Saturday, May 27, 2023

5 Keys To Personalized Team And Customer Connections

fully-engaged-teamThe days of leadership without engagement are gone. With interactive social media and video everywhere, everyone needs to feel they have a relationship with their leaders, and every brand needs leader personification for customers to relate. Soon you won’t be able to name a business as one of your favorites if you can’t personally visualize and relate to company leadership.

In the same way, great entrepreneurs and company leaders should no longer rely on faceless and nameless processes to drive business strategy and innovation to stay competitive. The old way doesn’t work, and results more than ever in slow decision-making, lack of real connection with employees, and ignorance of what customers really want.

The new principles of engagement, as well as the dysfunctions of the old, are well illustrated in the insightful classic book, “Why Are There Snowblowers in Miami?” by Steven D. Goldstein. He speaks from a wealth of personal experience in private equity, as well as top executive positions at American Express, Sears, and Citigroup.

He found the dysfunctional engagement that sent snow blowers to his store in Miami every year. As a result of this incident and many others, he defined five key engagement principles which resonate with me as just as relevant for new business founders as mature business executives. Here is my adaptation of his engagement principles for all the aspiring entrepreneurs I advise:

  1. Learn to adopt an outsider’s perspective. Every entrepreneur, even though confident in his domain, needs to fight complacency in a world that changes almost daily. You need to look at everything through fresh eyes, continually ask questions not usually asked, and actively listen to contrary views. No change means you are falling behind as a leader.
  1. Interact with employees and customers on a regular basis. Authentic communication at all levels and encouraging feedback is how you find out what is really going on. More meetings in your conference room won’t get to the truth as well as simply talking to people who interact with customers directly. Never be too busy to talk to real customers.
  1. Focus on two or three pertinent metrics in any situation. Keeping it simple is the best course. No one can remember your top ten priorities and measurements. Unbundle projects into smaller elements, and personalize the top couple of metrics for each team. These simplified targets are crucial to motivating a team, and getting the focus you need.
  1. Help people know more, so they can do their job better. Knowledge is power, and good information flow and collection tools are of the utmost importance. Information that is relevant and timely needs to be shared widely and efficiently. It’s also important to share the evaluation insights, and to tie the next action steps directly to current results.
  1. Accept that whatever speed you are going is too slow. Time is the enemy in today’s global marketplace. Follow the guiding motto of Andy Grove at Intel, “Only the paranoid survive.” It’s vital to get quick wins, learn rapidly from failures, and get comfortable with constant change. Waiting is never an option, as competitors will always be moving.

In the same fashion, these engagement principles must be applied to customers. More and more, I see evidence that customers want to be pulled to your company by engagement, rather than feel that you are pushing yourself on them. There are a multitude of opportunities through social media to engage your customers, as well as getting out of your office into the marketplace.

Customer business leadership through brand icons, such as Ronald McDonald and Aunt Jemima, is fading fast. Customers as well as employees want to relate and engage with real people as leaders, and business leaders need to interact with real employees and customers to stay vital and current.

As an entrepreneur, you need to start this focus early, with the same passion you currently apply to your new idea and solution. Have you taken a hard look recently at where you are spending most of your time?

Marty Zwilling

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Friday, May 26, 2023

8 Priorities When Offering A New Product Or Service

business-startup-targetEvery one of you business owners I know periodically introduces new products and services to sustain growth, fight off competitors, or take advantage of new technologies. Often, despite your passion and expectation, customers don’t immediately see the value and need that you see, and you have no idea why the initiative is stuck, and what could be the real customer issue or fix.

In my experience in business, and as a consultant, I have found a common set of challenges that every new initiative has to overcome for widespread adoption and the business growth you need. Even though many of these can be mitigated by testing and early customer feedback, you will find that it pays big dividends to do your homework before building and rolling out every new initiative:

  1. In today’s customer data overload, marketing is essential. Customers won’t buy what they can’t find or don’t understand. No matter how great your innovation, don’t count on word-of-mouth to save you. The cost of any new product these days must include education and rollout marketing, perhaps equal or greater than the development costs.

    Even more important than solution marketing is building your brand. Make sure new solutions offered actually build your brand, rather than dilute it. New offerings which build your brand will increase acceptance and sales of all solutions, not just the new one.

  2. Solution may require new category development time. Major leading-edge (also called bleeding-edge) products or technologies, such as artificial intelligence (AI) or the Internet of Things (IoT), involve new concepts, time for acceptance, and focus on understanding value. Don’t count on these as short-term solutions to a growth problem.

    These disruptive technologies also have the potential for exposing your business to new competitors, including a wealth of startups that can jeopardize your core business, and redefine the marketplace. If you go this route, make sure your solution is strategic.

  3. Customers need supporting approvals to fully benefit. Often products that introduce disruptive new technologies, such as electric vehicles or healthcare solutions, are dependent on supportive infrastructures, operational regulations, or insurance approvals before benefits can be realized. Your rollout plan needs to factor in these requirements.

    The challenge here is that supporting infrastructure decisions are usually outside your control, and may be political or emotionally driven. To win in this environment, you may need to expand your leadership in industry conferences and community activities.

  4. Target audience may be limited or new due to price. Premium products may have high feature value, but may push you to a new level of customer, and prevent mass market appeal. This may require you selling exclusivity, doing channel development, or alliances with new partners. Another approach is to expand your scope geographically.

  5. Even in the face of real value, customer change is hard. Most new solutions I see are easier to use, more productive, more fun, or cheaper than existing alternatives. You will find that customers discount advertising, and look for user testimonials, online influencer reviews, and return-on-investment examples from industry experts. Incent these early.

  6. Customers fear liability potential or see risks you don’t. These fears need to be offset by early success stories, educational case studies, or advice on ways to reduce risk. Also fears can be mitigated by warranties provided, complementary service options, or money back guarantees. Don’t forget to address the risks and cost of doing nothing.

  7. New solution highlights additional functional needs. Your new solution may seem straightforward and complete to you, but customers find complexity and new feature requirements that are difficult to solve. The result can be a host of new competitive and price challenges which can stall growth or require excessive resources and time.

  8. Customer may decide to wait for the next new thing. Your release of one cool new product may set unreasonable customer expectations for regular follow-ons. Instead of really expanding your market activity, you may find things slowing down as customers wait for the next wave of enhancements. Marketing costs will continue to increase.

Even though many of these challenges may seem obvious to you, I still see them often overlooked by aggressive business leaders, resulting in a large percentage of expensive new initiatives that fall well short of growth and revenue expectations. With the rapidly changing and competitive worldwide marketplace we live in today, do your homework early before you jump.

Marty Zwilling

*** First published on Inc.com on 05/11/2023 ***

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Wednesday, May 24, 2023

7 Keys To Making You A Team Leader And Future Manager

boss_executive_businesswomanOne of the things I’ve learned in working with aspiring entrepreneurs is that managing and leading a team is a scary venture into the unknown for many people, even if they have worked as a business professional for years. Having worked in my own career on both sides of the fence at various times, I recommend that everyone practice thinking like the boss in every role to prepare.

This will improve your effectiveness in your current role, and give you a head start towards a future role, such as startup founder, where you are the boss. You will find that the same key principles apply in both situations, and that every business professional has a boss, and should be a leader in their own domain to others with less experience and expertise.

I found some good insights and details on this approach in the classic book, “How To Be A Great Boss,” by Gino Wickman and René Boer, who speak from years of experience working with leadership teams of both small and large companies. Here is my summary of their key principles on being a great boss, which I will characterize here as applying to any business professional:

  1. Surround yourself with great people. As an entrepreneur, executive, or team member, you are most impacted by the people you gather around you. The smartest team members and the smartest bosses spend more time with people who are smarter in the relevant domain than they are. Then when you have to hire people, you will pick the best.
  1. Make more effective use of your own time. We all know bosses and peers who are always too busy, but never seem to get much done. Make sure that person is not you. Free up time for others by eliminating low priority tasks, and delegating items to the right people. Work on habits that improve your productivity, and find better tools every day.
  1. Understand both leadership and management. In business, leadership consists of creating the vision and direction, while management is primarily about gaining traction to achieve it. You don’t have to be a boss to be a leader or a manager. You should be practicing both in every role, and there will be no surprises as your career evolves.
  1. Train yourself to follow leadership best practices. If you practice all the key elements of leadership in every role, you will make a great team member or a great boss. These elements include giving clear direction, providing tools and training to the right people, getting out of the way, walking your own talk, and reflecting regularly on the big picture.
  1. Focus on demonstrating accountability for your actions. Accountability is everyone’s obligation, to accept responsibility for their activities, and to disclose your results in a transparent manner. Accountability cannot be imposed on you by a boss or entrepreneur – it’s a practice that you must learn to impose on yourself to be effective and appreciated.
  1. Develop productive relationships with people around you. Effective relationships, inside your business and outside, are critical in every professional, management, and leadership role. The most productive people get things done by working in concert with others, not demanding actions and results, but by orchestrating win-win relationships.
  1. Learn to deal effectively with people who disappoint you. While highly productive relationships lead to success, dysfunctional relationships make you a poor employee and a bad boss. People issues cannot be solved by avoidance or edict. If you surface and manage relationship issues early with respect and minimum emotion, you will be seen as a good team member and a good boss.

Thus, putting yourself in your boss’s shoes to see what they see, and act as you would expect them to act, is the best way to assure success in your role today, or prepare you for the startup founder role you dream about. In fact, the best team members and managers I work with always see themselves as their own boss. Try it – you may find and train that great boss you never had.

Marty Zwilling

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Monday, May 22, 2023

5 Keys To Capitalizing On Nondisruptive Business Growth

growth-nondisruptiveMost of the entrepreneurs and aggressive business owners I meet in my consulting practice are focused on finding new disruptive solutions and killing competitors as the key to success. If you are one of these, you may be missing win-win opportunities to incrementally expand existing markets, create new ones enabled by new technologies, or do good for society in this new age.

For example, witness the current creation of the space tourism industry, vaccines to control new viruses, or simply providing a free product to the needy for every product sold. Not all innovations have to be as disruptive as the Netflix digital download was to Blockbuster’s DVD business.

I found many non-disruption recommendations in the new book, “Beyond Disruption,” by W. Chan Kim and Renee Mauborgne. Both authors are recipients of numerous academic and management awards for leadership thinking, and I will summarize here their key strategy insights, combined with my own experiences:

  1. Lead with a focus on finding customer value. Begin with a perspective on improving the current market reality without needing to disrupt what is. This means flipping your mental script from rebuilding current platforms to envision what could be, by creating new realities, changing the environment, or creating an additional world with different actions.

    Don’t confuse the means with the ends. It’s easy to be seduced by innovative technology, but customers and the market need to see direct value to them, to offset the learning curve and infrastructure changes required. Seek innovation with non-disruptive value.

  2. Address an emerging or unexplored problem. A new opportunity may be one that has long existed, but has remained unexplored because it hasn’t been seen as solvable or a viable new market. Also look for emerging new needs beyond existing industry boundaries. I encourage you to dream big, but start small, and size these opportunities.

    In my experience, the biggest winners in business are those who excel at “seeing around corners,” or predicting customer needs and problems before they actually occur. To do this, you need a mindset of always looking ahead and reacting quickly to new trends.

  3. Find ways to unlock and capture the opportunity. This starts with debunking the existing assumptions that have concealed the opportunity and then reframing it with today’s technology to find a solution. Have the courage to develop an independent point of view and be prepared to ignore discouragement and assumptions from the pundits.

    I have found that the most innovative business leaders use reframing to change their perspective, think differently, and reduce anxiety. Reframing means re-conceptualizing a problem by look at it from a different perspective and identifying alternative solutions.

  4. Use your confidence and competence to succeed. Key enablers required along the way include capitalizing on the resourcefulness of you and your team, marshalling internal resources, and fostering a “can do” mindset. As with any innovation, you need to get market feedback by conducting rapid market tests with real people you intend to help.

    As a mentor to many business professionals, I find many who are risk-averse or not confident in their own abilities to make forward-looking decisions. You as a business leader must counter these fears by highlighting successes and rewarding risk takers.

  5. Aim high to build a better world for customers. There are many areas currently ripe for nondisruptive innovation, including aging of the world’s population, managing world energy demand, and probing deeper into our place in the universe. Any of these will provide business growth without socially disruptive or existing business consequences.

    That higher purpose motivates people in a way that financial wins alone never will. For a company to grow and thrive, it needs to find and broadcast its purpose in all that it does. Today’s generation of customers and workers also assigns real value to higher purpose.

With these steps, you can use innovation to create win-win outcomes in a world where economic growth and societal good are not trade-offs. The classic approach to change, involving disruptive innovation, is painful for all, and takes too long. I recommend this new strategy based on positive-sum thinking to build a world of business that is viewed most positively by today’s consumers.

Marty Zwilling

*** First published on Inc.com on 05/08/2023 ***

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Sunday, May 21, 2023

10 Ways To Get The Capital You Need For Your Startup

money-transfer-banking-iconOne of the most frequent questions I get as a mentor to entrepreneurs is “How do I find the money to start my business?” I always answer that there isn’t any magic, and contrary to the popular myth, nobody is waiting in the wings to throw money at you, just because you have a new and exciting business idea.

On the other hand, there are many additional creative options available for starting a business that you might not find for buying a car, home, or other major consumer item. If you have the urge to be an entrepreneur, I encourage you to think seriously about each of these, before you zero-in on one or two, and get totally discouraged if those don’t work for you.

Of course, every alternative has advantages and disadvantages, so any given one may not be available or attractive to you. For example, professional investors put great priority on your previous experience in building a business, and they expect to own a portion of the business equity and control for the funds they do provide. These are tough for a first-time entrepreneur.

Thus it is always a question of what you qualify for, and what you are willing to give up, to turn your dream idea into a viable business. Here is my list of the ten most common sources of funding today, in reverse priority sequence, with some rules of thumb to channel your focus:

  1. Seek a bank loan or credit-card line-of-credit. In general, this won’t happen for a new startup unless you have a good credit history, or existing assets that you are willing to put at-risk for collateral. In the US, you may find that the Small Business Administration (SBA) can get you infusions of cash without normal backup requirements.
  1. Trade equity or services for startup help. This is most often called bartering your skills or something you have for something you need. An example would be negotiating free office space by agreeing to support the computer systems for all the other office tenants. Another common example is exchanging equity for legal and accounting support.
  1. Negotiate an advance from a strategic partner or customer. Find a major customer, or a complimentary business, who sees such value in your idea that they are willing to give you an advance on royalty payments to complete your development. Variations on this theme include early licensing or white-labeling agreements.
  1. Join a startup incubator or accelerator. These organizations, like Y Combinator, are very popular these days, and are often associated with major universities, community development organizations, or even large companies. Most provide free resources to startups, including office facilities and consulting, but many provide seed funding as well.
  1. Solicit venture capital investors. These are professional investors, like Accel Partners, who invest institutional money in qualified startups, usually with a proven business model, ready to scale. They typically look for big opportunities, needing a couple of million dollars or more, with a proven team. Look for a warm introduction to make this work.
  1. Apply to local angel investor groups. Most metropolitan areas have groups of local high-net-worth individuals interested in supporting startups, and willing to syndicate amounts up to a million dollars for qualified startups. Use online platforms like Gust to find them, and local networking to find ones that relate to your industry and passion.
  1. Start a crowdfunding campaign online. This popular funding source, where anyone can participate, per the JOBS Act in the US, is exemplified by online sites like Kickstarter. Here people make online pledges to your startup during a campaign, to pre-buy the product for later delivery, give donations, or qualify for a reward, such as a tee-shirt.
  1. Request a small business grant. These are government funds allocated to support new technologies and important causes, like education, medicine, and social needs. A good place to start looking is Grants.gov, which is a searchable directory of more than 1,000 Federal grant programs. The process is long, but it doesn’t cost you any equity.
  1. Pitch your needs to friends and family. As a general rule, professional investors will expect that you have already have commitments from this source, to show your credibility. If your friends and family don’t believe in you, don’t expect outsiders to jump in. This is the primary source of non-personal funds for very early-stage startups.
  1. Fund your startup yourself. These days, the costs to start a business are at an all-time low, and over 80% of startups are self-funded (also called bootstrapping). It may take a bit longer, to save some money before you start, and grow organically, but the advantage is that you don’t have to give up any equity or control. Your business is yours alone.

You can see that all of these options require work and commitment on your part, so there is no magic or free money. Every funding decision is a complex tradeoff between near-term and longer-term costs and paybacks, as well as overall ownership and control. Yet with the many options available, there is no excuse for not living your dream, rather than dreaming about living.

Marty Zwilling

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Saturday, May 20, 2023

7 Ways To Prepare For A New Venture As A Side Hustle

sun-and-hazel-side-hustleMany experts will tell you that you can’t succeed as a part-time entrepreneur, as any good startup will require a 100 percent commitment of your time and energy. But not many of us have enough savings to live for a year or more without a salary, fund the startup, and still feed the family. Thus I often recommend that entrepreneurs keep their day job until the startup is producing revenue.

Of course, if you have investors anxious to give you money, or a rich uncle to keep you afloat, there is nothing wrong with a dedicated and full commitment to the startup, with commensurate more aggressive milestones and growth expectations. We all understand the risk of competitors quickly closing in, and market factors changing before we can roll out our solution.

For those of you who do decide to keep your day job, here are some pragmatic recommendations I espouse on how to make the most progress in your startup, while simultaneously juggling your other critical family and employer roles. In fact, these suggestions have tremendous value, even if you are dedicated and committed full-time to your new startup:

  1. Find a cofounder who can keep you balanced. Two cofounders, both working part-time are actually better than one founder full-time. You both need the complementary skills, ability to debate alternatives, and the tendency to keep each other motivated, that neither could match working alone. One still needs to be the agreed final decision maker.
  1. Schedule fixed times and days for the startup, working with the team. Building a startup is hard work, and requires discipline to get it done. Working part-time doesn’t mean all working randomly alone. Commit to a regular weekend time and a couple of specific nights per week where you meet with the team and focus only on the startup.
  1. Get better at saying ‘no’ to your friends. Learning to manage your own time is critical. Everyone around you enjoys adding things to your schedule, and reducing their to-do list. The key is learning to say no without offering a long list of excuses, or whining about how busy you are. It’s never possible to satisfy everyone, so be true first to your own priorities.
  1. Set realistic milestones and take them seriously. It’s easy for part-timers to make excuses that other priorities caused you to miss milestones, but predictable results and metrics in this mode are even more critical than for full-time members. Use the 80/20 rule to maximize productivity – get 80 percent outcome from 20 percent of focused efforts.
  1. Select a business idea that has a longer runway. Some startup ideas are dependent on a rapidly emerging fad, or have many competitors fighting for a limited market. You can’t move fast enough on a part-time basis to win in these areas. On the other hand, if you have a new technology, with patent applied for, maybe you more time to get it right.
  1. Prepare yourself for a longer journey to success. Seth Godin is famous for saying that the average time for overnight success in a startup is six years, even working full-time. Like any startup solution, the first version will likely be wrong, and require one or more pivots. Learn to look for small indications of success to keep you motivated.
  1. Make learning your full-time vocation. No matter how many full-time, part-time, and family commitments you have, you always need to carve out time for learning new things. Learning is not stealing from any employer, and it prepares you for all your futures. Don’t wait for anyone to pay your way to class, or give you time off for training. It won’t happen.

The advantage of quitting your day job early is that it removes all excuses, and all qualms from you and others, that the new startup is only a hobby. There is nothing that drives an entrepreneur like being hungry, dependent on the outcome, and seeing mounting debt. Without self-discipline, many aspiring entrepreneurs find that a single focus is the only way anything ever gets done.

There is certainly additional risk associated with working a paying job during the day, and working on your startup nights and weekends. First is the risk to your health and family life, which if you lose these, all the business opportunity in the world doesn’t matter.

Then there is the risk of antagonizing your current employer by missing deadlines, reduced productivity, or even getting embroiled in a legal conflict of interest or intellectual property ownership rights. I suggest it’s best to be up-front with your employer, with an honest commitment that your startup work will not impact company commitments or results.

Potential conflict of interest issues with a current employer should be explored openly, and resulting agreement documented, to preclude the possibility that you might lose everything later as your startup succeeds. On the positive side, your employer may like what you have in mind, and become your first investor and biggest supporter.

If your conclusion after all these pros and cons is that the risk is too high for you, you probably need to keep your day-job long-term, and give your startup idea to someone else. There certainly isn’t anything wrong with a regular well-paid job and career, with health-care benefits, and a competitive retirement plan. But the entrepreneur lifestyle is still more fun, even part-time.

Marty Zwilling

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Friday, May 19, 2023

10 Practices That Have Led To Multiple New Businesses

Elon_Musk_Royal_SocietyEntrepreneurs who experience success with their first startup are often amazed to realize that the risks and fears of doing it right the second time go up, rather than down. Encores are tough, especially in the high-risk world of startups, yet every entrepreneur I know can’t wait to start over and do it again. Sometimes their haste or ego causes them to ignore basics, and they fall hard.

Every startup success is a function of great people, products, and profits. But there is no magic formula on how to bring these together a second time, but I did see some good insights on the parameters in a classic startup business parable, “Endless Encores,” by Ken Goldstein, who advises startups and has built companies in technology, entertainment, media, and e-commerce.

I have pulled together here a few of our joint recommendations to every entrepreneur and startup that I advise. These work the first time, and are required every time for success:

  1. Seek extraordinary people and revere talent. In the heat of the battle, when you have the least time and money to attract the best, it’s easy for an entrepreneur to settle for who is available, rather than who can bring real value and innovation to the business. Repeat leaders think more about talent, while short-term leaders worry first about output today.

  1. Hire for character, competency, and compatibility. Hiring is the single most important thing you do as a leader, and firing is second. It’s more than filling an open slot on your team. You start with skills, but then you have to delve deeply into motivation, trust, ambition, chemistry, and experience.

  1. Diversity on your team expands thinking. Hiring people who are just like you may eliminate revolts, but it won’t get you outside your own box. Creativity requires constructive conflict, a willingness to collaborate, dealing with failure, and boundless iteration. Solution and business model innovation require pushing the limits.

  1. Self-demanding beats boss-demanding every time. Startup successes are never perfect. Too many entrepreneurs are their own worst enemy, trying to do everything right the next time. Remember to embrace pragmatic goals and solutions, and accept a little bit of luck and assistance along the way. Perfectionists never win in the startup business.

  1. Leapfrog products invent and reinvent markets. Incremental product ideas do not change markets. It takes a paradigm shift, like autos to airplanes. On the other hand, making the user experience easier, richer, and more pleasant, as Apple has done repeatedly, can reinvent existing markets. Focus on the customer for repeated success.

  1. Eat your own dog food. If you don’t, why should they? The basic premise is that if a startup expects paying customers to use its products or services, it should expect no less from its own team. There is no better way to get quick and honest feedback on strengths, weaknesses, and usability. Even encore startups should expect to pivot to get it right.

  1. A business model is not an after-thought. Passion and ego are no substitute for a business model that makes sense. Some entrepreneurs are so enamored by their first success that they inherently believe that their next idea will make even more money. If your solution is free, or you lose money on every sale, it’s hard to make it up in volume.

  1. Strategy is charting a course, not making a move. Implementing a strategy doesn’t force the answer you want, so it pays to map out the alternatives and envision the possible as well as the problematic. Markets change rapidly these days, so the strategy that brought you success the first time, may lead to your demise the second time.

  1. Recurring revenue is the foundation for growth. Everyone loves the subscription model, since transaction costs exclude the cost of acquiring a new customer. Investors love this and other recurring revenue models because they facilitate growth through scaling. Sometimes repeat entrepreneurs forget that they must acquire new customers.

  1. Use cash wisely, as if it were out of your own pocket. Every new startup has extensive cash flow out, before any flows in. Serial entrepreneurs, with new bigger ideas, often forget that part of the equation, and are caught short. Repeating successfully means the same focus and due diligence on cash you had the first time around.

Thus the path to repeat success in business is to utilize what you learned from your first experience, and subvert any illogical fear of being exposed as a fraud or a lucky accident. If you have been able to “bring the crowd to its feet” with the success of your first venture, the principles outlined here could bring you endless encores.

Marty Zwilling

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Wednesday, May 17, 2023

6 Approaches To Problem-Solving From Today’s Leaders

https://patina.photoAll the business leaders I know have noticed that the problems we all face today are becoming more complex, multifaceted, and our customers are more demanding. Everyone wants to know how to become a better and more timely problem solver, as well as a more creative solution provider. The challenges for every business are now more global and multi-cultural than ever.

We are all jealous of the few leaders who seem to get it right more often than not, amassing multiple business successes, such as Jeff Bezos and Sir Richard Branson, while the rest of us struggle to keep up with our smaller domains.

In my consulting practice, I seem to struggle the most with those of you who are perfectionists, so I was pleased with the guidance I found in a new book, “The Imperfectionists: Strategic Mindsets for Uncertain Times,” by Robert McLean and Charles Conn. These authors speak from a wealth of experience as investors, entrepreneurs, and environmentalists.

I particularly like and agree with their characterization of six mindsets that facilitate effective problems solving under today’s uncertainty and time constraints. I will summarize these here, adding insights from my own experience in business:

  1. Great questions generate the best insights. The best business leaders are ever curious about every element of every problem. You as a leader must be able to suspend your natural pattern recognition impulses long enough to see evolving challenges in a fresh light. Asking the right questions reduces uncertainty and provides new answers.

    Of course, you have to stop talking and start really listening if you want to learn anything from questions. That means also that you have to suspend your biases, forget your leading questions, and do the follow-up required to confirm what you think you heard.

  2. Look at the problem through multiple lenses. By changing your lens or widening the aperture, you can identify threats and opportunities beyond the periphery of conventional vision. Also, you can zoom in and zoom out to be sure you are seeing the real structure of the problem, rather than imposing an old solution or addressing only one surface.

    In the trade, this approach is sometimes called “dragonfly eye,” referring to the fact that dragonflies have huge compound eyes, with hundreds of lenses that gather much more data than our human eyes, giving them a survival advantage in a complex world.

  3. Constantly experimenting through trial and error. To be a great problem solver, you must go beyond conventional data to explore tomorrow’s evidence from experiments to test hypotheses. The internet and instant global communication have made this kind of direct experimentation possible and cost effective, leading to early pivots and retries.

    Jeff Bezos at Amazon credits much of their growth and success to conducting regular change experiments. Bezos believes that if you double the number of experiments you do per year, you’re going to double your innovation, and thus outpace your competitors.

  4. Enlist the collective intelligence of the crowd. With the pace of change today, it is unlikely that all the best people to solve any given challenge are inside your four walls. Clever leaders now cast their nets more broadly, reaching out to the crowd on the internet, as well as industry organizations, governments, and even competitors.

    Of course, this requires that you bring together highly functioning groups of diverse people, which means you have to be willing to share your challenges. That may be a new mindset for you, but in my experience, the payback is well worth the time and effort.

  5. Don’t demand risk elimination by perfectionism. Great problem solving under uncertainty requires assessing and betting on the odds through trial and error, leading with low cost minimum viable prototypes, and accepting that some initiatives will fail. You must embrace humility about what you can learn, and what is knowable at any time.

  6. Use the show and tell mindset to compel action. This enables you to connect an audience, constituents and customers with the solution, and then use combinations of logic and persuasion to get buy-in. Storytelling will present the case emotionally as well as logically, connect with the values of the audience and the balance of risk vs reward.

In all cases, problem solving is a wager on the future, so you need to understand the stakes, or costs, of playing the game. This means assessing the price of each strategic move, including the costs of doing nothing, or finding a perfect solution, and weighing the payoffs of each potential outcome. Now is the time to hone your problem-solving skills if you expect to survive and thrive.

Marty Zwilling

*** First published on Inc.com on 05/02/2023 ***

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Monday, May 15, 2023

6 Keys To Adding Customer Value In Marketing Content

Hero-Content-MarketingEntrepreneurs have always believed that their product or service must show real value to customers, but today the smart ones are even able to make their marketing valuable. The days are gone when marketing was all “pushing product.” Now customers seek out people who are willing and able to add value, with expertise and insight, even before they have a product.

This new approach is often called “pull marketing,” where the idea is to establish a loyal following and draw customers to your content, and eventually your solutions. Customers don’t even see this as advertising. For example, top bloggers today, including Rand Fishkin and Gary Vaynerchuk, find no need to advertise, as customers come to them for value from content alone.

The impact of the right marketing content, and the principles of providing it today are outlined well in a classic book, “Content, Inc.,” by the so-called godfather of content marketing, Joe Pulizzi. He provides details on six key principles that every entrepreneur needs to practice in building and executing any modern successful startup:

  1. Fill a need independent of your product or service. For example, Seth Godin’s daily articles online on marketing are so valuable that he pulls loyal customers without ever mentioning his publishing services, consulting services, or speaking engagements. Make your content answer some unmet customer need or question without pushing a product.

  1. Consistently deliver new and valuable content. The key is consistency. Startups that haven’t updated their website since rollout, or publish a new blog once a month or less, won’t be followed for valuable content. In this context, content is like advertising, unless customers see you every day, they won’t remember anything about you, good or bad.
  1. Customers relate to other humans and relationships. As a startup, you the entrepreneur are the brand. Customers like to think they know you, so you need to find a voice, and share it. If you have a story, share that too, and invite interaction and comments. It’s more true than ever that people buy from people, not companies.
  1. Value is in your point of view. Everyone knows how to use Wikipedia, universities, and textbooks for facts and history. Experts and advisors offer new value from their insights, opinions, and experience. Don’t be afraid to take sides on matters that can position you and your company as an expert. People appreciate that and come back for more.
  1. Avoid “sales speak” and pushing your product. The more you talk about your solution, the less people will value your content. Pulizzi has measured that page views drop quickly by as much as 75 percent on self-serving content. Skip the flowery phrases and frequent adjectives that make up so much of the advertising copy we all recognize.
  1. Demonstrate best of breed through actions. Although you might not be able to reach it at the very beginning, the goal for your content is to be best of breed in your chosen domain. This means that, for your content niche, what you are distributing and your recommendations are the very best of what you and other experts have found.

Pulizzi argues, and I agree, that great content can be used by entrepreneurs to build an audience of potential customers first, before you have a product to sell. It’s the smartest and least expensive way to test the value of your concept, as well as the potential makeup and size of your target customer set. You then have the opportunity to monetize an already loyal following.

By experimenting with content, every entrepreneur can explore their own sweet spot, where they can comfortably offer value to an interested customer set. They can find their personal tilt that sets them apart, build a base of followers as a foundation to a business, and then harvest the audience for diversification and monetization.

What we call “marketing” has changed from a focus on “selling” customers with push marketing, to a focus on providing value early and in every way possible, such that customers are drawn to you as a trusted provider of value. That’s the loyalty you need, to have them recommend you to their friends, and keep you ahead of the many competitors easily visible on their radar.

Marty Zwilling

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Sunday, May 14, 2023

5 Keys To A Viable Spending Rate And Cash Management

Projecting-burn-rate-cash-flowCash flow is a basic survival metric for every startup. Investors check your burn rate to assess your efficiency, and project your remaining runway before you run out of money and into a brick wall. Don’t wait until you are almost out of cash before managing every dollar spent or looking for the next refueling from investors. Desperate entrepreneurs lose their leverage and die young.

It doesn’t take a financial genius to recognize that you need to keep your burn rate low. Yet it always amazes me that I can find two different startups, seemingly working on the same problem, with one having a burn rate several times higher than the other. Of course, their answer is that the second intends to get to market faster, but every engine has limits regardless the fuel applied.

If your runway is less than a year, it’s time to either begin looking for a new cash infusion or defining and implementing a Plan B to assure survival. Your goal is that magical breakeven point and hockey-stick profit-growth curve. Raising money from professional investors, even friends and family, takes time. Count on six months from beginning the funding process until a new check is cashed.

As a mentor to many entrepreneurs and startups, here are my best recommendations for keeping the burn rate low, planning ahead and maintaining credibility with investors:

  1. Manage cash flow personally every day.  A big influx of orders may feel like success, but can kill your business if you don’t have the cash to produce, deliver and wait for payment. The best entrepreneurs manage cash flow ruthlessly and never delegate decisions about spending money. Cash flow out equates to burn rate, and the runway depends on your reserves.

  1. Buffer your projected resource requirements. You will make mistakes. Things will cost more than you expect. Always add 20 percent to your best estimate of funding requirements when approaching investors. They understand startup realities. Better to ask for more early. Going back to investors for more money ahead of the plan is high in terms of credibility and leverage.

  1. Use future cash for payments where possible. Deferred payments start with stretching the payables period but, more importantly, include giving employee equity in lieu of a higher salaries and negotiating vendor deferred payments out of future revenues. Think of these alternatives as paying interest on a loan, and manage them wisely.

  1. Be a miser with contract services and facilities. One of the main reasons that former corporate executives often fail as startup CEOs is that they expect a big office and an entourage of expensive professionals to do the real work. Cash flow can be drastically reduced by working out of your garage. Tackling most of the support tasks yourself.

  1. Use social media for early marketing.  Hire a professional marketing and public relations agency once you have a good revenue stream but you don’t need them to start a free blog, establish Facebook and Twitter accounts with initial content and complete the basics of search engine optimization. Social media is not rocket science.

The timing of cash flow is everything. Waiting until you have something to sell before bringing on a sales and operations staff. Getting a sales contract before manufacturing inventory. Match your office, facilities and computer equipment to the size of the staff you have today, and intend to have in the next six months.

As a rule of thumb, your monthly burn rate should be less than 10 percent of your last funding raise or starting cash in the bank. For example, a software development startup raising $250,000 from angel investors better be able to operate on $25,000 per month. This could equate to two technical founders (with a minimal salary), funding two developers for a year.

In this case, the primary cash outflow would be for product development and operating expenses, with potentially enough runway to build the initial product, get a patent, attract some early adopters, and build the initial revenue stream. That should equate to an adequate valuation for a $2 million follow-on Series-A round, without giving away all the equity.

Overall, managing cash flow and burn rate is more critical to your business success than having the right idea and the right product.  It’s why most investors proclaim that they invest in people, more than the idea. If you adequately manage your burn rate, your startup is much less vulnerable to flaming out before you get to that elusive break-even point.

Martin Zwilling

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Saturday, May 13, 2023

7 Ways To Validate Your Business Idea Before Starting

validate-your-ideaIn my experience, consummate entrepreneurs tend come up with more startup ideas than they can ever implement, and some of the ideas may not even make business sense. But how does any entrepreneur know which ideas to implement, and which ones are best left behind?

After all, most great breakthroughs, like a computer in every home, seemed like a crazy idea before Steve Jobs and Bill Gates made it happen. Now we are seeing a computer on every wrist, and in most household appliances.

That doesn’t mean that entrepreneurs should ignore business and market realities, under the assumption that success is a random phenomenon. Passion, optimism, and determination are necessary but not sufficient to assure a successful startup.

Some analysis and due diligence along the following lines should be performed on every idea, as a reality check, before committing your efforts and other people’s money to building a business:

  1. Look for places where competitors are few. Even if the idea sounds unique to you, it’s worth your time to do a few Internet searches using relevant keywords. If you find more than a dozen solutions that loosely match your idea, it may be time to skip that one and try another. Don’t forget to consider customer alternatives, like trains versus airplanes.
  1. Check for intellectual property barriers in your way. These days, you can find existing patents and trademarks through Google and the US Patent Office online site without spending thousands of dollars with your favorite patent attorney. Of course, existing patents don’t stop you from innovating, but charging ahead into a wall is no fun.
  1. Find a recognized billion dollar and growing market. If you will be looking for professional investors to help you along the way, recognize that they expect to see data from credible market analysts on the size and location of your solution opportunity. Look for double-digit growth data from Nielsen, J.D. Power, Frost & Sullivan, or others.
  1. Separate nice-to-have ideas from ones solving painful problems. All your friends may love your idea on how to find the nearest bar or gym, but how many people are willing and able to pay money for your solution? Even good social causes need to bring in revenue to continue their worthy efforts. Ask domain experts to quantify value for you.
  1. Choose projects with financial resources within your reach. These days, you can build a new e-commerce website to sell home-made wares for a few hundred dollars. New smartphone apps cost only a few thousand, if you have the programming skills. Unless you have a rich uncle, it’s probably not smart to challenge Intel for the next computer chip, which would require hundreds of millions of dollars in investment.
  1. Minimize infrastructure dependencies. Sometimes your solution is impressive, but mass acceptance requires a big culture change, a large support system, or government legislation. For example, the Segway personal vehicle was proven technology 20 years ago, but is still constrained by right-of-way laws, liability issues, and charging stations.
  1. Availability of necessary skills and team members. Most startup projects require special skills and a motivated team. Entrepreneurs with ideas may not have access to the support skills required, or the ability to put together a motivated team. A successful startup is more about the right people and the right execution than the right idea.

Despite what you hear from some Internet spammers, there are no slam-dunk entrepreneur ideas that can make you rich with no risk and minimal effort. In fact, from painful experience, every real entrepreneur I know could probably add at least one item to this list of reality-check items. Thus I’m suggesting that you do your due diligence carefully, and pick the right idea before you start.

Sometimes I have to tell wannabe entrepreneurs that their million-dollar-idea is actually worth very little, in their own hands. It may indeed be better to freely donate your idea to a more qualified entrepreneur or team, rather than foolishly running it into the ground or sitting on it. One hundred percent of zero is still a small number.

Martin Zwilling

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Friday, May 12, 2023

7 Viewpoints Required To Be A Satisfied Entrepreneur

business-office-happy-entrepreneurAs an angel investor and a mentor to aspiring entrepreneurs, I’m always disappointed to see founders who seem stressed out most of the time, and more annoyed than energized by the abundance of challenges they see in building their startup. The entrepreneurial lifestyle is a tough one under the best of circumstances, and it’s one you have to love in order to succeed.

Obviously, it’s not that simple, but making the right first impression is critical for an entrepreneur, not just with investors, but also with partners, customers, and even yourself. Even though I’ve been working with entrepreneurs for many years, I’m sure I’m not the only person who can quickly spot the ones whose mentality for the role is suspect.

We would all prefer that aspiring entrepreneurs take a hard look in the mirror early, before they assume they can step easily into the role of a Mark Zuckerberg, Richard Branson, or Bill Gates. Here are some key mindset attributes to look for, which I believe are essential for every entrepreneur to see in themselves:

  1. You relish the role of leading the charge. Being a visionary or an idea person is not enough; you have to be anxious to jump in and get your hands dirty. Most success stories in business are not about envisioning the next big thing, but about making that change happen. Investors and strategic partners look for entrepreneurs who can execute.
  1. Able to balance right-brain and left-brain activities. Most technical entrepreneurs are left-brain logical thinkers, even perfectionists. Yet every business today needs a focus on visualization, creativity, relationships, and collaboration, which are normally in the domain of right-brainers. Successful and happy entrepreneurs have that rare whole-brain focus.
  1. Enjoy being outside your comfort zone. New businesses are an adventure into the unknown. You need to be mentally prepared to enjoy the roller coaster ride, rather than face it holding your breath with your teeth gritted at every turn. Only then can you enjoy the thrill of victory when you survive a major turn, and be energized for the next one.
  1. Proactively seek input, but make your own decisions. Great entrepreneurs seek out critical customers and industry experts, and actively listen, but are not afraid to trust their own judgment as well. Ultimately they accept the responsibility of “the buck stops here,” meaning they live by their own decisions, and never make excuses.
  1. Willing and able to do a little bit of everything. Technology experts tend to have a very deep level of knowledge, but not very wide. If your real interests are not very broad, then building a business will likely be frustrating and expensive. Startups have limited resources, so the founders have to enjoy trying things, and learning from their mistakes.
  1. Viewed by others as a successful problem solver. The best ideas for a new business are solutions to a real customer problem, rather than great ideas looking for a market. Creating a new business means tackling one difficult problem after another, until success suddenly appears. Entrepreneurs see problems as milestones to success, not barriers.
  1. Don’t demand or expect immediate gratification. Seth Godin once said “The average overnight success in business takes six years,” and he is an optimist. For some entrepreneurs that success is financial, and for others it is a legacy of good deeds. Because it takes so long to get there, it is important to be happy with the journey.

I’m not suggesting that you need to fit every aspect of my view of an entrepreneur’s mentality for success. Certainly there are winning businesses run by people from every background and personal style. But if you are looking for investors, team members, and demanding customers, it helps to understand what their biases might be in committing to and helping the ideal partner.

I do believe that if every aspiring entrepreneur spent at least as much effort looking inward, understanding their own drivers and preparing, as they do in working outward by building solutions, seeking investors, and writing business plans, the startup success rate would go up.

Overall, the entrepreneur mentality is a state of mind that enjoys the activities and requirements of starting a business. Happiness is more likely to lead to success, than success leads to happiness. Are you certain that your desire and expectations of being an entrepreneur are being driven by the right perceptions?

Martin Zwilling

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Wednesday, May 10, 2023

8 Ways Different Team Members See Efforts To Innovate

Efforts-to-innovateEvery business organization, large or small, has a variety of individual and team member types that factor into your ability to innovate and change the business to meet evolving customer needs and competition. In addition, in my experience as a consultant, I have found that it is important to have the processes and discipline in place to integrate and manage the innovation you need.

Overall, I believe the people, and their personas, are as important, maybe more, than any process you can implement for timely problem solving and innovation. Thus I was happy to see both addressed very well in a new book, “Decision Sprint,” by Atif Rafiq. He brings over 25 years of experience with Silicon Valley leadership companies in highlighting winners and losers.

I particularly like and agree with his characterization of the eight top team member personas that comprise the majority of professional in these companies, and drive or hinder innovation and new initiatives to stay ahead of the pack. I will paraphrase those personas here, adding insights from my own career in business and consulting:

  1. Standalone innovator: idealizes full autonomy. As standalone innovators, these may have trouble recognizing where the mother ship skills and expertise can be applied to develop innovation ideas properly. As a result, these people often end up disheartened. If you fit here, I recommend you find a senior sponsor, or leave to strike out on your own.

    In my experience, new startup businesses are initiated primarily by these standalone innovators, popularly called entrepreneurs. These people are free thinkers, enjoy their independence to make their own decisions, and are willing to accept disruptive risks.

  2. Intrapreneur: visionary within corporate boundaries. Professionals in this category are wired for new territory, but deliberately work through the organization to build support and create momentum for an initiative. It’s a rare and ideal combination for a large company, and you need to have the patience to evangelize with key decision makers.

  3. Analytical: synthesizer of hypotheses and data. These personas are sought out in every company to better understand an initiative and plug gaps in ideas and plans, and recommend required resources and tactical moves. Your contribution can help a number of other personas overcome doubts and concern, and validate visions with real data.

  4. Pragmatist: open to change but recognizes realities. As one of these, It is important to surround yourself with “solution-oriented” supporters, open to finding reasonable ways forward with new ideas. Lean on your neutral instincts until the right domain experts can explore them. Don’t let pessimists convince you that all unknowns are too risky.

  5. Pessimist: constantly raise the specter of risk. You will recognize this persona as always highlighting the risks, and displaying a “wait and see” attitude, rather than jumping in to be a driver of change. If you find yourself here, you need to get out of your comfort zone with haste, and shift from a “know-it-all” mentality to “learn-it-all” and move forward.

  6. 6. Change agent: likes to drive novel ways of working. If you are a high-energy leader and see something that can enhance the customer experience or push the business forward, you always lean to making it happen. You should team up with intrapreneurs to land their ideas and translate them into the language that the company can understand.
  7. Action junky: ready to move, with little patience. Before jumping to conclusions, these personas should ask a few questions to gauge the rate of learning and clarity being created in a project. Channel your energy into feedback on the alignment and decision-making process. Pivot your focus upstream from implementation mode to exploration.

  8. Coach: force for stability and mentoring. The challenge here is to find the right people to mentor, typically people with bright ideas but less understanding of reading the tea leaves, concerns, and barriers to alignment. Coach them on building these inputs for stability in the organization, minimum conflict, and building support with senior leadership.

Each of these personas brings value to the workplace, so there is no right and wrong here. I’m simply suggesting that business has changed, so you need to look at the mix in your company, for needs and adjustments. It’s also time to look at your own fit, as it may be time for some new views and new career opportunities. Innovation and change can be a good thing for everyone.

Marty Zwilling

*** First published on Inc.com on 04/26/2023 ***

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Monday, May 8, 2023

6 Keys to Superior Thinking in Business Innovations

superior-thinking-innovationAs I work with aspiring entrepreneurs and business professionals, I often hear about stress and disappointment from a great idea or innovation that failed for reasons that you don’t understand. When I dig deeper, I find that many of you are easily excited by a great new idea, but fail to diligently follow a validation process to test the limits of your thinking, before proceeding to rollout.

I particularly find lack of validation to be true for people who fall in love with a new technology, without giving thought to any specific problem it solves, or the infrastructure challenges implied. These issues are addressed well in a new book, “Think Bigger: How to Innovate,” by Shenna Iyengar. She is an expert on the study of innovation, and professor at Columbia Business School.

I like her recommendation of five discrete steps to help you think bigger, and innovate more successfully in your business, as well as your private life. I will summarize her recommendations here, as well as adding my own insights:

  1. Pick a problem to solve rather than an idea. Start with a real problem, rather than a technology or solution looking for a problem. Forget your dreams to save the world, and focus on a specific business or personal problem you want to solve, with knowledge of people who are willing and able to reward the solution. Temper your passion with reality.

    Sometimes you have to reframe a problem if it looks insurmountable. You may find that thinking it through to find the root cause will lead you to the answers you seek, or talking about it with someone will spark your creative genius or add insight and perspective.

  2. Break down the problem to find complexities. When you jump from problem to solution without pausing to break the problem down, you may lose in quality what you gain in speed. Also, the breakdown allows you to see complexities and apply creativity to find solutions that work. Iterate to solve all subproblems and you have the total solution.

    Revision of the breakdown list is a key part of the process. Don’t just accept your first breakdown. Revise the list at least once. Keep revising until you find that your study and interviews no longer give you further ideas. The goal is to solve all of the subproblems.

  3. Identify the motivations of decision-makers. Of most importance is an awareness of your own wants and expectations, to better avoid paths that lead to frustration or dead ends. Of equal importance is the real need of your target audience, combined with emotions and other decision criteria. Don’t build a solution that totally satisfies no one.

    This is the point where you must keep the Big Picture as top priority. The three primary parties in this picture are you, your targets, and third-party players who matter. There will always be conflicting wants here, so optimize for the party you want to please most.

  4. Evaluate alternatives that are now available. Most real problems have workarounds, or solutions that you may not be aware of. Use all available search platforms, including Internet search engines, social media, and discussions with experts to find and evaluate these alternatives. Make sure your solution is unique and will be accepted by key parties.

    Also, use this step to evaluate the value of strategic copying of existing solutions. Look for sweet spots of others to imitate or combine, but never copy the entirety of a known precedent. Your goal is to end up with a solution that is in total more useful and novel.

  5. Build a list of many combinations and tactics. Stay open-minded and invite diverse perspectives to hone your solution features, marketing, and rollout. Position against competing offerings in the marketplace, highlighting your positives, rather than trying to put-down competitors. Encourage open discussions of options, rather than stealth mode.

  6. Test to see if others see the solution you see. This is often called the ‘Third Eye’ test, where you describe your idea and solution from memory to others and see if comes out and is understood the same way each time, for you and for the people listening. Now is a better time to change your description or pivot a solution before making a big investment.

In reality, I find that innovation is most often nothing more, and nothing less, than a new combination of old ideas, put together to solve a real problem in a more appealing way and executed more effectively. There is no guarantee, of course, that any combination or process will work, but thinking bigger about any new idea will certainly improve your odds and satisfaction.

Marty Zwilling

*** First published on Inc.com on 04/24/2023 ***

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Sunday, May 7, 2023

6 Values And Priorities That Investors Will Relate To

investor-analysis-businessYoung entrepreneurs often are so excited by new technology or their latest invention that they forget to translate it into a value proposition that their customers or potential investors can understand and relate to. They become frustrated with investors, senior executives, and even customers who don’t seem to “get it,” with the result that everyone loses.

Senior business leaders, for example, are unlikely to relate when you pitch your latest web app, highlighting the mashup technology, which you derived from early online social networking applications. Mashup probably reminds senior leaders of a train wreck, and social networking is still seen by some business executives as a frivolous waste of time.

It’s really your responsibility and to your advantage to translate your message into values and priorities that the intended receiver can readily relate to and understand. Here are some key value propositions that will resonate with every business leader I know:

  1. Ability to adapt quickly to changing requirements. Every business leader knows how difficult it is to keep up with a changing market. If you can quickly explain how mashup technology facilities this agility challenge, the technology may quickly turn from a negative to a major positive. This priority applies to big companies, as well as startups.
  1. Customer data integrity and security. Customer data, as well as internal data, is a key resource for every business that must be secured and protected. If your message starts with a focus on this priority and related costs, the technology will likely be appreciated and valued, rather than challenged.
  1. Personal privacy protection. Customers are always looking for a better user experience, and they don’t want their privacy compromised. Before you focus a senior decision maker on your new cloud technology and distributed data, make sure he or she understands how it will lower user privacy exposures, rather than increase them.
  1. Reduce litigation risks and support costs. Often new technologies are seen by senior decision makers as new opportunities for litigation and hackers. You need to address these concerns early, by highlighting patents, encryption capability, or other features which mitigate these risks and costs. Skip the acronyms and implementation details.
  1. Payback on investment. Every business executive wants to understand how each new investment in technology relates to their bottom line. Quantifying the return on investment (ROI) is “top of mind” for every investor and executive. Entrepreneurs who make this case effectively will get the decision they want, no matter how esoteric their technology.
  1. Ability to integrate with existing apps. New applications which can’t communicate with existing data and applications are often more of a problem than a solution. Mashup technology may be your biggest plus, if you position it in this context. Highlight the mashup use of existing friendly interfaces, and use of existing data in a new solution.

I challenge every entrepreneur to see how many of these priorities they can integrate into their new technology solution elevator pitch. You may be able to turn a potential train wreck into a win-win decision for both you and the investor or customer. In any case, it pays to do your homework on the background and experience of the decision maker you face. Don’t assume their understanding of technology is commensurate with yours.

Entrepreneurs need to remember that every investment decision, whether by professional investors or customer executives, is primarily a financial decision, not a technology decision, driven by limited funds. If you can translate your technology power into a solution satisfying key business goals, you will win the investors you need, as well as the customers you need to make your startup a success.

Technology is the means, not the end.

Martin Zwilling

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Saturday, May 6, 2023

6 Ways To Get Credible Data To Support A New Venture

credible_market_researchMany entrepreneurs are so enamored with their product vision that they believe their own hype and are convinced that the market for their solution is so huge that no one will ask them for independent market research data. They don’t realize that business projections with no third-party validation have no credibility with investors, and smart potential investors will walk away.

Every good business plan needs an early section which sizes the total market opportunity, and then breaks down that total into the most relevant segments for your focus. If ten percent of these numbers, multiplied by your average product price, will get you the revenue you need to scale your business, you will get the love you need from angel and venture capital investors.

A common excuse I hear from entrepreneurs for not doing the work is that real market research takes too much time, and costs too much money. Perhaps that was once true, but in this age of the worldwide Internet, big data, and pervasive business intelligence in every industry, you can use the following steps to get the data you need with very little time and cost:

  1. Start your research with Google. Use your favorite search engine and keywords describing your solution to find online sales reports, trade association statistics, and online newsletters with the latest statistics. The wealth of data available online is already much larger than the entire Library of Congress, and much more current.
  1. Modern libraries are still worth a visit. Universities and large municipalities still maintain subscriptions to the latest market research reports from key sources, including Nielsen, International Data Corporation, and Gartner Group. In most cases, these are available to the public for free access, and can be referenced and footnoted in your plan.
  1. Explore municipal development resources. The local Small Business Association (SBA) offices, or their equivalent in other countries, can often provide market statistics on key market domains in your area. New business development specialists there can also provide good additional sources for the specific information you may need.
  1. Browse the business section of your favorite bookstore. These days, it’s a great way to get some work done, while enjoying a cup of coffee, so you may not even have to buy a book. Pay particular attention to the titles discussing the latest issues having big opportunities, like alternative energy, global warming, and technology trends.
  1. Peruse company reports from your business domain. Competitor annual reports, white papers, press releases, and presentations are great sources of data and trends that you can use to support your own efforts. These are also important for your product positioning in the competitor section of your business plan.
  1. Conduct your own customized market research. With social media and the new survey tools, it’s easy and fast to set up and run your own focus group, or opinion survey. Just make sure your results are statistically significant, rather than anecdotal, and avoid any personal biases in the questions which may be used against you.

You need to find just enough information to quantify the real need out there for your product or service. For example, if you are offering an accounting service for small business owners, you would want to quantify the number of enterprises in your area, with the size, age, and spending demographics that you are targeting.

Buying large detailed reports from market research freelancers and name-brand providers usually costs several thousand dollars, and often is not required to find the summary data you need to satisfy investors. One of the free sources above, or just the teaser data from an online report advertisement, often is more than adequate as a third-party reference for credibility.

We all know that people can use statistics to prove any point they want, but not having any opportunity sizing is certain to raise a red flag above your whole business plan. On the other hand, spending your entire startup budget on market research won’t improve your odds of success or funding.

Successful entrepreneurs get the job done quickly, without breaking the bank.

Martin Zwilling

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Friday, May 5, 2023

8 Tactics For Every Entrepreneur To Manage Technology

system-web-digitization-technologyTechnology is so key to every business these days that experienced business-smart but non-tech entrepreneurs are feeling deeper and deeper in the hole. Even if they realize that they need real technical strength at the top, they are not sure how to attract and select the talent and expertise they really need. Should they go after high-tech nerds for partners, or professional technologists?

The right answer for a good business partner today is neither of the above. Startups succeed most often when the founding partners know how to build and run a business, rather than how to build and run technology. Only one component of running a business is managing technology, but it is a critical component, so no entrepreneur can afford to ignore it or totally delegate it.

That means every entrepreneur needs to learn how to attract, hire, and manage technical people for their team. Just like you don’t have to be a financial guru to recognize a good CFO, or a marketing genius to hire a VP of Marketing, you can find the right technical partner or team member by using the right evaluation and hiring steps, including the following:

  1. Engage a technical advisor to assist with recruiting and early interviews. Just like executive recruiters recognize the best executives, a technical expert in your business domain will recognize the right combination of skill, creativity, and experience you need for a cofounder or key team member. Don’t fall for a technical pitch you can’t fathom.
  1. Look for a match in culture and values, as well as technical strength. A great technical LinkedIn profile is a good start, but not enough to assure success in your environment. The non-technical leadership attributes of excellent communication skills, high integrity, passion, and perseverance are critical for the success of the whole team.
  1. Spend time informally with candidate peers and former employers. This approach works best with business associates that know you, or peers that you meet at industry conferences, or technical gurus that have no business connections to the candidate. Former employers will normally only give you candidate employment dates or good news.
  1. Let candidates educate you on attributes you need and they bring. The key here is to do more listening than talking in both formal and informal interviews. I find that many entrepreneurs are so passionate about their own idea that they can’t stop selling it to potential partners. They are attracted to people who agree, but may not be able to help.
  1. Evaluate their problem-solving ability in the context of your business. A business startup is not an academic environment, or a big company research organization. Practical problem solving, and communicating to business people, is often a big challenge for technical experts. Test them with problems outside their comfort zone.
  1. Challenge current team members to bring in the best and the brightest. Start with existing cofounders, extend the request to advisors and investors, and finally to existing team members. Make them part of the interview and decision process, since they all have a large stake in ultimate success of the new venture.
  1. Continually ramp up your own technical competence. Although technology is getting more pervasive in business, it’s not rocket science. If your kids can use computers by age six, every entrepreneur ought to be able to stay current with the latest social media marketing and e-commerce technologies. You can’t manage a technical team or negotiate with technical partners without understanding their view of the business.
  1. For non-core technical strength, look for outside partners. Outsourcing to expert freelancers or business partners is often a better solution for startups than managing everyone into the inside team. You may not have the breadth of technical challenge, or the budget, to lure in and keep motivated the caliber of technical expert you need.

Even if your company doesn’t sell high-tech products, like Zappos sells shoes, having and using the right technology in the business, for distribution, marketing, and customer support can easily make the difference between winning and losing in today’s high-tech world. It’s no anomaly that Zappos CEO Tony Hsieh graduated from Harvard with a degree in computer science.

On the other hand, there are many technology companies successfully started and run by non-technologists. For example, Richard Branson, CEO of Virgin Group, with no technical background at all, has started and run many technical companies, including the futuristic Spaceship One and an orbital space launch system, and reportedly does his own social media work.

Thus, non-technical entrepreneurs must not shy away from technical issues, and must also learn to find and effectively work with technical partners, inside their company and outside. Street-smart today means the ability to survive and prosper in a technical world. Are you there?

Martin Zwilling

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Wednesday, May 3, 2023

5 Keys To Leadership While Working With Remote Teams

zoom-video-sessionThe current surge of working remotely, driven by the pandemic and international freelancing, has challenged our thinking on collaboration and leadership, both within teams and outside, to other organizations. In my consulting work, I am finding this brings a need for more focus on the human side or empathetic leadership, rather than a reliance on the “command and control” paradigm.

I found some good guidance with practical specifics to accomplish this new type of leadership in a recent book, “Your Resource is Human,” by Melissa Romo. She brings more than twenty years of experience building and working with globally dispersed teams and Fortune 500 companies around the world. I offer here my interpretation of her five key leadership behavior principles:

  1. Help team members find meaning with work. Start with ‘How are you?’ and leave time for the answer. Don’t confuse performance targets with purpose and meaning. It’s all about contributing and being connected to team and company values for improving the lives of customers, or possibly a higher-level purpose, such as saving the environment.

    Another important driver of meaning at work is how the work relates to your career or personal development. Make sure you know your own aspirations, as well as those of the people around you, and focus on collaboration and relationships that further these needs.

  2. Always communicate with optimism and joy. We all need to overcome negative self-talk when we work remotely. Use modern tools, including video, to capture and share the sentiments of optimism, joy, and gratitude from and among remote team members on a regular basis. Be excited about change and the new beginnings it brings for your team.

    Team members who work remotely are also easily forgotten in their need for shared play activities outside of work. It’s still important to schedule virtual happy hours, special fun interactive quizzes, and creative video contests. Make time for play as well as work.

  3. Build respect and trust at the individual level. Trust is hard because it requires giving up control and being honest with ourselves, and with every team member. Leave it up to team members and leaders to decide what schedule works best for them. Prioritize care and concern over inconvenience. Don’t ignore or hide your remote and hybrid workers.

    Remote professionals also need to feel a sense of psychological safety, where they can make mistakes and trust they will not be punished, or offer ideas and trust they will not be laughed at. It takes effort to build and maintain the right culture in a remote work setting.

  4. Set boundaries to enable independent work. Be clear about expectations. Paranoia can run both ways – you might find yourself dependent on a remote worker, with them not sure where you stand. Be accountable for your commitments and hold team members accountable. Help them to know when to say ‘no’ or at least ‘not right now.’

    Also, you have to learn to practice ‘communication patience’. That habit of demanding answers right away may have to be moderated to allow time for people on other time schedules to not have to check and respond to messages at all times of the day or night.

  5. Measure everything and broadcast highlights. Make sure you know what is really happening, through metrics and feedback from others. Highlight individual achievements to the whole team, and connect work output to other teams, company purpose, and vision. Provide coaching and facilitate mentorship from others in the company for growth.

    The best thing you can do for a team member who isn’t performing well is to open-up a dialog about it early. They need to know, and they need to know that you know. Now you can apply empathy to understand personal burdens, versus blockers at work from others.

In summary, every leader has to deal with the many emotional pitfalls of the remote worker, including boredom, depression, guilt, paranoia, and loneliness. It’s up to you to spot where one or more of these pitfalls is leading to a dysfunctional worker, where even your best countermeasures outlined above will not be effective, and counsel that team member to avoid remote work.

Overall, despite the pitfalls, I’m convinced that remote and hybrid work is here to stay, and is a win for wellness. With the right leadership and the right organization design, there is already a significant body of research to prove that remote work makes more employees happier, reduces stress, enhances work-life balance, and increases job control. Make it work now for you.

Marty Zwilling

*** First published on Inc.com on 04/18/2023 ***

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Monday, May 1, 2023

5 Equity Distribution Parameters For Key Contributors

Startup Stock PhotosI always tell entrepreneurs that two heads are better than one, so the first task in many startups is finding a cofounder or two. You need to find the skills or experience you don’t have in business, technology, or money. So, the first question I usually get is what percent of the company or equity is that person worth? Giving a cofounder a salary won’t get you the “fire in the belly” you want.

The default answer, to keep peace in the family, is to split everything equally, but that’s a terrible answer, since now no one is in control, and startups need a clear leader. The next default of waiting until later is equally bad, since partners who bow out early will still expect an equal share of that first billion you make later.

Now comes the reality check. Just because it was your idea doesn’t mean you “deserve” 90% of the equity. The value in a startup is all about tangible results, so I see no equity value in the idea alone. Thus the real discussion must start with who will be doing the work, providing the funding, and delivering results. Each cofounder should get equity for value, based on these key variables:

  1. Lived a key role in a previous startup. Building a new business is quite different from an executive role in a mature company, so people from these backgrounds are often a liability. Value is embodied in previous success with investors, proven problem-solving ability, and having built and executed a business plan with minimal resources.

  1. Experience and connections in your business area. Textbook knowledge and academic degrees don’t count here. Value factors include your related product breadth and depth, relationships with thought leaders, key vendors, and large potential customers. Building the product may be the easy part of your startup challenge.

  1. Key to required patents or trade secrets. In many cases, one of the cofounders may bring some work in progress that can be patented, trademarked, or copyrighted. Your idea is not intellectual property yet, so it has no inherent value. Every previous experience filing and winning a patent is a rare and valuable asset.

  1. Level of responsibility and time allocated. Cofounders only able to work part-time, with responsibility and major income sources elsewhere, don’t carry the same risk as others with more operational responsibility. Less dependence or startup success, or more cash compensation, generally means less equity assigned.

  1. Amount of venture funding provided. Investors may not be called cofounders, but they always get equity, commensurate with their share of the total costs anticipated, or share of the current valuation. The challenge is for real cofounders to keep their equity percentage above 50%, or they effectively lose control of operational decisions.

If none of these five items is a clear differentiator in your case, a logical approach would be to assign each an equal weight of 20% of the total, and partition the total equity based on each cofounder’s correlation to each variable. A friend or family investor thus might get 20% of the equity, even with no business activity contribution.

Because these considerations can be quite complex, very emotional, and have long-term implications, smart entrepreneurs don’t hesitate to get some legal advice at this early stage, in drawing up an agreement document to be signed by each of the cofounders. Obviously it should be amended later, as roles are more clearly defined, and execution proceeds.

Even with an agreed initial equity split, it’s smart to have Founder’s stock actually issue or vest over a period of at least two years, on a month-by-month basis. That way, if one of the partners disappears, or their role changes, a portion of the equity can be re-captured and reallocated to the other members. Other common terms, like the right to re-purchase, should be investigated.

In all cases, roles and titles should be clear, but not necessarily tied to any given percent of equity. In other words, the CEO need not be top equity owner, but should be the one with the most business skill and experience. The CTO of many technical startups was the original founder. The CFO may have a major financial background, but might be a minority owner.

Of course, all cofounders need to remember that allocated percentages will be diluted as angel and VC investors are brought in. Keep your wits about you to make sure that dilution is done equitably and evenly. Naïve cofounders have found themselves squeezed out in some well-known cases, including Facebook.

But don’t get greedy. It’s the power of the team that makes the business. Major equity in a startup that goes nowhere is not my idea of fun.

Martin Zwilling

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