Sunday, June 30, 2019

10 Keys To A Startup Surviving The First Five Years

frustrated-business-ownerThe “valley of death” is a common term in the startup world, referring to the difficulty of covering the negative cash flow in the early stages of a startup, before their new product or service is bringing in revenue from real customers. I often get asked about the real alternatives to bridge this valley, and there are some good ones I will outline here.

According to my experience and a this Motley Fool article, the challenge is very real, with around half of all new businesses no longer existing after five years. The problem is that professional investors (angels and venture capitalists) want a proven business model before they invest, ready to scale, rather than the more risky research and development efforts.

My first advice for new entrepreneurs is to pick a domain that doesn’t have the sky-high up-front development costs, like online web sites and smart phone apps. Leave the world of new computer chips and new drugs to the big companies, and people with deep pockets. For the rest of us, the following suggestions will help you survive the valley of death:

  1. Accumulate some resources before you start. It always reduces risk to plan your business first. That includes estimating the money required to get to the revenue stage, and saving money to cover costs before you jump off the cliff. Self-funding or bootstrapping is still the most common and safest approach for startups
  1. Keep your day job until revenue starts to flow. A common alternative is to work on your startup on nights and weekends, surviving the valley of death via another job, or the support of a working spouse. Of course, we all realize that this approach will take longer, and could jeopardize both roles if not managed effectively. Set expectations accordingly.
  1. Solicit funds from friends and family. After bootstrapping, friends and family are the most common funding sources for early-stage startups. As a rule of thumb, it is a required step anyway, since outside investors will not normally consider providing any funding until they see “skin in the game” from inside.
  1. Use crowd funding. The hottest new way of funding startups is to use online sites, like Kickstarter, to request donations, pre-order, get a reward, or even give equity. If your offering is exciting enough, you may get millions in small amounts from other people on the Internet to help you fly high over the valley of death.

  1. Apply for contests and business grants. This source is a major focus these days, due to government initiatives to incent research and development on alternative energy and other technologies. The positives are that you give up no equity, and these apply to the early startup stages, but they do take time and much effort to win.
  1. Get a loan or line-of-credit. This is only a viable alternative if you have personal assets or a home you are willing to commit as collateral to back the loan or credit card. In general, banks won’t give you a loan until the business is cash-flow positive, no matter what the future potential. Nevertheless, it’s an option that doesn’t cost you equity.
  1. Join a startup incubator. A startup incubator is a company, university, or other organization which provides resources for equity to nurture young companies, helping them to survive and grow during the startup period when they are most vulnerable. These resources often include a cash investment, as well as office space, and consulting.
  1. Barter your services for their services. Bartering technically means exchanging goods or services as a substitute for money. An example would be getting free office space by agreeing to be the property manager for the owner. Exchanging your services for services is possible with legal counsel, accountants, engineers, and even sales people.
  1. Joint venture with distributor or beneficiary. A related or strategically interested company may see the value of your product as complementary to theirs, and be willing to advance funding very early, which can be repaid when you develop your revenue stream later. Consider licensing your product or intellectual property, and “white labeling.”
  1. Commit to a major customer. Find a customer who would benefit greatly from getting your product first, and be willing to advance you the cost of development, based on their experience with you in the past. The advantage to the customer is that he will have enough control to make sure it meets his requirements, and will get dedicated support.

The good news is that the cost for new startups is at an all-time low. In the early days (20 years ago), most new e-commerce sites cost a million dollars to set up. Now the price is closer to $100, if you are willing to do the work yourself. Software apps that once required a 10-person team can now be done with the Lean Development methodology by two people in a couple of months.

The bad news is that the valley’s depth before real revenue, considering the high costs of marketing, manufacturing, and sales, can still add up to $500K, on up to $1 million or more, before you will be attractive to angel investors or venture capital.

In reality, the financing valley of death tests the commitment, determination, and problem solving ability of every entrepreneur. It’s the time when you create tremendous value out of nothing. It’s what separates the true entrepreneurs from the wannabes. Yet, in many ways, this starting period is the most satisfying time you will ever have as an entrepreneur. Are you ready to start?

Marty Zwilling

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Saturday, June 29, 2019

10 Ways To Make Your Business Memorable With A Story

Chad-Hurley-YouTubeThe entrepreneur’s challenge is to effectively communicate their value proposition, not only to customers, but also to vendors, partners, investors, and their own team. Especially for technical founders, this is normally all about presenting impressive facts. But in reality facts only go so far. Stories often work better, because humans don’t always make rational decisions.

Most people care the most about the things that touch, move, and inspire them. They make decisions based on emotion, and then look for the facts that support these decisions. Thus it behooves every entrepreneur to learn how to craft stories from their personal experience and the world at large that make an emotional connection, as well as tie in the facts.

I like the point from the classic book “Tell to Win: Connect, Persuade, and Triumph with the Hidden Power of Story,“ by Peter Guber, a thought leader on this subject and long-time business executive. He asserts that everyone today, whether they know it or not, is in the emotional transportation business, and compelling stories are the best way for you to move your business forward.

More importantly, he provides the insights and guidance that we all need to do this effectively. I have extracted these ten basic principles for telling the right story, at the right time, and telling it right:

  1. Select the right story for the right audience. The most successful story tellers are also attentive story listeners. They understand that it’s more important to be interested in their listener than to appear interesting. What does the audience want and need? Armed with this insight, you can tailor a story that will achieve both your goals.
  1. Choose when the listener will be receptive. Getting to know your audience also means figuring out the place and time where they will be most receptive and least subject to interruption or distraction. They need to be able to give you your full attention, so you need to look, listen, and locate their optimal context.
  1. Finding the source material for good stories. The key is not to expect to find a story fully born, perfectly framed, and read to be told, but to constantly stockpile fragments and metaphors that have the potential to become stories. The most effective story material comes from firsthand experience, infused with your personal feelings and emotions.
  1. Make sure your call to action resonates. Every story needs something that will move the audience emotionally to hear your call to action. This may mean finding a hero or a villain in the story, showing your real passion and emotion, or describing the excitement and fear of others.
  1. Get in the right state for your story. Getting in state isn’t just a mental, emotional, or physical process; it’s all three. This state is vital to telling a story because reading your intention is what signals listeners to pay attention to you. Intentions speak louder than words. Train both your body and your mind on your clear intention to succeed.
  1. Tell the story with authentic contagious energy. Like intention, authenticity and energy cannot be faked. If you are telling a story you don’t believe in, your audience will sense it instantly. The good news is that they will pick up just as instantly on your genuine enthusiasm and conviction.
  1. Demonstrate vulnerability and perseverance. Everyone has something in common with every other person, so open up and expose your fears and concerns, allowing others to do likewise. The trick to perseverance is not to eliminate fear, but to use it to ramp up your energy, heighten your passion, and intensify your sense of urgency.
  1. Make the story experience interactive. You can make any business story more memorable, resonant, and actionable by asking for input or a response during the story, or getting an emotional interaction. Engage the audience physically or verbally, which makes them feel like part of your story, and that they have a stake in the outcome.
  1. Engage the senses of your audience. Scientists tell us that words account for only the smallest part of human communication. The majority is nonverbal, more than half based on what people see and more than a third transmitted through tone of voice. The more the audience feels the story in their bodies, the more positive they will react to it.
  1. Listen actively with all your senses. Even when you make the story a dialogue, rather than a monologue, how you listen as a teller is as important to your success as the actual words you speak. You must listen to gauge emotions, attention, and interest – moment to moment. More engaged listeners will be more likely to heed your call to action.

Examples of great storyteller entrepreneurs include Howard Schultz, founder of Starbucks, and Chad Hurley, founder of YouTube. Both demonstrated many times the ability to turn “me” into a “we,” by being able to tell a story that shined the light on an interest, goal, or problem that both the teller and the listener shared. That connection ignited empathy, secured trust, and gathered commitment to the call to action.

Stories have been used since the beginning of time to share knowledge, history, and ideas. Sure they contain facts, but often emotion is what makes them work. How often do you get beyond the facts in your pitch to customers and investors? If you want to kick your business up a level, maybe it’s time to add some stories to your message.

Marty Zwilling

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Friday, June 28, 2019

5 Keys To Business Culture That Are Counter-Intuitive

Positive-business-cultureIn the popular press, it’s easy to find articles that will convince you that companies with a good culture, such as Google, do it by lavishing perks and benefits, including some combination of free meals, trips and parties, financial bonuses, gyms, and a dog-friendly environment. These things are clearly good for morale, but its not so clear that they translate into a competitive advantage.

In my own years of experience as a business advisor, improving the company culture is still a major challenge to company leaders, many of whom were raised in a different era, or struggle trying to balance the rising costs of perks and benefits against measurable growth in productivity and profits. They are still looking for key leadership feedback that culture is driving their business.

I was pleased to find some specific guidance in this regard in a new book, “Five Frequencies: Leadership Signals that turn Culture into Competitive Advantage,” by the team of Jeff Grimshaw, Tanya Mann, Lynne Viscio, and Jennifer Landis. These authors present 20+ years of research, including case studies and metrics, showing how culture really makes or breaks your business.

I have found that while many of their lessons may seem obvious, others are not so intuitive. Here are a few that I found insightful, and consistent with my own observations:

  1. Heated debates are a good thing for a healthy culture. I don’t encourage conflict for its own sake. But I’ve learned that heated debate is a good thing, when you are not afraid to voice dissenting opinions and able to understand opposing views. It creates ownership and engagement that may be missing with consensus decisions or management edicts.

    To make sure all debates stay healthy, always make sure the discussions are facilitated and limited in scope and time, to prevent wandering off subject and redundancy. Disparagement of a team member’s character is always inappropriate and toxic.

  2. Leaders own culture, supported by HR – not vice versa. Human Resources and other support functions can provide invaluable feedback and support, but if you count on them to move the needle on culture, it won’t work. Leaders must initiate and model culture shifting efforts – it’s not something you can delegate.

    HR leaders are your culture coaches, and responsible for aligning managers and employees with the desired culture. They can foster a sense of ownership for the culture, measure progress, and assess accountability throughout all levels of the company.

  3. What the team feels is more important than what they know. One of your most important culture responsibilities is making your employees feel truly valued on a regular basis despite internal fears and conflicting feedback from their peers. Feelings are known to statistically produce the biggest impact on future performance, as well as morale.

    Knowing things intellectually is easily overridden by emotions, even in the best of times. In addition, most business knowledge, such as the reason for a lost sale, is subject to interpretation. A positive culture of trust is required to neutralize uncertain feelings.

  4. It’s easier to go from bad to good, than from good to great. When things are bad and failure is not an option, leaders really focus on doing the right thing. But when a great culture is a desire rather than a must have, it’s easy to get distracted by other things, such as operational improvements. During these periods culture often is lost.

    The famous author, Jim Collins, in his Good to Great discussions, points out that you as the driver can only go so far, without the right people in all the key seats. Getting those key people, including hiring, training, and coaching takes a long time to accomplish.

  5. Ongoing culture steps require tuning of measurements. All your efforts to improve the culture may be moot if you don’t continually hone your ability to measure results and respond to feedback. Nothing frustrates employees more than continuing to provide the same feedback time after time in engagement surveys while nothing appears to change.

    For example, the questions on your engagement survey will surface the initial set of challenges, but once those are addressed, you need different questions to get to the next level. Measuring and tuning culture is an iterative process, integrating business results.

The overall approach to culture change that I and the authors recommend is to first assess your current culture for a liability, or a competitive disadvantage. Start with addressing specific things that your team needs to more consistently know, feel, and do. I assure you that when you measure and strengthen culture along these lines, better business performance follows.

Marty Zwilling

*** First published on Inc.com on 06/14/2019 ***

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Wednesday, June 26, 2019

5 Reality Checks On Running A Charitable Organization

Charitable-organization-startupA common misconception I often hear in the startup world is that non-profits are easy and safe, since they don’t have to pay taxes, and they don’t have to make a profit for their shareholders. In reality, from the feedback I get from non-profit executives, exactly the opposite is true.

Technically speaking, in the United States, a non-profit corporation or association is one which has been exempted from Federal income taxes by meeting the criteria set out Section 501(c) of the Internal Revenue Code, most notably religious, educational, and charitable entities like the Salvation Army. Other countries have similar exemptions for similar organizations.

Yet even a non-profit has to make a profit on everything it sells, in order to cover operating expenses (salaries, offices, equipment, research, travel, etc.), unless it relies wholly on donations. Even then, the business and leadership efforts to solicit and manage donations cost real money, and may be more difficult than the marketing and sales jobs of most startups.

Here are the common reasons I hear that make starting and running a non-profit actually more difficult than starting and running a conventional business:

  1. Creating a non-profit 501(c) business is a long and arduous process. You can start an LLC for-profit in less than a month, often for less than $100. A non-profit 501(c)(3) status requires filing IRS Form 1023. For a serious entity, the form must be accompanied by an $850 filing fee, and may take as long as two years to complete successfully.
  1. Investors are not interested in non-profits. Even non-profits usually require startup funds for facilities, people, and inventory. But because they can’t project excellent returns on investment, no investors will likely be interested. Also, they can’t sell shares on the stock exchange to raise money, even though both the NYSE and Nasdaq are non-profits. That means they need to grow organically, or find a philanthropist.
  1. Reputable non-profits need to keep their operating expenses low. This usually means keeping wages low, and no fancy facilities. Thus it’s hard to attract top-notch talent, premium locations, and first-class marketing campaigns. Managing volunteers, and running any organization with these constraints is a challenge.
  1. Results are always subject to public scrutiny. Most startups, as private companies, don’t have to disclose their salaries and spending habits to anyone other than the IRS. Non-profits have to answer to watchdog organizations like Charity Navigator for how much of their proceeds actually make it to the causes they proclaim to support.
  1. Some laudable non-profit missions are hard to sell to supporters. A common complaint from many non-profits is that both government and private funders would rather spend their dollars on ‘sexy’ causes such as children’s charities, cancer, and heart disease, rather than long-term causes like global warming and erasing hunger in Africa.

Unfortunately, misuse scenarios, like the lavish lifestyles of leaders and scams, have given the non-profit environment a bad name, making things even tougher. Even reputable organizations, supporting veterans, the police, firefighters or children, often raise eyebrows, with alarming real data like these from the America's Worst Charities report on a popular activist news website:

  • Kids Wish Network – 2.5% distributed cash aid from $137.9 million collected
  • Breast Cancer Relief Foundation – 2.2% distributed cash aid from $63.9 million collected
  • Firefighters Charitable Foundation - 7.4% distributed cash aid from $62.8 million collected
  • National Veterans Service Fund - 7.8% distributed cash aid from $70.2 million collected
  • Children’s Cancer Fund - 4.6% distributed cash aid from $43.7 million collected

These numbers vividly show that non-profits with good causes can fail to achieve satisfying results, in the same way that for-profit startups often fail, even with good products. Despite these challenges, my advice is still to follow your heart and your passion when starting a business.

You shouldn’t choose a non-profit, or a for-profit, because one seems easier, or one can make more money. Do it because you love the cause, the service, or the product, and the challenges will get lost in the satisfaction and results you achieve along the way.

Marty Zwilling

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Monday, June 24, 2019

9 Keys To Effective Communication In Today’s Business

Bulletin-Board-List-Business-StickiesWhen was the last time you changed how you communicate to your team and to your customers? The way you deliver your message is key to maximizing its impact, or even reaching the intended audience. Don’t count on people reading your Annual Report for breaking news. Your team needs to hear from you on a regular basis, on a channel they can relate to easily and quickly.

Thus, top business leaders now deliver requests to their team via text messages, and even expect updates from top national leaders via Twitter. As a business advisor, I still find owners and entrepreneurs who have never sent a business text message, written a blog, or produced a small video to update their constituents, or highlight a key message.

If you know someone in this category (including yourself), here are some key principles, from my own experience, that you can help me pass along for the benefit all of us:

  1. Every message must be keyed to your expected receiver. The limited channels for delivering a message have exploded in recent years, with social media, the Internet, and smartphones. Your team and customers will judge you by how timely and effectively you deliver the message. For example, I find that millennials rarely read emails or policies.

  2. Use professional wording and tone in all business messages. Even with the new channels, don’t forget that business is not casual for your constituents. Skip any urge to use abbreviations, slang, or emoticons. Make the context clear, and keep the content on point. People still expect separation between business and personal relationships.

  3. Build a communication culture of engagement and participation. The days of command and control are gone, and you can’t depend on your title and the management hierarchy to amplify and relay the message. For example, messages are better delivered these days via informal weekly “town hall” meetings, rather than official CEO updates.

  4. Minimize the use of meetings to communicate. Employees already spend up to 70 percent of their day in meetings, so meetings should be minimized and reserved for two-way decision-making opportunities, rather than delivering a message. With modern tools, you can deliver messages in a much more palatable format, without lost productivity.

  5. Use every message as an opportunity to highlight people. Everyone listens to messages where they expect to see and hear team members get recognized and rewarded. Even if you have bad news to deliver, try to couch it in the context of some positives and extraordinary effort. Always talk to the people, rather than about them.

  6. Remember, your actions speak louder than your words. It’s more important than ever that you be visible and approachable. Your team wants to feel comfortable that your actions are consistent with your message, and you are empathetic to their needs and feelings. Even customers these days expect to see and hear you online and in public.

  7. Pack each message with focused value to the recipients. People lose interest quickly receiving generic or irrelevant messages. Make sure every message you deliver is factual and valuable to your audience, and delivered in a compact and relatable fashion. Don’t try to pack multiple important messages into a single communication.

  8. Always communicate as a person, rather than a business entity. Real engagement depends on your team’s understanding of your commitment to them and what the business goals mean to you. Business names and brands are important from a marketing and consistency standpoint, but insiders, and even customers, want to be part of a family.

  9. Follow-up your message delivery with a question opportunity. By asking people for a personal perspective, or questions, you show inclusiveness and concern for people. In addition, their feedback and questions give you important information for follow-up and future actions. Overall, this is important to maintain engagement and relationships.

New communication tools have made great leaps forward in utility and potential impact, just like products. In addition, modern business leaders have raised the bar on employee and customer expectations. Just as you regularly update your products and processes, you need to enhance your communication style and tools to maximize your leadership. Your success depends on it.

Marty Zwilling

*** First published on Inc.com on 06/11/2019 ***

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Sunday, June 23, 2019

6 Clues To The Right Employees For Your New Venture

job-interview-innovationEntrepreneurs are usually highly creative and innovative, but many innovative people are not entrepreneurs. Since it takes a team of people to build a great company, the challenge is to find that small percentage of innovative people, and then nurture the tendency, rather than stifle it.

A few years ago I read a classic book “The Rudolph Factor,” by Cyndi Laurin and Craig Morningstar, which is all about finding the bright lights that can drive innovation in your business. The story most specifically targets big companies, like Boeing, but the concepts are just as applicable to a startup with one or more employees.

The core message is that real innovation and competitive advantage are more people-based than product or process-based. Every good entrepreneur needs a people-centric focus to ferret out creativity and innovation in his team, and to build a sustainable competitive advantage.

The authors observe that people who behave as mentors tend to have an uncanny ability to recognize and nurture people who have innate capabilities along these lines. Here are six of the characteristics they and you should look for:

  1. Problem solvers. Innovators are naturally creative and love new challenges. Some may appear a bit eccentric to people around them. They generally promote unconventional ways to solve problems and have an easier time than most at identifying the root cause of a problem.
  1. Passionate and inquisitive. These team members are passionate about their work and light up when talking about their role or a particular project they are working on. They often ask “Why?” even when it is not the most popular question to be asked.
  1. Challenge the status quo. They believe that questioning is of value and benefit to the organization. This is also how they discover what they need in order to solve a problem, so they aren’t rocking the boat just for the sake of rocking the boat.
  1. Connect the dots. Innovators have the ability to quickly synthesize many variables to solve problems or make improvements. To others, it may appear as if their ideas come out of the blue or that there is no rhyme or reason behind their thinking.
  1. See the big picture. They tend to be natural systems thinkers and see the whole forest rather than a single tree … or just the bark on the tree. They may express frustration if people around them are having conversations about the bark, rather than the forest.
  1. Collaborative and action oriented. They are not loners, and have the ability and confidence to turn their ideas into action. They act on their ideas, sometimes without knowing how they will accomplish them. The “how” is always revealed in time.

Your challenge is to go forth with this new awareness and thinking, to find and mentor those bright lights that will drive innovation and competitive advantage. The next step after finding innovators is to integrate them into your team. A key aspect is establishing a team-based culture that is a safe environment to share and execute ideas.

In fact, this safe and nurturing environment has to extend beyond a single team to the highest levels of the organization. It should embody a style of leadership that is essentially a commitment to the success of the people around you. That opens the door for anyone in the organization to lead from where they are, rather than waiting for management to “do something.”

Innovation is at the very heart of every successful startup. Everyone wins when you look at things very differently and wonder “why”, not “why not.” What better way to extend this power than to surround yourself with more highly creative people? Then you can make the world a place of possibilities, as well as probabilities.

Marty Zwilling

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Saturday, June 22, 2019

5 Keys To Growing What You Have Planted As A Startup

marketing-community-gardenHave you noticed that more companies beg you to participate in their business today? It started with an email survey on your last stay at their hotel, but now includes requests for online product reviews, to social media input on the design of future products. They do it because engaged customers become loyal advocates and buyers. Welcome to the “Participation Age” of marketing.

Some say it’s happening today because it’s new, and technology makes it possible. Others say it stems from Intrinsic Motivation Theory, which asserts that people have always been motivated by a desire to join, share, take part, connect, and engage, and find that experience rewarding. In any case, your business needs it today to rise above the crowd and edge out competitors.

If you want all the specifics, you must follow the new wave of marketing experts, like Daina Middleton, and her classic book “Marketing in the Participation Age.” I’m most intrigued by one aspect that I believe relates to every business - the move from a hunter-based metaphor to a gardening metaphor – nurturing what we have planted, based on the following five rules:

  1. Embrace test-and-learn values. That means constantly trying new marketing elements, understanding quickly what works, and immediately scaling, then moving on to the next alternative. Nurturing marketers reserve a minimum of 10 percent of their marketing budgets for testing and learning. It’s a dynamic customer environment out there.
  1. Innovate; don’t perfect. The nurture approach leverages from the best of the moment, quickly adding value before someone else does it first. The concept of continual innovation is crucial, because the best may not last long. Pick something that is good enough and embrace the flaw as an opportunity to learn. Adapt quickly and move on.
  1. Act quickly and motivate others, including participants, to act on your behalf. Motivate people, including your customers, to do something to improve your marketing today. Inspire your organization to act quickly and create an environment that rewards moving quickly. Estimate and act; because if you don’t, your competitors will.
  1. Mix and blend; don’t invent. Partner with others to create unique solutions that might benefit your brand, product, or solution. Choose an agency partner who is pushing the envelope and remember to consider technology, media, and creative opportunities. Look for elegant blends of all three, not an elegant single media solution.
  1. Embrace risks and champion failures. Prepare to learn from mistakes and accept that failures are inevitable in finding success. Partner with agencies that are willing to put skin in the game and get paid only if they deliver results. It often takes several failures to find opportunities that yield the best results.

In the current world of escalating change and information overload, marketing is not a luxury, and participative marketing can be the key to success, even for very technical solutions. We often see a mediocre product with effective marketing outperform a good product with little or poor marketing. Big marketing budgets alone and single blockbuster campaigns don’t assure results.

The message is simple. Ask your customers and partners for ideas, try them all, measure results, and scale up the ones that work. The participants, not the marketers, are in control, and they are demanding a relationship, not just a marketing message. If they don’t find value in the relationship, they move on. The choices and opportunities are theirs.

The situation is not unlike the attraction of current major social media sites, like Facebook, successful multiplayer game sites, like Activision, and today’s real world sports and politics. Gen-Y members were born participants, and they are a major force in every business domain. People thrive on continually learning, feeling empowered, and providing input to the world they live in.

So if you are a startup, or even a mature business, you need to nurture these intrinsic desires and develop more meaningful customer relationships that yield greater revenues. Marketing is no longer a one-way conversation. Does your marketing include listening as well as talking?

Marty Zwilling

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Friday, June 21, 2019

5 Elements Of Innovation That Are Not Product Related

Elon-Musk-non-product-innovationHaving a breakthrough idea or technology alone does not assure business success. “If we build it, they will come” may have worked as a movie theme for Kevin Costner, but as an investor, I tell entrepreneurs a great solution is not enough. Successful businesses require innovative people, who have built an abundance of innovation capital, to win support and resources for their ideas.

Professional investors are adept at looking for innovation capital, beyond the passionate pitch. Of course, the best evidence is you have done it before, and succeeded more often than you failed. That’s why Elon Musk, and a few others you could name, don’t have any trouble getting investor attention – they have the reputation and networks to successfully commercialize creative ideas.

I saw this message illustrated well in a new book, “Innovation Capital,” by Jeff Dyer, Nathan Furr, and Curtis Lefrandt, who all have excellent credentials in the real world of business, as well as the academic world, through their innovation consultancy and access to key business leaders. I like their summary of five key components of innovation capital that we should strive to maximize:

  1. Human capital: forward thinking, problem solving, persuasion. A key skill everyone looks for is your ability to engage in mental time travel to envision opportunities before others do. Then you need creative problem solving to come up with a solution, and the ability to persuade others of the viability and value, and to join you on the journey.

    You can enhance your human capital by constantly updating yourself on new trends, social movements, and new technologies, to get a sense of where things are headed. Commit time to thinking deeply about the future, focus on problem solving by first principles, and practice continuous learning in areas where you desire expertise.

  2. Social capital: influencers, leaders, investor relationships. Successful business innovators excel at networking, through both strong and weak social ties, to get the resources and support they need. They nurture connections to other innovators and entrepreneurs, financial benefactors, organizational leaders, and potential customers.

    Remember that in business, sometimes who you know is more important than what you know. You can always use more social connections, but to be effective, think through your networking objectives first, and categorize the contacts you already have. Use social media channels, as well as conferences, to develop and maintain relationships.

  3. Reputation capital: visible track record for innovation. What counts most here is that you have been a founder, rather than a contributor. You may have founded a new process, or built a reputation for innovation by taking on challenging and visible assignments, or by associating with prestigious individuals and getting their support.

    Reputation doesn’t come without favorable exposure. Many business owners I know are obsessed with countering any negative information, but don’t work on getting positive visibility and endorsements. They don’t highlight their scrappiness - their dogged spirit that allows them to get a lot done with a few resources – a great innovation reputation.

  4. Impression amplifiers: actions to get attention and credibility. Most impression amplifiers fall within one of these seven major categories: broadcasting, signaling, storytelling, materializing, committing, comparing, and creating scarcity. Successful innovators use these effectively for the power to influence the behavior of others.

    To amplify your impressions and win support for your ideas, you need to focus on a fundamental human need and make it personal. Elon Musk does this masterfully when he talks about SpaceX going to Mars to assure the future of mankind, and learn about the origins of life. Then he commits that he intends to be among the first to move to Mars.

  5. Innovation leadership: vision, inspiration, attracting talent. Investors and others look for evidence of the virtuous cycle of innovation leadership – a lofty vision attracts better talent, producing better products and memorable customer experiences, attracting key customers, building a stronger brand, which attracts the best talent. The cycle repeats.

    Jeff Weiner of LinkedIn has always talked about the company vision to connect everyone on the planet and to “create economic opportunity for the global workforce of three billion people.” As you create an innovative product, put an equal effort into a compelling vision.

It’s time for all you entrepreneurs and business professionals to take stock of your own situation and decide if you have the innovation capital to win the support you need from bosses, colleagues, partners, and investors, for your next breakthrough idea or invention. If not, now you know the places to start. We need you, and I’m convinced we all win when you win.

Marty Zwilling

*** First published on Inc.com on 06/07/2019 ***

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Wednesday, June 19, 2019

5 Key Attributes That Foretell New Venture Survival

business-successEvery startup wants to be a predictable success, yet so few ever achieve this enviable position. In reality, getting there is not a random walk, and requires an understanding of the stages that every business must navigate and the organizational characteristics necessary at each stage.

Les McKeown, in his book from a while back, “Predictable Success” outlines these stages and characteristics for any business. He points out, for example, that every business should anticipate the early struggle stage, a possible fun stage, and probably a turbulent whitewater phase, before they can hope for the predictable success stage.

This predictable success stage is defined as a point where you can set and consistently achieve your goals and objectives with a consistent, predictable degree of success. Unlike previous stages, where you may not know how or why you have survived, you now know why you are successful, and can use that information to sustain growth in the long term.

His studies show that companies at this stage show five key characteristics, which I believe every startup should strive to achieve from the very beginning:

  1. Decision making. The ability to readily make and consistently implement decisions. You need a sense of flow – decisions are made without the decision-making process placing a burden on the organization, or the leader. Decision making is delegated and decentralized, freeing management to concentrate on what they can do best, rather than micromanaging others.
  1. Goal setting. The ability to readily set and consistently achieve goals, and really being in control. It has to happen seamlessly, as part of the day-to-day operation of the business, not as the resource-sucking, do-it-at-the-last-minute event that it is in so many organizations. Goals are hit more than missed, and people are willing to take timely, corrective action.
  1. Alignment. Structure, process and people are in harmony. Otherwise, a lot of time and energy is expended by people because they have to manipulate the organization’s processes and/or structure in order to get things done. There is just the right amount of process and structure to efficiently get the job done.
  1. Accountability. Employees become self-accountable, in addition to being externally accountable to others. When empowered to make decisions of genuine import about their own jobs and responsibilities, and given the resources and freedom required, each employee personally buys in to the overall success.
  1. Ownership. Employees take personal responsibility for their actions and outcomes. This results is everyone pulling together, rather than by the manager group constantly “pushing.” There is a deep sense of co-dependency, where managers are dependent on their teams for delivering, and employees are dependent on managers for guidance.

As challenging as it may seem to achieve these characteristics in your business, the bigger challenge is to retain them for the long haul. Many businesses slowly slide into a treadmill stage, where they become over-systematized, or on toward the big rut where creativity disappears (“the way we have always done thing”), on into the death rattle, where the market moves faster than the company.

As a startup, you need to walk before you can run. That means starting early to practice and implement the techniques that will lead to predictable success. Remember that the lynchpin of the entire framework comes down to your own personal ownership and self-accountability. There is no room here for excuses or half-way efforts.

Marty Zwilling

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Monday, June 17, 2019

5 Reasons Business Leaders Are Short On Relationships

short-on-relationshipsIf you are a business professional or owner today, success is more and more about relationships. People relationships are the key to career growth, more than results, and customer relationships build brands, rather than the other way around. In this era of communication overload with many misleading messages, we have learned to count first on the people we know well, even virtually.

In fact, I believe that for all of us, relationships are our most important asset. Yet I find in my business advisory activities that busy entrepreneurs and professionals, especially the introverts like me, find it hard to spend the necessary time networking and nurturing the relationships they need to get ahead. The result is slow growth, frustration, and exhaustion, rather than success.

I recently saw some real insight on the barriers to building relationships, and how to get around them, in a new book, “Success Is in Your Sphere,” by Zvi Band. He has a proven track record, despite being an introvert himself, of building and managing relationship-oriented businesses and tools, and is now a well-recognized speaker and writer on this subject.

Here is a summary of the barriers we both still see all too often in the business world, with some thoughts on how to overcome them:

  1. Many fear human limits in number of relationships. It’s true, we all have limits on the number of relationships we can manage. According to studies, intimate relationships are limited to about five, but most people can easily handle 50 to 150 or more professional ones, if they work at it. That’s more than enough to put you ahead of your competition.

    In fact, you can get far beyond that number if you take advantage of the tools, process, and technology out there today, such as social media, text messaging, email, customer relationship systems (CRM), and discipline yourself to prioritize relationship building.

  2. Most let existing relationships decay over time. That’s a natural human reaction to accepting new relationships, as required by normal daily activities. The challenge is to continually refresh important old ones, and to proactively add key new ones on a regular basis. Busy business professionals often tell me they are too busy to allow networking.

    I recommend setting aside some time each week for networking, including phone calls to key advisors, lunches, emailing follow-up to contacts, and regular attendance at business and industry events, to reconnect to old relationships, as well as build new ones.

  3. Our social and relationship needs change as we age. The general trend shows an increase in relationship network size during adolescence and young adulthood, but a “continuous decrease” afterward. Many business professionals also feel more confident about their own knowledge and abilities over time, so tend to rely on fewer relationships.

    Don’t forget that the world of business and technology is changing rapidly around you, so the ability to change and keep up is becoming more and more the key to your success. Top business executives, including Warren Buffett and Bill Gates, are always proactively seeking new relationships in areas that are relevant to their business interests.

  4. Good relationships are harder to decipher than ever. First of all, the age of the Internet makes every relationship search a global affair, with thousands of candidates. The good news is the wealth of alternatives; the bad news is the time and effort required to select the right relationship, and then keep it going. Sorting it all out is the challenge.

    Fortunately we have Facebook, Skype, and other social media, with video, voice, and easy travel to help you build and maintain connections, anywhere in the world. Smart professionals use these facilities to hone their perspective, and get the help they need.

  5. Short-term thinking overwhelms long-term value. As humans, we are instinctively wired to prefer short-term gains to long-term benefits. Some of your best potential relationships may take years to bear fruit, which poses a challenge when we’re predisposed to urgent issues rather than long-term strategies and future opportunities.

    My advice in business is to adopt a portfolio strategy for relationships, as you would as an investor in stocks or startups, with the understanding that there will be winners and losers over time, as the world changes. Don’t just invest in the passion of the moment.

The message here is that relationships are your key business asset, and not just an ancillary pleasure or burden. Keep them high on your priority list, and work every one with key tools and discipline. When leveraged properly, relationships can be your most effective sustainable competitive advantage in growing your business or your career. Make the investment today.

Marty Zwilling

*** First published on Inc.com on 06/03/2019 ***

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Sunday, June 16, 2019

7 Societal Changes That Invite New Venture Innovation

Génération_ZIf every entrepreneur could predict the future, starting the right new business would be easy. Since my experience and interests have been primarily with technology, I’ve been watching those trends for a long time, and I see rapid change, but predicting impact is a challenge. Recently I’ve changed my focus a bit to people demographics, and I find the implications a bit more concrete.

In fact, I was impressed with the classic book, “Upside: Profiting from the Profound Demographic Shifts Ahead,” by Kenneth Gronbach, which is full of specific facts on demographic changes over the past few years, and what they mean for some of the major business segments out there today. Gronbach is well-known for his generational research and keen forecasting of societal trends.

First, a quick summary of the major U.S. demographic generations out there today, ranked from large to small:

  • Generation Y (Millennials) – 86.6 million, born 1985-2004, biggest business opportunity
  • Generation X (Generation Me) – 82.9 million, born 1965-1984, growing with immigration
  • Baby Boomers (no other name) – 78 million, born 1945-1964, major workforce element
  • Generation Z (Post-millennials) – 40.9 million, born 2005-2024, yet to be defined
  • Silent Generation (Lucky Few) – 28.6 million, born 1925-1944, slowing down rapidly

Outside these societal generations, the people counters are also seeing other major shifts and trends that will have a marked impact on our economy and business, including the following.

  1. Healthcare: An oncoming tidal wave. There is a Baby Boomer and Silent Generation tsunami headed straight for our healthcare system, so opportunities there are endless. That means that starting soon, our doctors, hospitals, eldercare, hospice and even death care systems are going to face unprecedented demand. Technology won’t solve this one.
  1. Autos for drivers: Waning market demand. American’s long love affair with owning and driving a car is over. A recent survey shows that 45 percent of Generation Y, the largest generation ever, consciously seek out alternatives to driving. Here technology is stepping up to the plate with driverless vehicles, resulting in big opportunities all around.
  1. Housing: A shortage looms. In the next ten years, 86 million Gen Y’ers will be moving out of their parents’ homes to start their own families. With 330 million people in the U.S. already, we’ll be at least 25 million homes short, based on the 155 million housing units that exist today. That’s good news for all business segments and the economy.
  1. Shipping and delivery: Strained to the limits. The building of new houses, communities, and infrastructure – as well as the new demand for retail that delivers – will strain trucking and shipping to its limits. As Boomers migrate to the Sunbelt, and everyone orders more online, I can hardly wait for drones to use the sky to help out.
  1. Education: More students and different classes. Everyone is predicting a rise in massive open online courses (MOOC), that will drive the need for new course content, architecture, and delivery approaches. In addition, children from Gen Y will spark a comeback in public school enrollment, and keep traditional colleges in business.
  1. Immigration: Continuing on the rise. Despite recent controversy, we are becoming more and more a nation of immigrants. The Asian population is expected to double by 2050, and Latinos are projected to jump from 17 to 25 percent in the same time frame. These cultures bring a whole new set of needs in food, entertainment, and lifestyle.
  1. Women: On the move. Women professionals are definitely increasing their ranks. There are 60 women to every 40 men in college, and they are entering the world of work in force. They are also moving into more critical leadership positions in both the public and private sector. That brings new business opportunities in fashion, home care, and leisure.

These shifts are independent of technology innovations, but certainly will drive the application of key product developments. Every entrepreneur needs to understand that people and populations drive business opportunities, as well as society. Thus I recommend the study of demographics in determining what business you start, where you start it, as well as how to scale it. Your success may depend on it.

Marty Zwilling

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Saturday, June 15, 2019

How To Be A Business Leader As Well As Thought Leader

businessmen-and-thought-leaderBy definition, most entrepreneurs are thought leaders. They have the ability to recognize a market need, the skills to design and implement a solution, and the drive to start a business from that solution. It all comes from within themselves. A business leader does the same thing and more, through the people around them. Most entrepreneurs are not both.

In reality, a successful startup can be built by a thought leader, but growing a successful business requires a business leader. That’s why venture capital investors often replace startup CEOs as a condition of their scale-up investment. That’s why so many startups plateau after gaining some initial traction, and are run over or acquired by their competition.

Much has been written on this subject, including the classic integration and update of two famous business books by Steve Farber (former partner of Tom Peters), “The Radical Leap Re-Energized”. I like Farber’s highlights of the traits of radical and profound leaders (extreme leaders) as follows:

  1. Cultivate love. Successful leaders model the intensity and energy that it takes to stay ahead competitively and meet ever more ambitious goals. They do this because they love what they do. As they continue to pursue their passion, they remain focused on the contribution made to others and to the surrounding community.
  1. Generate energy. Ask yourself this question – Do I generate more energy when I walk into a room, or when I walk out of it? Do your actions create positive energy for those around you, or are you an “energy vampire,” sucking the life out of your workplace? Hopefully you are the former, and not the latter.
  1. Inspire audacity. This is a bold and blatant disregard for normal constraints. Thinking and acting, “outside the box.” Audacity inspires people to do something really significant and meaningful. It enables them to change the business, the world, and themselves, for the better.
  1. Provide proof. How do we prove to ourselves (and to others) that we are really exercising extreme leadership? The simple answer is “Do What You Say You Will Do” (DWYSYWD). The best leaders achieve their own success by raising the self-esteem of followers. They build credibility by looking for ways to respond to the needs and interests of others.

In this extreme leadership model, leaders aren’t afraid to take risks, make mistakes in front of employees, or actively solicit team feedback. Farber asserts that most of us, at some level, have the innate ability to become a business leader. Getting fully in tune with who you are, and then following your heart, goes a long way towards helping you discover the leader you can become.

Many entrepreneurs who are great thought leaders are unwilling to listen and network. They can’t imagine that their vision for the business can be improved, or even implemented by others. They don’t hire people until it’s too late, because no one else can do the job up to their standards, or with their commitment. At best, they hire “helpers” rather than help, and are too busy to train the helpers.

Obviously some people who call themselves business leaders are only posing. They wear the label and assert the title without putting their own skin in the game. The best leaders approach the act of leadership as an extreme sport, and they love the fear and exhilaration that naturally comes with the territory.

Business leadership is not a solo act. Real leaders accept the job of recruiting, cultivating, and developing other leaders as priority one, as well leading on the thought side. Learning to be both a thought leader and a business leader can make you great. Elon Musk has long been a thought leader, but more recently has shown promise on the business leader side. Where are you along the spectrum?

Marty Zwilling

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Friday, June 14, 2019

Finding The Right Angel Investor For Your New Venture

Angel-investor-flocksIf your startup is looking for an angel investor, it makes sense to present your plan to flocks of angels, and assume that at least one will swoop down and scoop you up. Or does it? Actually numbers and locations are just the beginning. The challenge is to find the right angel for you, and for your situation. Here are some basic principles:

  • Angels invest in people, more often than they invest in ideas. That means they need to know you, or someone they trust who does know you (warm introduction). For credibility, they need to know you BEFORE you are asking for money.
  • Angel investors are people too. Investors expect you to understand their motivation, respect their time, and show your integrity in all actions. They probably won’t respond well to high pressure sales tactics, information overload, or bribes.
  • Angels like to “touch and feel” their investments, so they are generally only interested in local opportunities. It won’t help your case or your workload to do an email blast and follow-up with 250,000 members around the world.

But now to answer one of the most common questions I get “How do I find angel investors?” With today’s access to the Internet, and Google searches, it really isn’t that hard. Here are the largest flocks:

  1. Gust (formerly AngelSoft). This is perhaps the most widely-used source of information on angel investor groups across the world, run by the “Father of Angel Investing in New York,” David Rose. This software platform is used by many local angel organizations for managing deal flow.

    Gust claims to have facilitated over $1 billion of investments in 650,000 startups to date, via connection through their platform to over 80,000 angel investors in 190 countries. As an entrepreneur, you simply use their investor search engine to find appropriate investors for your business according to location, industry interest, and other relevant criteria.

  1. AngelList. This is another very popular website for raising equity or debt investments for startups. It was founded back in 2010 by Naval Ravikant and Babak Nivi of Venture Hacks, which is also a great place to visit for startup advice.

    AngelList has featured over 3 million businesses for potential investors in a format that is, effectively, a social network for entrepreneurs and angels. They claim to have already raised over $560 million for 1400 startups, primarily in the US and Europe. In addition, they serve as a jobs available site for 24,000 startups.

  1. Keiretsu Forum. This one claims to be the world’s largest single angel investor network, with 3000 accredited investor members throughout 53 chapters on 3 continents. Since its founding in 2000, its members have invested over $800 million dollars in over 800 companies in technology, consumer products, healthcare/life sciences, real estate and other segments with high growth potential.

    The Founding Chapter is in Silicon Valley, California, (naturally). A caveat is that this is a for-profit organization, so fees to present may be significant.

  1. USA Angel Investment Network. This group claims to be the largest angel investment community in the world. They have already raised $300 million for startups in the US and across the world. A caveat is that this network doesn’t offer a personal touch, as it only facilitates the exchange of contact information, so the matchmaking is left up to you.

    The reach is very broad, with a network has 30 branches extending to 80 different countries. They have over 1,000,000 registered members with over 200,000 investors and 650,000 entrepreneurs.

  1. Angel Capital Association (ACA). The ACA is the angel industry alliance, which now includes a directory to more than 275 angel groups and 14,000 individual angels across North America. ACA member angel groups represent a wealth of accredited investors and are funding approximately 800 new companies each year, and managing an ongoing portfolio of more than 5,000 companies throughout North America.

Of course, there are many more angel investors, often called “super angels,” that have a large following and large reach, so they don’t need any of these organizations to be found. Examples of some leaders in this space include Ron Conway, Mike Maples, Jr., and the founder of 500 Startups, Dave McClure. Connecting with one of these would be a real coup for your startup.

My real message is that the best angel you can find is a local high net-worth individual, with whom you or your advisors have an established prior relationship. So get out there and network, and you can be one of the lucky ones who is touched by an angel without having to go through hell first. If none of these will touch your startup, maybe it’s time to look again, in the mirror.

Marty Zwilling

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Wednesday, June 12, 2019

4 Strategies To Ramp Up The Total Customer Experience

excited-happy-customersMuch has been written recently about the requirement to focus today on the total customer experience, as a competitive edge or even for survival. Traditionally, you just worried about the quality of the sales transaction (price, speed, service), but the “customer experience” now includes ease of pre-sale shopping, post-sale support, with a connected relationship throughout.

The challenge I hear from savvy business owners and entrepreneurs operating on a shoestring is that providing a superior customer experience costs money. They are rightfully looking for some new business models and improvements in operational efficiency to provide them with a win-win connected strategy, where the customer becomes their advocate, while growth and profits soar.

I had some ideas on how to do this, but I was pleased with the insights to a connected strategy that were pulled together in a new book, “Connected Strategy,” by Nicolaj Siggelkow and Christian Terwiesch, professors at the Wharton School at the University of Pennsylvania. They highlight several key pathways for turning customer transactions into connected relationships:

  1. Recognize and respond quickly to customer desires. In terms of the customer experience, your challenge today is to minimize all friction from the moment a customer desires a product or service, to the moment he receives it. You want that customer to be delighted by the overall experience, rather than remember the many steps and the pain.

    Amazon does this by being the “go-to” place for almost anything, showing you options you like by knowing you and your past purchases, quickly listing comparable items by price and features, allowing you to order with only one keystroke, and delivering the item to your door very quickly, potentially (in the future) even before you ordered it.

    Uber and Lyft make hailing a ride an instant process, which you can see and track with no effort, and pay for without struggling with your credit card or cash. Alexa can order pizza or play your favorite song, just like an assistant, rather than a business transaction.

  2. Delight customers with personally tailored options. This business model recognizes that customers might not know exactly what they want, or they may not know exactly where to go to get what they need. Many, like me, would prefer that someone else do the shopping for them, and present them with the best choices currently available.

    Expedia and Travelocity do this by checking all the ways you can get from one city to another, with current prices, including connections to rental cars and hotels when you get there. Netflix suggests comedies based on your unique previous choices, and Blue Apron will deliver you a meal-kit based on your interest in health, fun, or variety.

  3. Provide useful prompting to prevent future pain. In many cases, customers would be delighted to be coached on upcoming needs, such as time to reorder medication or printer ink, before the crisis, with the option of getting the solution with a single click. This can save them grief, as well as reduce your own marketing and sales costs.

    The latest Apple Watch utilizes this strategy by continually monitoring your heart rhythm, as well as other fitness indicators, with coaching to you on maintaining your health. This obviously helps Apple sell their watch at a premium, as well as assuring loyal customers.

  4. Anticipate and meet customer needs not yet realized. Automatic execution of business transactions in anticipation of a customer need is still not common, but it’s easy to see the potential with the sensors on so many devices now being connected to the Internet (IoT). Soon your refrigerator may order more milk or bread when stock is low.

    Amazon already has a patent to automatically ship you other items of interest, without prompting, based on your prior order and usage patterns (returns are free and simple). The latest wave of medical alert sensors for seniors, like Medical Alert™, will automatically call an ambulance for you after a fall without even pressing a button.

A key point you should take from these insights is that connections and relationships these days don’t necessarily require more people and cost to your business. Current generations of customers are perfectly happy with virtual relationships, and new low-cost learning technology is setting a new bar at predicting customer desires and needs.

Thus, with a connected strategy and smart software, you can indeed improve your customer’s experience, and reduce your costs at the same time. That’s a win-win we can all live with.

Marty Zwilling

*** First published on Inc.com on 05/28/2019 ***

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Monday, June 10, 2019

8 Ways To Use Personal Values To Highlight Leadership

Values-based-leadershipTrue business success and leadership starts with real personal values, extends to building a team, and finally to inspiring customers and your community. That’s a huge leap from an entrepreneurial idea, to a product, to making money. Is it any wonder that the majority of startups fail? My job as a new business advisor is to help entrepreneurs get over this chasm early.

My approach has always been to suggest specific actions that have immediate impact, as well as highlight positive leadership attributes, leading to longer-term success and a commitment to values. I found some great guidance in this context in the classic book, “Lead True,” by Jeff Thompson, MD. Thompson is a well-recognized successful values-based leader and speaker.

I fully support and appreciate his case studies and conclusions on specific required personal initiatives, and how these can change people, organizations, and even entire industries. Here are some of the key elements of his message that every aspiring business leader needs to understand and practice:

  1. Muster courage to not allow fear to make your decisions. As challenges come along that require specific and concrete action, they are seldom easy. Your company finances, reputation, or even your survival may be on the line. Courage is not the absence of fear, but it is the ability to put your values and vision ahead of the easier way out.

  2. Practice discipline to translate values to consistent actions. In business, consistency is the key to productivity and trust by team members and customers alike. Leaders who are disciplined around values build trust, inspire others, and have more impact. With discipline, you can be the role model your constituents need to overcome all obstacles.

  3. Use durability to stay true to your vision in tough times. Most entrepreneurs find that they are their own toughest critics. Your values and vision can give you persistence and stability, even when the road ahead seems hazardous and endless. The world may not be ready for your great solution just yet, but leadership can carry you for the duration.

  4. Find reverence for people over profits, egos, and convenience. Reverence for others takes humility, but it results in deeper relationships, deeper wins, and a greater business. The more complicated the lives of your team and your customers, the more they need values to understand those struggles. Their reverence is returned to make you a leader.

  5. Measure, don’t guess, with tools that build, not limit. Hope is the weakest strategy for improvement in business. Set goals based on values, that are meant to exceed, and use metrics, rather than gut feeling to assess your own progress, as well as that of your team. Don’t be limited by tools of the past – always be alert for best of breed and innovation.

  6. Commit to a higher cause to attract like-minded partners. Business leadership in today’s environment is all about relationships. People build relationships in the context of common values, or win-win. More important than killing your competitors or making money is a making the world a better place. People will seek your leadership as partners.

  7. Take responsibility for the big picture and your bottom line. Great business leaders really believe their values can win by improving the economy, the environment, and the bottom line all at the same time. They find it improves their ability to build relationships, communicate effectively, and excite their customers into becoming loyal advocates.

  8. Lead to learn and the benefit will go both ways. The days of educating customers to sell your current solutions are gone. Business leaders today listen and learn customer values, and then use their values to provide solutions to customer needs today, and project customer needs for tomorrow. Customers want to be led, rather than pushed.

Thus it’s fair for entrepreneurs to start by pitching an idea and an implementation, but investors and other constituents (as well as customers) quickly need to see beyond this to the values that drive your efforts. If you haven’t communicated these, or are still a bit fuzzy on them yourself, it’s time to rethink your whole business leadership strategy. Your success these days depends on it.

Marty Zwilling

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Sunday, June 9, 2019

4 Keys To A Super-Charged Team And Workplace Culture

happy-team-cultureStartup work environments are always chaos, but they can still be great environments to work in, or they can be terrible. Whether yours is terrible or great, that same tone flows out to your customers, and regulates your productivity inside. You as the founder are the starting point and definer, so you need to get it right.

What does it take to create a positive workplace culture? I did some research on this, and compared it with my own experience. I’ve concluded and the experts agree that it’s all about understanding people, and overtly optimizing the factors that drive them at work.

Ed Muzio, in his classic book “Make Work Great: Super Charge Your Team, Reinvent the Culture, and Gain Influence One Person at a Time,” summarized four key influences which I have also seen as follows:
  1. We are driven by peers. According to many studies and observations, group pressure entices us to rethink our own opinions, and can even change our actual perceptions. That’s a good thing if your business peers are positive about what is happening, and it can cause a spiral into the ground if goals, priorities, and issues are not understood.
  1. We are driven by authority. Stanley Milgram, a famous researcher in the 1960s, concluded that “Ordinary people, simply doing their jobs, and without any particular hostility on their part, can become agents in a terrible destructive process.” It’s up to you, as the authority figure, to define the standards and communicate roles correctly.
  1. We are driven by expectations. Around most people at work is a core group of six to eight people (your “role set”) who send you expectations about what you should or should not be doing, along with implied rewards or punishments. Our satisfaction is strongly driven by this role set. Find compatible and complementary people for your role sets.
  1. We underestimate the impact of the situation. The pressure of a situation actually can override the prior three forces. Thus you always must be very sensitive to the context, since unfair blame based on situational factors will negate all your positive influences. Don’t make the mistake of assuming people act from personal choice alone.
You as an individual team member, and you as the authority figure, must make a conscious choice to drive the culture around you, rather than be driven by it. Psychologists have noted that going passively along ‘on automatic’ if often our worst enemy. It doesn’t get the job done, and it’s not even satisfying.

The most effective way for you to drive the culture is to understand yourself and to be explicit on the following items to your role set and others:
  • Your personal goals and purpose
  • Your intended impact (‘So what’)
  • Your incentives and motivation
  • Your progress as it happens
  • The resources you need
  • Your capability (share your knowledge)
By default, the at-work culture is just “how we do things around here,” based on problems faced “back then.” The problems you face today are different, and the solutions from back then were likely not the best. That means there is always a premium on culture teachers, compared to culture followers.

So don’t ask yourself how you can influence the culture, but rather how you already are influencing it. Are you a beneficiary of precedent or a slave to it? Choose to choose to make your work environment great.

Marty Zwilling
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Saturday, June 8, 2019

How To Tune Business Strategy For Long-Term Success

business-long-term-successThe biggest challenge these days doesn’t seem to be in starting a new business, but sustaining it against the onslaught of market changes and new competitors that emerge every day. Yet, as an angel investor, I still see too many new business owners who are convinced that their biggest challenge is to get money to start, and once launched with some initial success, they can relax.

In my other role of business advisor, I see examples often of startups that may have taken success for granted too early. A recent high-profile one, Theranos, the blood-testing company, had no trouble getting customers, but promised more than their technology could deliver, Another, Shyp, an early on-demand delivery platform, blamed their demise on premature scaling.

The keys to sustainable success require you to retain that sense of urgency, focus, and vigilance after the launch that you felt during the development and early funding stages. That starts with initially building a solid business strategy, including a strong support system for scalability, long-term leadership, and adaptability. In my view, this strategy must include the following elements:

  1. Define and communicate a purpose and destination. Your constituents can’t plot a journey if they aren’t sure where they are going or why. For a successful launch and scalable growth, they need to establish many checkpoints, with metrics to assess their progress and alignment with the vision. Don’t let that communication fade post-launch.

  2. Build and nurture a team culture of trust and leadership. You and your business won’t be able to sustain a position of leadership without everyone on the customer-facing team being willing and able to emulate your lead. That requires trust and respect from all, as well as constant coaching and development to keep them committed to following you.

  3. Demand continuous innovation to keep up with change. Change is the only constant in a successful business, to keep up with new competitors and new customer demands. Innovation must be applied to your business model, your processes, as well as your product offering. Aim to obsolete your own products with new, before competitors do it.

  4. Make sustainability a key design objective for every step. You may start with prototype products, but you need rock-solid processes for successful growth and agility. Seek out the best practices in the industry, and improve them for your business. Recognize that every successful journey is long and hard, so don’t cut corners now.

  5. Hire the best people and continually upgrade your team. A big mistake often made in the rush to scale is to shortcut the hiring and training processes, to get out there fast, assuming that the team can learn on the job. Look for team players who can collaborate with others, and make sure everyone has the training and tools to do the job.

  6. Seek out strategic partnerships and collaboration. When you finally get that funding for scaling, it may be tempting to do everything yourself, to keep control and do it faster. The problem is that you may not have the experience or connections to jump into new customer segments, manufacturing, and distribution. Capitalize on what already exists.

  7. Focus on existing customer retention and repeat business. For sustainable growth, don’t forget that, according to data from the field, it is five times as expensive to gain a new customer than retain an existing one, and a returning customer purchases 30 percent more items and brings in three to seven times more revenue per transaction.

  8. Build your brand equity and relationships with customers. As a startup, you have no brand recognition, but long-term sustainability requires a powerful brand. These days, brand equity means relationships with more customers, and a more memorable overall experience. Your brand-loyal customer advocates can be your exponential marketing.

  9. Never stop hunting for new opportunities and new markets. Initial success breeds complacency. While a laser focus is necessary to get your startup off the ground, long-term success requires a broad and ever-changing product line, target audience, and geographic focus. Don’t be a “one-trick pony” that fades into oblivion as time passes.

Congratulations are definitely appropriate for a successful new business launch, but it’s not the time to relax or take your eye off the ball. A sustainable business, with long-term success, is a different and never-ending challenge, requiring additional strategies as outlined here. Don’t wait for a business crisis to get started. As many have found out, recoveries are not always possible.

Marty Zwilling

*** First published on Inc.com on 05/23/2019 ***

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Friday, June 7, 2019

5 Questions To Help Solve The Tough Business Problems

question-markIn my role as a business advisor, one of the attributes I often see in a good leader is the ability and willingness to ask good questions, before moving forward or issuing edicts, potentially in the wrong direction. We all have mental barriers – those unquestioned assumptions, unexplored options, or unchallenged rules of thumb that keep us stuck at a lower level of effectiveness.

Thus, an essential skill for anyone who wants to push the limits of their team and their business is the ability to ask questions that expose and remove those mental obstacles. The challenge is to frame questions that can provoke people into thinking about the problems in a new way, and to ask these questions in a style that doesn’t elicit defensiveness, resistance, or fear.

I saw this challenge outlined well in a new book, “Learning to Lead,” by Ron Williams, former CEO of Aetna and self-made business leader, who rose from the poor side of the tracks in south Chicago to lead several large businesses, and ultimately serve on the President’s Management Advisory Board for several years. His life proves that leadership is learned, not a birthright.

I like his summary of five kinds of questions that can help you change your leadership effectiveness, and your organization’s view of reality when faced with complex new issues:

  1. Questions that highlight key roadblocks to a solution. Before any assumptions are made on a seemingly impossible challenge, you need to focus the conversation on existing barriers to achieving the desired goal, what methods have already been tried to alleviate the problem, and what specifically happened that caused those efforts to fail.

    For example, I too often see entrepreneurs with great determination failing to get investor funding to start a capital-intensive business, such as building a new automated factory. Others face the roadblock with questions like, “Who has such a facility that might partner with us?” and find a win-win solution through a joint venture to achieve their dream.

  2. Questions that clarify the uncertainty over facts. When there is significant confusion over the nature of the problem, or disagreement as to the cause-and-effect processes that are creating current difficulties, you need to ask questions that probe the reliability and sources for the information. Also, opinions are sometimes over-stated as facts.

    If someone on your team is adamant that lack of a complex technical feature is the biggest competitive threat to your business, you may need to ask for specific data from customers and competitors that supports this conclusion. Engineers love to tackle new technology, and sales people are always looking for one more feature to close business.

  3. Questions that probe the evolution of a complex problem. Asking questions designed to elicit explanatory narratives can illuminate how a particularly difficult challenge came to be, which can be crucial to understanding it’s cultural, social, organizational, and psychological roots. There’s an enlightening story behind every issue.

    I have been involved in trying to fix several perennially problematic internal processes, where understanding the history made it obvious that we needed to get the original creator involved, or needed to start over to structure some code that was never intended to be more than a prototype.

  4. Questions that suggest alternatives can be quite powerful. When your team members’ thinking seems to have gotten stuck in a rut, you need to ask questions that raise alternative possibilities. Perhaps they need to be challenged to investigate how other companies have used different approaches to avoid or resolve similar issues.

    For example, every business these days struggles with keeping customer data secure in their database, when potentially that data might be available from another source, kept in cookies on the customer system, or not really be needed at all to do the job.

  5. Questions that drill down to what business we are in. Sometimes problems make it seem like your business may be fundamentally lost. At this point you need questions designed to raise basic issues, relating to business goals, or who is the target audience. Perhaps the problem can be easily resolved by not trying to solve everyone’s problem.

As a leader, taking a big step back to gain a fresh perspective will shed a powerful light on what you should be doing every day, and asking the right questions is a good way to start the process. Just be sure to wield them carefully so they remain useful tools rather than seeming like aggressive weapons. Today’s workforce, and customers, are looking for leaders, not tyrants.

Marty Zwilling

*** First published on Inc.com on 05/22/2019 ***

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Wednesday, June 5, 2019

How Modern Companies Have Redefined Customer Support

Australian (AUS) fans in green and gold cheering 2000 Sydney PGToo many business owners still think of “customer support” as an after-sale process to rectify customer problems with completed transactions. The world has changed. With the advent of instant communication and social media, customer service starts at the first hint of interest by you, and never ends for repeat customers. One bad customer experience will kill not only one customer, but many future ones, who hear the message via social media and friends.

For example, the days are gone when simply replacing a purchase or giving your money back was considered premium service. Now, if your web site is not clear and clean, or you don’t have a chat robot for a product question online, you may be abandoned as providing poor customer service, just as certainly as having to wait in a long product exchange line after the holidays.

Now customer support is called the “customer experience,” and everyone is expecting you to actually anticipate their personal needs, and totally delight them with all aspects of the shopping experience, price versus value, as well as help with any follow-on questions or problems. Big companies and small, from Amazon to Zappos, have set the bar high along the following lines:

  1. Business must be available when and where you are. Even small businesses can now easily be global in scope, and available 24x7 online. Customers expect you to provide access via their mobile devices, as well as being responsive to sales and support questions on social media and multiple Internet channels and partners at their whim.

  2. Company amazingly finds you based on your interests. No one likes to be blasted by TV and online ads for products you have no interest in, but we all love to be pleasantly surprised by memorable deals nearby on favorite clothing styles or food tastes. The best companies do their homework first to find the customers who will appreciate their service.

  3. Technology enhances experience, not impedes it. We have all been annoyed by the airline agent who seems to type forever into a slow computer, or repeatedly asks for information already known. Amazon introduced the one-click order button and overnight delivery, which has reset the bar for all other businesses in processing transactions.

  4. Customer sees you as a relationship, not a brand. The days of loyalty to a name brand are over, so every company has the same potential to reach out and build relationships with customers. Customers expect to be in control, remembered, and treated uniquely, every time they need support or come back for additional business.

  5. The marketing metrics covers support as part of experience. If your marketing metrics and budget ignore the fact that you have call center queues thirty minutes long, or no coverage of online reviews or social media, your customer service is not keeping up with competitors. Zappos, for example, counts the number of new customer relationships established, not minutes on the site.

  6. Customer experience starts with user-centric product design. The standard today for new products is that if it requires a user manual, that is considered a failure. Product usage by your target audience should be intuitive, and the elegance of the packaging, such as that provided by Apple, which always reflects the sleek, user-friendly experience of the product inside, is as important as the product itself.

  7. Show empathy and empowerment in handling customers. Every person in your organization needs to be committed and able to make decisions for enhancing customer relationships. Ritz-Carltons, for example, encourage employees, once they're fully trained, to spend up to $2,000 per guest to solve a guest issue or improve a guest's stay.

  8. Make it easy for customers to help themselves and each other. Customers today want to be in control and help themselves. They also like to hear from other customers, and even help others. That means facilitating customer online forums, special events, and contacts, where they can share experiences, and answer questions for each other.

Ultimately, your experience is your brand and it’s no longer possible to separate customer support from the overall customer experience. Both are part of the relationship that you build with your customers, and these can be the key to an amazing advocacy, or the tag of poor customer service. It up to you to meet customers on their own terms, and they will reward you for doing it.

Marty Zwilling

*** First published on Inc.com on 05/21/2019 ***

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