Within a year of its founding in 1982, Compaq Computer posted revenues of $111 million. In 1995, six years after its founding, Telegroup Inc., (now part of Primus) posted revenues of $129 million - nowhere near Compaq’s record, but in many ways a more spectacular performance. While Compaq's growth was executed by a start-up team of seasoned executives who followed a detailed plan and spent a lot of investment capital in the process, Telegroup's growth wasn't planned at all. "My intention was to do this business to support my family while I decided what to do with the rest of my life," according to Telegroup’s founder, Fred Gratzon. Besides starting without any sort of plan, Gratzon was also dead broke at the time. Gratzon was an accidental entrepreneur. Down and out after losing his job, he parlayed a way to make a toll call on the cheap into one of the largest long-distance telephone companies in the world. But it might never have existed if Gratzon hadn't tapped into package deals offered by AT&T as a way of reducing his own telephone bills.
Iomega hasn’t produced a significant hit since it introduced the Zip Drive in 1995. This is usually the kiss of death for a technology company - things just move too fast for hot products to stay hot for very long. In 1995, hard discs rarely stored as much as one gigabyte of data. Today, a typical $100 hard drive can store several terrabytes. People no longer pass data on large products back and forth either - they just send the data by email. The Zip has devolved into a solution to a problem that no longer exists.
Despite its fame as an innovator, 3M hasn’t come up with another Post-it. Most unique selling points prove to be anything but, as they’re rapidly imitated by competitors. In a fast moving world, even blockbuster products have less and less time to reap the rewards. By regularly introducing new products, you give the consumer a reason to buy. You need to convince them that, “If the product you currently have is more than two years old, you’re really missing something.”
Be the first to create new products that put your existing products out of business. Develop new products fast, get to market first, that’s how you win. A McKinsey study showed that products that got to market on time and 50% over budget eventually earned only 4% less than those that were on time and on budget. Products that got to market six months late and on budget earned 33% less than those that were on time and on budget. A Stanford University study of 78 product development projects in 36 companies in Asia, Europe, and the United States, found that in negotiating a highly uncertain path through shifting markets and technologies, the key is to build on intuition and to include flexible options.
A fast product development cycle:
- Allows a company to reinforce its new brand positioning more frequently.
- Ensures the company is first to deliver new products and features through more rapid innovation.
- Reduces the impact when competitors copy the company’s innovations.
- Integrates consumer feedback into the product more frequently.
- Improves reaction time to competitive actions.
- Supports competitive advantage and price premiums.
If success arrives too big or too early, then you've got to have the passion and commitment to go beyond success - to build a durable, lasting enterprise. The best entrepreneurs don't focus on success; instead, they focus on building a company that can be a leader in the global economy. They know success will follow. If you focus on success, you won't get there. If you focus on contribution and customer value, then you can win.
To many entrepreneurs, the greatest satisfaction, owning a business, which often includes working closely with customers and employees, inevitably diminishes as the business grows and the owner’s role changes. Jack Ferner, a former dean at Wake Forest University says, “Many entrepreneurs would rather limit their company’s growth than give up those satisfactions. My experience has been that for every one who has dreams of grandeur and size and billions of dollars, there are probably five that prefer to remain small.” The other perspective is pointed out by John Thorne from Carnegie Mellon University: “I think there’s an argument in many industries that if you don’t grow, you can’t hold on to good people, you’re not going to stay in touch with the technology or the marketing trends, and you sort of slowly die.”
Monday, January 12, 2009
Friday, January 9, 2009
Song for Cracked Voices, a poem by Morris Bishop.
Morris Bishop (1893 - 1973) had a long and distinguished career as a scholar, linguist, teacher, and author of 30 books. He was also a master of light verse, and enjoyed a wide and appreciative readership in the 40-years he contributed to the Saturday Evening Post, The New Yorker, Life, and the Saturday Review.
He was a professor of Romance Literature at Cornell and held three degrees from that university. He was awarded many honorary degrees from other universities in the US, Canada, and France, where he was made a Chevalier de la Legion d'Honneur. He served for a time as president of the Modern Language Association.
His verses speak to our fads and foibles and his ingenious way with words makes us laugh at ourselves.
Song for Cracked Voices by Morris Bishop
There once was a man
With a burning desire:
"As soon as I can
I want to retire;
Retirement is what
I want to get on to,
And work I will not,
But do what I want to."
With energy vast,
He labored undaunted
In order at last
To do what he wanted.
But when, after all
His struggles were through,
He couldn't recall
What he wanted to do.
Oh, most of us can't
(And much we regret it)
Still want what we want
When able to get it.
But happy, I grant,
Are the fortunate few
Who do what they want
When they know what to do.
He was a professor of Romance Literature at Cornell and held three degrees from that university. He was awarded many honorary degrees from other universities in the US, Canada, and France, where he was made a Chevalier de la Legion d'Honneur. He served for a time as president of the Modern Language Association.
His verses speak to our fads and foibles and his ingenious way with words makes us laugh at ourselves.
Song for Cracked Voices by Morris Bishop
There once was a man
With a burning desire:
"As soon as I can
I want to retire;
Retirement is what
I want to get on to,
And work I will not,
But do what I want to."
With energy vast,
He labored undaunted
In order at last
To do what he wanted.
But when, after all
His struggles were through,
He couldn't recall
What he wanted to do.
Oh, most of us can't
(And much we regret it)
Still want what we want
When able to get it.
But happy, I grant,
Are the fortunate few
Who do what they want
When they know what to do.
Thursday, January 8, 2009
Keeping focused as you grow.
If you don't know where you're going, you probably won't get there. A very common problem in startup businesses is confusion of purpose and lack of focus. It's easy to fall into the trap of being scattered, unfocused, overwhelmed. Entrepreneurs are often high-achievers, but they waste time, money and energy having too many irons in the fire because they’re unable to let go of the details. It's tempting to be a jack-of-all-trades and master-of-none. But that won't work - you must focus, focus, focus.
Your thoughts, energies and ideas must all be single-mindedly concentrated on your primary objective and your strategic initiatives. You can’t pursue five goals at once. You must focus your energy until you become like a laser beam. Then, communicate, so everyone understands the vision, the plan. Talk about these every single day. Don’t ask employees to pursue vague intermediate objectives like “excellence.” If you can’t clearly state on paper what you expect from someone, you’re in trouble.
Keep people focused on bottom-line performance and long-term survival. Have really clear system-wide goals - reduce crime by 30% for example, rather than concentrating on intermediate objectives such as increasing arrests or improving the response time of police officers. Avoid goals such as launching a new advertising campaign by the end of May - focus instead on increasing market share by 20%. Don’t focus on narrow functional goals. When you do, everyone goes off in a different direction and even though the basic measures of the company’s performance may be slipping, no one feels responsible to do anything about it. Emphasize improvement in broad business performance instead. Sharon Ballard says, “You get what you inspect, so inspect the things that are key for your startup's success.”
You can't succeed without mastering the fundamentals of your business. People who are masters at anything are relentless about studying, practicing and polishing the fundamentals. There are no short-cuts to mastery. You must be doing the fundamentals right before you get to the advanced stuff. The fundamentals include: business, management and interpersonal skills, planning, financial controls, marketing strategies, superior products and services, effective sales efforts, unparalleled customer service, and effective tools and systems. And you must understand the financials. After all, it’s your money. You have to have the numbers down cold.
One of the problems that comes with success is that people don't want to change. So the person at the top has to be the champion for change. When complacency stalls growth, get people to think about redefining their markets. In the early 1980s, Robert Goizueta challenged Coca-Cola’s staff to stop thinking about their 35% share of the soft drinks market, but to remember instead that people drank 64 fluid ounces of liquid a day - and only two of these were Coke.
As your company grows, you no longer face the challenge of having to do everything yourself. Instead, surround yourself with people who are smarter than you are and get out of their way. Don’t be afraid to give up control. Include rather than exclude them in decisions about running the business. Delegate and you’ll be amazed by what people can do. However, the price of getting people’s commitment is working on their issues as well as your issues.
Your thoughts, energies and ideas must all be single-mindedly concentrated on your primary objective and your strategic initiatives. You can’t pursue five goals at once. You must focus your energy until you become like a laser beam. Then, communicate, so everyone understands the vision, the plan. Talk about these every single day. Don’t ask employees to pursue vague intermediate objectives like “excellence.” If you can’t clearly state on paper what you expect from someone, you’re in trouble.
Keep people focused on bottom-line performance and long-term survival. Have really clear system-wide goals - reduce crime by 30% for example, rather than concentrating on intermediate objectives such as increasing arrests or improving the response time of police officers. Avoid goals such as launching a new advertising campaign by the end of May - focus instead on increasing market share by 20%. Don’t focus on narrow functional goals. When you do, everyone goes off in a different direction and even though the basic measures of the company’s performance may be slipping, no one feels responsible to do anything about it. Emphasize improvement in broad business performance instead. Sharon Ballard says, “You get what you inspect, so inspect the things that are key for your startup's success.”
You can't succeed without mastering the fundamentals of your business. People who are masters at anything are relentless about studying, practicing and polishing the fundamentals. There are no short-cuts to mastery. You must be doing the fundamentals right before you get to the advanced stuff. The fundamentals include: business, management and interpersonal skills, planning, financial controls, marketing strategies, superior products and services, effective sales efforts, unparalleled customer service, and effective tools and systems. And you must understand the financials. After all, it’s your money. You have to have the numbers down cold.
One of the problems that comes with success is that people don't want to change. So the person at the top has to be the champion for change. When complacency stalls growth, get people to think about redefining their markets. In the early 1980s, Robert Goizueta challenged Coca-Cola’s staff to stop thinking about their 35% share of the soft drinks market, but to remember instead that people drank 64 fluid ounces of liquid a day - and only two of these were Coke.
As your company grows, you no longer face the challenge of having to do everything yourself. Instead, surround yourself with people who are smarter than you are and get out of their way. Don’t be afraid to give up control. Include rather than exclude them in decisions about running the business. Delegate and you’ll be amazed by what people can do. However, the price of getting people’s commitment is working on their issues as well as your issues.
Wednesday, January 7, 2009
Entrepreneurial leadership.
The ideal personal profile of an entrepreneurial leader is someone who is strong on every level, physically, mentally, emotionally, spiritually:
- Physically strong - healthy, fit, and energetic.
- Mentally strong - tough, sharp, and disciplined. Can solve problems quickly and decisively. Comfortable handling conflict and adversity.
- Emotionally strong - in touch with his or her emotions. Human. Empathetic.
- Spiritually strong - is grounded, balanced. Has a rich inner life. Feels a deep connection and purpose. Has his or her life together.
Great leaders have high reserves in all areas of their life. This is the case when:
- They make sure their personal needs are met.
When you have unmet needs, you attract others in the same position.
- They tolerate nothing.
You are what you tolerate. When you put up with something, it costs you. Costs are expensive and thus unattractive. “The art of leadership is saying no, not yes. It’s very easy to say yes,” according to Tony Blair.
- They’re oriented exclusively around their values.
When you spend your days doing what fulfills you, you're attractive to others.
- They deliver twice what they promise.
When you consistently deliver more than was expected, people are drawn to you.
- They affect others profoundly.
The more you touch others, the more attractive you become. And optimism is a force multiplier.
Here’s a checklist of things to think about as you carry out your leadership roles:
- Are you really focused on results, or on your own needs?
- Are you open or closed to correction?
- Do you always try to learn, and teach others when you can?
- Do you hold yourself fully accountable in work, or shift responsibility when things go wrong?
- Do you move quickly to solutions or take perverse delight in problems?
- Can you earn people’s trust?
- Are you looking for progress, not perfection?
Finally, remember Pat Murray's observation; “No great leader is a scorekeeper – all the wealth happens on the way to somewhere else.”
- Physically strong - healthy, fit, and energetic.
- Mentally strong - tough, sharp, and disciplined. Can solve problems quickly and decisively. Comfortable handling conflict and adversity.
- Emotionally strong - in touch with his or her emotions. Human. Empathetic.
- Spiritually strong - is grounded, balanced. Has a rich inner life. Feels a deep connection and purpose. Has his or her life together.
Great leaders have high reserves in all areas of their life. This is the case when:
- They make sure their personal needs are met.
When you have unmet needs, you attract others in the same position.
- They tolerate nothing.
You are what you tolerate. When you put up with something, it costs you. Costs are expensive and thus unattractive. “The art of leadership is saying no, not yes. It’s very easy to say yes,” according to Tony Blair.
- They’re oriented exclusively around their values.
When you spend your days doing what fulfills you, you're attractive to others.
- They deliver twice what they promise.
When you consistently deliver more than was expected, people are drawn to you.
- They affect others profoundly.
The more you touch others, the more attractive you become. And optimism is a force multiplier.
Here’s a checklist of things to think about as you carry out your leadership roles:
- Are you really focused on results, or on your own needs?
- Are you open or closed to correction?
- Do you always try to learn, and teach others when you can?
- Do you hold yourself fully accountable in work, or shift responsibility when things go wrong?
- Do you move quickly to solutions or take perverse delight in problems?
- Can you earn people’s trust?
- Are you looking for progress, not perfection?
Finally, remember Pat Murray's observation; “No great leader is a scorekeeper – all the wealth happens on the way to somewhere else.”
Tuesday, January 6, 2009
Becoming an entrepreneurial leader.
Bill Gates says, “When I started Microsoft, I was so excited that I didn’t think of it as being all that risky. It’s true, I might have gone bankrupt, but I had a set of skills that were highly employable. And my parents were still willing to let me go back to Harvard and finish my education if I wanted to .... If you’re going to start a company, it takes so much energy that you’d better overcome your feeling of risk.“ Entrepreneurs have the innate ability to compartmentalize their fears and doubts. They believe in what they’re doing with a passion that overcomes doubt. They’re resilient, tenacious and have the guts to overcome some white-knuckle adventures, such as replenishing a bank account the day before the payroll is due. They’re very resourceful and operate mostly on instinct. They’re always rolling the dice. They have a powerful need to provide for their families and they have an overpowering urge to do it their way. If they’re too intent on the dream to recognize the risks, they often lack the experience and the resources to protect themselves. So, they take action, make the mistakes, pay the price and if they’re lucky enough to survive, a successful business emerges. Although much has been written about how the “entrepreneurial personality” is characterized by “a propensity for risk-taking,” successful entrepreneurs spend considerable time trying to define the risks they have to take and trying to minimize them.
Leaders, by definition, set standards and attempt things that “can’t be done.” So, in a startup, the CEO’s job is figuring out what the company stands for, pushing the company to understand what it’s really good at, and building mechanisms (preferably something dramatic) that will force people to pay attention, such as Granite Rock’s altered invoice that says, “If you’re not satisfied with something, don’t pay us for it. Simply scratch out the related line item ... and send your check for the remaining balance.”
An entrepreneurial leader focuses on three employee-management fundamentals to start building an innovative organization. The first step is to formally integrate innovation into the strategic-management agenda of senior executives. In this way, innovation is not only encouraged but it's also managed, tracked, and measured as a key element of the company’s growth. Second, executives make better use of existing (and often untapped) talent for innovation, without implementing disruptive new programs, by creating conditions that allow dynamic innovation networks to emerge and flourish. Finally, management fosters an innovative culture by developing and enhancing trust among employees. In this kind of culture, people understand that their ideas are valued, that it’s safe to express these ideas, and that everyone collectively shares the risks inherent in introducing and implementing new ideas. This environment will be more effective than just using monetary incentives to sustain innovation.
Leaders, by definition, set standards and attempt things that “can’t be done.” So, in a startup, the CEO’s job is figuring out what the company stands for, pushing the company to understand what it’s really good at, and building mechanisms (preferably something dramatic) that will force people to pay attention, such as Granite Rock’s altered invoice that says, “If you’re not satisfied with something, don’t pay us for it. Simply scratch out the related line item ... and send your check for the remaining balance.”
An entrepreneurial leader focuses on three employee-management fundamentals to start building an innovative organization. The first step is to formally integrate innovation into the strategic-management agenda of senior executives. In this way, innovation is not only encouraged but it's also managed, tracked, and measured as a key element of the company’s growth. Second, executives make better use of existing (and often untapped) talent for innovation, without implementing disruptive new programs, by creating conditions that allow dynamic innovation networks to emerge and flourish. Finally, management fosters an innovative culture by developing and enhancing trust among employees. In this kind of culture, people understand that their ideas are valued, that it’s safe to express these ideas, and that everyone collectively shares the risks inherent in introducing and implementing new ideas. This environment will be more effective than just using monetary incentives to sustain innovation.
Monday, January 5, 2009
Startup advice from Sharon Ballard.
Sharon Ballard is the CEO of Enable Ventures Inc. and the former CEO and cofounder of Reticular Systems. She’s been a management fellow for UCSD’s CONNECT program where she advised over 60 early stage high technology companies. She served as entrepreneurial management consultant to the San Diego Technology Incubator, mentoring their high technology clients, and served several fellowships with Hunter Centre for Entrepreneurship at the University of Strathclyde, Glasgow, and the Center for Enterprise Management at the University of Dundee, Scotland. She’s been a frequent judge for San Diego State University Entrepreneurial Management Center's Annual Student Business Plan Competition. For Arizona State University, she’s assisted university spinouts with their federal proposals for research grants and contracts. She’s one of two principals of Tech Continuum Ventures, LLC, under contract to deliver education, coaching and connecting events for ASU's Technopolis Program.
Sharon cautions to watch out for the following in a new startup:
1. Product development delays.
When products run late, this can have serious implications for cash flow. Try to keep development cycles on track and on time.
2. People problems.
People are the core of most businesses and the single largest expense. Hiring great employees takes time, hard work and some good luck. Every business makes hiring mistakes, but one key to success is fixing the mistakes quickly. If your company has problems with poor individual performance, lack of teamwork, or high turnover, deal with it immediately. Don't wait until personnel issues threaten to destroy your business.
3. Sales below projections.
Revenue projections are often overly optimistic. Be realistic. Sales usually ramp up more slowly than expected. Factor this into your thinking because it affects cash flow and can cause serious operating problems.
4. New competitors.
There’s a lot of money chasing a few good ideas. If your idea works, expect investors to form new companies that will compete with you. Stay focused, and continually think about what your company can do to stay ahead of your competition.
5. Investor agendas.
A constant consideration for any startup is asking, “What am I doing and how is that going to be perceived by the investment community?” as well as, “Does it make sense and will it build value for my present investors?” An entrepreneurial CEO is constantly thinking about both.
6. Feel the fear, but do it anyway.
If you’ve been honest and have done your very best to make your venture successful, there’s no shame in failure and also no reason not to try again.
Sharon cautions to watch out for the following in a new startup:
1. Product development delays.
When products run late, this can have serious implications for cash flow. Try to keep development cycles on track and on time.
2. People problems.
People are the core of most businesses and the single largest expense. Hiring great employees takes time, hard work and some good luck. Every business makes hiring mistakes, but one key to success is fixing the mistakes quickly. If your company has problems with poor individual performance, lack of teamwork, or high turnover, deal with it immediately. Don't wait until personnel issues threaten to destroy your business.
3. Sales below projections.
Revenue projections are often overly optimistic. Be realistic. Sales usually ramp up more slowly than expected. Factor this into your thinking because it affects cash flow and can cause serious operating problems.
4. New competitors.
There’s a lot of money chasing a few good ideas. If your idea works, expect investors to form new companies that will compete with you. Stay focused, and continually think about what your company can do to stay ahead of your competition.
5. Investor agendas.
A constant consideration for any startup is asking, “What am I doing and how is that going to be perceived by the investment community?” as well as, “Does it make sense and will it build value for my present investors?” An entrepreneurial CEO is constantly thinking about both.
6. Feel the fear, but do it anyway.
If you’ve been honest and have done your very best to make your venture successful, there’s no shame in failure and also no reason not to try again.
Thursday, January 1, 2009
Thoughts on Capital Punishment, a poem by Rod McKeun.
Born in Oakland, California, in 1933, McKuen ran away from home at the age of eleven to escape an alcoholic stepfather and to send what money he could to his mother. After a series of jobs, from lumberjack, ranch hand, railroad worker to rodeo cowboy, McKuen began in the 1950s to excite audiences with his poetry readings, appearing with such well-known poets as Jack Kerouac and Allen Ginsberg. McKuen's commercial success is unparalleled in the field of modern poetry. He also achieved considerable success as a songwriter, soundtrack composer, and singer. As a songwriter, he has contributed to the sale of over 100 million records. In addition, his humanitarian efforts have twice won him the prestigious Freedoms Foundation Award. McKuen retired from live performances in 1981. What a guy!
Thoughts on Capital Punishment by Rod McKuen
There ought to be capital punishment for cars
that run over rabbits and drive into dogs
and commit the unspeakable, unpardonable crime
of killing a kitty cat still in his prime.
Purgatory, at the very least
should await the driver
driving over a beast.
Those hurrying headlights coming out of the dark
that scatter the scampering squirrels in the park
should await the best jury that one might compose
of fatherless chipmunks and husbandless does.
And then found guilty, after too fair a trial
should be caged in a cage with a hyena’s smile
or maybe an elephant with an elephant gun
should shoot out his eyes when the verdict is done.
There ought to be something, something that’s fair
to avenge Mrs. Badger as she waits in her lair
for her husband who lies with his guts spilling out
cause he didn’t know what automobiles are about.
Hell on the highway, at the very least
should await the driver
driving over a beast.
Who kills a man kills a bit of himself
But a cat too is an extension of God.
Thoughts on Capital Punishment by Rod McKuen
There ought to be capital punishment for cars
that run over rabbits and drive into dogs
and commit the unspeakable, unpardonable crime
of killing a kitty cat still in his prime.
Purgatory, at the very least
should await the driver
driving over a beast.
Those hurrying headlights coming out of the dark
that scatter the scampering squirrels in the park
should await the best jury that one might compose
of fatherless chipmunks and husbandless does.
And then found guilty, after too fair a trial
should be caged in a cage with a hyena’s smile
or maybe an elephant with an elephant gun
should shoot out his eyes when the verdict is done.
There ought to be something, something that’s fair
to avenge Mrs. Badger as she waits in her lair
for her husband who lies with his guts spilling out
cause he didn’t know what automobiles are about.
Hell on the highway, at the very least
should await the driver
driving over a beast.
Who kills a man kills a bit of himself
But a cat too is an extension of God.
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