Friday, July 23, 2021

6 Management Strategies To Maintain Brand Leadership

protect-your-brandEvery one of you business owners I know has worked hard to build your brand, and recognizes the critical value of instant brand recognition and leadership. You have done everything to register your brand legally, including domains, copyrights, patents, and trademarks. Yet, as an outside advisor, I often see slippage over time on protecting your brand, which can be costly.

The specifics of these shortcomings are hard to nail down, but I was impressed with the good summary provided in a new book, “Make It, Don’t Fake It,” by Sabrina Horn. She is a widely acclaimed C-suite advisor, speaker, and founder of HORN Strategy, LLC. I add my insights here to her top six key strategies for keeping your brand authentic and above reproach:

  1. Avoid changes that may compromise quality or image. We all strive to reduce costs and improve efficiency, but the ultimate test is the potential to erode values, culture, and brand image. Every change has possible downsides, and it your responsibility to quantify and balance these against benefits. Don’t let your bean counters devalue your brand.

    For example, a few years ago Wells Fargo seriously damaged its brand trying to grow the business by creating accounts without proper customer consent. This resulted in lawsuits and fines, angered many new customers, and the Wells Fargo brand is still recovering.

  2. Evaluate the brand impact of proposed market moves. The push is always on to grow your market with new geographies, new products, and new market segments. Yet every change can cause brand dilution or competition you don’t need. Always check language nuances and translation issues. Moving in or out of the wrong market can kill your brand.

    Most of us can still remember when Ford expanded into Brazil with the Pinto model, not realizing the translation had a negative sexual connotation, which severely hurt Ford’s brand in many countries for all models. There are many comparable examples of big hits.

  3. Recognize that employee morale impacts your brand. If employee morale is down, your brand will be negatively impacted. Thus you need to see and be seen with your people, and walk the talk. Don’t wait for quarterly morale surveys, or feedback from HR. Ask employees for feedback, and commit to fix problems before you feel brand impact.

  4. Never argue with customers, public or private. Pay close attention to social media and online feedback, and never respond defensively. Create and truly listen to your customer advisory council, and focus on removing opportunities for them to be disappointed. Customers, more than advertising, make your brand image in the market.

    Of course, we can all agree that the customer isn’t always right, but it does your brand no good to debate the issue. The best approach is to listen and learn from them – and clarify your brand marketing, customer service, business model, or just find the right customers.

  5. Accommodate and integrate multiple cultures. As you expand the business into new geographies and market segments, focus on culture inclusivity rather than trying to manage multiple subcultures. Use global online “influencers” and common values to seek communication across groups, and keep the focus on your brand rather than differences.

    In this age of the Internet and global communication, it is virtually impossible to isolate individual subcultures, and market your brand uniquely to each. Attempts to do this have resulted in more confusion than value, as well as high management and marketing costs.

  6. Differentiate your brand based on a higher cause. Be different based on a unique value proposition, not just better quality or cost. Know yourself as well as your customer, and make your brand a statement that they can relate to, and want to be a part of. Keep you image authentic, fresh, and harmonious, and firmly based in reality.

    For example, TOMS shoes differentiated their brand of common shoes by highlighting a higher purpose from founder Blake Mycoskie of donating a pair of shoes to the needy for every pair sold. He found that the return was far greater than the cost of donated shoes.

Building and protecting your brand is the ultimate responsibility of every business owner and leadership team. It supersedes all other responsibilities, and should be top-of-mind in everything you do. Don’t let the day-to-day pressures from customers, competitors, and scaling push you into shortcuts that look good on paper today, but may damage your brand image in the long term.

Marty Zwilling

*** First published on Inc.com on 07/09/2021 ***

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Wednesday, July 21, 2021

8 Principles For Better Delegation And Work Control

to-do-listIn my role as a business advisor, a complaint I often hear from owners and professionals alike is that there is just not enough time to get everything done. This is especially true from those of you who are perfectionists, and feel hard-pressed to delegate critical tasks to anyone who may be less capable. Even worse, I hear the terms control freak or micro-manager tossed around.

The solution, in most cases, is more effective delegation of work to the right people. I’m convinced that effective delegation is a skill that we can all learn and benefit from, and improve on over time, through a new and continual focus on the following key principles:

  1. Give everyone at least one chance to earn your trust. You really don’t know what others around you are capable of until you give them a chance. Don’t assume anything. Less experienced people need the challenge, and you may be the only obstacle to their progress, as well as yours. This starts by hiring people with the right skills and training.

  2. Evaluate every task for the opportunity to delegate. We all have strengths as well as key interest areas. Delegate to match strengths and interests of others. You need to keep only the most critical tasks for your role, and delegate others to give you the focus to excel in the ones you keep. Don’t wait until you are overloaded to consider delegation.

  3. Never delegate work to others that is rightfully yours. Delegation should never be seen as unloading undesired work, or automated load balancing. Every task should be evaluated for applicability, priority, and fit to your role. Arbitrary delegation will likely result in poor quality work, loss of trust, and ineffective use of everyone’s time and skills.

  4. Focus on providing clear instructions and coaching. I often find that people who disappoint in delivery never really knew what was expected, or how it was to be done. Think back to when you were new in this area, and what would have helped you to get the job done quickly and effectively. Make sure they have the right tools and sources.

  5. Set completion times and milestones for follow-up. Just handing out work and expecting no more involvement is not a good strategy. Always expect to check interim milestones, and be attentive to other indicators of good progress or problems. This is an area where multi-tasking and management by walking around pays big dividends.

  6. Delegate decision authority as well as responsibility. If you insist on making all the decisions, you have not really delegated the task. Make sure the person doing the work has all the tools, resources, and decision rights necessary to do the job without constant support from you. Delegation should never result in multiple people doing the same job.

  7. Give private and peer recognition for jobs well done. To provide the highest incentive to complete delegated work, and inspire loyalty and trust, don’t forget to provide the positive individual feedback deserved, as well as peer recognition for progress and results. Don’t make the mistake of always taking credit and never giving credit for work.

  8. Learn to say no when others request help from you. Perhaps you are your own worst enemy, by being too quick to accept assistance requests from others. Some people may try to dodge responsibility or lighten their own workload by pushing their work to you, or frequently asking for your help. Practice speed mentoring, and ask for interim progress.

    Another approach to avoid appearing negative is to ask for time later to discuss the specifics. This gives you a chance to check your calendar first, or give some thought to alternatives before committing. You can also seek reciprocal help to balance the impact.

I understand that all of you who have grown a business from a single-person entity are reluctant to believe that another person can do the work as well as you. Yet your growth and the growth of your business depends on your ability to manage the bigger picture, as well as get the day-to-day work done. You can’t be the leader and have the success you want, if you kill yourself with work.

Marty Zwilling

*** First published on Inc.com on 07/08/2021 ***

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Monday, July 19, 2021

7 Accelerated Growth Strategies For Disruptive Change

Nuclear-Power-PlantTo build a startup, entrepreneurs need a laser focus on providing an innovative solution to a real problem. Once they achieve that initial traction, the focus needs to change for quicker growth. Most entrepreneurs dream of achieving the exponential expansion of a Google or Amazon, but few investor pitches I see outline any strategy beyond simple marketing to make this happen.

Investors are looking for innovation in the growth strategy, to match or exceed the innovation in the technology and solution. Conventional marketing may be adequate for linear growth, but it probably won’t take your startup to the exponential growth of a large-scale movement.

While searching a while back for the most effective strategies of companies that have achieved huge growth, I came across the classic book “Bold: How to Go Big, Create Wealth and Impact the World,” by Peter H. Diamandis and Steven Kotler. These visionary thinkers outlined in their book a set of modern accelerated growth strategies that I believe every entrepreneur should adopt:

  1. Build a community of evangelists. Become a conduit for people to talk to each other, and feel like part of a special community. According to Seth Godin, it’s also necessary to engage them with the message from you, the leader, about where you want to go, and the change you want to take place in your world. This incents word-of-mouth on steroids.
  1. Nurture partnerships with many other organizations. Playing well with other organizations in cyberspace and in the real world is more effective than trying to move the mountain alone. Build a list of specific organizations that can help you, and how to engage them. Organizations bring their own communities to exponentially grow yours.
  1. Incent friendly competition with prizes. People love to compete. Give community members incentives, rewards, and challenges as a way to square off against one another, and they will show up. Diamandis created the XPRIZE and Singularity University which created huge movements, and exponential growth for related businesses.
  1. Go into battle against a common rival. One of the best ways to strengthen a community is to take a stand, and find a common enemy. Attacking an issue that affects many potential customers allows you to focus on providing solutions, and lets your community do the selling. Refrain from ranting and raving or bashing the enemy.
  1. Deliver edgy product demonstrations. New products being used in innovative and unusual ways spark buzz and attract followers. The opportunities are endless, with the Internet of Things, wearable technology, driver-less cars, and new fashion trends. Get your community involved in both the idea and the delivery.
  1. Host events to bring your community together. Events can also be in cyberspace, or anywhere in the real world. These encourage members to band together and share experiences based on common interests, and strengthen ties to your brand. Don’t forget that when planning an event, your ultimate goal is incite people to advocacy and action.
  1. Maximize your online brand and media presence. Don’t forget the basics of search engine optimization, social media engagement, video marketing, and courting influential bloggers. Your online brand is what your community thinks of you when you are not available. Creating and updating quality content is required to maintain visibility online.

These strategies are exceedingly effective when applied to solutions that are derived from one of the accelerating new technologies, including networks of sensors, infinite computing, robotics, artificial intelligence, and 3D printing. They also work well in building movements based on social causes, environmental change, and health initiatives.

Another more recent strategy for business community building is crowdsourcing. With crowdfunding early, and crowdsourcing to build a community throughout, entrepreneurs can massively increase the speed of business evolution in today’s hyper-connected world. Why not make your idea an unstoppable movement, and not just a business?

Marty Zwilling

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Sunday, July 18, 2021

10 Startup Execution Steps Highlight The Finish Line

business-growing-fast-businessmanBusinesses always seem to take longer to succeed than an entrepreneur expects. Seth Godin once said that overnight success in startups takes about six years, and Seth is an optimist. Thus we all look for shortcuts. Execution shortcuts would be hidden strategies to achieve the endgame sooner, without losing 40 to 60 percent of the financial potential along the way.

The short answer is that there is no magic. But there is consensus from the experts that human dynamics are more the key and the problem, rather than any particular business strategy or tactic. The classic book, “The Execution Shortcut,” by Jeroen De Flander, a well-respected writer and speaker on business strategy execution, offers some good insights and examples.

If you aspire to get a better return from your strategy, De Flander and I agree that you must learn to position your strategy to capture the head, heart, and hands of your constituents. They need a full sense of awareness of where you are going, to care deeply about it, and maintain the highest energy to drive it. Here are ten ways he offers for an entrepreneur to enhance his/her strategies:

  1. Facilitate small choices that get you closer to the finish line. Provide prioritization guidelines to align day-to-day choices with the big choices. To make the right big choice, everyone needs to know who to focus on, and how to offer unique value to customers in the chosen segment. When to say no is also a critical part of any strategy.
  1. Keep the big choice clearly visible in all your actions and communications. People shorten and package messages all the time, causing message distortion which can hide the core of your big idea. So don’t pass messages down the line. Talk directly to every key constituency often, and make your messages as sticky as possible.
  1. Draw a finish line so key people know the real objective. Capture the core of your strategy and show everyone in an inspiring way what strategy success looks like. Everyone works harder when they know who’s winning and the distance to the end. The right finish line also motivates and gives purpose to those traveling the execution road.
  1. Define lead indicators, and regularly re-measure distance to the finish line. Everyone needs a limited set of lead indicators to provide feedback, and allow recalibration based on things learned along the way. Remove old signposts to prevent confusion, and work to prevent information overload.

  1. Share strategy stories for stickiness and heart connections. Story wrappers add context and emotion to the strategy to make people feel and remember the core message. People want to see what kind of small choices they have to make to contribute to the big choice.

  1. Climb the micro-commitment ladder with full engagement. Don’t settle for small commitments on big things. Go after big commitments on small things. The highest rung on the commitment ladder is “Yes, I will get it done no matter what.” This is the only level that represents full ownership of the task, and execution responsibility has really shifted.
  1. Go beyond self-interest to boost belief in others. The key to success is belief. Celebrating small successes along the road make people believe they can achieve a big success at the finish line. Success is a self-fulfilling prophecy, causing people to dig deeper, recover faster, and keep going longer.
  1. Constantly tackle complexity as your business grows. Complexity is the CO2 of the modern business world – the biggest performance killer in organizations. Embrace simplicity to create the most productive working environment. Be constantly on the lookout for best practices and tools to improve your strategy execution.
  1. Experience the power of habits to automate decisions. Each overt decision we make demands mental strength, and when there are too many decisions to take, our reserves run out. Remember how draining your first day on a new job was. Quickly the small decisions become habits. Group habits become your company culture.

  1. Find your 7-day rhythm. A daily rhythm or schedule creates habits faster, but is unrealistic in most business environments. A 7-day rhythm provides regular repetitions, and follows a more normal business flow. Be sure to connect decision horizons and find a spot for strategy in everyone’s weekly agenda.

We have all seen businesses and startups with great ideas that never seem to reach the finish line, while others with more mundane solutions seem to take some hidden path to success. In my experience, like that of De Flander, the difference is almost always related to the entrepreneur and their execution strategy, more so than to the solution provided.

So, the next time you talk to a potential investor, spend more time on your execution dynamics and less time on the product pitch. I suspect it will be a shortcut to at least the funding phase of your startup, and probably long-term business success as well.

Marty Zwilling>

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Saturday, July 17, 2021

5 Keys To Spending Your Time On The Right Work Items

time-management-more-resultsIf you define your self-worth as an entrepreneur by how busy you are, it’s time to find another lifestyle. We all know people who are extraordinarily busy, but never seem to accomplish anything. For survival, entrepreneurs need to be all about accomplishing results that matter for themselves, their team, and their customers. That’s productivity.

Why is this so hard? In an eye-opening Franklin Covey study, respondents indicated that 40 percent of their time was being spent on things that were not important to them or their companies. That is a huge hit on productivity. For insight, I recommend the details provided in the classic book “The 5 Choices: The Path to Extraordinary Productivity,” by Kory Kogon, Adam Merrill, and Leena Rinne.

Although the authors focus has been on large organizations, I believe concepts are even more relevant to entrepreneurs and startups. Every entrepreneur should consciously follow these five key actions and implementation tips, to compete and survive, as well as to get the personal satisfaction they expect from the lifestyle:

  1. Act on the important, don’t react to the urgent. Filter the vitally important business priorities from the urgent for the moment, but less important ones, and keep your focus on what matters most to your success as a startup. This will increase your return on the moment (ROM) in the midst of fierce distractions.
  1. Go for extraordinary, don’t settle for ordinary. To change the world, as envisioned by your passion, you need to achieve extraordinary results on the important things. That means identifying the few most important roles you play in the startup right now, giving a framework for balance, motivation, and fulfillment.
  1. Schedule the big rocks, don’t sort gravel. You can never achieve major milestones by just sorting through the gravel faster. Decide what is most important and get those activities in the bucket before the week begins. Spend at least thirty minutes each week planning your schedule to execute with excellence on those important things.
  1. Rule your technology, don’t let it rule you. Turn technology into a productivity engine, rather than a burden, to battle the avalanche of email, texts, and social-media alerts that threaten your productivity. Put order into the chaos by using technology to place all incoming information into four categories: appointments, tasks, contacts, and documents.
  1. Fuel your fire, don’t burn out. There are only two sources of energy: a clear and motivating purpose, and a healthy body. Manage the five primary energy drivers of moving, eating, sleeping, relaxing, and connecting to create a pattern of life that fuels your fire and keeps you from burning out before your startup achieves success.

In addition to following these choices personally, and entrepreneur has to instill the same priorities and values into every member of the team, through leadership. Every business culture is built by the actions of its leaders, primarily through the startup process. Here are some ideas on how you can exercise leadership in creating a high productivity culture throughout the team:

  • Regularly share your commitment to productivity with everyone.
  • Practice productivity planning with your key team members.
  • Create an environment where it is safe for people to make better decisions about where they are spending their time, attention, and energy.
  • Break the assumption that everything you ask for is needed immediately.
  • Provide and encourage the best use of technology to manage information overload.
  • Reward highly productive efforts, just as you might reward good emergency responses.
  • Encourage an aura of healthy energy and living versus anything for the cause.

Whether you are the entrepreneur leader or a team member, remember Pareto’s Law, which asserts that 80 percent of all outputs result from 20 percent of the inputs. It’s not the hours you work, but the work you put into those hours. Think seriously about which 20 percent of your tasks will produce more results than the other 80 percent combined. That’s extraordinary productivity.

Marty Zwilling

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Friday, July 16, 2021

8 Keys To Maximizing Your Confidence and Self-Esteem

businesswoman-confidence-self-esteemConfidence and self-esteem are critical to your success as an entrepreneur, or any business role. As a mentor, I’m regularly frustrated by people who try to cover their lack of confidence with ego and arrogance, rather than working on the base issue. Every business leader and investor I know quickly sees through the façade, and tags you as a high risk and difficult person to work with.

On the other hand, most business professionals and the customers we all need in business recognize that professionals with a healthy self-esteem will always be more resilient, creative, listen better, and treat others with respect. Fortunately, the skills and behaviors required to demonstrate the confidence you need can all be learned by focusing on the following strategies:

  1. Capitalize on your strengths and never stop learning. We all have strengths and weaknesses, so pick an initial role that highlights your strength, build a team around you that can fill in for weaknesses, and trust them to help you, until you have filled the gap. Trying to “fake it until you make it” is a losing strategy in today’s complex world.

  2. Prioritize your passions in improving competence. Some of us are proud to be technologists, while others love marketing or team building. As you look at your own idea of fun and success, self-esteem and support will come from greater competence in these areas. You can’t be all things, and attracting good people around you is the ultimate skill.

  3. Show how your interests lead to long-term success. Your self-worth will be improved and more credible if you can paint the bigger picture of long-term value and success. Ego and arrogance must never be perceived as covering shortcomings in the plan. In addition, you will be motivated to learn and communicate a broader view of your project.

  4. Show that others are an inspiration, not competition. Never degrade others, including competitors. Give them full credit for what they have accomplished, but use their context to highlight your skills and innovations. This makes you and your solution the baseline, rather than an angry contender. Your image will be improved in the minds of everyone.

  5. Admit that you have learned from past mistakes. No one fully trusts someone who claims to have never failed, or continues to repeat an approach that doesn’t work. We all gain confidence and self-esteem when we learn new things, and see progress as a result. Everyone sees your energy applied more productively, and has the urge to help.

  6. Avoid making excuses and putting blame on others. People often use ego and arrogance to avoid taking full accountability for actions within their control, and this lowers their own self-esteem in everyone’s eyes, including their own. A better alternative is to acknowledge your shortcomings, and use these to incent new skills and new behavior.

  7. Develop a mindset of self-worth and ability to adapt. A positive mindset of being able to add value is a self-fulfilling prophecy, and is seen by others as leadership, rather than giving orders. It allows you to change and learn as the market evolves, and your business needs change. The people you need will be quicker to engage with and support you.

  8. Recognize relationships as the real key to success. You can never succeed alone in business, no matter how much you learn and adapt. Requiring other people for things outside your control is not a shortcoming. The ability to anticipate market changes, and build strong relationships is itself a key skill and mindset that every leader needs.

    Even the most proven and recognized business leaders today, including Bill Gates and Warren Buffett, give credit to their relationships and mentoring. There is no down-side to having the humility to acknowledge that you can always learn from others around you.

In my experience, in the long-run, ego and arrogance normally fail to fool anyone, including yourself, into believing that you are a leader and can achieve success, despite your passion and demeanor. Therefore, the sooner that you adopt the strategies outlined here, the better will be your odds of really changing the world, and having fun and satisfaction while doing it.

Marty Zwilling

*** First published on Inc.com on 07/01/2021 ***

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Wednesday, July 14, 2021

6 Keys To Getting Beyond Basic Incremental Innovation

Tesla-sports-car-in-spaceOne of the business ironies that many entrepreneurs have learned the hard way in the past is that ideas which are truly disruptive carry the highest risk of failure, take the longest to gain traction, and thus are the least likely to get external funding. So some entrepreneurs stick with incremental solutions, avoiding more transformational or adaptive solutions implying disruptive change.

In the past, only a few entrepreneurs, like Steve Jobs and Bill Gates, maintained the passion, patience, and determination to accomplish disruptive change in the marketplace. Today with the growing number of disruptive technologies available, like cloud computing, wireless sensors, Big Data, and mobile devices, an incremental solutions mindset is no longer enough to win.

John Sculley, in his classic book “Moonshot!: Game-Changing Strategies to Build Billion-Dollar Businesses” argues that every entrepreneur now needs to think and act like one of those elite entrepreneurs who could go the extra mile and cause disruptive change. He coins the term “adaptive innovator” for the required mindset to characterize the required focus.

I strongly support the key principles he outlines as required to drive the mindset to make business leaders successful in this new world, both in established companies as well as startups. I have summarized or paraphrased the points here, to add my own focus and experience with new entrepreneurs and startups:

  1. Be forever curious and an optimist. Adaptive innovator entrepreneurs are inspired by what’s possible, but focus on what’s probable. Great entrepreneurs aren’t just dreamers, they are doers. They wake up each day re-energized and optimistic, curious about the world around them, but always committed to getting real things done.
  1. Unpack your best ideas. Unpacking an idea is about taking deep dives into it; twisting and turning it to see the concept in different ways. The deeper your dive into an idea, the more creative will be your insights. Ideas without context are just a commodity. Context comes from experience. Trying and failing is an experience building-block to get context.
  1. Learn more every day in layers. Let every new bit of learning spark your curiosity to build a new layer of knowledge, which will then drive another layer of learning. Thinking visually can help. Listen for insights from others, and follow-up on every reference to spark new learning. It’s the reverse of peeling layers off an onion.

  1. Never give up in finding a better way. Steve Jobs was never satisfied, and kept pushing himself and everyone around him. He kept raising the bar. At Apple, when a product actually shipped, against unimaginable timelines, even the most talented and skeptical on the team were amazed and empowered by what they had accomplished.
  1. Prepare incessantly and daily. The best athletes are naturally gifted, but even they train constantly and invest hours of practice every day. It’s no different for the best adaptive entrepreneurs. The most formidable tools of the adaptive innovator are smart personal productivity aids to help realize your dream. Learn to use these tools effectively.
  1. Put the customer at the center of your business concept. As you consider a really transformative business concept, leverage your domain expertise and create a customer experience never realized before in that industry. Couple this with automation and technology to offer a disruptive solution. The customer, not the technology, is in control.

Sculley correlates many of these principles to the lessons he learned and insights from his failures at Apple, as well as his entrepreneurial successes before, during, and after Apple. We both agree that the marketplace and pace of technology have changed since the days that Jobs and Wozniak started Apple, so the entrepreneurial and investor mindset has to change as well.

If you are a new entrepreneur, you can still choose to “play it safe” with incremental innovation to improve your initial funding chances, but getting funding won’t be very satisfying if you can’t compete, and lose it all. It’s time to adopt the adaptive innovator entrepreneur mindset principles listed above, capitalize on the game-changing new technologies, and go for the gold.

Marty Zwilling

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Monday, July 12, 2021

8 Ways Entrepreneurs Keep Ahead Of Business Change

apple-iphone-imacSometimes entrepreneurs are so focused on making change happen for customers that they forget that continually changing themselves and their company is equally important. Some get stuck in a rut and get run over by competitors with new technology, like Eastman Kodak, and others get pushed into a crisis, like Apple did, before they reinvent themselves into a new market.

Everyone and every company needs to continually learn from their experience and adapt to a changing world to thrive. “If it ain't broke, don't fix it” is an old adage that really doesn’t work in today’s business world. If you don’t plan to reinvent yourself regularly, your competitors will make you obsolete, and any success to-date will likely be short-lived.

In his classic book “Invent, Reinvent, Thrive,” Lloyd E. Shefsky, Entrepreneurship Professor at the Kellogg School, highlights this message, and provides some expert insight on how entrepreneurs can apply the principles to their own career and company. Here are the key recommendations from both of us, based on my own business mentoring insights:

  1. Re-launch using your enhanced core competency. Use that same technical and business expertise that served you well on this startup to find the next opportunity. I’m sure you have seen many new ones, and now understand even better the due diligence required to validate the opportunity, and the executions steps required to make it happen.

  1. Ignore the voices of dissent again. Negative advice on an unknown is easy and safe to give, so every entrepreneur hears it over and over. As an entrepreneur with some success, you had the confidence to prove them wrong once, so don’t lose your nerve and try to play it safe now. Proven problem solvers only get better with practice.
  1. Listen and act on the ideas of others around you. Take advantage of the fact that you have surrounded yourself with key people who have good ideas, but may lack the skills or confidence to act on them. Skip the arrogance of “not invented here,” and re-invent your current company, or start a new one, before a crisis occurs.

  1. Move to a higher platform. Many entrepreneurs get their first taste of success running their own consultancy or practice. A few are able to move to higher platform, like moving from a sole practitioner physician to create and run a much larger medical organization. That’s a type of re-invention that can give you a major advantage over competitors.

  1. Changing times call for a new skill set. Smart entrepreneurs in any given industry, like publishing, recognize the appearance of new technologies which threaten their survival, including digital publishing and print-on-demand. The best immerse themselves in these technologies, and invent new businesses, rather than fight in the old one to the death.
  1. Seek out customer trends before they become an avalanche. Don’t stop doing the in-depth communication with customers that brought you initial success. Plan an annual set of customer sessions that you don’t delegate to subordinates. If customers don’t convince you to re-invent a part of your business each year, you probably aren’t listening.
  1. Find mentors who have the skills you lack. Proactively seek out mentors who will tell you what you need to hear, rather than what you want to hear. Work on the new skills you acquire from your mentor, and test incrementally what you have learned. With each new skill you acquire, your likelihood of long-term success is improved.
  1. Expand your investment alternatives. If your business success so far is based on family and Angel investors, perhaps it’s time to start working with institutional investors and external business partners. Their expectations and insights will broaden your view, and may incent you to upgrade your strategy, or re-invent a portion of your business.

Entrepreneurship is not a one-time transformation that qualifies you for long-term success. It is a lifestyle, like many others, which requires constant effort to keep you ahead of the crowd in a rapidly changing business environment. Standing still is falling behind. What is your action plan to continually re-invent yourself and thrive?

Marty Zwilling

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Sunday, July 11, 2021

6 Obligations That Come With Startup External Funding

investors-signing-funding-agreementAs an angel investor to startups, I’m still surprised to find entrepreneurs who expect investors to give them money, and assume no strings attached. Would you do that if it was your money? If the entrepreneur wants total control of their own venture, with no one looking over their shoulder, they should work within the limits of their own resources, a process called bootstrapping.

Angel and venture capital money always comes with ownership and management implications, starting with the obvious ones outlined in the term sheet for the deal. These normally include what percentage of the company the investor now owns, how and when tranches of money will be delivered, and even how and when you can sell your own shares (liquidation preferences).

Finally, entrepreneurs should never forget that investors really believe that they are there to help (not like “I'm from the IRS and I'm here to help”). In fact, they usually invest because they have extensive experience in your business domain, often have strong convictions on what it takes to succeed, and probably would like you to do it their way.

In any case, your startup is now part of some investor’s portfolio, so you need to treat the situation like reporting to a new boss, and not like a new freedom. That means listening to investor expectations, communicating regularly and effectively, and assuming that all your efforts will now be monitored in the following ways:

  1. You now must have a Board of Directors. As an early-stage startup, you may have some hand-picked mentors as an Advisory Board, but now you need a formal Board with approval rights on all your strategic decisions and pivots. Investors will expect at least one seat on the board, and expect a board report from you each month on key items.
  1. Progress milestones become management objectives. Every funding term sheet is followed by a set of milestone commitments, which should not be considered optional suggestions. Funding can be pulled, and future distributions withheld, if objectives are not met. Your very role as CEO is at risk if the Board is not satisfied with your progress.

  1. Your time is no longer your own. Many investors will feel the need to visit your office, or just call you to chat, for a personal update on how things are going. They see you as working for them, as opposed to them working for you, so these calls, visits, and questions are not something you can delegate, or postpone repeatedly.
  1. Communication to investors must be regular and proactive. A quick way to lose support of investors is to wait for prodding from them before providing communication updates, or answers to changes in status or direction. On the other hand, calling them on every minor issue, or asking them to make decisions for you is equally bad.
  1. You can’t keep bad news secret. Most entrepreneurs try to keep team morale high by limiting and editing the flow of information downward, so they try to do the same thing upward to their investors. Unfortunately, this practice can get them fired quickly, due to the legalities of the shareholders rights agreement on what must be shared and when.
  1. Cash flow tracking is even more important with someone else’s money. Since they now have money in the bank, entrepreneurs sometimes start delegating spending decisions, or they decide that it’s time to make that trip to Paris that they couldn’t justify before. You must be even more strict with investor cash than with your own.

If you haven’t done this before the investor deal was signed, now is the time to talk to each of your peers who may have received money from the same investors. These peers can tell you what works and what doesn’t work with a given investor. Also, these peers are now your competition in a portfolio ranking, so you need to know to stay ahead of them in the pack.

If your startup is one of the high fliers in the portfolio, be aware that investors may ask you to take even bigger steps into the unknown, hoping you can be the next Google. Certainly you don’t have full control, but don’t get talked into taking unnecessary risks just to make the investor’s portfolio a leader among their peers.

In reality, when you take someone else’s money, your job as an entrepreneur gets even tougher and riskier than before. I’ve seen many startups that might well have succeeded, if only they had not attracted all the money they wanted. In the startup world, hardship and struggles are often your best teachers. If you do take investor money, do it with your eyes open. It can disappear quickly, leaving you with just some heavy strings.

Marty Zwilling

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Saturday, July 10, 2021

7 Strategies To Prepare For The Next Customer Change

Volkswagen-Group-Le_Grand-SaconnexIf you think your business has weathered the storm, think again. In addition to obvious economic challenges, the emerging generation of customers is determined to radically change the rules for customer engagement. Their expectations of relationship and personalization are taxing businesses today, and their power through social media will kill those who can’t or won’t comply.

An eye-opening list of insights was highlighted in the classic book, “Build for Change,” by Alan Trefler, Founder and CEO of Pegasystems. He makes a convincing argument that it’s time for every company to get prepared for the next customer generation, or your company is heading toward life support.

As a backdrop, he defines the evolution already in progress from current Gen Y customers to a more demanding and less tolerant state (Gen D) that will make them even quicker and more technologically able to demonize and destroy your business, if it won’t meet their norms of interaction, personalization, and purpose.

While I’m not so sure that I agree that these represent the ultimate apocalypse of customers, I do believe the solutions he recommends should be taken seriously by every entrepreneur. I summarize here my interpretation of his key points:

  1. Take heed of serious next generation customer expectations. More and more, I see evidence that customers want to be pulled to your company, rather than feel that you are pushing yourself on them. They are not hesitant to engage the crowd through social media and sites like Yelp to drive you from the marketplace. Your reputation can be compromised these days by poor handling of even a single customer experience.
  1. Don’t count on big data alone to save you. In reality, data today is only memory about past transactions. Responding to transaction trends without the proper context can lead to broken relationships. Your changes must allow them to discover something so awesome that they are excited, versus disgusted, that you seem to know who they are.
  1. Add context and intent to your customer analysis. Use aggregated data from social media, professional market research, public sentiment, and key influencers for change analysis. Going beyond data to get intent is common sense, more than technology. Intent goes both ways, so make sure your customers understand your business as well.
  1. Make sure all your processes are customer-centric. Most business processes today are driven by internal needs to cut costs and maximize quality. Customers want their interactions and transactions to be painless and personalized. It’s time to rethink every process from the outside-in, to be consistent with customer expectations.

  1. Upgrade to modern information technology tools. Too many businesses still tolerate archaic IT tools, or resort to rogue mashups developed to circumvent the approved tools. Only modern tools can assure you the best and seamless execution for every customer interaction. Traditional waterfall development and outsourcing won’t keep up with change.

  1. Rethink how you organize, train, and reward employees. The first step is to break the legacy silos and underground channels in the current organization, which usually means realigning executive leadership and roles. Integration of all groups is the key to an optimal customer experience, starting from the hiring process to pay for performance.

  1. Adopt new core principles to stay competitive and assure survival. These must include democratizing how you do technology, thinking in layers, and using modern analytics to optimize continually. Technology need no longer be only the realm of expert gurus, business professionals in each layer of the business can build solutions, and executives with analytics can continuously refine the high-definition view of the customer.

Your ability to meet the test of the ever more-demanding and less-tolerant customer, as well as the emerging swarm of new competitors, is dependent on your willingness and ability to change your thinking and your company. The challenges ahead are great, but the opportunities are greater. Don’t be left behind in the ashes.

Marty Zwilling

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Friday, July 9, 2021

5 Tips For New Entrepreneurs Needing Investor Funding

new-entrepreneur-investor-fundingAs a mentor to startups and new entrepreneurs, I continue to hear the refrain that business plans are no longer required for a new startup, since investors never read them anyway. People cite sources like this Inc.com article “5 Reasons Why You Don't Need a Business Plan,” or my own blog discussion on this subject, “Situations Where A Business Plan Does Not Add Value.”

Let me be clear – business plans are never “required,” they should never be written “just for investors,” and if you sold your last startup for $800 million, most investors will not ask for a written plan for the next. On the other hand, if you are a first-time entrepreneur, the discipline of building a business plan will dramatically improve your success odds, and your odds of finding an investor.

For aspiring entrepreneurs, or if your last startup failed, it’s all about standing out above the crowd of others like you, and demonstrating your readiness. There is no crowd of successful entrepreneurs. Here is my outline of key deliverables that could convince me that you are a cut above the “average” entrepreneur that approaches me with nothing but a dream and a prayer:

  1. Personal video introduction with elevator pitch. Successful startups are all about the right people with the right stuff. In a two-minute video clip, you can introduce yourself, show your passion and the engaging personality you need to win over customers, partners, and employees. Net out the problem and your solution in the first 30 seconds.
  1. Executive summary glossy. For the more traditional investor, or for that chance meeting in a real elevator or meeting, you need a two-page brochure (two-sided page). The challenge here is not to see how many words you can get onto each side, but how you can make this so engaging in layout and content that an investor will ask for more.
  1. Investor and strategic partner pitch. A perfect size is ten slides, with the right content, that can be covered in ten minutes. Even if you have an hour booked, the advice is the same. I’ve seen a lot of startup presentations, and I’ve never seen one that was too short - maybe short on content, but not short on pages. Pitch your company, not your product.
  1. Written business plan.  Disciplining yourself to write down the plan is actually the best way to make sure you actually understand it yourself. Would you try to build a new house without a plan, if you have never done it before? In simple terms, it is a 20-page document which describes all the what, when, where, and how of your new business.
  1. Financial model.  Most new entrepreneurs tend to avoid the financials of the business, and as a result are badly surprised by cost realities, and can’t answer investor questions. I suggest a simple Excel spread sheet loaded with your revenue, cost, and margin targets covering the first five years of your business. Investors will expect it for due diligence.

Thus you see the business plan is only one of five elements of a package that every aspiring entrepreneur needs to build to stand above the crowd, in your own level of understanding of your business. You need it for communicating to your team, finding strategic partners, or soliciting investor funding from friends and family, angel investors, VCs, and crowd funding.

The ability to communicate effectively is critical to standing above the crowd. Good communication is not talking louder and longer than others, but practicing active listening, and providing a package of other elements to effectively to back up your words. Make yourself unforgettable, in a good way. This means adding value before, during, and after every interaction.

Believe it or not, there are many people in the entrepreneur crowd with outstanding ideas, but building a business is more about execution. If you have built a successful business before, you don’t need all the components above to convince anyone, including yourself, that you can do it again.

Even including repeat entrepreneurs, statistics continue to show that the overall failure rate for startups within the first five years is greater than 50 percent. The real objective of “standing above the crowd” is to give you as an aspiring entrepreneur every chance to end up in the winning group, rather than the crowd of losers.

Starting without any written plan elements may seem easier, but is not the way to win.

Marty Zwilling

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Wednesday, July 7, 2021

10 Keys For Responding To A Reputation Crisis Online

criticism-write-a-reviewIn my role as an advisor to small businesses, I still find that many of you still claim to have a negligible online presence, and don’t feel it necessary to monitor your reputation there. I have to point out that the rest of the world looks for you online before visiting your business, finds talk about you on Yelp and social media sites, and what they see can make or break your business.

Today your reputation online is more important than your price, service, or location. Despite what anyone tells you, you can and must manage it both before and after it may turn negative. I can provide you the basics in strategy and tactics, but I was impressed with the guidelines in a new book, “Control the Narrative: The Executive's Guide to Building, Pivoting and Repairing Your Reputation,” by Lida Citroen. She is an expert in this area, with some great stories to tell.

Here is her summary and mine of the steps that every business owner should follow in assessing and repairing any situation when you sense that your business reputation in is jeopardy:

  1. Assess the scope and impact of any negatives. In today’s world, it’s hard to satisfy everyone totally, so you should expect some less-than-positive comments. If you find a few negatives amongst hundreds of accolades, your feelings may be hurt, but your reputation is probably not at risk. Look for trends, and people jumping in against you.

  2. Don’t ignore the issue, or pretend no one notices. For fear of calling attention to any problem, you may choose to not respond publicly, but no feedback should be ignored internally. Every customer or outside concern should be taken seriously as an opportunity to improve. Every reported problem likely means that many similar ones went unreported.

  3. Resist cancelling existing social media accounts. Trying to disappear from the online world, or penalize it, is never productive, and may imply that you have something to hide. You can remove items from your article or blog, but people do notice, and may escalate their concerns on another forum. Adding more positives is the best way to mask negatives.

  4. Separate your emotion from feedback reality. When you get emotional about a situation or negative feedback, you are likely to react defensively, instead of with intention and clarity. Before you jump to any conclusions on impact or response, ask trusted members of your team for their perspective on possible options. They can help you to remove emotion.

  5. Set specific recovery goals and create action steps. Consider your real accountability requirements, both legal and business, for each recovery alternative. Perhaps a public apology would be appropriate, or a private phone call or meeting with the impacted parties, providing resolutions and asking them to remove their issues. Seek long-term resolutions.

  6. Be realistic about what you have control over. You cannot physically control another person on or off the Internet, or force them to work with you. However, you can always inform, inspire, and build trust through good actions. You also have full control of your own image and context, including providing leadership, skills, and expertise, rather than control.

  7. Assess whether or not to take legal action. Before you file a lawsuit, become familiar with the differences between slander, defamation, and libel, and retain legal counsel for advice. Always consider the long-play scenario. Unfortunately, in some cases where a legitimate claim exists, it’s not worth the personal and professional cost for a legal victory.

  8. Minimize your public response and defense. Always resist fighting your battle online or in public. Online chatter can quickly turn hostile, and people tend to fight for the underdog. The Internet is a hiding place for “trolls” – people who post anonymously, ducking behind a keyboard with a sense of entitlement, because you can’t confront them in person.

  9. Consider bringing in reputation experts to help. If you have early indicators of a serious threat, or an existing situation that is getting worse, it’s time to consider bringing in crisis management professionals, legal counsel, and reputation management experts. I recommend interviewing them personally, to be sure you feel comfortable with their goals.

  10. Define indicators and measure impact and results. These can be as simple as regularly counting positive versus negative results from a Google search, to satisfaction survey improvements over time. Refrain from bringing up the past to new customers, and celebrate every success with all your constituents. Be selective in how you communicate.

Remember that your company reputation and your personal one are two different things, but they are inextricably intertwined. Either one can kill the other. That means, for example, that your personal social media accounts must not show you contradicting the values of your company. As a leader in your business, you can’t hide. Be the role model you want constituents to talk about.

Marty Zwilling

*** First published on Inc.com on 06/22/2021 ***

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Monday, July 5, 2021

5 Ways Creative Startups Can Sustain The Environment

Beautiful Waterfall on green rock in rainforestAs I have said many times, the cost of entry for an aspiring entrepreneur has never been lower, and the total wealth of opportunities has never been larger. Today you can start a new web site business for as little as $100, produce cheap smart phone apps, or lead the effort to tap the multitude of opportunities brought by capitalizing on our concern for dwindling natural resources.

A while back, I focused on the new sharing economy, so this time I will highlight how a shortage of something, like natural resources, should be seen by an aspiring entrepreneur as a wealth of new startup ideas. I was inspired by the classic book, “Resource Revolution: How to Capture the Biggest Business Opportunity in a Century,” by Stephan Heck and Matt Rogers.

Based on their work in CleanTech and sustainability, Heck and Rogers outline five strategies for existing companies to apply to current practices and processes for dramatic efficiency improvements in the use or production of resources. I have recast these strategies here for new entrepreneurs and startups, who thrive on change, to show the wealth of opportunities for them:

  1. Substitute new materials for scarce natural resources. Entrepreneurs have huge opportunities to deliver higher-performance materials at lower cost, like carbon fiber for steel. These will not only save some weight, but build better vehicles, and improve the environment. Consider the startup MarkForged, which takes carbon-fiber to a 3D printer.
  1. Eliminate waste throughout existing processes. Mature companies often lose sight of scrap and changeover time in existing systems. Entrepreneurial minds can more easily see energy, water losses, and inefficient material usage. For example, a startup named Dirtt has been able to take reusable building components to a whole new level.
  1. Upgrade, reuse, or recycle every product. Make every product a natural loop, from creation to use to recycle to reuse. The tighter the loop, the greater the value captured and the stronger the competitive differentiation. Reusing a phone, like the ecoATM story, is more valuable than reusing a chip, or just extracting the gold and silver.

  1. Optimize existing product efficiency, safety, and reliability. Sadly, cars are parked 96% of the time, and shipping containers takes lots of space while empty. You don’t have to be an aspiring entrepreneur to see opportunities for improvement. Startups like Uber for cars, and Staxxon for containers are already there, but these are only the beginning.

  1. Move physical products and services into the digital realm. Steve Jobs has led the way here, by turning music, movies, cameras, and flashlights into apps. The opportunity is to reinvent whole products and whole industries, making things ten times better in the process. This not only saves scarce natural resources, but adds value to the economy.

Relative to all these principles, the “big three” of scarce natural resources consist of land (food), water, and energy. The stark reality is that the people and businesses of the world need to produce more with less in all these areas, while eliminating wasteful practices and policies. The effort has started, but there is still a huge need in all areas.

A key fact for both startups and existing businesses is that we have more than 2.5 billion people in developing countries to support who need to be moving out of poverty and into industrial and service occupations by 2030. This number almost doubles the number who have already moved into the middle class and urbanized. These will be your customers, and your competitors.

Overall, with all these opportunities, entrepreneurship is perhaps the most scarce and valuable natural resource in today’s society, for driving economic growth and social development. So now is the time to invest in all natural resources, by supporting aspiring entrepreneurs, in support of the opportunities they are mining. It’s a higher calling than one more social media platform.

Marty Zwilling

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Sunday, July 4, 2021

8 Startup Excesses Which Will Jeopardize The Business

burning-resources-timeEvery entrepreneur I know is short on resources, including time, money, and skills. The last thing they can afford is to waste any of these, but in my mentoring and coaching activities, I see it happening all too often. Waste in a startup is any activity that burns resources, but creates no value or competitive advantage in the eyes of customers.

Much has been written about this subject in the world of manufacturing, stemming primarily from the 1990’s work by Taiichi Ohno, called the Toyota Production System (“Lean”). More recently, the concepts have been applied to the general business management context, in a classic book by Certified Turnaround Professional, Thomas H. Gray, titled “Business Techniques for Growth.”

While his book goes well beyond controlling waste as an element of growth and success, I was struck by how relevant the waste points are for every startup and every small business. Thus I am morphing the points here, with specific focus on the entrepreneur, who would never think of themselves in the context of automobile manufacturing:

  1. Offering too many products and services concurrently. In the startup world, this is often seen as a lack of focus. Trying to do too many things with too few resources, usually means the startup will not shine at anything, and will not survive the competition. That’s a deadly waste you can’t afford. My advice is to keep it simple, and do it well.

  1. Inventory and features added too soon. Inventory is money sitting idly by, adding no value. For market changing products, build first a minimally viable product (MVP), and never build products for sale until you have real orders in hand. More features and inventory added early will be wasted as you will need to pivot to match the real market.

  1. Bottlenecks to team productivity. Time utilization inefficiency is wasted time. Make sure you are not the bottleneck for your team. Many entrepreneurs insist on making every decision, and spend too much time working in the business, rather than on the business. The result is lower productivity all around. Hire real help and learn to delegate.

  1. Lack of communication. Communication is the fuel that controls the speed of startups. Delays in sharing, or lack of communication from the top, result in time and effort wasted, adding no value to the business. As an entrepreneur, you need a visible business plan and weekly team meetings, so everyone is working on current issues and real goals.

  1. Poor or too many business processes. Business processes can be your biggest time saver, or your biggest waste. Productive processes start with a plan, and end with metrics that measure value delivered. Entrepreneurs have to embrace creativity and change, yet move quickly with trained teams who can deliver repeatable processes.

  1. Focus on activities rather than results. Too many entrepreneurs confuse action with momentum and results. Focus on the 20% of your important tasks that will deliver 80% of the results. Judiciously apply 20% of your energy where it will achieve 80% of the momentum you desire. Then always measure customer results, not work.

  1. Defective products and services. Poor quality products and poor customer service are doubly deadly wastes. You lose the customer you paid to acquire, and the unhappy customer spreads the word to potential customers that you are spending marketing resources on, but will never win. Recovery efforts are wasted resource which rarely succeeds.
  1. Underutilizing people skills. When people can do more than they are asked or motivated to do, the money spent on others doing that work is waste. The solution is to maximize your own staff productivity first. Recognize and reward the people who excel, provide training, and challenge the team to invent new methods for significant change.

Entrepreneurs and small business always operate on the edge. There is no cushion. Waste means death. Are you as an entrepreneur really ready to deal with the new technology, new regulations, and a new workforce schooled in the digital age? How much time have you spent learning to use the practical techniques and new tools available? It won’t be wasted.

Marty Zwilling

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Saturday, July 3, 2021

7 Keys To Asking The Right Questions To Be A Leader

meeting-with-your-leaderEvery entrepreneur has blind spots which limit their effectiveness and success, but due to ego, over-confidence, or deferential subordinates, many live totally in the dark. Some are smart and humble enough to assume that they don’t know what they don’t know, but lack an effective process for shining a light on their blind spots. Both are equally surprised by their every setback.

I recently found some real insight on this subject in a classic book by Robert Bruce Shaw, aptly named “Leadership Blindspots.” Shaw specializes in organizational performance and has helped a wealth of business leaders identify and overcome their weaknesses. He provides a detailed analysis of the blind spots of many well-known business powerhouses.

Shaw argues that every successful leader balances two conflicting needs. The first is to act with a confidence in their abilities and faith in their vision for their organization: The second is to be aware of their own limitations and avoid the hazards that come with overconfidence and excessive optimism. That means that they have to see themselves and situations accurately.

I agree with him that the best way to do this is to continually ask the right questions, in the right way, to avoid and identify blind spots. Here are some key guidelines that we both offer to entrepreneurs to drive this process:

  1. Avoid yes-or-no questions. Closed-end questions (yes-no) are efficient, but don’t surface data that may be critical to a leader’s understanding. Questions are called open-ended when they allow for a variety of responses and provoke a richer discussion. These allow a leader to know what he doesn’t know, and ultimately make a better decision.
  1. Don’t lead the witness. Hard-charging leaders often push to confirm their own assumptions about what is occurring in a given situation and what is needed moving forward. This can result in questions that are really disguised statements, like “doesn’t this mean that we really don’t have a quality problem?” These usually prevent contrary points of view and further data from surfacing.
  1. Beware of evasive answers. All too often, people will avoid giving direct answers to direct questions. They may not know the answers or not want to provide the answers, to appear smart, or not want to offer incriminating data. Leaders need to keep coming back with directed questions until they get a straightforward answer or “We don’t know.”
  1. Ask for supporting data or examples. Leaders need to ask questions that surface points of view and, at the appropriate time, also clarify which answers are based on fact and which are based on speculation. They should encourage people to say what they know from data and what they think they know, and make sure they clarify the difference.

  1. Paraphrase to surface next-level details. One technique to push people to provide more information is to paraphrase what you are hearing. While this may result in a yes or no response, proceeding to next-level questions opens up the dialogue. Smart leaders sometimes mis-paraphrase what they are hearing in order to provoke a richer dialogue.

  1. Ask for alternatives. Another approach to surfacing non-confirming data is to overtly ask for an opposing point of view. A related line of questioning is to ask the respondent to alter his or her fundamental position, like “You are asking for $10 million to grow this brand. What more could you do if we gave you $25 million?”

  1. Give an opening for additional input. Leaders also need to provide an opportunity for others to offer additional input and, in particular, dissenting views. Often, the final moments of discussions are the richest, as people will wait until that time to surface what is really important to them. Ask if there is anything left unsaid that should be heard.

In today’s global business world, you should assume that all your peers are smart and experienced, but have blind spots just like you. These are automatic behaviors that are not flaws, but they do need to be identified and mitigated by continually asking the right questions as outlined here.

Otherwise they will undermine your organizational performance and may well destroy your legacy when you least expect it. Early learning is a lot easier than a later recovery.

Marty Zwilling

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Friday, July 2, 2021

8 Personal Attributes Mitigate Startup Funding Risks

business-man-entrepreneurIn the eyes of investors like me, to be an entrepreneur, it’s not enough to create an innovative solution – you need to convince me that you can build a profitable business. Investors expect a great return for their risk, so they look for people who can look beyond the technology and their own passion to see a customer need that perhaps even the rest of us haven’t yet envisioned.

As I work with aspiring you new venture leaders, I always wish I had a definitive checklist of all the right attributes that I could share with you, encourage you to develop and highlight in your efforts with potential investors, and guide your own actions in starting the next billion dollar company. There are no magic bullets, but here are the key items that always bubble to the top:

  1. Confidence that you can deliver a new business. I don’t want to hear how easy it’s going to be (naivete or over-confidence), but practical strategies to overcome the inevitable challenges and competitors that you will face. Creating and growing a business requires creativity beyond the product, in the areas of finance, marketing, and operations.

    Unless you just sold your last business for a billion dollars, it’s hard to talk credibly about your next one without a written plan that outlines key business strategy elements, as well as product details. Don’t assume you can just scratch the details on the back of a napkin.

  2. Understand the real-world domain you are entering. Markets and industries are always more complicated than they seem. People who tackle a world that is unknown to them, with no relevant prior experience or insight are very likely to be unable to adequately respond to ambiguous situations and competitors. Pick a world you know and understand.

  3. Highlight a background of trust and integrity. It is no secret that investors invest as much or more in the person, rather than the solution. You need to tell your personal story, and highlight previous work or experiences that show your integrity in the face of difficult challenges, and evidence that your team and constituents have trust in your leadership.

  4. Have the support of an expert team and advisors. If you have taken the initiative to assemble a support team of experts and business advisors, this speaks volumes about your ability to get the help you need, surround yourself with smart people, and effectively communicate. All of these are key to fulfilling the multiple disciplines of business.

  5. Able to move smoothly from idea to execution. Some people like to talk incessantly about their idea and possibilities. But a successful business is all about focus on specifics, and making them happen. Investors (and customers) need to know the realities of costs, prices, marketing, delivery, and what differentiates your offering from competitors.

  6. Driven by a higher purpose as well as profit. A visible sense of purpose, such as feeding the disadvantaged, or helping the environment, complements your business drive, and creates an extra degree of engagement for team members and customers. Investors look for this as a measure of your conviction and determination to produce results.

  7. Able to integrate principles from disparate domains. The best business solutions are often ones that have principles tried and tested in one domain, and now transferred to another. An example would be the now popular notion of consumers sharing underused resources, such as ride sharing (Uber) incenting the businesses of home sharing (Airbnb).

  8. Demonstrate a creative mindset and endless curiosity. Investors know that an initial solution and business idea are only the beginning. Business success requires an endless stream of innovations, problem solutions, and follow-on ideas. Curiosity provides the incentive and determination to learn and adapt as your market and environment changes.

    Great entrepreneurs like Elon Musk are always talking about their next venture to another planet, underground transportation, or electric vehicles. This gives them the credibility, both public and private, to enlist the support of the help they need to make it happen.

If you are like the rest of us, and need every advantage you can muster, to get the funding and support you need for your new business, see how many of these non-product elements you can highlight in your next networking discussion. The payoff will be a heightened personal satisfaction, as well as the resources you need to make it happen.

Marty Zwilling

*** First published on Inc.com on 06/18/2021 ***

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Wednesday, June 30, 2021

7 Ways To Raise Your Visibility As A Business Leader

potential-business-leadersBy definition, all of you entrepreneurs are leaders, by taking the initiative to start a new company. Yet I have learned over the years as a startup advisor that all business leaders are not the same. Some are great product leaders and innovative technologists, others are leaders in creating new business models, a few can assemble great teams, but only the rare exception can do all three.

Most investors will readily admit that they invest in entrepreneur leadership, more so than innovative ideas, but they often find it difficult to separate aspiring leaders from those that are clearly extraordinary. I often hear a list of high-level attributes, including determination, vision, initiative, and integrity, but these are hard to translate into specific actions.

Based on my own years of experience helping new businesses grow, I’d like to offer my own summary of some key lower-level action items, which I believe every business professional and entrepreneur can learn and practice to their advantage:

  1. Show ambition and a sense of urgency in every role. This means not only demonstrating that you can do whatever is required, but are also in a hurry to show that you are willing to change the underlying system and yourself to get better results than anyone else. That does require a singular focus, but also an awareness of the big picture.

  2. Visibly accept full responsibility and accountability. Extraordinary leaders never look for excuses or rationalizations when problems and challenges arise, as they will in every job or new business. As you do this, you will move from critic to cheerleader, from what is wrong to what is going right, and people will line up to help you tackle tough challenges.

    For example, a couple of years ago, Starbucks' CEO Kevin R. Johnson accepted full company accountability on Twitter for a racial profiling incident at a Starbucks in Philadelphia. He could have claimed that a fired employee was at fault, but instead he closed 8,000 of his stores for a day to provide additional employee racial-bias training.

  3. Create innovative change from existing resources. You generally don’t fix things by throwing them away and starting over. The most effective leaders marshal existing resources and incent people to create innovative yet competitive solutions. They understand the need to work within existing constraints, and think outside the box.

  4. Build community with team members and advisors. A community requires two-way communication and respect – including advisors, partners, and customers. The best leaders don’t just give orders – you work with people you depend on to build trust, give and accept coaching, and motivate by being a role model for the approach you espouse.

    Sir Richard Branson, for example, often makes a point of personally rewarding outstanding leaders by taking them aside and telling them that they are now in charge of one of his new companies. His Virgin Group today consists of over 400 companies.

  5. Be transparent in communicating your values and needs. Don’t try to hide your real direction or aspirations. True leaders don’t let their ego or competitive nature create a façade. They focus totally on collaboration, highlighting the strengths of others, and celebrating joint successes. People will follow you if they know what you really want.

  6. Continually enhance your leadership through feedback. Just as your business needs feedback from customers, you need regular feedback from those around you on how to do better. That means accepting coaching and seeking mentoring, as well as giving it. Strive to evolve from guru to guide, coaching others to find their own answers.

  7. Espouse a higher purpose than profit or recognition. An acclaimed sense of purpose, such as feeding the disadvantaged, or helping the environment, creates an extra degree of engagement for team members and customers, and tags you as an extraordinary leader. The result is better team productivity, and greater loyalty from your customers.

In my experience, all businesses, especially startups, thrive on leadership, and die without it. No matter what your current role, you can use the themes and strategies outlined here to build and enhance your leadership image and business results. For you the payback is the satisfaction of greater impact, as well as new career opportunities. The time to get started is now.

Marty Zwilling

*** First published on Inc.com on 06/17/2021 ***

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Monday, June 28, 2021

6 New Venture Realities To Target Your Funding Effort

adam-somlai-fischerEntrepreneurs who require funding for their startup have long counted on self-accredited high net worth individuals (“angels”) to fill their needs, after friends and family, and before they qualify for institutional investments (“VCs”). The many crowd funding platforms on the Internet, led still by Kickstarter and IndieGoGo, were expected by many to put regular people in charge of funding new opportunities, and kill the need for angel groups.

I still don’t see it happening any time soon. Neither does David S. Rose, according to his classic book, “Angel Investing.” David is still one of the most active angel investors in New York, and also the CEO of Gust, which is an online platform for startup financing used by 800,000 entrepreneurs over the years, providing access to 85,000 angel investment professionals.

In fact, angel investing worldwide does seem to be leveling off at around $25 billion annually, while crowd funding is setting new records, achieving over $34 billion in 2020, despite the pandemic. Of course, both are impressive, but still small compared to over $300 billion from VC investments annually.

Nevertheless, according to Rose, both are poised for further growth due to online technology, and there is indeed plenty of opportunity. He does caution both entrepreneurs and investors to skip the hype and recognize the fundamental truths of the startup industry, before joining the crowd, or joining angels:

  1. Most startups fail. Small business statistics have long shown that the failure rate for startups within the first 5 years is higher close to 90 percent. Running out of money, or not getting funded is often given as the cause, but it’s often more an excuse than a reason. Thus investing in startups should always be approached as a low odds game.

  1. No one knows which startups are not going to fail. Even David Rose, who has invested in over 100 startups, and proclaims real success, reminds everyone that there are too many exogenous factors affecting business outcomes for anyone to be able to pick only winners. Professional venture capitalists will tell you the same thing.

  1. Investing in startups is a numbers game. Most startup investors today will tell you to put the same amount of money consistently in at least 20 to 25 companies, if you hope to approach a target 20 to 25 percent overall return. This is called the “portfolio approach,” which counts on hitting only a couple of big winners, while the others return very little.

  1. What ends up, usually went down first. Because unsuccessful startups tend to fail early, and big successful exits tend to take a long time to develop, graphing growth follows the classic J-curve. This means that winning investors need to spread their investments across a long period of time, as well as across a large number of companies.

  1. All startups always need more money. It doesn’t seem to matter what the founders’ projections are, or how fast they believe they will turn profitable. They will need more money. Thus every serious investor reserves a certain amount of his investment capital for follow-on rounds, which allows them to stay to course to success, even with dilution.

  1. If you subscribe to truths one to five, startup investing can be lucrative. There is a rarified brand of successful investors who can show average IRRs of 25 percent or greater over the years. Investing can be satisfying, if not lucrative, for the rest of us, for keeping up with technology, as a give-back to entrepreneurs, and building a legacy.

Angel investors have long been required to "certify through signature" that their net worth or income qualifies them to become accredited, so their burden and risk haven't changed yet. Some investors fear that the recent general solicitation rule will lead to bank statement or tax return disclosures, increase their burden, and may cause qualified angels to back out of the process.

Angel groups fear the loss of members for the same reason. Here again, the entrepreneur will be the one hurt most, by having fewer funding sources to access. I predict that angel investors, who are generally early adopters, will actually be quick to adapt to the new requirements and online systems, and will operate side by side with the new influx of non-accredited investors.

After all, investors of all types who fund entrepreneurs, starting with friends and family, have always been all about creating win-win situations. The investor wins only when the startup wins, and today’s angels can only cover about 3 percent of funding requests. We have a long way to go, in this new era of the entrepreneur, before angel investors aren’t needed.

Marty Zwilling

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Sunday, June 27, 2021

9 Key Issues That Can Support Your Breakthrough Ideas

Elon Musk, serial entrepreneur, at TED2013: The Young, The Wise, The Undiscovered.  Wednesday, February 27, 2013, Long Beach, CA. Photo: James Duncan DavidsonThe entrepreneurs I see are always talking about “disruptive innovation” ideas, but the plans I read are more often linear extensions of a current hot offering, like one more social network with the best of Facebook and Twitter, one more dating site dimension, or another “must-have” accessory for smartphones. Perhaps hard questions need to come before ideas, rather than after.

This approach was highlighted in the classic book by Warren Berger, “A More Beautiful Question,” which makes the case for the power of questions to spark breakthrough innovations. He and I agree that the most creative, successful business leaders tend to be expert questioners. They master the art of inquiry, raise questions no one else is asking, and find powerful answers.

Berger suggests nine key questions, which I have adapted for entrepreneurs and startups, from his focus on existing companies. Every smart entrepreneur needs to ask himself and his team these questions before charging down the road to meet the other ninety percent of his peers that fail:

  1. What business are we really entering? Many aspiring entrepreneurs, especially engineers, are focused on their invention or technology, and never consider the challenges of entering the business realm until too late. Hydrogen auto engines, for example, have tremendous advantages, but haven’t cracked the bureaucracy of government regulations, the power of existing energy companies, and big auto biases.

  1. Why have other smart people failed on a similar idea? All too often I hear the refrain that big existing players, like Microsoft or IBM, are too fat and slow to be real competitors. While these companies do have their challenges, they also have some of the smartest people out there. You need to question strongly why these failed on your innovation.

  1. What will happen if we build it and no one comes? The “unthinkable” questions need to get asked before the crisis. Customers always have alternatives, most notably continuing to do what they do today without you. Asking the hard questions early will force more thinking outside the box, and improve the potential for real breakthroughs.

  1. What if we could become a cause and not worry about profit? Every startup should start with a set of values that would fit the definition of a good cause. The new age of consumers, and the new age of young employees want to align themselves with good cause principles. Figure out what you are against, as well as what you are for.

  1. How can we create the best test, and assume the need for pivot? Your first offering will likely be a learning experience, rather than a run-away success. Plan to make it the best experiment that you can, with metrics to focus on the “why,” as much as “what.” Create a safe environment for your team to question every aspect of the offering.

  1. If we brainstorm in questions, will lightning strike? Collaborative thinking in problem solving and early planning is essential because it brings together multiple viewpoints and diverse backgrounds. Innovation flourishes when diverse ideas and thoughts are aired. Tackle the startup unknowns by generating questions instead of generating solutions.

  1. Will anyone follow if we initially embrace uncertainty? Entrepreneurs are normally all about giving answers, not admitting uncertainty. They are reluctant to take advantage of questioning input from outside advisors, investors, and even friendly customers. Business leaders from Google, Netflix, and others have uncertainty built into their DNA.

  1. Should our mission statement be a mission question? The declarative mission statement is usually seen by the team as non-questionable, thus limiting business thinking. In these dynamic times, it may be appropriate to take that static statement and transform it into more open-ended, fluid mission questions that can still be ambitious.

  1. How do we create a culture of continuous inquiry? The first mistake is not wanting a culture of inquiry, in today’s age of continuous change. Some leaders and entrepreneurs don’t want to continually explain and rationalize their actions. The challenge is to reward questioning by your actions, culture, hiring, and the way you treat customer feedback.

If you want more specifics as well as the theory behind it, I recommend Berger’s book as a practical system of inquiry that can guide you through the process of innovative questioning, helping you find imaginative, powerful answers and building the culture of continuous innovation.

Disruptive innovation is always hard, and takes a very special breed of entrepreneur who is willing to ask the hard questions, as well as listen to tough questions from advisors, team members, and customers. How effective are you and your business in asking more “beautiful questions” and sparking the breakthrough ideas you need to survive?

Marty Zwilling

*** Ukrainian translation provided by Anna Matesh ***

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