreme Being for help, but rely on themselves for results.

This victim mentality is not a good thing under any circumstances, but it’s particularly lethal when applied to an entrepreneur. If you would like to be an entrepreneur, remember that you don't have to be a victim. Take a hard look in the mirror. Truly the only one who makes you feel like one is the same person who can make you a survivor - you!

Marty Zwilling

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Saturday, December 22, 2018

10 Leadership Elements That Work In Today’s Business

Lisa_Leslie_by_Gage_SkidmoreThe pervasiveness of social networking and the Internet has caused a new focus and value on “openness,” which leads to a new element of leadership, called “open leadership.” The mantra of open leadership is “Be Open, Be Transparent, and Be Authentic.” This is counter to the traditional business premise of “control,” so many companies are still pushing back.

Charlene Li, in her classic book “Open Leadership,” shows leaders how to tap into the power of the social technology revolution and use social media to be “open” while still maintaining control. I share her view of the ten key elements of the basic framework and vocabulary of open information sharing and open decision making:

  1. Explaining: creating buy-in. This element is sharing information through the new video, audio, and interactive media about, and the logic behind decisions, direction, or strategy with the goal of gaining buy-in to the idea so everyone is working toward the same goal.

  2. Updating: capturing knowledge and actions. New publishing tools, like blogs, collaboration platforms, and even Twitter provide updates that are easily available. These have the added benefit of being searchable and discoverable.

  3. Conversing: engaging in a dialogue with others. Employees can share best practices with customers on social network platforms and customers can help each other. When done well, an organization’s online community can become a competitive advantage.

  4. Open microphone: encouraging participation. Everyone and anyone is welcome to contribute through new collaborative tools with no preconditions. Search, combined with ratings and reviews become key in separating the useful from the rambling.

  5. Crowdsourcing: solving a specific problem together. The goal here is to grow the sources of new ideas and gather fresh thinking to create a new product or service. It can also be for solving everyday problems, like logo design or open source code.

  6. Platforms: setting standards and sharing data. EBay is an example of open standardizing on how items are listed and how transactions are handled, enabling millions of individual sellers. Common platforms enable open data access at any level.

  7. Centralized. The key challenge of making centralized decision making more open is to open up information sharing in both directions, so that those in power have the right information and also have the commitment to share it back out to the organization.

  8. Democratic. Increasingly, voting is used to allow people to choose from a set of equally viable options, with the result is that employees feel a greater sense of ownership in the process. This is also becoming prevalent in decisions with customers on products.

  9. Consensus. Social technology tools now allow this process to be done quickly and less chaotically, with tremendous buy-in from everyone affected. This process works well in today’s extremely flat and non-hierarchical startup organizations.

  10. Distributed. This is a hybrid of all the preceding decision processes, in that it pushes decisions away from the center to where information and knowledge actually reside, typically closer to the customer. This mode requires more discipline and planning.

I’m still waiting to see how all this works out in real life. The challenge is to be open without abdicating all control, or spiraling into chaos. Hopefully, by embracing social media rather than banning it, leaders can transform their organizations to become more effective, decisive, and ultimately more profitable in this new era of openness in the marketplace. Are you there yet?

Marty Zwilling

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Friday, December 21, 2018

How To Stay Cool, Despite Team Members Who Annoy You

secret-annoying-gossipIn my career in business, I’ve found that the people you work with make all the difference. If everyone works well together, you all feel a sense of job satisfaction. If some people on the team are irritating to you and others, the whole environment becomes toxic, killing your motivation and the productivity of the team. Everyone thinks this is a management or the other person’s problem.

Yet, as a business advisor, after investigating a few of these situations, I find that both sides see the situation differently. Thus you may be irritating or annoying other people without even realizing it. In any case, there are many things that you can do to minimize the impact on yourself, and on the productivity of your team, especially if you are not the manager:

  1. Limit interactions with problem people to smaller doses. Total avoidance doesn’t get the work done, but strategically timed short encounters may not exceed your patience. Be proactive in timing your visits close to a natural exit, such as just prior to a meeting. Keep your vibes positive and unemotional, and you may uncover a new team member.

  2. Adapt your approach to match the style of the other person. It’s all in the approach. Some people are invigorated by a confrontation style, while others consider it irritating. Some want to tell you all the details, when you are just interested in the bottom line. As in any relationship, both sides have to be empathetic, or positive results don’t flow.

  3. Define and adhere to role and relationship boundaries. It’s easy to forget that all members of a team are peers, especially if you have been there longer, or an expert in your specialty. Treat all with respect, and remember that the manager has a different role. Find neutral time and ground to discuss boundaries that may have been crossed.

  4. Declare constraints on your meeting times before starting. Many irritating interactions are the result of rushed or perceived incomplete discussions. If you have other commitments pending, such as a meeting about to start, or phone call scheduled, these constraints need to be communicated early to avoid negative reactions.

  5. Be aware that body language speaks louder than you do. You can’t change the body language of others, but you can control your own. Present a posture of being open and supportive, speak unemotionally, and keep the dialog positive. Reports indicate that body language is fifty percent or more of every communication. Make yours work for you.

  6. Treat all team members comparably and consistently. If any team members don’t know what random action to expect from you on the next interaction, you are part of the problem rather than part of the solution. Productive relationships require some degree of predictability, and the ability to anticipate the needs and style of peers and management.

  7. Avoid being a complainer or commiserating with downers. Perennially negative people are always perceived as irritating by the rest of the team and management. Even worse, however, downers drag down both you and your colleagues. It’s up to you to be proactive about fixing relationships rather than complaining to others about them.

  8. Find a job or role, rather than a relationship, to motivate you. Highly annoying and ineffective people tend to look to others around them for motivation and direction, rather than accept that responsibility. An example is someone who essentially does nothing until someone tells them to. If you find the work you love, good people relationships will follow.

Your ability to work effectively with potentially annoying team members is a perfect indicator of your future ability to manage an organization, rise in your career, or build your own business as an entrepreneur. It’s not all that different than adapting to difficult non-work situations and relationships. Remember that you can’t change others, but you help them change themselves.

Marty Zwilling

*** First published on Inc.com on 12/06/2018 ***

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Wednesday, December 19, 2018

Don’t Despair While Building A Sustainable Business

practice-practice-practiceEntrepreneurs seem more quickly frustrated these days when their “million-dollar idea” doesn’t turn into a sustainable business overnight. They don’t realize that it takes many skills to build a business under the best of circumstances, and today’s world of instant gratification doesn’t leave room for the patience and practice to develop these skills.

Successful sports figures and musicians have long understood the value of time and practice in perfecting their skills. So why do entrepreneurs think that building a business is intuitively obvious, and should happen overnight? Building a business is a complex task, like building the product or service, and requires the same focus, discipline, and practice to get it right. Even the revered Steve Jobs of Apple didn’t get it all right the first time.

In his classic book, “The Practicing Mind,” Thomas M. Sterner outlines how people learn the necessary skills for any aspect of life, from golfing to business. He emphasizes the importance of a practicing mindset, and provides some clues on how to offset our modern culture of habitual multitasking, short attention spans, and giving up quickly in the face of any setback.

He believes, and I agree, that creating the practicing mind, and acquiring any skill, without stress and futility, comes down to following a few simple disciplines:

  1. Keeping yourself process-oriented. As entrepreneurs, we have a very unhealthy habit of making the product or service the focus, instead of the process of “changing the world,” which was the big vision in the first place. When you focus on the process, and see progress and learning with each small step, all pressure drops away.

  2. Staying in the present. In business, the world of customers and competitors changes every minute, so you learn by iterating and listening, taking all feedback as positive progress, rather than delays and mistakes. Don’t lose touch with your original dream, but fixating on the “final” solution is not productive or satisfying.

  3. Making the learning process your goal. Use the original dream as a rudder to steer your efforts. Success in business comes to those who learn most quickly, and adapt their processes most effectively. Don’t get caught up in achieving the exact product or service of your entrepreneurial dream, because it’s almost always wrong anyway.

  4. Being deliberate, and keep a clear picture of your destination. A random walk does not lead to business success. Deliberate intention is focused on a destination, but realizing that every step need not be predicted. Being deliberate is making each iteration land nearer to the destination, focusing on positive thoughts and positive actions.

Most of the anxiety that entrepreneurs experience comes from the feeling that there is an end-point of perfection in every product and business. The reality is that there is no ultimate product or business, since each improvement or business growth increment brings a whole new set of challenges, requiring more learning, more practice, and more skills.

Practice is required to replace bad and unproductive habits, like too much multitasking, with desirable habits, like solving important challenges more often than the crisis of the moment. Building new good habits is important, since they allow you to do required things effortlessly and without overt planning each time.

Even this is a process that must be practiced. First you have to be self-aware, and decide on what you want to be a habit. Then set up triggers to help you remember the action and the time, and finally make sure you have clear motivation for the action. Practice is the required repetition on this action with patience, until it’s effective and automatic.

Entrepreneurs should not be afraid to use the terms failure and practice interchangeably, since investors usually conclude that startups learn more from failure than from success. Obviously, it’s to your advantage to make your practice steps small ones in time and cost. Successful professionals actually enjoy honing their skills through practice. Are you having fun yet?

Marty Zwilling

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Monday, December 17, 2018

Business Complexity Goes Up Dramatically As You Scale

complexity-of-designMost of the entrepreneurs I advise today are ready to declare success when they get that first surge of traction with a real customer. This is a good sign, but they have no idea that the hard work of scaling the business is still ahead of them. It’s a bit like the heady first days after you’ve fallen in love, when you can’t imagine anything will ever kill that passion or commitment.

Scaling a business is fraught with risk and unknowns. You need to find investors for funding, vendors for volume manufacturing, processes for repeatable execution, as well as marketing and distribution to attract customers far beyond your pilot rollout. In fact, this is where your startup has to move from an initial project to a complex product business.

Based on my software career with IBM and several startups, I experienced the challenges and failures of scaling a software project to a business many times. I now realize that software has evolved to be key to the value of most products, including cars, airplanes, and appliances, as outlined in the new book, “Project to Product,” by Dr. Mik Kersten, currently CEO of Tasktop.

Dr. Kersten asserts, and I agree, that it doesn’t work today to manage software as a cost center inside a business – it is too integral to the value stream of the solution provided, most evident during scaling. He outlines five dimensions of scaling any business that introduce new levels of complexity, requiring tools with an overall view of business flows, processes, and value delivered:

  1. Adding more features to support a broader customer set. More features means more complexity, more experts, and specialized tools to facilitate the integration, testing, and support. What may have looked like an incidental cost in your base product will now grow to be a major impact on profitability, customer responsiveness, and time-to-market.

    For example, new car infotainment system options alone are fundamentally more complex in terms of features than entire software products were a few years ago, requiring millions of lines of code from multiple vendors, multiple languages, and UIs.

  2. Evolving from an initial solution to a product line for growth. As the number of products increase to attract a larger market share, the complexity increases exponentially to produce, distribute, and support the business. This means more suppliers, more interfaces, and more integration to manage, which is today the realm of software.

    BMW, for example, now has around 12,000 suppliers worldwide, for their many models, and each car now consists of over 30,000 parts. They produce a new car every seventy seconds, in the sequence of received customer orders. That’s a huge scaling challenge.

  3. Adding partners, with their own tools and specialists. You can’t manage partners in the same fashion as you manage your own internal teams and processes, so scaling the business through partners adds additional complexity. Communication at the digital level has to be done through formal software interfaces (APIs) that you never anticipated.

  4. Attracting new markets and market segments. Each market or market segment may require a new edition or configuration of the management system and software, again increasing complexity. The specialists to support these may speak different technical as well as communication languages, and be physically dispersed around the world.

    If a business sells to both business-to-consumer and business-to-business, it will need two separate support channels connected to multiple value streams. The opportunities for disconnects and disruptions go up again as the business scales to this level.

  5. Moving information platforms to the Internet cloud. Expanding businesses today forces a full dependency on storing and moving data through the cloud, exposing it to additional risk from security breaches and data loss. The tools and expertise to manage this risk require new and additional resources that most companies do not anticipate.

    Many businesses believe they will free up staff time and money by moving applications and data to the cloud, but end up facing spiraling costs as they underestimate the scale of such projects. Here again, it’s important to measure value, rather than project cost.

Businesses that are the current masters of scaling, including Amazon and Alphabet, are making the challenges harder for the rest of us by redefining the software technology landscape around their platforms. It behooves us all to keep up with these changes, manage the transition to a more software-centric world, and thrive in that world from a bottom line business perspective.

Marty Zwilling

*** First published on Inc.com on 12/03/2018 ***

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Sunday, December 16, 2018

Reasons Not To Make Decisions Today On Gut Instincts

instinct-strategic-decisionsI still know some entrepreneurs who boast of simply following their gut instincts, rather than listen to anyone or any data, to make strategic decisions. We’ve all worked with autocratic leaders in large companies who seem to thrive in this mode. They all forget or ignore the high-profile failures that have resulted from some single-handed business decisions.

One of the biggest in this decade was the merger of America Online (AOL) with Time Warner, engineered in the early 2000’s by Time Warner CEO Gerald Levin and AOL CEO Steve Case for a whopping $164 billion. Levin famously prevailed on his board and ignored everyone, but later admitted that he had presided over perhaps the worst deal of the century. Time Warner was forced to take a $99 billion loss only two years after the merger, and Levin was forced out. It’s been downhill from there.

A classic book by Thomas H. Davenport and Brook Manville, “Judgment Calls: Twelve Stories of Big Decisions and the Teams That Got Them Right” helped me put some structure around the better alternatives available today. I like the authors’ outline of four major trends which shape the new pattern for making good business decisions:

  1. The recognition that “none of us is as smart as all of us.” There is so much positive feedback on the value of involving customers in product development, and the use of social media for crowd feedback, at a very low cost, that’s it hard to argue that one person could have more insight alone, and be right more often.

  2. New models for “collaborative leadership” in organizations. The support for “open source” software and Wikipedia have pioneered other business archetypes based on open innovation, collaborative decision making, and flat hierarchies. The art of collaboration is now taught as a key success skill at every level within organizations.

  3. The use of data and analytics to support and make decisions. Intuition should never be ignored, but it should be supplemented by the growing wealth of data and analytic power available. The evidence is overwhelming that systematic analysis, not paralysis, leads to better decisions than intuition alone.

  4. Technology moves to the realms of knowledge, insight, and judgment. Ever-improving information technology makes possible the timely results and analytical decision support above. It allows for rapid capture and distribution of the many forms of explicit and implicit knowledge, derived directly from the base transactions.

All of these lead to a new paradigm of organizational judgment and decision making, to add some repeatable process and quantification to your intuition:

  • Decision making as a participative problem-solving process. Making important decisions is like any other problem to be solved, and must be approached with discipline and fact-based analysis. Smart executives seek collaboration with multiple points of view, including contrarian ones and stakeholders, before jumping off the cliff.
  • The opportunities of new technology and analytics. Technology and business intelligence are no longer the rarified provenance of “the geeks downstairs,” but are integral to decision making and the overall judgment exercised by executives at every level, whatever the industry or sector.
  • The power of culture. Organizations that practice great judgment have the basics embedded in their culture, including respect for problem-solving and leaders as facilitators of decisions, rather than monarchs. The also reward cultural change as analytical processes and technology evolves.
  • Leaders doing the right thing and establishing the right context. The role of the leader in creating organizational judgment is often first about reframing decisions as not their own exclusively. It’s also about building a team with the right mind-set, and giving them the responsibility and accountability to stand up and be counted.

Even the legendary Steve Jobs at Apple admitted to some early gut decisions which came back to haunt him, most notably his hiring of John Sculley to help him, who ultimately “destroyed everything I spent 10 years working for, starting with me.” It is said that at his second stint at Apple, Jobs relied much more on others in key decisions, but never sacrificed his values.

In my view, the days are long gone when a lone wolf at the top can make these key decisions, based primarily on intuition. Yet I still see too many executives in that mode most the time, usually driven by extreme passion and a large ego. Maybe it’s time to take a hard look at your own organization, and a hard look in the mirror, before your golden gut comes back to bite you in the butt.

Marty Zwilling

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Saturday, December 15, 2018

5 Strategies To Overcome The Fears Of A New Venture

overcoming-fearOne of the biggest impediments to starting a new venture is the “terror barrier,” as popularized by Bob Proctor, a 75-year-old millionaire and world renowned entrepreneur. This is the imaginary barrier that always seems to appear at the critical point where we would step out ahead of peers or competitors, but fear causes us to stop short.

Everyone has a comfort zone, or level of risk, where they feel in control. The problem is that if you stay in that comfort zone too long, you don’t learn and achieve new objectives. According to Bob, all growth takes place outside that comfort zone, and the edge of that zone is called the terror barrier.

If you want to be an entrepreneur and start a new business, you must be willing and able to break through your terror barrier. If you hope to succeed with any real “new” opportunity, you must be willing to learn new skills, set high goals, and get out of your comfort zone.

Overcoming the terror barrier requires first a passion for the new dream, willingness to take a risk, and determination to never quit. In addition, it helps to have a few specific strategies, outlined by Ingunn Aursnes a while back, to help you push through:

  1. Reconfirm how you have dealt successfully before with terror barriers. Everyone has had to deal with terror barriers, since the day you were born. Convince yourself that this one is only incrementally larger, not a huge jump. Contemplate the things that have worked before for you, and things that cause you to go off track.

    Some people procrastinate, make excuses, or feel real fear. We all have our “security blanket,” like sessions with a trusted friend, classroom training, or prayers to reduce the pain and keep us moving forward.

  2. Set specific goals, rather than rely on a generic dream. Make the goal increments small, so you can see yourself making each step, rather than face a step the size of a mountain. Create a picture in your mind of you achieving your end result, like you getting a Nobel prize for curing cancer, or relaxing on a beach with no more money worries.

    Then write down and prioritize your goals. If they are not written down, they don’t exist and it’s easy to forget the real meaning behind them. But don’t be overwhelmed working out the details and all the steps required just now. Work on one step at a time.

  3. Take the first step toward your first goal. You never get anywhere until you start. It doesn’t have to be a big step, but it has to be in the right direction. Put a stake in the ground, and start measuring how far you have gone. Remember that everyone takes one step backward for every two steps forward, so setbacks are normal bumps.

    Everyone learns more from failures than from successes. Moving forward, accomplishing goals, is a process rather than a continuous motion. After the first step, the second is easier, and after the first goal gives you confidence, the second will be easier.

  4. Recognize the terror barrier and see it as a growth opportunity. Take satisfaction in widening your comfort zone, the opportunity to learn, and the progress toward your goals. Use your mentor or support organization to get you over the hurdle, and celebrate the success.

  5. For team members, don’t forget your responsibility to help other members over their terror barriers. Helping others is the best way to forget your own fears and build the satisfaction of leadership as well as learning.

  6. Iterate the process, picking up confidence and momentum along the way. The more you persevere and keep moving in the direction of your goal, the easier it will seem and the better the results you will achieve. Even if the terror barriers get tougher, they will seem easier as momentum helps you achieve more of your goals.

People who avoid facing the terror barrier, or who back away easily, are actually falling behind, and they will quickly become less confident, less determined, and less happy. You want the spiral to go the other way, toward greater levels of success, ability to achieve greater goals, and to be a successful entrepreneur. Follow these steps and put your terror barriers behind you.

Marty Zwilling

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Friday, December 14, 2018

7 Keys To Business Relationships That Lead To Success

handshake-relationship-businessInvestors invest in people, not ideas. Customers buy from people, not companies. Employees rally for a great leader, not a brand. As an entrepreneur, you need relationships to succeed. That means relationships with team members, investors, customers, and vendors. One of the best ways to build a good relationship with anyone is to make them feel important.

One of my favorite authors, Brian Tracy, in his classic book “No Excuses!: The Power of Self-Discipline,” outlined seven ways to make other people feel important, which I believe are extremely relevant to entrepreneurs and business:

  1. Accept people the way they are. Because most people are judgmental and critical, to be unconditionally accepted by another person raises that person’s self-esteem, reinforces his or her self-image, and makes that person much more likely to accept you and follow your lead.

  2. Show your appreciation for others. When you appreciate another person for anything that he or she has done or said, they will like themselves and you more as well. The simplest way to express appreciation is to simply say, “Thank you” for an idea, some good feedback, time spent together, or an order.

  3. Be agreeable. The most welcomed people in every situation are those who are generally agreeable and positive with others. Entrepreneurs who like to be argumentative, complaining, or disagreeable, will have a hard time closing a contract, investment, or a customer contract.

  4. Show your admiration. People invest a lot of personal emotion in their possessions, traits, and accomplishments. When you admire something belonging to another person, it makes him feel happy about himself. Everyone has positives, and it’s up to you to find them. In turn, these positives will be reflected back on you.

  5. Pay attention to others. The most powerful way to pay attention to someone is to listen attentively first, even ask questions, before you launch into a monologue answering every question they might never ask. Believe it or not, before you even say a word, you will become a more interesting and intelligent person in their eyes.

  6. Never criticize, condemn, or complain. In business as well as personal relationships, the most harmful force of all is destructive criticism. It lowers a person’s self-esteem, makes him feel angry and defensive, and causes him to dislike you. If your target is someone not present, it still causes a loss of trust in you, since your listener could be the next target.

  7. Be courteous, concerned, and considerate of everyone you meet. When you treat a person with courtesy and respect, they will value and respect you more. By being concerned, you connect with their emotions. Consideration is the discipline to do and say things to people that are important to them.

Think back on your own recent experiences as a customer or contractor. You don’t always buy the cheapest product or service, if you have a good relationship with the people involved. On the other hand, I almost never buy from someone that treats me like I’m not important.

If you want to be a leader, you need to inspire followership. Great leaders develop a good relationship with good people, who are then inspired to follow. A successful leader inspires people to do more than they might have done without the relationship, and more than they may have even dreamed possible.

So, if you follow all these seven ways to make other people feel important, you will receive a seven-fold payback on your own objectives of being a leader and building a successful business. That’s a lot cheaper and lot longer lasting than the best advertising and public relations you can buy.

Marty Zwilling

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Wednesday, December 12, 2018

7 Practices Reduce Risk In Even The Smallest Business

shop-micro-businessIn the last few years, I’ve heard more and more about a new type of small business, called a “micro-business” (or micro-enterprise). These are usually characterized as owner-operated, with five employees or less, and less than $250,000 in sales. With the low cost of e-commence entry, and powerful Internet technologies, they require minimal capital to start, perhaps as little as $500.

I see the potential for these to become big business in this entrepreneurial economy. According to the Voice of Microenterprise (AEO) website, if one in three micro-enterprises in the United States hired an additional employee, the US would soon be at full employment. These businesses are usually run out of the home, and cover the gamut from consulting services to e-commerce.

Dal LaMagna, in his humorous classic “Raising Eyebrows: A Failed Entrepreneur Finally Gets It Right,” leads with the foundational principle of micro-businesses, which is to start small. This allowed him to learn enough from all his early mistakes to hit it big ($10 million revenue) with a global beauty tools company called Tweezerman. He and I offer seven key additional practices to reduce the risk:

  1. Tailor the business to you. Do you love antiquing? Fishing? Cars? Cooking? Now, think about what pursuing this passion might mean for your lifestyle. Think how you want to spend your day; where you want to live; whether you want to work with people or alone; in the morning or at night, and so on. Eliminate any aspect of your business that doesn't create your preferred lifestyle -- and will work against you.

  2. Be frugal. Don't spend money you don't have. Don't invest in anything you don't need. If this means baking cupcakes in the local church basement and delivering your signature pastries by bicycle to local stores -- two dozen at a time -- do it. Take the money you make and put it right back into the business.

  3. Record every expense. From the dollar you gave to the homeless guy on the way to meet a prospective client, to the new tie you bought to look professional, write down every single penny. The key to launching a micro-business is to keep expenses under control and fully accounted for.

  4. Keep a monthly profit-loss. For the first two years of your business, complete a monthly profit-loss statement. This helps you stay on top of where your business is going, where it could do better, and why it fluctuates.

  5. Find free stuff. Many items needed to start and run your small business are available for free or next to nothing. Be creative. Use freecycle.com; ask friends if they have an old computer or printer; or visit a thrift shop for office furniture or office supplies.

  6. Write down agreements. With a very small business, your clients sometimes make the assumption that they don't have to sign an agreement. Wrong. Get in the habit of thinking like a company founder and get promises in writing. And while you're at it, keep your side of agreements.

  7. Keep it simple. When Dal first started Tweezerman, he did nothing but focus on tweezers and selling them to cosmetic counters, one store at a time, which he did very well. If you can do one thing well, don't dilute your efforts until you have been turning a large profit over a consistent stretch of time.

My net recommendation is that if you consider yourself a do-it-yourself entrepreneur, preferring to do things yourself rather than forking over money to consultants, then definitely the micro-business approach is for you. The down side is that your business will probably grow slowly and more organically.

If you prefer to rely on others for most things, or want to get there fast, the investor approach may be the best answer, but the price is higher in time, dollars, and control. It’s your choice, but remember that the wrong choice probably won’t get you there at all.

Marty Zwilling

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Monday, December 10, 2018

8 Ways To Prepare Yourself For Business Crises Ahead

financial-crisis-aheadMost entrepreneurs see their new venture as a fun adventure, until the pressures of a cash flow crisis, or a manufacturing quality problem, or a major customer satisfaction problem hits. Even with all my years of experience mentoring in business, I can’t predict how you will prepare for and react to pressure situations. I wish I could, since these often make or break your business future.

Over the years, I have found some key things that you can do to prepare yourself, how a proper mindset can mitigate the pain, and put you back in control. Here are the top approaches I recommend, and the entrepreneur mindsets that I see in survivors:

  1. Evaluate new competitive threats as new opportunities. New competitors can steal your market, or they can open up new markets. Entrepreneurs who react with fear and anger are in major jeopardy of losing their health, since competitors are a constant in the startup world. Use them positively to tune your solution and expand your opportunities.

  2. Use business model pressures as drivers for innovation. There is a natural human tendency to fight the need for change, and the pressure to change causes pain. True entrepreneurs love change – that’s why they are starting a new venture. They use pressures, like shrinking margins, as drivers for their next innovation in manufacturing.

  3. Incorporate fun and humor into pressure relationships. If your team is feeling over-whelmed by the pressures of customer demands, it may be time for an off-site fun event to get them recharged and fully motivated. Fun and humor will also offset the tension in dealing with tough customer issues, resulting in higher satisfaction, loyalty, and referrals.

  4. Take control of the situation by breaking task into chunks. When the challenge ahead looms large, it’s easy to let anxiety get the best of you, and you are afraid to start. Every big task can be broken into milestones, allowing you to enjoy small successes. That’s why I suggest a business plan before you start, with a timeline and deliverables.

  5. Work from your strengths – don’t worry about weaknesses. Most entrepreneurs start with passion and confidence, but many succumb to their weaknesses when pressures set in. Lead with your strengths and in-depth skills, and don’t be afraid to ask for help from advisors or partners to fill in the gaps. Confidence alone will overcome many challenges.

  6. Turn every failure into a positive learning opportunity. When pressures mount and things go wrong, don’t start looking for excuses, or someone else to blame. Make every failure a lesson learned, and project that mindset to your team. Thomas Edison counted many learning opportunities, bouncing back after 1000 failures on the light bulb alone.

  7. Prepare for challenges rather than hope for the best. The best entrepreneurs always have a plan, with alternatives, and continually research their industry and competitors. Others strike out blindly, assume it will be an easy win, and quickly feel the stress and pressure, with minimal insight on how to respond. Be over-prepared, and enlist advisors.

  8. Stay physically fit and balance work with play. Pressure situations will happen in every business, so stay at your best both physically and mentally to respond. Don’t let the “normal” workload wear you down – keep a balanced focus on work, and find other activities, including sleep and entertainment, to keep up your motivation and stamina.

Based on my own experience as a business executive and advising small business owners, I’m convinced that anyone can learn from these techniques to handle the pressures of a new venture or existing business, no matter what their background. It won’t happen by default, and it does take effort and initiative on your part.

You too can then thrive on the challenges and pressures of your business, rather than let these pressures destroy you. Most entrepreneurs I know can’t stand the boredom of “business as usual,” as that threatens their sense contribution and self-worth. Be one of the best, whose motto proudly is “when the going gets tough, the tough get going.”

Marty Zwilling

*** First published on CayenneConsulting on 11/27/2018 ***

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Sunday, December 9, 2018

8 Guiding Principles For Pursuing A Winning Venture

human-future-technologyEvery entrepreneur has an idea for transforming a market with innovative new technology, or transforming society with a new process. But unfortunately, most of these ideas fail at the execution level, or are not truly innovative. Entrepreneurs who have been really transformative, like Steve Jobs and Walt Disney, seemed to know how to deal with all the right elements.

Jeffrey A. Harris, in his classic book “Transformative Entrepreneurs,” provides examples of key elements of transformative ideas and leadership abilities that separate the winners from the losers. I found his observations, like the following, to be inspirational for those of us chasing an entrepreneurial dream:

  1. It’s all about the people. Ideas have to be implemented well to change a market, or the world. Good implementation requires a plan, and a great plan and great operational decisions come from great people. That’s why investors look for entrepreneurs who have true grit, dogged persistence, and a disdain for the status quo.

  2. Seek innovation that begets invention. It doesn’t always work the other way around. According to an MIT study a while back, only about 10% of patents granted in the United States have any meaningful commercial importance and less than one percent are of seminal importance. True business titans deliver both invention and innovation.

  3. Find enough venturesome capital. Nearly all new businesses aspiring to reach meaningful scale require some sort of outside funding to finance a competitive growth trajectory. The objective must be to get sufficient capital, with experienced and motivated counsel, to make the venture succeed.

  4. Create a formidable and durable business model. Your business model is your value proposition. “Free” sounds like a great model, but it doesn’t imply value. Look for customer-focused value creation. Make your business model your competitive differentiation, like Fred Smith with Federal Express, or Ingvar Kamprad with IKEA.

  5. Grab the next-mover advantage. First-movers have an initial advantage, but this position is fraught with risk, and often comes with a high price. Herb Kelleher, who started Southwest Airlines, wasn’t the first in the airline business, but he saw the need for low-cost short hauls, with exemplary customer service, and transformed the industry.

  6. Failure is an option. Building a business from a raw start is hard, risky work. That means that the process of innovation is not always pretty and rarely successful. The best entrepreneurs always regroup after a failure, learn from prior mistakes, persevere, and launch a new venture with considerably improved odds of success.

  7. Government matters. Government policies, initiatives, and leadership set the stage for economic growth, and provide resources for improving living standards, and enabling technological advantage. Transformative entrepreneurs pay attention and capitalize on these cues, rather than ignore or fight them.

  8. Innovate or die. In a world connected through a broadband Internet and mushrooming social networks, information flows quickly and relatively seamlessly, expediting the pace at which new innovations gain traction and speed. Standing still is tantamount to giving up. It is not an option.

These elements and the people stories in the Harris book highlight just how difficult it is to build a truly transformative business, yet at the same time illustrate that it can be done, and has been done many times, with no correlation to geographic, ethnic, age, or sexual boundaries.

In fact, I’m convinced that it needs to happen more often, with all the challenges we have in our modern world. So it’s up to each of you to assess your activities, and your potential, to be transformative. The investors I hear from want to see more innovation, and fewer “me too” startups. Can your idea generate some excitement to really change the world?

Marty Zwilling

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Saturday, December 8, 2018

5 Lessons For New Venture Founders From Great Chefs

Emeril LagasseI realized a while back that creating a new company for the first time is a lot like whipping up a great dinner entrée for the first time – you need a recipe, even though it may look simple. You know the basic ingredients, and you can visualize the results you want. Yet you may not be so sure where to start, and how to put it all together.

In all cases, don’t skip the basic training. Any startup coach or business advisor will tell you that, on your way to being a great chef, you don't start your journey by inventing the ultimate entre. First you work in the kitchen for a while, learning some tools of the trade, experiment with a few recipes, and test on willing clients. Finally you create and document your recipe (business plan).

There are two parts to every recipe – the specific ingredients, and the instruction steps for putting the ingredients together. For a new business, you can provide unique ingredients, but the preparation steps in your business plan must follow a tried and true recipe for startup success:

  1. Identify a market with a real need. This means find some hungry people who would love a good dinner, and be willing to pay for it. If you can’t identify customer interest, it doesn’t matter how good your product is. (not a solution looking for a problem)

  2. Be sure you have a great team. You need a good cook, good marketing, and first-class service. Domain knowledge and experience is a huge success factor. All the investment money in the world won’t make your company succeed, if you have the wrong team. (investors invest in people, not ideas)

  3. Effective and timely go-to-market. Don’t be afraid to test your ultimate entrée on customers. Make them “feel the love.” Be adaptable to cultural tastes, trends in the market, and economic realities. But don’t practice too long. If your startup is over a year old, and your business isn’t yet ready, you have a problem. (time-to-market is critical)

  4. Viable financial model. Have you set the right price for your entrée, and correctly included all costs? Have you projected sales and marketing costs, cash flow, and capital requirements? Show return on investment, growth rates, and market penetration. (validate your business model)

  5. Continuous improvement. Don’t stand still. Emeril Lagasse is always ready to “kick it up a notch!” Companies and cooks who rest on their laurels don’t last. Develop metrics with which to measure yourself and use these to incrementally expand and improve your offering as fast as the market and capital will allow. (scale up the business)

If you are already a chef, and you have your own money, you can skip the instructions. You can vary the ingredients, change the formula, or add an extra pinch of salt, and your pasta salad will still be great. If it’s your first time, don’t try to get creative on the “how to” side just yet.

If you are already a celebrity chef like Emeril, meaning you have a record of success using your creativity despite the odds, you don’t even need your own money, and you only need to scratch your business plan on the back of a napkin to get funded.

For the rest of us, the business plan must be the complete recipe, combining ingredients with process. If you don’t have one, your chances of success are low, even if you are an experienced chef. Now you know why professionals and experienced investors are quick to toss an incomplete plan.

Follow the “how to” instructions above for combining the ingredients, combined with you own “special sauce” (competitive edge), and I’m sure you will deliver a tasty dish, on time and with a profit. You can look forward to being a celebrity chef later. For now, get cooking!

Marty Zwilling

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Friday, December 7, 2018

Why Team Management By Fear Is Bad For Any Business

businessman-afraidDespite the ease of communication through social media, new tools, the popularity of fearless independence and #MeToo, I still see many business organizations that are less than productive due to fear. Yet in my work as an advisor to senior executives, I find that many fail to see reality in their own organizations, and have no idea whether they are part of the problem or the solution.

I finally found some real guidance on this challenge in a new book, “The Fearless Organization,” by Amy C. Edmondson from the Harvard Business School. She presents a wealth of case studies on the pain and business losses from this type of leadership and culture, and provides some practical guidance on how to change it to a more psychologically safe and productive workplace.

If you are one of those leaders or team members who really wants to change things, here are some key indicators of the problems that I have seen, and some pragmatic guidance on how to get things moving in the right direction:

  1. Team members fail to speak up for fear of retribution. Hearing too much silence in your organization is a dangerous sign. This reticence to speak up, for fear of being embarrassed, intimidated, or penalized, can lead to widespread frustration, anxiety, depression, or even physical harm to others. Team members just don’t feel protected.

    Changing this culture has to start from the top. You as a team leader or executive have to openly invite participation from every team member, and respond positively in tone and actions when people actually do speak up. Show humility and appreciation for all input.

  2. People show excessive confidence in authority. In some organizations, especially medical and highly technical ones, authority and reverence are well understood and tightly linked to one’s place in a strict hierarchy. Deference to the leaders can become the default mode of operation, suppressing valuable input, to the detriment of everyone.

    The solution here is to hire and surround yourself with people who bring strong complementary skills to the table, as well as high confidence and self-esteem. In my experience, leaders who hire helpers rather than real help are breeding this problem.

  3. A culture of silence where leaders fail to listen. Often employees learn to stay silent when they see that voicing concerns or ideas is futile. In fact, they usually give up not just their voice but also their entire psychological engagement with your company. Evidence of not listening includes interrupting feedback, being defensive, or no evident follow up.

    You can reverse this culture by asking for opinions or updates at the end of meetings – then pause and ask again, so they know you are sincere. Also, you must be available and approachable. Mingle with employees. Ask questions, listen to responses. Be conscious of your eye contact, facial expression and tone of voice.

  4. Impossible stretch goals are never challenged. Performance goals set without team member input, and without support and feedback, are a sure sign of managing by fear. Most people feel that unattainable targets led to the serious problems at both Wells Fargo and Volkswagen a couple of years ago. Both are still struggling to change their culture.

    The solution is to communicate what you want - early and often - once is not enough for people to take you seriously. Then ask for input, listen to the evidence, and provide feedback based on what you hear. Be fair and consistent, with no excuses or emotion.

  5. You only hear the good news from team members. How many times have you chopped people off at the knees for being the bearer of bad news? Team members learn quickly, and the message spreads, that problems must be buried, and people are berated or penalized for surfacing tough issues. It’s fair to ask for solutions, in a positive way.

    Actually, the best approach is to ask the hard questions to get to the heart of a problem in a non-threatening fashion. Hard discussions can be the most productive, as well as more satisfying to team members, if they feel they are being heard and can make a difference.

Psychological safety is a workplace state in which people feel confident expressing themselves and comfortable calling attention to problems without humiliation or retribution, where colleagues trust and respect one another. In today’s complex world of constant change, collaboration in a fearless organization is the only way to survive and thrive, and only you can build it.

Marty Zwilling

*** First published on Inc.com on 11/23/2018 ***

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Wednesday, December 5, 2018

10 Business Constants Flourish In This Age Of Change

meeting-relationshipIn this age of constant change, I usually find myself writing about what has changed. Yet I find that periodically it pays to reflect on what hasn’t changed in business, probably won’t change in the foreseeable future, and is still critical to our success in our professional career, as well as the success of our business. Here is my list of the basics that some people in business tend to forget:

  1. Showing up consistently must still be priority one. I’m not talking about clocking in to work and physically putting in your time. I’m talking about being present mentally and engaged, with a full focus on the business work at hand, and contributing to the team. According to recent Gallup data, only 32 percent of employees are fully engaged today.

  2. Customers and peers still expect follow-up and timeliness. I still expect people in every business I call to answer the phone, or at least return the call in a timely fashion. Today there are many more ways to make contact, including email, social media, and web site queries, yet a common complaint I still hear is that no one ever responds.

  3. No one wants to hear that you are too busy for them. Every smart professional and business owner needs to reflect regularly on what they have really accomplished in a given day or week. Results of consequence should never include how many meetings you attended, or hours spent at work. Businesses grow based on customers served.

  4. Number and quality of relationships is still critical. Business connections and networking are still the source of major new clients, new job opportunities, and most promotions. Relationship building does not happen without effort, and the right people won’t find you automatically. It takes initiative on your part, just like it always has.

  5. It’s good for your business to find a work-life balance. Successful business people find a way to escape the pressures of work on a regular basis – through family, a hobby, sports, or other recreation. Every human body needs time to rejuvenate, for maximum productivity and creativity at work. Take some time to get totally away from the grind.

  6. Your job in business goes well beyond any job description. There is no simple formula for delighting customers, and anticipating the next business challenge. Your ability to satisfy the needs of customers and peers in any role can never be fully defined by a job description. Yet declaring that something is not your job will not impress anyone.

  7. It’s not how many things you start, it’s how many you finish. Crossing the finish line ahead of competitors is what gets you paid, and the only way your business will thrive. Investors in new businesses look for traction and results, not ideas. People who proclaim to be thinkers, rather than doers, rarely get funded, and rarely succeed in business.

  8. Customers and peers want to follow leaders, not processes. Even very detailed business processes can’t cover all the important cases. The best businesses people have always been the ones who are skilled and empowered to push the limits, and manage tough situations without excuses. These will lead your business to success.

  9. Managing cash flow is still a major key to business operation. According to financial experts, 80% of small business failures today are caused by poor cash flow, and that hasn’t changed for a long time. Cash is king when it comes to the financial management of a growing company. Entrepreneurs need to manage cash flow daily and personally.

  10. Honesty and integrity in business still pay big dividends. A couple of the most important factors in any business and career continue to be honesty and integrity, which breed trust. It is very difficult to have long-term success if your customers and your peers don’t trust you or don’t think you’re honest. I don’t believe that will ever change.

Thus it’s still critical to spend as much time at work focusing on the things that don’t change, as you do on the things that must change. More importantly, these things that don’t change can be your anchor for stability and enjoyment, leading to real satisfaction as well as success. What more could anyone want from work?

Marty Zwilling

*** First published on CayenneConsulting on 11/19/2018 ***

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