Sunday, March 31, 2019

How To Practice As Well As Preach Being Accountable

Image via Flickr by Cabinet Office
It’s easy to say to people on your team that they must be accountable for their actions, but it’s not so easy to tell them how to do it. It’s even harder to give them the mindset of wanting to be accountable. In fact, many business leaders forget that they are the role model for accountability, and don’t audit their own actions to make sure that they always practice what they preach.

In a classic book, “The Difference: When Good Enough Isn't Enough,” Subir Chowdhury shines a bright light on both these issues. Chowdhury is one of the world’s leading management consultants, and he argues that accountability is only one part of a real caring culture that must be built and maintained to achieve a sustainable competitive difference.

The other key parts of a caring culture include nurturing employees and leaders who are straightforward, thoughtful, and resolute in their approach to the business. All my years of experience in business resonate with that assessment, and allow entrepreneurs to explain to team members what accountability means, and what steps are required to get there:
  1. Willing to proclaim that something needs to be done. We all know of examples where employees and managers see the same problem occur over and over again, but never raise a flag indicating that something can and should be done. A mindset of caring about the business and other workers is required to motivate this first step in accountability.

  2. Accept personal responsibility for tackling an issue. People without a caring mindset are quick to point the finger at someone else, or defer totally by saying “It’s not my job.” Leaders must send the message, and show by example, that delivering quality solutions to customers is everyone’s business. People working on problems must be rewarded.

  3. Make positive choices or decisions to act. Making positive choices is difficult with leaders or organizations that tolerate inertia or too much negativity. The right to make choices is one of the most important freedoms we have, so you won’t get accountability from employees that don’t feel they have the mission and training to make decisions.

  4. Think deeply about the consequences of each choice. It is easy to make a poor choice if you are not thinking about the consequences of that choice. Are you working to get a problem off your back or only serving your ego? Is what you are about to do the best long-term solution for the customer, or merely an expedient? Think before you act.

  5. Set high expectations for yourself and your team. When you set your own sights high, you cannot help but inspire others. When you inspire others, you make it easy to become more accountable yourself. Inspired team members will then set their own target higher, and that momentum will lead to better customer experiences and business success.
To make a real difference in your business, you need to be the role model for accountability, as well as nurturing these additional facets of a caring mindset across your whole business:
  • Culture of direct and open communication and respect. Your team’s ability to be straightforward and honest suffers when they are afraid, egos dominate, or people don’t trust that they will be treated fairly. Too often, leaders hide business realities and personal mistakes, but expect everyone else to understand and do the right thing.
  • Culture of individual empathy and thoughtful listening. Real listening involves not just hearing what others say, but trying to put yourself in their shoes, to fully understand the message. For managers, this requires getting out from behind your desk, going to the factory floor, meeting with customers, and being accessible at any time to your team.
  • Culture of passion, determination, and perseverance. This is a mindset that every problem can be resolved, and every situation can be improved. It requires humility and a willingness to change and adapt, even an acceptance that continuous improvement is the norm. People in this culture don’t ever settle for less than their personal best.
Thus you can see that accountability isn’t easy. It can’t be accomplished by edict, but it can be taught by example, by leaders who practice the principles they want their team to follow, and leaders who build a mindset of caring throughout the organization. How long has it been since you have taken a look in the mirror at yourself and your organization in this respect?

Marty Zwilling
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Saturday, March 30, 2019

8 Pragmatic Reasons Not To Wait For The Next Bubble

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According to The Washington Post and WSJ, the economy has been slowing down around the world, and the US will follow suit before 2019 ends. Yet if you wait for an economy bubble before starting your new business, you will be making a comparable mistake to the people who thought during the dot-com bubble "all I have to do is a startup, and I'll be rich." In reality, what matters more is who you are, not when you do it.

Like Paul Graham, founder of Y-Combinator, said a long time ago, I see startups succeed or fail every day based primarily on the qualities of the founders. The economy has some effect, but as a predictor of success it’s a rounding error compared to the founders. If you're worried about threats to the survival of your company, don't look for them in the news. Look in the mirror.

Here are some pragmatic reasons from Paul and others to highlight why you might not want to wait for the next business bubble before taking the leap:
  1. Alternatives are not as tempting. If your alternative is no job security, and low pay, why not work for yourself and build your startup? You'll be investing your time and energy into something with more potential upside in future. If you're talented and have always toyed with the idea of a startup, financially it makes sense to do it now.

  2. More available talent. It's hard to hire good people because they already have a job. But in a lesser economy that's not true -- companies have exploded and laid-off everyone, even the stars. Check your business network for a great co-founder or a great designer.

  3. Low cost infrastructure. Notice the empty offices that are wasting away as you drive down the street? Make them an offer. Need less expensive advertising? Ad revenue is still down as companies right-size marketing budgets. Negotiate, or use social networks, which are virtually free.

  4. Competitors are vulnerable. They have higher overhead, long-standing bills, yearly advertising contracts and high office leases signed years ago. Their prices are high and hard to lower. They're eating cash. You have none of these pains; you're sipping cash with no overhead and lots of time to devote to coddling new customers.

  5. Technology progresses. So for any given idea, the payoff for acting fast in a struggling economy will be higher than for waiting. Technology trains leave the station at regular intervals. If everyone else is cowering in a corner, you may have a whole car to yourself.

  6. Markets don't "reduce headcount." As a startup, you have more control over your customer base. You’re probably not going to lose your customers all at once, even though they may drop off individually if they can no longer afford you.

  7. Some business opportunities go up when the economy is down. While inventory liquidation is not an especially pleasant business, it's an example of one that generally does well during economic downturns. An aging population whose health is declining is going to purchase healthcare products and services—struggling economy or not.

  8. Investors are still looking for good startups. Everyone knows you're supposed to buy when times are bad and sell when times are good. A few investors actually think that way, so be there. You're an investor too. As a founder, you're buying stock with work.
The way to start in a sluggish economy is to do exactly what you should do anyway: manage cash as tightly as possible. If you don’t quit, the most likely cause of death in a startup is running out of money. So the cheaper your company is to operate, the harder it is to kill. And fortunately it has gotten very cheap to run a startup.

The most popular day for starting a new company is the same as starting a new diet: Tomorrow. So take the leap today, not tomorrow. If you don’t get started now, the odds are you'll never start. If you are an entrepreneur at heart, don’t be doomed to a life of trudging through jobs, depending on someone else for salary and bonuses and health care and retirement, a life's work without ownership or upside.

Besides, bubbles are hard to recognize until they burst. We may well be in one right now, but we won’t know until it’s too late. So either way, now is the right time to pursue your entrepreneurial passion.

Marty Zwilling
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Friday, March 29, 2019

6 Changes To Your Hiring Process To Attract The Best

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Startup investors tell me they invest in a new venture with a higher caliber of people, rather than the product or service, and I agree. In my role as a business advisor, I see successful businesses most often emerging from great teams rather than great products. Yet I find the people building teams are usually product experts, often with no experience in team building.

Of course, it’s no surprise that most entrepreneurs don’t have a background in hiring teams, and don’t have a budget for training or human resource consultants. But these days with all the resources on the Internet and elsewhere, there is no excuse for not keeping up on the latest insights, best practices, and technology in the area of hiring, motivating, and training.

For example, I just remembered a classic book, “The Best Team Wins: Build Your Business Through Predictive Hiring,” by Adam Robinson, CEO and cofounder of Hireology, which details the how and why of hiring your most valuable assets today. He comments that in spite of the digital revolution, the hiring process hasn’t changed from its low priority, last minute, subjective roots.

In fact, his analysis of current statistics and many case studies leads both of us to recommend a focus on a set of key hiring principles that shouldn’t come as a surprise, but don’t seem to get followed very often these days by new companies, or even the more mature ones:
  1. Look for a cultural fit before a skill match. In the past, very little consideration has been given to finding people who share your purpose and values for the business. But today, in this era of relationships, people who fit your culture have proven to be much more engaged and productive than others who are more skilled, but feel like outsiders.

    Some of the companies with the best team cultures, including Zappos, even go so far as to offer new employees $2,000 to quit after the first week on the job if they don’t feel a fit with the team assigned. It’s a small cost to prevent a long-term loss.

  2. Give priority to attitude over experience. New businesses need people who have a passion for getting things done with limited resources, enjoy problem solving, and relish constant change. Often times, candidates with more years of experience are frustrated and unproductive in these environments, and are looking for structure and consistency.

    At Twitter, for example, even though everyone gets great perks, including meals, yoga classes, and unlimited vacations for some, employees can’t stop talking about how they love working with other motivated people, where no one leaves until the work gets done.

  3. Be patient when filling open positions. Not planning ahead, and only hiring people in the crisis of an open position is a recipe for creating dysfunctional teams. Having no one is better than someone who needs constant attention, or is working against you. Define a disciplined process, take the time to find multiple candidates, and do proper reviews.

  4. Get interactive in candidate interviews. Some entrepreneurs approach hiring as a test of their selling ability, while others wait for the candidate to sell them. The best approach is to ask open-ended questions, really listen to the answers, and then follow-up for depth. Have multiple team members do their own two-way interviews, and compare notes.

  5. Avoid surprises through proactive homework. Team managers in a hurry to hire often skip references, assuming they won’t get the real story anyway. In truth, much can be inferred from what is not said, and the tone of former managers. Doing multiple calls will reinforce your qualms or eliminate them. Recovery from a surprise bad hire is expensive.

  6. Another type of surprise is the perfect candidate who walks away at the last minute. This can be avoided by asking about extenuating circumstances before you extend them an offer, such as spousal objections or other pending job offers. Asking will give you the chance to address these considerations, and avoid disappointment and drama.

  7. Do your onboarding with conviction. Integration of a new employee into their team is the right time to communicate the culture and direction of the business, and let them know what is expected of them. The proper training and support right up front is key to retention, the right attitude, and their ability to be influential in driving your business.
Building and managing a great team doesn’t stop when your last position is filled. Keeping the team motivated and happy over time is just as hard. Even happy people expect to be promoted, and do move on to other opportunities, so you have to plan for replacements as well as new business. Is your business able to grow and adapt as fast as the market changes these days?

Marty Zwilling
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Wednesday, March 27, 2019

6 Actions To Find The Perfect Angel For Your Startup

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Fundraising is brutal. Actually, according to Paul Graham of Y-Combinator fame, “Raising money is the second hardest part of starting a startup. The hardest part is making something people want.” More startups may fail for that reason, but a close second is the difficulty of raising money.

A while back, I outlined “The 10 Best Sources of Cash to Start Your Business” for startups, listing angel investors as alternative six. I still get a lot of questions on these mysterious and often invisible investors, so here is another attempt to bring them out of the ether.

By definition, an angel investor is not an “institutional investor.” Venture capitalists (VCs) are paid to invest other people’s money, and measured on the rate of return they get. Angels are typically high net worth individuals who are investing their own money, for a wide range of motives.

So “good” angels are ones with motives that are consistent with what you bring to the table. This means they usually invest in people who have the right “chemistry”, and areas of business they already know. They tend to work locally, so they can “touch and feel” their investments.

Angel investors also tend to limit the size of individual investments to $250K or less. If you need more, you need VCs or a flock of angels. So how do you find those good angels?
  1. Use personal networking. The best angels you will find are the ones who know you personally, or know a member of your team or advisory board. If a potential investor gets to know you BEFORE you are asking for money, your credibility and investment probability will be improved by an order of magnitude.

  2. Entice angels to play along. Of course, angels are really mortals. They want to make a difference. Asking an angel to work with your company in an advisory role is a great way to establish a relationship that may lead to a cash investment. If you impress the angel, it will likely make her at least an archangel (advocate) when it comes to funding.

  3. Court local angel groups. Since angel investors most often focus only in their own geographic area, it’s most effective to court the local group, or even make a guest appearance with an archangel. If you can earn an archangel's confidence, he or she will invite you to pitch the group, and you'll have an edge in the voting.

  4. Mine national databases. If you are still alone, submit your application to the leading online website national databases of angel investors, Gust (USA) and National Angel Capital Association (Canada). These sites have arrangements with hundreds of local groups and individual investors that you might otherwise have missed.

  5. Remember angels beget angels. That means that once you get the first one, he or she becomes your best advocate for finding more. Investment angels don’t like to travel alone, so they will bring in others if they can (it’s called share the risk).

  6. Don’t forget passive angels. These are angel investors who are private, meaning they don’t go to meetings, but will invest if someone they trust brings them an attractive opportunity. Find the right investment advisor, or member of your advisory board, and the “match-making” will happen.
Remember that angels have a culture all their own, and it pays to understand how to deal positively with them after you find one. There are some books out there to help, like the one I published a while back with Joe Bockerstette “Attracting an Angel - How to get Money from Business Angels and Why Most Entrepreneurs Don't”, and an old standby “The Art of The Start”, by Guy Kawasaki.

Even if you follow this recipe, you are likely to find that fundraising is a brutal challenge. But if it results in a good angel or two watching over your startup, you will definitely be one step closer to heaven.

Marty Zwilling
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Monday, March 25, 2019

8 All Too Painful Entrepreneur Negotiation Mistakes

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One of the things I have learned the hard way over my years in business, and in advising others, is that it takes more than passion, creativity, and hard work to start and grow a business. A key skill that many of you don’t appreciate is the ability to effectively manage the negotiations that come with every business. The results are lost opportunity, poor contracts, or a failed business.

For example, one of the first decisions that most of you entrepreneurs face is how much equity to give to early investors, co-founders, and key new hires. These are tough and sensitive decisions, especially for technologists and introverts, who may prefer to let their innovations speak for them.

With that context, I was pleased to see a new book, “Entrepreneurial Negotiation,” by Samuel Dinnar and Lawrence Susskind, consultants and negotiation experts from Harvard and MIT. They reinforce my own view that negotiation is a critical skill for every business professional, and it can be learned and honed throughout your career.

The most successful business people, in my experience, are the ones who start early, and never stop learning better negotiating skills. In particular, we all need to recognize and prevent negotiation mistakes before they occur. The most common mistakes their research has identified include the following:
  1. Focusing totally on your own interests (self-centered). If you don’t work to recognize and understand the needs and priorities of those with whom you have to negotiate, you will be blind to clues that could lead to better outcomes for both sides. Remember that every business, and every relationship, must be a win-win one, rather than a win-lose.

  2. Passion making you overly optimistic and overconfident. Your conviction that your innovation cannot fail will lead to contingencies not discussed or documented, or failing to consider the possibilities that agreements could break down or people might act unreliably. Negotiation is more about mitigating risk and uncertainty, rather than selling.

  3. Winning defined as reaching an agreement - now. Sometimes no agreement or a future agreement is the best alternative. You must always consider the lasting impact of an immediate action on reputation, trust, future negotiations, and long-term relationships. Don’t allow yourself to become desperate, and always be willing to walk away for cause.

  4. Accepting a quick compromise to get things done. Most of you are “doers,” who are multitasking under a heavy workload, and measure success by how many things get done. You may have an aversion to conflict, or be willing to declare victory by signing on to a compromise that you later regret. Don’t ever sacrifice base principles or integrity.

  5. Approaching negotiation as an individual sport. As a business owner, you survive by lean operations, and value your independent spirit. Don’t confuse being responsible, in a heroic sense, with being an effective team leader. Perhaps coming up with the original idea required individual effort, but negotiation often requires utilizing the right expert.

  6. Negotiating as merely haggling over the price. Most business owners I know feel comfortable handling transactions with buyers, with the owner as the seller negotiating the price. More important for success are the complex transactions between partners, investors, and suppliers, where risk, long-term gain, and relationships are negotiated.

  7. Relying heavily on intuition versus prepared evidence. All negotiation involves some improvisation, but there is no substitute for advance preparation to support best case, acceptable compromises, and walk-away triggers. It doesn’t help to blame the other side when negotiations don’t go as expected, and you only have gut instinct to fall back on.

  8. Allowing biases, emotion, and ego to overrule logic. This mistake causes you to hear and see only what you want, and to react inappropriately when things don’t go your way. By keeping your emotions in check, understanding the other person’s position, and using logical arguments, you will find negotiation to be much more satisfying and successful.
The first step in avoiding these mistakes is accepting the fact that negotiating is a way of life in business, not an occasional special event. By recognizing that you do it every day, you can get better and improve your confidence simply from the practice and learning from your mistakes.

When negotiating, always be pleasant and persistent but not demanding. Be professional at all times - do not get frustrated and angry if a negotiation does not proceed in your favor, and don’t be hesitant to enlist the help of internal and external subject experts as required. Negotiate your way to success, rather than wait for random luck to favor you.

Marty Zwilling

*** First published on Inc.com on 03/11/2019 ***
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Sunday, March 24, 2019

6 Signals That Your Startup Could Be The Next Google

Image by Origa via Wikipedia 
I tell entrepreneurs that Google was an “exception” to all the investment and startup rules, but I’ve always wondered what it takes to be an exception. Since every business is built by unique individuals, I’m totally convinced that exceptional people are the key to an exceptional company.

To check out the Google founders, and because I still see so many business plans that are modeled after Google (more search engines, and more billion dollar growth models), I had to take a look at the classic book about them a while back, called “Inside Larry & Sergey’s Brain,” by Richard L. Brandt. It didn’t disappoint me.

This book was not sanctioned by Larry Page and Sergey Brin, so it’s not a love story. All the controversy is highlighted, but the message still seems to be that these guys were and are exceptional in their efforts to build a company. Here are some lessons from the book that all entrepreneurs should wish they could emulate:
  1. Independently outstanding, but complementary founders. Larry is the primary thinker about the company’s future direction, and still weighs in heavily on key hiring decisions. Sergey, a mathematical wizard, is the arbiter of Google’s technological approach. Both have a deep sense of moral values and ethics, and work well together.

  2. Unique business tactics. Technology alone does not make a great company. Business tactics do. Google developed the most profitable form of advertising anyone had ever seen, ads selected real-time based on search terms. They focused on small advertisers looking for bargains. The model was a perfect fit for the Internet Age.

  3. Survived phenomenal early growth. In 2003, just four years old, sales hit $1.5 billion, profit was $100 million, and it had taken over some 80 percent of the world’s search queries. Google now employs about twenty thousand people. Most founders don’t survive this kind of growth and change, but Larry and Sergey are still a well-balanced machine, with a net worth of over $50 billion each.

  4. Leaders loved and hated at the same time. Larry and Sergey have been wickedly clever. They break the mold. They challenge old industries and make a lot of enemies. They’re ruthless businessmen. Yet through it all, they’re idealists, believers in the power of the Internet to make the world a better place.

  5. Founders surround themselves with the best people. Early on, they were able to get money from the likes of Andy Bechtolsheim and John Doerr. They convinced Eric Schmidt to take the reins with them for growth as interim CEO and Executive Chairman for years, and had Dr. Larry Brilliant to set up the philanthropic arm. Amazing.

  6. Continue to think big. According to the book, both founders continue to think big. Some of their ideas are as flighty as space travel; others are as grounded as the DNA that makes them who they are. No one proclaims to know where its leaders will take Google and Alphabet next, but everyone expects more great things.
Even the pros should probably pay attention here, to sharpen their game and to improve the accuracy of their assessments about people in general, as well as Google’s motivations and intentions. I think Larry and Sergey have shown a relentless focus on innovation that puts them miles ahead of competitors on all fronts.

I challenge each of you, as you reflect on your own vision and entrepreneurial plans, to take a lesson from Larry and Sergey. Do you have the intestinal fortitude to walk away rather than be “corrupted by financial interests,” or to ignore conventional wisdom and follow your own instincts?

If so, then you too may be the exception that even the best and the brightest will line up to support. This world needs more exceptional people. Act like one and you too may be one.

Marty Zwilling
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Saturday, March 23, 2019

7 Guidelines For Picking Business Battles You Can Win

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Many entrepreneurs are not prepared for conflict, or actively avoid it. Their vision, passion, and focus are so strong that they can’t imagine someone disagreeing, much less fighting them to the death. But the reality is that startups are composed of smart people, with emotions as well as intellects, working in close proximity under much pressure, so conflicts will occur.

In fact, most business conflict is constructive and should be embraced in steering through the maze of innovation and change that is part of every successful business. Surround yourself with “yes” people, and you may feel good initially, but the brick walls no one mentions will hurt later.

On the other extreme, constant and unmanaged conflict will quickly drive your startup to be dysfunctional. Here are a few simple principles leading to constructive conflict resolution that I espouse, as summarized from the classic book by Peter T. Coleman, “The Five Percent: Finding Solutions to Seemingly Impossible Conflicts:”
  1. Know what type of conflict you are in. The first step is to assess whether the conflict is win-lose, win-win, or mixed (some competing and some shared goals). Each of the three types requires different strategies and tactics. Learning how to identify and respond to each type is central to success. Try a good business mentor to get you on the right track.

  2. Not all conflicts are bad. Most often, conflicts present us with opportunities to solve problems and bring about necessary changes, to learn more about ourselves and the business, and to innovate – to go beyond what we already know and do. Avoid the ones that are irrelevant to your startup, but don’t hesitate to engage in the others.

  3. Whenever possible, cooperate. Research has consistently shown that more collaborative approaches to resolving win-win or mixed-motive disputes (the majority of conflicts) work best. Therefore you should always approach conflicts with others as mutually shared problems to be solved together.

  4. Be flexible. Try to distinguish your position in a conflict (“I need a raise”) from your underlying needs and interests in the relationship (“I want more respect for my contribution”). Your initial position may severely limit your options. Creativity and openness to exploration are essential to constructive solutions.

  5. Do not personalize. Try to keep the problem separate from the person when in conflict (do not make them the problem). When conflicts become personal, the rules change, the stakes get higher, emotions spike, and the conflict can quickly become unmanageable.

  6. Meet face-to-face and listen carefully. Meet in a neutral location, and work hard to listen to the other side in a conflict. Accurate information is critical, and careful listening communicates respect. This alone will move the conflict in a more friendly and constructive direction. Don’t mistake sending text messages and emails as listening.

  7. Be fair, firm, and friendly. Research shows that the process of how conflicts are handled in usually more important than the outcomes of conflicts. Always attempt to be reasonable, respectful and persistent, but do not cave in. Find a way to make sure your needs are met.
Applied correctly, these methods can move most business conflicts in a positive and satisfying direction. But Coleman asserts that there are five percent that will always be “intractable.” These usually involve issues that won’t ever be resolved in the workplace, and should be avoided, like politics, religion, personal enmity, and cultural biases. Your best bet on these is not to engage.

For the rest, you must engage (avoidance just hardens positions and delays the consequences), and you must bring closure to the argument or conflict. Closure in business should include formalizing the result in a written document, with clearly outlined terms and activities, and follow-on milestones as required.

The most successful entrepreneurs are creative and skillful in handling conflicts, and actively seek constructive conflict with key stakeholders. The result is better decisions, more consensus, and better communication. In business, as in life, real change rarely happens without some pain. Learn to deal with it.

Marty Zwilling
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Friday, March 22, 2019

Artificial Intelligence Can Help Or Hurt Any Business

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Everyone has heard about the big potential for using artificial intelligence (AI) to expand your business, but many of the small businesses I mentor are still wary of embracing it, because they don’t understand how it works, and fear losing control and unintended consequences. My advice is that AI is here, so it behooves all of us to learn how to use it properly and move forward.

For example, it is a no-brainer to first take advantage of the wave of new capabilities for data collection and smarter analysis to improve productivity and marketing. What is not so obvious is how to create and roll out solutions that can directly impact customer trust or financial well-being. There have been too many recent glitches, such as evidence of devices invading our privacy.

To put this all in perspective, I was happy to see the guidance and recommendations on how to deal with artificial intelligence correctly in a new book, “The Big Nine,” by Amy Webb. As a recognized futurist and thought leader in this space, she outlines how the big nine tech titans, including Google, Microsoft, and Alibaba, should be working to solve key long-term issues.

I believe her guidance and insight on these issues is equally important to every business owner and entrepreneur in understanding and marketing the principles of artificial intelligence to their business solutions and their customers, along the following lines:
  1. Don’t forget the social implications as well as business. AI assistants in homes are great (Google Assistant, Siri and Alexa) – but to children, they might easily be considered co-parents or teachers. Make sure you are comfortable that your offering which includes AI doesn’t go too far in molding human society into a non-human machine.

    For example, Facebook realized just before rollout that their new AI-based chatbots, Alice and Bob, had developed their own secret language and were talking to each other in a new shorthand, potentially misleading users. Alice and Bob were shut down immediately.

  2. Human employees and customers still need roles. While the disturbing visions of robots taking our jobs are almost certainly overblown, almost everyone sees no small amount of disruption ahead. Your role in business is to manage the transition where humans and machines will productively co-exist to keep human customers satisfied.

  3. Honor fundamental rights to personal security and privacy. As AI technology shapes how your customers access information, interact with devices, and share personal information, you will still be held responsible for protecting their data and privacy. This doesn’t require any great technical acumen, just vigilant attention to values and rights.

    It is already possible to collect digital breadcrumbs on team members or customers and use them to determine if online behaviors signal an intent to complete a desired action. The wrong use of these actions will put them, as well as your business, in jeopardy.

  4. The value of a human life cannot be compromised. Artificial intelligence systems from IBM Watson and BioMind have already made great strides in diagnosing and treating life-threatening cancers. But early mistakes have made it abundantly clear that they are not perfect, and decisions that are critical to saving lives can never have too much scrutiny.

  5. We live in a non-homogeneous world. We must make sure that our business behavior is always inclusive. AI without oversight can take phenomena for granted, or fail to see that what works in one social domain, culture, or gender may not work in another.

    As a current example, Tessa Lau, a computer scientist and cofounder of robotics company Savioke, says she frequently sees designs that neglect to take into account the perspectives of women and other minority groups.

  6. Individual biases must be excluded. We all have unconscious (and conscious) biases that can be inadvertently built into artificial intelligence solutions and their usage, based on our race, gender, appearance, age, wealth and much more. The result will be a lack of trust in your solution, and lost opportunity for both your business and your customers.
As a business professional or executive, whether you feel qualified or not, you are in the forefront of the artificial intelligence revolution that will soon change every business and every customer. The decisions you make now, even the seemingly small ones, may be critical in avoiding AI unintentional consequences and even assuring the long-term survival of our human species.

Marty Zwilling

*** First published on Inc.com on 03/07/2019 ***
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Wednesday, March 20, 2019

9 Simple Approaches To Creating A Sure-Fire Startup

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As an advisor to startups and entrepreneurs, I often hear the myth that all new businesses must start with a great idea. I have to disagree. I believe the best entrepreneurs start by finding a large opportunity, and only then use good ideas to capitalize on that opportunity. The best opportunities are recognized from painful needs, plus a growing population of customers with money to spend.

For example, technologist entrepreneurs often come up with a new device or application, just because they can, and assume everyone will want one. Social entrepreneurs pitch me their latest idea for eliminating world hunger (producing algae), but may forget that really hungry people probably don’t have any money. It takes a real selling opportunity to sustain a business idea.

You will find specifics in the classic book, “The Entrepreneur’s Playbook,” by Leonard C. Green, which supports my view, and is full of practical advice for aspiring entrepreneurs, including easy ways to identify sure-bet opportunities, most not requiring any invention, before you finalize your innovative business idea. Here are some approaches that both of us recommend to get you started:
  1. Take a basic product and make it special (upgrade). Premium bottled water (Fuji), expensive coffee (Starbucks), and gourmet cookies (Mrs. Fields) are examples of what were once pedestrian products that have driven successful new businesses. Sometimes you need to take a commonplace item, like a cup of coffee, and make it an “experience.”

  2. Offer a no-frills version of a high-end product (downgrade). For example, Southwest Airlines eliminated all the frills that usually come with an airline ticket, and now they are a market leader, being copied by the majors. In supermarkets, everyone today knows that generic brands often offer more value and quantity, without giving up key ingredients.

  3. Find products that seem to fit together (bundle). Instead of requiring people to shop and pay for related items, combine them into one package. Today’s smartphones are more attractive than a separate phone, camera, computer, and software packages. Sometimes just including training and installation makes a product more attractive.

  4. Break existing bundles into separate packages (unbundle). This is obviously the inverse of the bundle approach. Home computers have long been offered in unbundled as well as bundled hardware and software, to allow for a lower entry cost and flexible configuring versus simplicity. Long-term warranties are now unbundled from appliances.

  5. If a product sells in one area, transport it to another. Importers/exporters make their living this way with products from different parts of the country or the world. The same concept resulted in the birth of franchises, which are essentially proven business models transported to new locations. The Internet is a business for transporting web services.

  6. Expand a narrow product offering to the mass-market. A popular incarnation of this approach today is to take an Internet-only product into brick-and-mortar retail for access to a much larger audience. The same concept applied to every startup which test-markets its product in a local area, then scales the business for national or global access.

  7. Take a broad-appeal product into a niche. With the widespread popularity of social media, I now see many businesses looking at niche market interest groups, such as sites for travelers, hunters, cancer support, and crafts. In television, this is called narrow-casting, to gear specific channels to a special audience, like golf, old shows, or history.

  8. Maximize the selection of products offered (think big). This approach brought us the “big box” stores, including Walmart, Lowe’s, and Home Depot. Online, the same concept has been implemented by Amazon and Alibaba. It allows customers to complete their shopping in one place, and businesses get the value of volume and common processes.

  9. Focus on in-depth expertise and support (think small). This is the inverse of the “think big” strategy, which you see at your local hardware stores, with knowledgeable and friendly support staffs. They specialize in the depth of their selections that a true connoisseur demands. Online sites now advertise customized designs and personal fits.
It shouldn’t be hard to see from these examples the wealth of business opportunities available without inventing a totally new product or technology. Thus I continue to tell entrepreneurs that business success is more about the execution, and the quality of the team, rather than the idea.

Also, by looking at the size of the opportunity, you can take a calculated risk, rather than close your eyes and step into the total unknown. Calculated risks are less likely to be fatal, and more likely to be fun and profitable. Think about it before you send me your next business plan to change the world.

Marty Zwilling
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Monday, March 18, 2019

5 Keys To Relying On Intuition In Business Decisions

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With all the progress in analytical tools and big data available, many people feel there is no place in business today for intuition and gut instincts. As an advisor to entrepreneurs for many years, I strongly disagree, and still see the value of at least combining intuition with logical analysis, as we face customers and markets driven by relationships, emotions, and unpredictable social trends.

I also see many successful entrepreneurs, including Richard Branson, who openly state, “I rely far more on gut instinct than researching huge amounts of statistics.” The venerable Steve Jobs was reportedly in the same category. In proper business circles, it’s called thinking outside the box, so don’t be misled into concluding that business no longer benefits from individual thinking.

In fact, I just saw a new book supporting this position, “Decisive Intuition,” by Rick Snyder, an international business coach who has launched and grown several businesses of his own, as well as helped big companies, including Intel and Anytime Fitness. He digs deeper into how intuition works, and concludes that correctly honing and using your gut instinct is a powerful tool.

We both agree that a big challenge we face in helping business professionals is getting you to stop being stymied by your own inner critic – that voice in your head that you are not good enough, or are probably doing something wrong. We all have to make friends with our inner critic, and make room for our intuitive voice to show up and lead us to the right decisions.

Here is my interpretation of Snyder’s recommendations to develop your intuition, and get you to that balance of logical analysis and intuitive decision making:
  1. Isolate your inner critic from the rest of you. Of course, we all have that inner critic element, as it’s important for our safety and security, but it need not overwhelm what we have learned about our business and our customers. Keep it in its place by avoiding the moods and emotions that can cause you to censor yourself on key decisions.

    For example, when you begin to feel overwhelmed by the stress of a heavy workload or crisis, it may be time take a long walk to think, or retire to your favorite gym for a workout to change your focus. Then your intuitive forces will help you reach a balanced decision.

  2. Use humor to loosen the grip of your internal critic. Self-critic messages are already so heavy that often bringing levity is valuable in helping balance it all out. For example, say “Oh, there’s my inner critic again!” or “Apparently, my inner critic thinks that I shouldn’t be the one to do the investment pitch,” as you smile at its attempt to thwart you.

  3. Ask your critic what it’s trying to protect you from. Think carefully about what’s at risk if you follow through with the behavior you are fearful of or are being warned about. Now you can logically isolate the current situation from past experiences, and how this decision can be made, from more recent learning, without repeating past actual risks.

    For example, you might find that the critic is trying to prevent the repeat of past pain where you trusted someone and later felt betrayed, or a time when you delegated work to someone else and you felt let down. Now you decide from confidence rather than fear.

  4. Work to be a better advocate for yourself. Once you are able to isolate the internal critic portion of your being, and better understand its cause and boundaries, you will be able to restore trust in yourself, repair your own reputation internally, and restore self-leadership. The better you understand it, the quicker the critic will disarm and relax.

    According to a recent article on ConsciousED, Elon Musk learned a long time ago to trust his intuition. He calls it: “thinking from first principles,” and it lead him to create Tesla, SpaceX and Paypal.

  5. Practice new behaviors to wire new neural pathways. New modes of trusting yourself won’t happen by thinking alone. If your inner critic procrastinates, start working on that task right now. If you have been hesitant to delegate work, make a list of all your activities and publish a delegation list for all to see. Repetition increases skill and defeats the critic.
With these tips, I’m convinced that you can train yourself and get help from the people around you to integrate your directional, social, and informational intuition with results from all the logical analysis and data tools to make better decisions in business. Even though I’m a technologist, I believe the most competitive and most innovative businesses will always be run by people, not robots.

Marty Zwilling

*** First published on Inc.com on 03/04/2019 ***
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Sunday, March 17, 2019

5 Investor Types Who Will Test Your Negotiating Style

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Every entrepreneur seeking funding loves the challenge of getting customers and investors excited, but dreads the thought of negotiating the terms of a deal with potential investors. They are naturally reluctant to step out of the friendly and familiar business territory into the unfamiliar battlefield of venture capitalists from which few escape unscathed.

In reality, a financing negotiation is not a single-round winner-take-all game, since a “good” deal requires that both parties walk away satisfied -- with a win-win relationship. Brad Feld and Jason Mendelson, in their classic book “Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist” emphasize that there are only three things that really matter in this negotiation: achieving a good and fair result, not killing your personal relationship getting there, and understanding the deal that you are striking.

To be an effective negotiator, I agree that you first need to quickly identify and adapt to your opponents negotiating style. Feld and Mendelson identify the five most common negotiating styles that you will see on both sides of the table, and talk about how you can best work with each of them:
  1. The Bully (aka UAW negotiator). The bully negotiates by yelling and screaming, forcing issues, and threatening the other party. They usually don’t understand the issues, so they try to win by force. Unless this is your natural negotiating style, their advice is to chill out as your adversary gets hotter.

  2. The Nice Guy (aka used-car salesman). This style is pleasant, but you always feel like he’s trying to sell you something. While he doesn’t yell at you like the bully, it’s often frustrating to get a real answer (need to talk with the boss). For these, be clear and direct, and don’t be afraid to toss a little bully into the mix to move things forward.

  3. The Technocrat (aka pocket protector guy). This is the technical nerd who can put you into endless detail hell. The technocrat has a billion issues and has a hard time deciding what’s really important, since to him everything is important for some reason. Make sure you don’t lose your focus and fight for what you really care about.

  4. The Wimp (aka Marty McFly). You may be able to take his wallet pretty easily during the negotiation, but if you get too good a deal it will come back to haunt you. You have to live with him on the Board and making decisions. You may end up negotiating both sides of the deal, which is sometimes harder than having a real adversary.

  5. The Curmudgeon (aka Archie Bunker). With the curmudgeon, everything you negotiate sucks. He may not yell, but he’s never happy, and keeps reminding you how many times he has been around the block. If you are patient, upbeat, and tolerant, you’ll eventually get what you want, but don’t expect to ever please him.
Secondly, you should never walk into any negotiation blindly without a plan. Know the key things that you want, understand which items you are willing to concede, and know when you are willing to walk away. When determining your walk-away position, you need to understand your best alternative to agreement, and have a Plan-B (bootstrapping, competing investor, or more time).

Another key preparation is to get to know the investors you will be dealing with. Do your homework on the Internet and through contacts to find out their strengths, weaknesses, biases, curiosities, and insecurities, Knowledge is power, and that can be used for leverage.

On the other hand, when negotiating a financing for your company, you should never present your term sheet first. Always wait for the investor to play his hand. Next, make sure you listen more than you talk. You can’t lose a deal point if you don’t open your mouth. Finally, don’t lose sight of the deal as a whole, by being forced to a decision linearly on each point in isolation.

If you are the least experienced person around the negotiating table, it’s time to hire a great lawyer to help balance things out. Remember, your lawyer is a reflection of you, so check their reputation and style, as well as their win-loss record. The financing is only the beginning of a critical relationship, and a small part at that. Don’t work so hard at winning the battle that you lose the war.

Marty Zwilling
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Saturday, March 16, 2019

10 Key Principles To Drive Customer Decisions Today

Today’s customers are overloaded and overwhelmed by too much information, so making a decision is a challenge. You may think this is only important to your marketing and sales people, but in reality it doesn’t matter how great your product or technology might be, you won’t succeed if you don’t understand your target customer decision process. Every aspect of your business must be about sales.

In my role as an advisor to startups, I often have to remind entrepreneurs to think more like sales people from day one, in finding a real problem to solve and designing the solution. Even the best technology won’t sell itself. Everyone on your team needs a regular update on the latest insights for sales people, like the classic book, “Heart and Sell,” by sales training expert Shari Levitin.

Levitin outlines ten universal truths about selling, and the customer decision process, which every business needs to address in their product, business model, and their whole customer experience. Just think of your whole business as the sales engine, rather than just the sales reps:
  1. Success requires continuous learning and improvement. No matter how certain you are that your solution perfectly matches customer needs, you will be wrong. Success requires a willingness to take responsibility for shortcomings, better understand customer needs, and the ability to quickly learn and adapt. This is the growth equation for a startup.

  2. Emotions drive customer decision-making. Your ability as a business to uncover and capitalize on customers emotional motivators will dictate your success. That’s why Steve Jobs spent as much time on “insanely great design” as technology, and marketed to customer emotions. The lowest price is not always the real customer motivator.

  3. Every growth business must have a repeatable process. Just like good sales people have a repeatable process they follow, every startup has to overcome the chaos of a new business, put structure in place, document their processes, and focus on scaling up the engine. Everyone on the team must adopt the same culture and recipe for success.

  4. Resilience is the life skill of a business. Setbacks are inevitable, but good businesses and good sales people always bounce back. Both should assume that “no” never means “never.” A good entrepreneur actually gets stronger as he or she learns from each growth failure, and responds ever more effectively to customer needs and expectations.

  5. Business brand trust begins with customer empathy. Empathy is about being fully engaged with your customers, through interactive social media, and taking the time to listen to real customers face-to-face. You have to demonstrate common ground and shared values with your customers over the entire customer experience.

  6. Integrity matters in all aspects of a business. A business has to demonstrate integrity, reliability, and competency, just like a good sales team member. Integrity means doing what you say you’re going to do as a business, being responsive to changing needs, and making the right kind of promises to your target customer segment.

  7. Grow by helping customers rather than pushing a message. If you ask customers how you can help, you will uncover what matters most. This is more effective in directing their thinking and actions than selling technology. Well-crafted questions pull in customers. Good questions create change. Great questions can change the world.

  8. Emotional commitment precedes economic commitment. Don’t try to create a sense of urgency by appealing to greed. Your business and your team need to understand and demonstrate how your product connects precisely to what motivates your customer. These days, that includes a memorable total experience and testimonials from friends.

  9. Removing customer resistance takes persistence. All customers are prone to raising objections, because change is hard, there are many competitors, and decisions take time to make. As a new business trying to grow, you need to be able to isolate the toughest customer objections, and adapt your solution or business model to eliminate them.

  10. Looking for wrongs never makes you right. Every entrepreneur struggling with business growth has the urge to blame it on a lack of funding, an economic downturn, or unfair competitor. Instead, look for what has worked, and what you haven’t yet tried with your customers, to get it right. Focus on the real purpose that customers seek.
Businesses that think and act as a whole like their best sales people will build what their customers want and need, making everyone’s job a lot easier, and the customers a lot happier. That’s a recipe for business success that I recommend to every entrepreneur and professional.

Marty Zwilling
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Friday, March 15, 2019

5 Keys To Boosting The Performance Of A Business Team

Team-Performance-EvaluationIt takes an effective team to attract and serve a community in business these days. With real-time online reviews and feedback via the Internet, and instant relationships via social media, a voice from the top that is inconsistent with what is heard from the firing line defines a dysfunctional and noncompetitive company for today’s customer. Thus team makeup is the critical success factor.

A few companies seem to be leading the way in building and maintaining ultra-effective teams, sometimes called extreme teams. These include companies across multiple industry spectrums, notably NetFlix in entertainment, AirBnB in hospitality, and Whole Foods for groceries. I see the commonalities detailed well in the classic book, “Extreme Teams,” by Robert Bruce Shaw.

Shaw is a consultant specializing in team performance, and he brings real experience building and working with extreme teams in companies like the ones mentioned above. In my many years of experience in business, and recent work as a mentor to entrepreneurs, I have seen the business world change, and can relate well to his five success practices paraphrased here:

  1. Build the team from people with a shared obsession. The most effective teams are built from people with a strong sense of values and commitment, starting at the top of the company. Team members need to view their work as a calling, much more than a job, and embrace a higher purpose that shapes their collective thinking and behavior.

  2. When selecting members, value fit over experience. Companies with the best teams seek out candidates with the right mix of personal motives, values, and temperament to be a true team player. Cultural fit matters more than job history or functional skills. Those that have these traits are incented to join, and those who don’t are often paid to leave.

  3. Incent them to focus and always look to the future. Extreme teams are tightly aligned around the company’s top few priorities, while remaining open to new ideas. For team members, the ongoing challenge is figuring out what not to do. These teams are motivated to develop approaches to creatively explore new opportunities for growth.

  4. Let them deal with people performance, as well as results. Teams today need a culture of being simultaneously tough in driving for measurable results, and direct in support of individuals who best create an environment of collaboration, trust, and loyalty. Teams must openly deal with their own weaknesses and take action on underperformers.

  5. Embrace healthy conflict to avoid the comfort of stagnation. Members push themselves and each other to speak up, question the status quo, take bold risks, and confront hard truths. They recognize the value of being uncomfortable as a way to push thinking outside the box, and as a wakeup call when something is not working.

I recognize this is a revolution in the way most companies and employees work today, viewing work as a set of tasks with no passion, new members selected primarily on past experience and functional skills, and viewing conflict as something to be avoided or a sign of failure. They value harmony among members, and measure success as a function of the number of priorities concurrently managed.

Building and managing teams along the new lines outlined is not easy, and that’s why it’s a real competitive advantage when you do it. It takes a new kind of management team with a strong belief that a company can thrive with a larger purpose, total customer experience is critical to success, and the new generation of workers needs a new culture of passion and relationships.

As hard as it is to build extreme teams from the beginning, it’s much more difficult to turn around a failing or stagnant team. In fact, many would say that it’s impossible, without first replacing the top leaders and key team members in an existing organization. Thus, if you are a business leader who intends to survive and thrive in the long-term, it’s time to start today by checking the culture of your teams.

Your career and your company’s future depend on it.

Marty Zwilling

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Wednesday, March 13, 2019

10 Business Plan Tips Too Many Entrepreneurs Forget

pencil-business-plan-writingIf you want people to invest in your idea, then my best advice is first write a business plan, and keep it simple. Don't confuse your business plan with a doctoral thesis or the back of a napkin. Keep the wording and formatting straightforward, and keep the plan short. For minimum content, see my original article “These 10 Key Elements Make a Business Plan Fundable.”

The overriding principle is that your business plan must be easy to read. This means writing at the level of an average newspaper story (about eighth-grade level). Understand that people will skim your plan, and even try to read it while talking on the phone or going through their e-mail.

But don't confuse simple wording and formats with simple thinking. You're keeping it simple so you can get your point across quickly and effectively to team members and investors. With that in mind, here are some specifics that bear repeating, updated from a classic article on simple plans by Tim Berry:

  1. Keep the plan short. You can cover everything you need to convey in 20 pages of text. If necessary, create a separate white paper for other details and reports. The one-page Oprah plan is a good executive summary, but it’s not enough to get the investment.

  2. Polish the overall look and feel. Aside from the wording, you also want the physical look of your text to be inviting. Stick to two fonts in a standard text editor, like Microsoft Word. The fonts you use should be common sans-serif fonts, such as Arial, Tahoma or Verdana, 10 to 12 points.

  3. Don't use long complicated sentences. Short sentences are the best, because they read faster, and reader comprehension is higher in all audiences.

  4. Avoid buzzwords, jargon and acronyms. You may know that NIH means "not invented here" and KISS stands for "keep it simple, stupid," but don't assume anybody else does.

  5. Simple straightforward language. Stick with the simpler words and phrases, like "use" instead of "utilize" and "then" instead of "at that point in time."

  6. Bullet points are good. They help organize and prioritize multiple elements of a concept or plan. But avoid cryptic bullet points. Flesh them out with brief explanations where explanations are needed. Unexplained bullet points usually result in questions.

  7. Don’t overwhelm the plan with too many graphics and flashy colors. Pictures and diagrams can effectively illustrate a point, but too many come across as clutter.

  8. Use page breaks to separate sections. Also to separate charts from text and to highlight tables. When in doubt, go to the next page. Nobody worries about having to turn to the next page.

  9. Use white space liberally, spell-checker, and proofread. Include one-inch margins all around. Always use your spell-checker. Then proofread your text carefully to be sure you're not using a properly spelled incorrect word.

  10. Include table of contents. No investor likes searching every page for key data, like executive credentials, or exit strategy. Most word processors these days can automatically generate a table of contents from your section headings. Use it.

Investors hear from too many entrepreneurs that envision a great business opportunity, but don’t have any written business plan at all. They think they can talk their way to a deal. It won’t work. On the other end of this spectrum are entrepreneurs who present long product specifications with a few financials at the end. This is a failing strategy as well.

If you're not the type who can connect with people based on a simple message, told succinctly, then hire someone who can. In fact, simplicity and readability is one of the most effective strategies for selling even the most complex proposal. A business plan that is easily understood and looks professional is already half sold. Simple is not stupid.

Marty Zwilling

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Monday, March 11, 2019

How To Focus On Relationships To Maximize Your Brand

Loyalty_One_logoBrands are people first. Customers are people too, so customers tend to take their relationship with a brand personally. Thus it’s not a surprise that people love their favorite smartphone brand, cringe when you mention their cable company, or even hate the mention of a particular bank.

Startups, as well as every existing business, need to realize that this brand perception is becoming more and more driven by their relationships with customers, as well as feedback from other customer brand relationships, made visible on social media and Internet websites like Yelp and Foursquare. Proving the new model today are sites like Patagonia and Zappos.

According to Chris Malone and Susan T. Fiske, in their classic book “The Human Brand,” humans are very perceptive, from early survival evolution, and make quick judgments about other people’s intents toward them (warmth), and the capability of carrying out intents (competence). Thus your brand (people) needs to project both warmth and competence, for loyalty today.

But how do you know if your brand is projecting warmth and competence to your customers? Here are some key signals, outlined by Malone and Fiske, which I believe every startup founder and business leader should evaluate in their own business to see if their brand is positive:

  1. The loyalty test. For loyal customers, a business has to first demonstrate genuine warmth, concern, and commitment. Selling to loyal customers is 3 to 10 times cheaper than acquiring new customers. Go beyond loyalty expectations, and you can turn loyal customers into passionate advocates who actively recommend your company to others.

  2. The principle of worthy intentions. This principle is a relationship building strategy that involves attracting and keeping customers by consistently putting their best interests ahead of those of your company or brand. Competence alone won’t ensure loyalty. Only the emotional connections of worthy intentions has the power to change minds.

  3. The price of progress. Faceless commerce these days leads to a focus on discounts. Discounts are viewed as less-than-worthy intentions, and do not buy loyal customers. Every website must offer more than one-way commerce and discounts. It must also offer interactive relationships, and warmth and competence, through worthy intentions.

  4. Take us to your leader. Customers today have a primal desire to judge brands by the people behind the brand, most notably the CEO. Customers look for transformational rather than transactional leaders, who inspire employees to exert the extra effort on customers’ behalf. Leaders need to come out from behind their curtain.

  5. Show your true colors. Mistakes and crises are a golden loyalty opportunity. We are apt to forgive when we feel empathy for an offending partner. Customers watch and judge whether people or profits come first. A brand spokesperson can show worthy intentions, or can deflect blame and take a narrower more self-serving view.

Today’s business market exists in the renaissance of relationships. Perception is reality, and businesses can no longer hide behind their brand. Transactions move faster and mistakes happen faster, with customers able to watch for warmth and competence, or no worthy intentions. Here are key imperatives, sanctioned by Malone, Fisk, and myself, to keep you on the right track:

  • Become more self-aware. On-going self-awareness is a crucial competency of every brand and every business leader. Don’t be afraid to ask customers the direct questions – do you see us as warm and trustworthy, as well as competent and capable? Then listen with an open mind and genuine interest, and be willing and able to change.
  • Embrace significant change. Change is now the norm, so no change over a period of time is actually moving backward. Companies and brands must shift from a mentality of control, defensiveness, and unresponsiveness to one that is more open to understanding how they are perceived, and to adopt change as a good thing, rather than a problem.
  • Fundamentally shift priorities. Lasting change requires a sincere examination and adjustment of the goals and priorities that have led companies astray in the first place. Sustained success in the future will require companies to dramatically shift their emphasis from short-term shareholder value to shared value for multiple stakeholders.

Overall, your customers now have near-instantaneous power to hold companies and brands accountable for their words and actions. That power will continue to grow in the years ahead. Is your brand ready to flourish in that environment, or highly at-risk for any slight misstep?

Marty Zwilling

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Sunday, March 10, 2019

7 Facts Of Business Life People Learn From Experience

facts-of-lifeWhen I started mentoring entrepreneurs and startups a few years ago, I anticipated that I would get mostly tough technical questions, but instead I more often hear things like “Where do I start?” I find that the basics are actually the hardest to answer, just like your parents found out when they first tried to fill you in on the “facts of life” a long time ago.

Most entrepreneurs are not born with the knowledge to run a successful business, so the right place to start is some business training in school, or some practical work experience in a business of your interest, prior to starting your own company. Jumping into a business area you don’t know, because you see a chance for big money, is a surefire path to disaster.

I also found a wealth of books are available to address the basic facts of business life, like the classic by Bill McBean, aptly named “The Facts of Business Life,” based on his forty years running large and small businesses. Bill does a great job of outlining the key realities as follows:

  1. If you don’t lead, no one will follow. Good business leadership begins with defining both the direction and the destination of your company. That’s where you start. From there you need to hone a whole set of skills to survive and prosper, including effective communication, leadership under pressure, and constant adaptation to change.

  2. If you don’t control it, you don’t own it. Control in business requires teamwork, which occurs in successful companies when team members, products, and processes work in unison. You have to define the key tasks that must be handled every day, and institute the proper controls to make sure they happen effectively and consistently.

  3. Protecting your company’s assets must be your first priority. Assets include the obvious equipment, accounts receivable, and cash. Maybe more importantly, your long-term survivability is tied to intellectual property, like trade secrets and patents, as well as other less tangible items like your customer base, your experience, and your skills.

  4. Planning is about preparing for the future, not predicting it. Planning is not just an early-stage activity, but must be an ongoing activity, based on current accurate information as well as educated guesses on future changes. Planning should keep you focused on what’s important, and prepare you for what lies ahead.

  5. If you don’t market your business, you won’t have one. Marketing and advertising are business realties. Word-of-mouth and viral are not long-term solutions. It doesn’t matter how good your product or service is if most of your potential customers don’t know about it. With 200,000 new websites per day, customers won’t find you by accident.

  6. The marketplace is a war zone. Every company has competitors, or there is no market for what you offer. Successful entrepreneurs know they have to fight not only to win market share, but to retain it as well. Past success is no guarantee of future success, and the only way to remain successful is to maintain a fighting mentality.

  7. You don’t just have to know the business you’re in, you have to know business. Understanding one’s industry is necessary but not sufficient to be successful. Many businesses fail simply because they ignore or do poorly one or more of the basic aspects of every business, like accounting, finance, personnel, or business law.

In business, as with people, there is a life cycle of birth, constant maturing, change, and rebirth. Entrepreneurs are ultimately responsible for guiding their business through this life cycle, rather than getting suck in any one stage. This means the entrepreneur has to focus correctly not only on what is important, but also on when it’s important.

Before you start building a business, you really do need to know the basic concepts of leadership, management, and operations, and you need to know how these areas change as a business goes through its life cycle. These are the “street smarts” that many entrepreneurs try to acquire by fast talk and bravado. That’s a painful and expensive way to learn any facts of life.

Marty Zwilling

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Saturday, March 9, 2019

9 Strategies For Maximizing Your Social Media Impact

social-media-impactIf you are an entrepreneur these days, or trying to grow an existing business, everyone is telling you that you need to use social media. There are many ‘experts’ out there telling you how to do it, or even offering their services. But very few are talking about how to measure your results and return on investment (ROI), and the right metrics for optimizing your marketing environment.

Jim Sterne, who has written many books on Internet advertising, marketing, and customer service, tackled this complex world of social media metrics in a classic book titled simply "Social Media Metrics." He has one of the first books on this subject, and he breaks the process down into nine key activities, as follows:

  1. Get focused and identify goals. Social media is the realm of public opinion and customer conversations. If you don’t have a clear idea of why you are there, anything you measure will be useless. He suggests you begin with the “big three” business objectives of higher revenue, reduced costs, and improved customer satisfaction.

  2. Get attention and reach your audience. Measuring message delivery in social media is a lot like measuring it in classic advertising, so classic metrics apply. With social media, it is also important to identify how many people see your message as remarkable. That leads to the extra reach of word-of-mouth, commenting, and telling their friends.

  3. Measure respect and find influencers. Your task now includes reaching the people who are key influencers, and understanding their impact. Therein lies the multiplier effect. Your message multiplier velocity and reach are the signals that your offerings have the right scope, spread quickly, and resonate with your target audience.

  4. Track the emotional sentiment. Counting is fine, but analyzing the outpouring of millions of souls can reveal attitudinal shifts. Tracking public sentiment over time provides invaluable insight and gives you the chance to stay right on top of changes in the marketplace and your organization’s brand equity.

  5. Measure customer response and action. If they read it and like it, do they click through to your web site, or engage with your organization in new and different ways? Action is when people are drawn into a profitable and sustainable relationship with your company. That’s where the money is.

  6. Get the message from your customer. With the customer in control, you need to make sure you are getting the right message from the right people at the right time. That’s real-time market research, and you need to measure how well you are hearing it and acting on it in your business strategy planning.

  7. Drive business outcomes and get results. Now it’s time to cycle back around to measuring what sort of business impact your efforts are having. Measure to see if you have an increase in revenue, a lowering of costs, and improvement in customer satisfaction. Then it’s time to re-examine your goals to look beyond the “big three.”

  8. Get buy-in from your colleagues. Some executives are slow to understand and embrace new communications methods. Use your results to convince them that social media is a vital part of your marketing mix, and deserves the resources necessary for proper implementation and measurement.

  9. Project the future. Start now to look at where social media will be in two to ten years, and prepare for it. Don’t let the changes takes your organization by surprise, or allow your organization to be the last to implement and measure you in the new world.

The tools to help you with all these actions are still evolving. You can scan the Internet for the many offerings to gather data, but the evaluation of the ‘why’ behind the results is still largely manual. That’s the insight you need to support your efforts to reach higher performance goals. The sooner you find these insights, the quicker you can make better decisions to positively enhance your bottom line.

Marty Zwilling

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Friday, March 8, 2019

7 Lessons From Airbnb and Uber On Customer Values

airbnb-customer-valuesContrary to popular myth, to be a disruptive new businesses, you don’t always need an innovative new technology to win. Many notable recent successes, including Airbnb and Uber, have done it by finding disruptive customers, with essentially no new technology. They seek customers willing to decouple from accepted buying models, or are actively looking for a better total experience.

These customers, and they are becoming the norm these days, are ones actively looking for new ways to discover, buy, or use a product they need, and won’t hesitate to break the single-source company link between these activities. They have no problem shopping in retail to see and test items, yet order online for a better price, and jump to another company for add-ons or support.

As a new business, you need to intimately understand today’s customer value chain, to allow you to peel away a piece for your business from the Hiltons, Yellow Cabs, and the General Motors of the world. I found some real guidance on this challenge in a new book, “Unlocking the Customer Value Chain,” by Thales S. Teixeira, based on his recent Harvard Business School research.

From his work with many new companies that have made it big, even without disruptive new technologies, he offers the following seven lessons that I, as a long-time entrepreneur advisor, believe every new business founder should take to heart:

  1. Focus on acquiring an initial customer set in bulk. Acquiring users one by one takes too much cost and time. As a startup, you need to build a large customer base quickly, as Airbnb did with social media work around oversubscribed big-city conferences. Uber used promotion of major sports events and concerts, where masses of people sought rides.

  2. Hit competitors where they are vulnerable. Don’t put yourself in the crosshairs of established incumbents, or directly target their customers. Instead seek out customers they can’t or won’t serve. Uber and Airbnb managed to remain “under the radar” of the giants by snatching up excess demand until they had their own foothold in the market.

  3. Don’t be afraid to start with less-scalable tactics. To launch a disruptive business, focus on more people-intensive tactics that yield insight into customers and their needs, no matter how small the impact might be at first. Scale should only be a concern later in your company’s lifecycle. If you lack customers early on, you have nothing to scale.

    Large tech companies, like General Motors, tend to obsess over building only scalable strategies, like a dealer network. Their view is that if it doesn’t work for millions of customers, it is a poor investment. Tesla quickly built their base by eliminating dealers.

  4. Build your supplier base before early customers. Your initial customers are critically important, yet their relationship with you is extremely fragile. Without suppliers, the customers walk away. For two-sided marketplaces, focus on acquiring supply-side offerings, like Airbnb rooms, before going to the demand side (people needing rooms).

  5. Capitalize on offline and low-cost strategies. Tech startups tend to dismiss offline customer acquisition strategies, such as organizing events, creating on-the-ground operations, or incentivizing users to promote their services. Birchbox was able to make big money only after turning off television advertising and relying heavily on social media.

  6. Favor operations over technology to prove it works. For your disruptive business to succeed, it needs to work, plain and simple. Early on, you cannot expect technology to recognize problems and be flexible enough to quickly adapt as you learn.

    Uber thus went door-to-door to get its first drivers to sign up. Airbnb did the same for its renters, and convinced people to list their homes. Employees went out of their way to find a person to rent each home. Only later was technology used to accelerate the process.

  7. View your business only through customer’s eyes. As your new business is seeking customers, you have to maintain the customer’s point of view at all times, making operational adjustments quickly to lower customer effort, time, and monetary costs. This holds doubly true if you have an online marketplace, with disparate customer groups.

I’m convinced that finding disruptive customers and new business models is often more important to creating a new business than new technology. Thus it’s critical to target your customers well, understand how their value chain can be decoupled, and work to deliver unique value compared to competitors. In the end, it is your customer, not your company, who drives disruption.

Marty Zwilling

*** First published on Inc.com on 02/22/2019 ***

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