Saturday, August 31, 2019

10 Realities Today Cause Startups To Bypass An IPO

ipo-risk-vs-rewardIn the old days, every entrepreneur dreamed of easily taking their startup public, and making it big. Today the rate of startups going public (IPO – Initial Public Offering) is up from the dead zone, but is still half the rate back before 2000. Smart entrepreneurs are just now starting to look at this option again, due to its unpredictability and the challenges of running a public company.

According to a recent Ernst & Young global report, the first half 2019 global IPO activity slowdown continued, following an unusually quiet Q1 2019 as ongoing geopolitical tensions and trade issues dampened IPO sentiment. Today around 90 percent of successful startups are still acquired by bigger companies, as the safer and preferred method of growth and funding.

The reasons are a lot more complex than the meltdown of key investment banks in the US a few years ago, so don’t expect a big change in the numbers soon, even with recent stock market rallies. In my view, the key reasons that IPOs have lost their luster from an entrepreneur and investor perspective include the following:

  1. The US IPO process is still stumbling. Too many startups have experienced early financial losses and technical glitches, like Uber and the Zynga IPO a while back, which antagonized individual investors and startup executives as well. In addition, most ordinary investors are convinced that IPO rewards only go to insiders.
  1. Going public is an expensive process. Typical costs for startups today range from $250,000 to $1 million, even if the offering does not go through. In addition, huge amounts of executive time are required, as well as hits to key operational, accounting, and communication processes. The M&A alternative looks simple by comparison.
  1. Constant pressure to increase earnings. Because public shareholders usually take the short-term view, they want to see constant rises in the stock's price so they can sell their shares for a profit. Thus, there is tremendous pressure to increase current earnings, and little appetite for strategic investments.
  1. Startups going public are laid open to competitors and critics. Startups are typically run by a couple of executives who are reluctant to disclose via the prospectus and SEC reports all the decision-making criteria, operational financial details, and compensation formulas. With thousands of shareholders, dealing with critics is an onerous challenge.
  1. Complying with Sarbanes-Oxley requirements is a heavy burden. Public companies of any size must comply immediately with the full reporting requirements of the SEC. There is no accommodation for smaller public companies, who can’t be competitive in their space with the new accounting, documenting, and reporting processes required.
  1. Public companies are always at risk for takeovers. Friendly or hostile takeover attempts are just a couple of the many ways that company founders sense a loss of control of their own destiny. The board of directors, as well as public stockholders, are no longer part of the inside team focused on the founder’s vision to change the world.
  1. Increased liability risk exposure. Public company executives and directors are at civil and even criminal risk for false or misleading statements in the registration statement. In addition, officers may face liability for misrepresentations in public communications and SEC reports. Executives are also at risk for insider trading and employment practices.
  1. Violent market swings usually hit public companies first. Private companies in less-relevant market segments can often fly under the radar in turbulent times like the recent recession. Public stockholders are more easily swayed by emotion and the activities of the crowd, than real market conditions.
  1. Startup founders don’t fit in a public company. Most just don’t enjoy all the challenges of communicating to analysts, placating demanding stockholders, and keeping up with legal reporting requirement. They know they can be quickly tossed aside for not maintaining the right image and the right relationships with people they don’t like.
  1. The image of large public companies is negative. In the last few decades, the paternal image of large multi-national company leaders like Thomas Watson at IBM and Henry Ford is gone. Now the mistakes of large companies like Enron and BP have set a new image of public companies as being led by greedy and uncaring executives.

These negatives have largely overshadowed the potential IPO positives of increased capital for the startup, possible huge increase in personal net worth, broader access to investors, market for their stock, the ability to attract top-notch professionals, and the peer prestige of running a public company.

Thus most startups I know don’t even mention the IPO exit option, when applying for angel funding, and most angel investors will react negatively if you do mention it. As best, you should reserve this option for later stage VC discussions, once you have a well-proven business model, large market following, and substantial revenue.

More importantly, make sure first that you really want to give up the entrepreneur lifestyle for the challenges of a public company executive. I’m betting that Mark Zuckerberg of Facebook fame still has second thoughts from time to time, despite being worth $68 billion as a result.

Marty Zwilling

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Friday, August 30, 2019

5 Ways Writing a Book Will Kick-Start Business Growth

writing-a-bookWhat every entrepreneur needs more than anything else, after they have built an innovative new product or service, is visibility, credibility, and trust by customers, potential employees, and future business partners. In my experience as a business advisor, one of the best ways to get all of these, is to publish a book on the technology, the journey, or some relevant lessons learned.

Your book need not be a best-seller, and it probably won’t make you any money directly, but it’s the best business card you could ever imagine. In addition, the discipline of producing it, like writing a business plan, will help you immensely in understanding the key elements that drive you and your business. Yet, most good business people I know agree, but don’t know where to start.

I had the same problem before my first book, but I find that all the information you need these days is easily found on the Internet, or in a good book on the subject, like the new one I just finished, “How to Self-Publish Your Book,” by Dr. Jan Yager. Whether you choose to self-publish (my favorite approach), or work with a publisher, all the guidance you need is in this book.

I often hear the excuse that writing a book takes precious time away from building and running your business, which you cannot afford. In fact, it does take time, but in my view brings far more value than many of the things you might otherwise be doing, including expensive advertising, extensive networking, or email blasts. Key value elements of a good book include the following:

  1. Publishing a book defines you as an influencer and authority. Everyone realizes that writing a book is not easy, and shows you have made a real commitment, can get things done, and are willing to take a position. Customers pay extra, and inherently gravitate to people they view as leaders, rather than others just pushing advertising and web content.

    I can tell you from my own experience as an advisor to new entrepreneurs, that my first book, “Do You Have What It Takes To Be An Entrepreneur,” did more for my credibility and leads as an advisor than all the marketing and networking I had done previously.

  2. The book itself raises your visibility through media coverage. Once you have a book, media coverage can come from book reviews and academic discussions, as well as from you and your customers. The book can also give you access to speaking engagements, television interviews, special events, lecture halls, and people’s minds.

    Even for self-published books, you get visibility through the Amazon website worldwide, Google searches for related topics, book reviews, and various online catalogs. If you use a publisher, they may add more visibility with press releases and book-signing events.

  3. Having a book gives you instant credibility with clients. People who hire consultants and coaches look for evidence of external credibility, such as reviews and referrals, to back up their own judgement of your marketing interactions with them. If you sell to other business organizations, a book is a huge asset in reducing their perceived selection risk.

    For high-potential clients, it’s well worth your investment in handing out a personally signed copy of your book, in lieu of the standard business card. It makes customers feel special, and gives you the opportunity to highlight your broad experience and credentials.

  4. Being an author will attract top-notch talent to your business. Potential team members and partners who excel are attracted to leaders and influencers. Successful businesses require the best people to deliver your vision and services one step better than the competition. They see you as a role model for their own career development.

    A good example of this impact is Tony Hsieh, who wrote his own book, as well as one about the culture he was building at Zappos. These books became one of his best recruiting tools, and still are a great lead generation source for his businesses.

  5. A book can provide the bridge to an enhanced career. Writing a book and debating it with key people may give you the confidence and desire to become a conference speaker, business school professor, or executive in another field. In that fashion, it also serves as an enhanced resume, highlighting your skills, expertise, and vision.

Another good reason for writing your book today, using self-publishing, is that it is consistent with the entrepreneur lifestyle. No more struggling with big publishers to meet their expectations and long production cycles – you can make your book innovative and get it done on your terms and timeline. That means you can integrate the work with your own business schedule and objectives.

In fact, a few smart entrepreneurs publish their book first to test the waters for their business idea to follow, and build an early following of potential customers. That’s just another innovative business model worth considering. What’s holding you back from starting today?

Marty Zwilling

*** First published on Inc.com on 08/15/2019 ***

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Wednesday, August 28, 2019

7 Delusions About Business Ethics Limit Future Growth

Ethical-Moral-EthicsNew entrepreneurs tend to focus only on getting the product right, and assume that the right culture and ethics will come later simply by hiring good people. In fact, they need an early focus on developing their moral compass, as well as setting the right ethical tone. Building an ethical business is more than just compliance and meeting legal requirements, and it has big paybacks.

One 11-year classic study of over 200 companies, detailed in “Corporate Culture and Performance,” found that those working on their culture improved revenue by 516%, and increased net income by 755%. Conscious Capitalism, a popular business movement which includes a large focus on culture and ethics, claims returns 10 times higher than the S&P 500.

One of the keys to setting the right ethical tone is understanding and avoiding the myths and pitfalls of others. I saw a good summary of these in a classic book, “Ethical Leadership,” by Andrew Leigh, an expert in this area. I like his specifics for business leaders on improving and sustaining the best company cultures, and his summary of the cultural myths facing new business leaders:

  1. It’s easy to be ethical. This myth ignores the complexity surrounding ethical decision making, particularly within business organizations. Ethical decisions are seldom simple. For example, people often do not automatically know that they are facing an ethical choice. Any given individual may not recognize the moral scope of the issues involved.
  1. Business ethics are more about religion than management or leadership. Behind this myth lies the confused belief that ethics are a means of altering people’s values. The reality is different. An ethical culture deals with managing values between the individual and the company, to best handle the inevitable conflicts that crop up in every business.
  1. Hire only ethical people, so further time on business ethics is not needed. This is usually an excuse for not developing ethical policies and practices. These can be as simple as how to handle customer over-payments, or more complex in how to handle the choices every employee may face between conflicting customer and company interests.
  1. Business ethics are best left to philosophers and academics. Deal with this myth by sharing with colleagues some of the highly practical tools for making sense of the issue – such as ethics audits, behavior codes, risk strategies, targeted training and leadership guidance. Business ethics is a discipline that must be practiced every day by everyone.
  1. Ethics can’t be managed. While codes of behavior do not guarantee an ethical culture, they do clarify desired behavior and articulate for employees what is expected of them. Every business has complex and diverse dilemmas which are not specifically covered in documented procedures, so employees need clear values leadership for guidance.
  1. We’ve never broken the law so we must be ethical. Many perfectly legal actions can still be deeply unethical. As an example, companies often realize that faulty products are slipping out, but they delay a recall, sighting that strictly legal requirements are being met. Unethical behavior can even with something low key which initially goes unnoticed.
  1. Unethical behavior in business is just due to a few ‘bad apples.’ In reality, most unethical behavior in business happens because the environment tolerates it, usually through benign neglect. When it comes to ethics, even good people tend to be followers, and if told to do something, they will do it, without considering the ethical implications.

Company ethics are a prime example of where you and your company only get one chance for a great first impression, and if you lose it, it’s almost impossible to regain. Don’t follow the examples of institutions in the recent financial meltdown, or certain oil companies working offshore, or the many smaller company examples we have seen in our own neighborhoods.

Every business, new or old, needs to remember that an ethical culture, or lack of it, shows in the actual behavior and attitudes of all team members, rather than just in policy documents and videos from the top. A successful business is far more than a good product and a good business model – it’s equally about projecting and executing with a great culture. Can you vouch for the culture and ethics of your company, from top to bottom?

Marty Zwilling

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Monday, August 26, 2019

6 Myths On Starting A New Business That Can Kill You

Business-misconceptionsStarting a new business is fraught with challenges, and none of us has the bandwidth to kill them all. As an advisor to business owners, and an occasional angel investor, my job is to separate the actual challenges from the common misconceptions that distract many promising entrepreneurs while building the leadership team required for your solution, marketing, and finance success.

I remember first seeing a good summary of these risk-reduction myths a while back in a classic book, “How to Start a Business & Ignite Your Life,” by Ernesto Sirolli, PhD. With his wealth of business experience and expertise as a top economic development consultant, he confirms my own view that the top five myths in starting a new business commonly include the following:

  1. You have to be able to do every job in your business. In reality, it is important to know the basics of all roles, but it’s counterproductive to try to be an expert or attempt to micro-manage every task. It is more important to find and nurture team members who have the right expertise, and have them respect and appreciate their work, as well as yours.

    For example, if you start a new business with a software product you developed, you really need to know the basics of marketing and finance, but you will probably never be the expert in marketing and finance you require. Partner with experts who share the risk.

  2. Business success is all about having a winning idea. In my experience, finding a good idea is the easy part. It’s the execution that’s hard. I have seen too many great ideas fail due to poor execution, and less impressive ideas succeed due to an innovative business plan, implemented and managed by the right team of entrepreneurs.

    Witness the number of seemingly simple or stupid ideas that have become million dollar businesses, thanks to some creative marketing or innovative financials. Of course, if you have a great idea AND a great execution, your company may well be the next unicorn.

  3. You have to pay big salaries to get top-notch help. In my experience, the people who will best drive your business are ones who share your long-term vision, and are willing to work for a share of the business or delayed compensation, rather than a high salary in the short term. Most business partners I know take little or no salary in the early years.

    In fact, finding the right partners requires building the right relationships, more than negotiating a contract. A good business partnership is more like a marriage, where success depends more on relationship synergy than any financial expectation.

  4. “Staying small” is a positive strategy for your business. In fact, staying small does not protect you from the risks of growth, and makes it harder to survive, due to fewer economies of scale, no help from investors, and an easier target for competitors. Unless your company is a hobby or side project, I recommend a strategy that assumes growth.

  5. Sharing your business ownership increases the risk. Very few entrepreneurs have the skills and bandwidth to adequately cover all the business bases of product, marketing, and finance. Thus finding a complementary partner or two will dramatically increase your chances of success. Trust is required, so build relationships slowly.

    Business founders who are paranoid of other people, or have an ego that demands total control, are doomed to a life of isolation and frustration. Their lack of trust and sharing will be noted by employees, vendors, and customers, and the business will suffer.

  6. More money would solve all your startup problems. Every investor I know will tell you that many startup businesses fail due to having too much money too early. They try to grow too fast, stop looking for innovative solutions, or try to buy their way into markets or partnerships. Money is necessary, but not sufficient to reduce the risks of a business.

In business, if you take no risks, don’t expect any rewards. Smart entrepreneurs do their homework to mitigate known risks, by talking to peers and advisors, and avoid approaches which are known to be problematic or counterproductive.

My advice to every new business owner is to never be reluctant or embarrassed to seek assistance, but do so with prudence and optimism. There are many of us who have gone there before you, and want to make your path easier than ours. With our help and your own commitment, this can be the best of times for both you and your business.

Marty Zwilling

*** First published on Inc.com on 08/09/2019 ***

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Sunday, August 25, 2019

7 Traits Of Today’s New Business Innovator And Model

Elon_Musk_at_a_Press_ConferenceIn the beginning all businesses are just people playing out an idea. It’s never the other way around – there is no idea so big that it doesn’t need people to make it succeed. Investors know this, hence the saying “Bet on the jockey (founder), not the horse (idea).” A great jockey is a great role model.

Like it or not, everyone looks to the entrepreneur as the jockey role model in a new business. Typically this energizes new startup founders, but some struggle trying to live up to their own, as well as everyone else’s expectations. In reality, nobody really expects anyone to be superhuman, but it can feel like that.

We certainly wouldn't expect superhuman behavior from the people looking to us for guidance, nor would we want them to expect flawless behavior from themselves. If not flawless behavior, what characteristics and actions do they look for? Here are some frequently mentioned ones:

  1. Demonstrate confidence and leadership. A good role model is someone who is always positive, calm, and confident in themselves. You don't want someone who is down or tries to bring you down. Everyone likes a person who is happy with how far they have come, but continues to strive for bigger and better objectives.
  1. Don’t be afraid to be unique. Whatever you choose to do with your life, be proud of the person you've become, even if that means accepting some ridicule. You want role models who won't pretend to be someone they are not, and won't be fake just to suit other people.
  1. Communicate and interact with everyone. Good communication means listening as well as talking. People are energized by leaders who explain why and where they are going. Great role models know they have to have a consistent message, and repeat it over and over again until everyone understands.
  1. Show respect and concern for others. You may be driven, successful, and smart but whether you choose to show respect or not speaks volumes about how other people see you. Everyone notices if you are taking people for granted, not showing gratitude, or stepping on others to get ahead.
  1. Be knowledgeable and well rounded. Great role models aren't just "teachers." They are constant learners, challenge themselves to get out of their comfort zones, and surround themselves with smarter people. When team members see that their role model can be many things, they will learn to stretch themselves in order to be successful.
  1. Have humility and willingness to admit mistakes. Nobody's perfect. When you make a bad choice, let those who are watching and learning from you know that you made a mistake and how you plan to correct it. By apologizing, admitting your mistake, and accepting accountability, you will be demonstrating an often overlooked part of being a role model.
  1. Do good things outside the job. People who do the work, yet find time for good causes outside of work, such as raising money for charity, saving lives, and helping people in need get extra credit. Commitment to a good cause implies a strong commitment to the business.

True role models, like Richard Branson of Virgin Group and Elon Musk with Tesla, are those who possess the qualities that we would like to have, and those who have changed the way we live. They help us to advocate for ourselves and take a leadership position on the issues that we believe in.

We often don't recognize true role models until we have noticed our own personal growth and progress. That really implies that it takes one to know one. Thus, if you are asking the question, that may mean you are well along the road to being that role model already. Don’t stop now.

Marty Zwilling

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Saturday, August 24, 2019

How New Ventures Can Avoid Conventional Media Costs

superbowl-advertising-metlife-stadiumThe power and influence of paid media advertising, including print ads, TV commercials, radio, and even online digital campaigns is waning, in favor of unpaid earned and owned messaging from your website, social media, key market influencers, and existing customer word-of-mouth. But startups need to remember that even zero paid media doesn’t mean that marketing is free.

The case for zero paid media as the new marketing model was highlighted in the classic book, “Z.E.R.O.” by Joseph Jaffe and Maarten Albarda, both experienced marketers working with new companies, as well as larger firms. They advocate investing in their new framework, where the Z.E.R.O. initials take on meaning as follows:

  1. Zealots, disciples, and influencers. New products and startups often require a culture shift to drive acceptance, which can best be accelerated by zealots or a visible chief disciple, like Steve Jobs. Other sources stronger than paid media today include key social media influencers, such as “mommy bloggers” and popular YouTube events.
  1. Earned media. This is media exposure from a neutral third-party, such as an unpaid news story on your product or service to highlight innovations or social value. This exposure is highly credible, since you don’t control the message, and extremely valuable since it is not viewed as part of any advertising context.
  1. Real customers. Marketing media content from real customers in real time is now commonplace via sites like Yelp, Foursquare, and online reviews. This word-of-mouth media source is also highly credible and valuable, since it comes from “peer” customers, rather than you as the source, or any paid source.
  1. Owned media. This includes your website, blog, and presence on social media platforms, including Facebook, Twitter, Pinterest, Tumblr, Instagram, and many more. These usually provide a customer’s first impression of your offering, and should not be blatantly self-promotional, but instead informative, educational, and even entertaining.

As I mentioned, this framework is powerful, but none of these elements are free. A while back in a blog article, I pointed out that none of these justify a startup business plan with little or no budget for marketing. All require planning, deliberate actions, and quality content and event creation which will likely absorb all the savings from reduced paid media campaigns.

In any case, reframing the conversation from paid media marketing to the new framework requires a balance, and measurements along the way to better manage return on investment. In the book, Jaffe introduces three new sets of metrics for gauging progress:

  • Medium-term metrics. This is essentially a series of interim forecasts not dissimilar from mile-markers in a marathon race that advise whether it’s time to pick up the pace or slow down to smell the roses. Examples include counting members of an advocacy program, app downloads, tenured customers, or subscribers to an e-mail list.
  • Long-term sales. We often talk about short-term sales and long-term relationships in mutually exclusive terms. They are polar opposites in terms of their time frames, but how about building a bridge of compromise between them? Whereas every short-term initiative is akin to a traditional campaign, the long-term sales effort is the commitment.
  • Short-term wins. Accountability is not optional, as it’s still important to have something to show for your efforts quickly. Only this time, consider the large “W” (big win), the small “w” (small win) or in some cases even the small “l” (small loss), which represents failing fast or failing smart, insights, lessons, learnings, or pleasing initial results.

I’m not suggesting that paid media channels should be seen as dead to young companies, since even the revolutionaries, like Google, Facebook, and Apple, still rely on paid media to optimize their own efforts. And paid media are hardly standing still, continually figuring out ways to be more effective, using big data and other innovations to get more customer attention.

Thus while I see startups quick to jump on the zero paid media bandwagon (for budget reasons), I recommend a balance. First, go for that earned and owned media channel, using the same budget parameters you might have previously allocated for paid media. Later, you can lower the budget as the metrics show results, or apply the remainder to paid media as a follow-on step.

In all cases the tone and resources must be focused on capturing today’s customers, who are looking for engagement and connection, rather than the traditional loudest noise. Z.E.R.O. marketing is not zero marketing.

Marty Zwilling

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Friday, August 23, 2019

8 Actions To Ignite Engagement For You And Your Team

Engaged-Team-Business-MeetingBased on my own experience as a business professional, employees who are not seriously engaged in the business should be totally obvious to everyone, including the manager or CEO. Yet many managers and executives seem to ignore the situation, or have no idea how to fix it. The result is that the performance of whole team is degraded, and the business suffers as well.

For example, in one assignment my desk was near another professional, and I could not help but overhear this person on the phone discussing personal business most of the time, despite the fact that he always complained of being overworked, and missed most of his project deadlines. I and many others reported him regularly, and we were all frustrated that nothing was ever done.

I might have been convinced that this was a rare exception to the norm, until I saw some Gallup survey reports showing that 68 percent of employees are not fully engaged at work. From my experience as a business professional, and later years as an executive, I’m convinced that all of us, especially management, have a role in fixing the problem, with actions including the following:

  1. Top management must be the role model for engagement. That means a visible and timely acknowledgment from the top to change “business as usual,” with specific actions to improve the culture and resolve known issues. Asking HR to fix the problem won’t work. Don’t be the manager who can’t be found, or is “too busy” to focus on engagement.

  2. Provide positive feedback and rewards to engaged employees. Take daily time to provide genuine and specific feedback on things done well, as well as items needing attention. Praise alone, especially in front of peers, is one of the most powerful engagement motivators. Monetary awards and bonuses are good, but not sufficient.

  3. Add a higher purpose to your vision and shared values. Today, every employee wants to feel a sense that they are bringing more than profit to a company – they want to feel a sense of positive contribution to the environment and society as well. For example, Whole Foods and Patagonia raise engagement by focusing on health and sustainability.

  4. Measure your investment in engagement as an asset. Too many companies think of employee development efforts and benefits as an expense that must be minimized. They don’t recognize that employees drive customer growth, improve productivity, and drive company success. They, like you, are the key assets of every thriving business.

  5. Share business realities and issues with employees. Keeping employees in the dark on business problems and customer issues is a sure way to lose their trust and their engagement in the business. You cannot ask workers to take on more responsibility, without demonstrating full transparency and treating them as a key part of the team.

  6. Hire and mentor people who show engagement in prior roles. People willing to engage are actually more valuable than those with deeper skills or prior experience. After the hire, the keys are mentoring and continuous training, as well as providing growth opportunities to retain the best. The result is a culture of engagement and performance.

  7. Promote a more collaborative leadership style. Of course, top leaders must retain the final say, but efforts to work collaboratively will encourage and reward engagement, and expose the ones who are not engaged. When employees feel they are not heard, or have no say in the business, they have no incentive to take risks or do their best work.

  8. Admit and demonstrate that you have learned from them. Active listening is the key message here. You can’t learn while you are talking, or not engaged yourself. Great leaders have found that mentoring works both ways, and taking the time connect to each employee, over lunch, or outside of work, will pay big dividends in their engagement.

Indeed, I find that many employees are also overwhelmed by the rate of change they see in business today, making them hesitant and fearful of fully engaging. Sometimes the best thing you can do is not to try to force them to change, but simply be there for them as they struggle to change themselves.

Engagement in business is largely about relationships, just as it is in your non-business life. How good is your relationship with your employees, and how hard are you working on making it better?

Marty Zwilling

*** First published on Inc.com on 08/08/2019 ***

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Monday, August 19, 2019

5 Tips to Gain From People Who Don’t Think Like You

exchange-of-ideas-debateOne thing we all have to learn in business is how to work with and lead people that are not like you, and don’t think like you. In my experience as a business advisor, that’s probably the biggest hurdle to success encountered by every new business owner. Your biggest challenge may be members of your own family, some of your best customers, or a key business partner or investor.

For example, like me, you may be an aggressive, logical, and “get things done” type of person, who created a new product, but is easily frustrated by others around you who are committed, but tend to make decisions slowly, or rely more on emotions than the facts in any situation. For me, it was a session with Myers Briggs that finally opened my eyes on how to deal with different people.

Some notable business people never figured it out, and allowed differences to lead to business or personal setbacks that probably didn’t need to happen. Examples include the Theranos failure brought about by Elizabeth Holmes’ inability to work with her team, the early Apple setback due to differences between Steve Jobs and John Sculley, and the travails of Uber under Travis Kalanick.

The reality is that the business world is becoming more a global space, so all of us have to learn to understand and capitalize on people of different generations, cultures, points of view, and priorities. You have to manage your business with more people not like you, as well as a more diverse set of customers. Here are some key principles that I have found to make this work:

  1. Build more relationships with people who are not like you. If you limit your relationships in business to people who are just like you, your business potential is severely limited. Get to know your business associates as people, to understand their personality, strengths, and motivation, before you deal with them on business issues.

    Only by first understanding their differences can you fully appreciate that what others bring to the table, even if it is contrary to your view. Don’t let the current focus on emails, procedures, and message exchanges convince you that work is a mechanical process.

  2. Don’t assume others are intentionally being difficult. They are simply being who they are, and they are as frustrated with you as you are with them when things aren’t working. They are thinking and making decisions based on their unique personality, cultural background, and their previous experiences. Your challenge is to adapt to them.

    For example, I have found that some people are most effective after talking you through a situation, while you may prefer to jump to action quickly. By better understanding each member of your team, you will know when to listen and when it’s time to push for action.

  3. Never try to change people – capitalize on their strengths. It’s easier to adapt your own style than to try to force others to be like you. People can change themselves, if they respect you as a role model, and feel your courtesy and respect for their position and ability. Always be civil and diplomatic, and don’t allow emotions to cloud the situation.

    I often recommend to technical entrepreneurs (logical) that they team with a cofounder who has a business perspective (emotional customer appeal). One of these without the other is a recipe for disaster. At the same time, each can always learn from the other.

  4. Encourage business disagreements and healthy conflict. Real innovation can only come from people who think and see things differently. Disagreements should lead to constructive discussions, real learning, and better solutions. The challenge is to remain non-judgmental, non-defensive, and not feel the need to win every argument.

    The best way to stay in control, and get maximum benefit, is by asking open-ended and relevant questions. This will allow constituents to feel that you respect them and are debating their ideas rather than judging them because of their views.

  5. Don’t generalize the discussion – stick to the problem at hand. Often it’s tempting to bring up prior issues to make a point, but this approach is fraught with the danger of escalating emotions and potential misunderstandings. Successful work relationships require focus, cooperation, and listening, and often benefit from different approaches.

    Save the generalized discussions and feedback for scheduled mentoring and coaching sessions, rather than the daily impromptu strategy or problem solving meetings. Demonstrate to your constituents that you can do both, and understand the difference.

All my experience tells me that diversity in business is a plus. People with different values and different perspectives from your own lead to better decisions and innovation – ultimately growing your business success and your satisfaction. The sooner you learn to deal with it, the quicker you and your business will benefit. Look around you and check your use of diversity in your business.

Marty Zwilling

*** First published on Inc.com on 08/06/2019 ***

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Monday, August 12, 2019

6 Keys To Convince Investors Of Your Competitive Edge

Entrepreneur-investor-pitchMost entrepreneurs are quick to assert to potential investors that their product or solution will kill the competition, but unfortunately your opinion alone is not enough to convince most experienced investors. They want quantifiable facts and figures on how your offering compares to recognized key players in your domain, and quotes from recognized third-party experts to back you up.

Of course, we all know there are no guarantees, and we like your passion and commitment to future results. We certainly want to hear about any positive feedback you have from potential customers on your idea, your prototype, and your business model, but that better not be the end of the story. We want to see a documented business plan that clearly addresses this challenge.

First of all, you need some convincing market research that your solution addresses a real and growing problem. A competitive advantage to a non-problem or tiny niche is not interesting to investors. They want to be convinced that you are attacking a large opportunity, preferably in the billion dollar range, that will continue to grow at least ten percent per year, without a solution.

Secondly, they want to see your competitive analysis of how you stack up to the top players in the space, by name, with quantitative comparisons and customer value. Skip the fuzzy marketing terms, like “easier to use” and “more functions.” Avoid the temptation to narrow the scope so far as to conclude that you have no competitors, since investors might conclude you have no market.

There are a myriad of other important ways that you can demonstrate your competitive advantages in your presentations, discussions, and business plan, including the following:

  1. Highlight your intellectual property. We all know the challenges involved in getting and protecting a patent, but patents are still strong evidence of a competitive advantage, generally sustainable for twenty years. Don’t forget other intellectual property, including trade secrets, trademarks, copyrights, domain names, and your expert publications.

  2. Capitalize on the experiences of you and your team. Competitive businesses have great teams, as well as great products. If you already have a proven team in a previously successful business, this puts you ahead of most startups, and investors will give you extra consideration. Past leadership success is definitely a competitive advantage.

  3. Promote any inside relationships or customer base. Many markets, including government and education, are especially difficult to penetrate, and connections to public leaders are very valuable. If you already own a known brand, or an existing customer base that is relevant, any market lock or carryover can be a large competitive advantage.

  4. Quantify any dramatic changes to the cost or value equation. Most investors agree that cost reductions need to exceed 20 percent to break loyalty ties and convince customers to change. Thus any order-of-magnitude cost reductions or customer value increases are very important. Reducing margins to lower prices won’t help your case.

  5. Present a clear differentiation and a laser market focus. If your product or strategy is targeted too broadly, or attempts to combine several existing products, it will likely confuse customers and not be competitive to any one segment. Your best competitive position is picking a clearly needy market niche and serving it better than anyone else.

  6. Outline a long-term strategy of maximum depth. While you must start with a narrow focus, make it clear that you are not a “one-trick pony.” Highlight your innovative technology, giving you a great initial product, and documenting a long list of follow-ons as the business scales. This is clear evidence of a long-term competitive advantage.

To survive for any length of time against competitors, you need a “sustainable competitive advantage.” This requires that you demonstrate a competitive lead today, as well as a plan and strategy to maintain that lead over time as the market evolves, and competitors with deep pockets try to replicate your advantage.

Thus, the ultimate competitive advantage is the agility and insight to stay one step ahead of your competitors and changing market needs. No one said it would be easy, but I’m confident you’ll find the payback well worth all your efforts.

Marty Zwilling

*** First published on CayenneConsulting on 07/26/2019 ***

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Wednesday, August 7, 2019

8 Keys To Enjoying Work, And Enhancing Your Career

Enjoying-workAs a business advisor, one of the most frustrating things I see is the number of employees who are unhappy at work. Business owners don’t like it, the new generations think promotions will solve it, and productivity levels continue to suffer. According to the polls, only 32 percent of workers are engaged, and the rest spend much of their time wishing they were somewhere else.

Based on my own career with small companies as well as large ones, I assure you that it’s a lot more satisfying for everyone, as well as productive, working in a happy business environment. According to other surveys, there are many leading companies, including Google, Zappos, and Southwest Airlines, where happy and engaged employees are the norm, not the exception.

In my view, too many people put the total problem and the solution on the company to keep employees happy, when in fact it takes an equal commitment from both sides. Yes, companies have to enable a culture of purpose, employee value, positive feedback, and the tools to do the work, but people have to take ownership of their own life, liberty, and the pursuit of happiness.

For me, ownership of the challenge meant developing and honing a set of personal habits that fostered a sense of learning, challenge, and accomplishment, rather than boredom, fear, and negativity. Here are some key recommendations that I espouse:

  1. Make a habit of initiating a real relationship with peers. It’s hard to stay positive and happy working with people you don’t really know. As an introvert, I initially found it to be difficult to approach new people, but I found it much easier in a work environment, where we had many common subjects. Getting to know the managers also helped engagement.

  2. Take satisfaction from a couple of simple wins every day. We’ve all hit some tough roadblocks, but don’t ignore the cases where you finished a task ahead of time, the right answer just popped into your head, or your idea made someone else’s day. Make it a habit to tally these up at the end of a day, and share your small successes with a friend.

  3. Add a positive productivity change that you learned this week. Most people are happiest when they are feeling smarter about their job. Make building new habits a recurring thing, rather than a process that ended when you graduated from school. The world we live in is constantly changing, so not learning means that you are falling behind.

  4. Focus on improving work habits that have the biggest payback. It’s easy to get discouraged about one bad habit that you know you have, such as not responding to all emails every day. Yet your creativity in solving customer concerns may have far more potential in boosting your career. Highlight your strengths, rather than fear weaknesses.

  5. Put time in your schedule for improving you. Get in the habit of scheduling some time for you every day – maybe just a few minutes at the beginning of the day before the first crisis hits. Your satisfaction and productivity will both go up for the rest of the day. Pick a relaxing and friendly environment, perhaps with a mentor or friend over a cup of coffee.

  6. Integrate new habits into a more healthy lifestyle. Positive new habits need to be associated with a healthy lifestyle, that includes the proper rest, exercise and recreation. Don’t believe the old myth of “no pain, no gain.” A more satisfying and happy work environment will propagate into better family, group, and personal relationships.

  7. Work on old problems incrementally, rather than big bang. If your operational mistakes are making you unhappy, ask for five-minute mentoring every day from one of your peers, rather than trying to carve out two weeks for an in-depth class. You will get the satisfaction of seeing multiple improvements, and make a good friend in the process.

  8. Use daily repetition to turn improvements into habits. Good habits are made permanent by regular reinforcement. Lead with your strengths, and stop worrying about all the things you could be. Your strengths will lead to successes that make you happier, and your peers will see you as a leader in these areas, giving you even more satisfaction.

In summary, more positive personal habits will raise your self-esteem, your confidence, your productivity, and your happiness. Best of all, these will improve your image and credibility in the eyes of your customers and your employer. That’s what I call a win-win opportunity.

Life is too short to go to work or come home every day unhappy. It’s really up to you, so stop waiting for everyone else and the business to change around you.

Marty Zwilling

*** First published on Inc.com on 07/24/2019 ***

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Friday, August 2, 2019

5 Stages In Leading Paradigm Shift Levels Of Change

segway-human-transporterA refrain I often hear from technology entrepreneurs to investors is that their product or solution is so innovative that it will cause a “paradigm shift” in the industry. Their assumption is that customers and investors will be wowed by this into buying, ignoring the evidence that large-scale change takes a long time, most often fails, and scares away customers and investors alike.

For example, I still remember when Dean Kamen launched the Segway Human Transporter in 2002, predicting a transportation paradigm shift, and geared up to sell 10,000 per week for the next five years. Due to qualms of customers and governments, he sold less than 30,000 of the devices over the next five years. Most other new vehicle designers have suffered a similar fate.

Clearly large-scale change efforts, whether driven by an entrepreneur or an enterprise, need strong leaders and a proven approach to beat the odds of failure. I found some excellent guidance in this regard in a new book, “Beyond Performance 2.0,” by Scott Keller and Bill Schaninger, based on their work and a decade of research at McKinsey & Company.

They outline five stages, which I espouse, to leading paradigm shift levels of change and increase your odds of success from the historical thirty percent to at least double that number. While the author’s focus is slanted toward enterprises, I believe I have seen and can characterize comparable steps for small businesses and entrepreneurs:

  1. Aspire: Set strategic objectives and business health goals. Create a compelling long-term change vision with milestones and deliverables. Roll back the future to immediate and mid-term aspirations, while guarding against emotion and biases in the process. Test your goals and objectives on real customers and outside experts to validate reality.

    Objectively audit your business health for weaknesses and strengths in resources, leadership, skills, and experience. Build an action plan for any ailing areas needing immediate improvement. Choose where you must be exceptional in service and focus.

  2. Assess: Forecast required skillsets and needed mindset shifts. Looking at your desired rollout and growth, and understanding resource supply dynamics and availability, identify how any gaps will be closed.

    Explore the underlying mindset drivers of the required team behaviors. Isolate and reframe the critical “root-cause” mindsets for any unhealthy ones. Pinpoint helping and hindering behaviors related to health priority areas, such as hiring and training.

  3. Architect: Build an actionable plan and acquire delivery resources. Define and document the portfolio of initiatives to deliver on your strategic objectives and fulfill your production and skill requirements. Review the plan with your advisors and investors, as well as outside experts. Detail and sequence actions, and schedule resources to deliver.

    At the same time, you need to build or reshape the work environment to influence needed shifts in mindsets and behaviors. Hardwire health interventions into performance initiatives by linking desired behavior to measurements, rewards, and consequences.

  4. Act: Execute the plan and establish leadership drive. Take leadership control and allocate responsibility and feedback loops. Scale up your portfolio of initiatives, monitor progress and dynamically pivot as your plans are implemented. Constantly validate your solution fit, schedule, and business model with feedback from key customer advocates.

    Mobilize influencers, make the change personal for a critical mass of leaders, and maintain high-impact two-way communications. Keep the motivation level high for all constituents through internal and external marketing, social media, and events.

  5. Advance: Institutionalize new learning and leadership creation. Formalize processes and expertise to enable knowledge sharing, continuous improvement, and new learning to characterize the day-to-day working of the organization going forward.

Prioritize roles by value-creation potential on the go-forward strategy, match the best talent to priority roles, and operationalize the talent match process to ensure that it is regularly revisited.

Notice that each of these steps has both a performance and a business health component. In my experience, the difference between success and failure is keeping current and future business health a top priority. Hard work is not enough – especially when paradigm shifts and large-scale change are involved.

Marty Zwilling

*** First published on Inc.com on 07/19/2019 ***

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