Category Archives: Entrepreneurship

Pieces of 8 Need to Become All of 8

Have you ever heard the phrase, “work on your business instead of in it?” Michael Gerber (he of the E-Myth book notoriety) popularized this concept if he didn’t invent the phrase. Gerber chastises business owners for trying to do everything instead of doing the strategic things that will grow the business. He points out that the “jack of all trades,” “chief cook and bottlewasher,” etc epithets are crutches and should not be celebrated. Instead, he recommends systems over personalities and methodologies in lieu of gut instinct. 

Many years after writing the E-Myth, Gerber is still speaking, writing, and training. A blog post earlier today at Inc.com addressed what he considers to be the 8 Essential Parts to a Business (And How They Work Together.) He begins by saying that one “must understand that a small business is a system in which all parts contribute to the success or failure of the whole:”Model T assembly

Like Henry Ford understood the relationship between the Ford Motor Car and the Ford Motor Company (which manufactures, sells and services the car), you must understand the connection between all the parts in your business and how your company relates to the world.

Here are the essential parts of your business:

1. Consumer

Perhaps you’ve spent your life working in an industry. You know all about that industry from the inside. But building a business requires going outside. You must consider your customer’s needs first and foremost.

2. Competitor

Every customer is being pursued by other companies in competition to yours. They are all making offers to solve the same problem your business solves. Your job is to analyze those solutions, and know how yours is better.

3. Channels of Distribution

There are numerous channels of distribution available to you, but you need to know which ones are most effective for your business. The channels you ultimately choose will determine your reach and your cost.

4. Media

How will you get the word out about your business? You could get on the news by doing something newsworthy, or by buying advertising. Get yourself out there as often as you can.

5. Financial

This involves capitalizing your new venture. Likely, your first steps will be bootstrapping–or financing through yourself and those you know. Down the road, investors may be a possibility, but all the pieces of your business must be running smoothly.

6. Strategic

The strategic part of your business is what happens inside it. They include Strategy, Marketing, Operations and Finance–the four essential functions in your business.

7. Tactical

The tactical aspect of your business overlaps into Marketing, Operations and Finance. This is the execution of the strategy that you have created.

8. Incremental

All the work done by the workers in your business falls into this category. The tactical part lays out the tactics, the incremental part performs them.

You can tell that Michael Gerber is no novice when it comes to entrepreneurial matters. He has a keen ability to cut through words and phrases that are over used, and therefore meaningless, to succinctly get a point across. His entire hypothesis is that a business is an organization of many individual parts that work together in processes not unlike the human body and its respective systems.

When one component part is malfunctioning or misguided, it affects the other parts. Collaboration, synergy, and harmony arise when we achieve coordination of effort. Such clarity masterfully improves operating performance!

 

Fly High, Entrepreneur, With 3 Key Skills

There are great minds aplenty when it comes to individual business disciplines (marketing, finance, quality, social media, etc). Rare is the individual whose thought leadership spans effortlessly from one to another. Seth Godin, however, is one of those truly bright minds who “gets it” on many fronts. His Twitter posts are very interesting to read and his books are well respected. Godin’s most recent, The Icarus Deception (Portfolio, 2013), is described below by Amazon.com:

The old rules: Play it safe. Stay in your comfort zone. Find an institution, a job, a set of rules to stick to. Keep your head down. Don’t fly too close to the sun.
 
The new truth: It’s better to be sorry than safe. You need to fly higher than ever.
 
In his bravest and most challenging book yet, Seth Godin shows how we can thrive in an econ­omy that rewards art, not compliance. He explains why true innovators focus on trust, remarkabil­ity, leadership, and stories that spread. And he makes a passionate argument for why you should be treating your work as art.
 
Art is not a gene or a specific talent. It’s an atti­tude, available to anyone who has a vision that others don’t, and the guts to do something about it. Steve Jobs was an artist. So were Henry Ford and Martin Luther King Jr.
 
To work like an artist means investing in the things that scale: creativity, emotional labor, and grit. The path of the artist isn’t for the faint of heart—but Godin shows why it’s your only chance to stand up, stand out, and make a difference.
 
The time to seize new ground and work without a map is now. So what are you going to do?

Fall_of_Icarus_Blondel_decoration_Louvre_INV2624In a blog post last week for Entrepreneur.com,  blogger Bryan Elliott cites three essential skills Godin mentions in the new book as being critical for every great entrepreneur:

1. Quiet your lizard brain.
We all have what Godin refers to as a lizard brain. He says, “The lizard is a physical part of your brain, the pre-historic lump called the amygdala near the brain stem that is responsible for fear and rage and reproductive drive.”  

Godin has written a lot about this in previous books including Linchpin and Poke the Box and cites author Steven Pressfield for further explanation — “As Pressfield describes it, the lizard brain is the resistance. The resistance is the voice in the back of our head telling us to back off, be careful, go slow, compromise. The resistance is writer’s block and putting jitters and every project that ever shipped late because people couldn’t stay on the same page long enough to get something out the door. The resistance grows in strength as we get closer to shipping, as we get closer to an insight, as we get closer to the truth of what we really want. That’s because the lizard hates change and achievement and risk,” Godin says in The Icarus Deception.

2. Think like an artist.
In The Icarus Deception, Godin challenges us to think beyond the norm and become artists. “It’s not art if the world (or at least a tiny portion of it) isn’t transformed in some way. And it’s not art if it’s not generous. And most of all, it’s not art if there’s no risk. The risk isn’t the risk of financial ruin (though that might be part of it). No, the risk is the risk of rejection. Of puzzlement. Of stasis. Art requires the artist to care, and to care enough to do something when he knows it might not work.”

3. Connect the disconnected. 

Godin writes about “The Connected Economy” and explains that the era where we needed to care about catering to the masses is gone. It’s about connecting people who are disconnected — then connection becomes a function of art. The opportunity in the Connection Economy is about finding the problem (where are people disconnected).

Can you make the transition to reduce resistance, seek to transform, and connecting others to solutions? If so, you have assets that will serve you well as an entrepreneur!

 

Entrepreneurial Twists and Misfortune

Anyone who has read my blog for more than one sitting knows that I began my career doing turnarounds, mixed in some strategy added to marketing and nonprofit, started some businesses, and now help startups and SMEs. Invariably, some of the companies I run across or that you may read about in an epitaph simply do not pan out. Megan Kauffman posted a blog entry today that features the thoughts of Wen-Szu Lin, a Wharton grad whose entrepreneurial venture in China was unsuccessful. Lin’s thoughts are below:

When our business in China did not work out as hoped, I could not believe that I failed at something I set out to achieve.  Four years of my life were gone.  The emotional scars and physical ailments resulting from the stress were real enough.  I couldn’t believe that I had lost money for my investors (who were friends and family).

Few people discuss the details about such periods in their lives.  Most entrepreneurs that we hear about succeed.  Or else they fade into oblivion.  Older entrepreneurs occasionally discuss the multiple failures that they experienced to reach success.  Yet, those painful memories are long past.  The younger a successful entrepreneur is, the more he or she is featured and sought after in stories.Venture failure

So, what happens with the majority of the entrepreneurs who, like myself, have experienced a major setback?  By far, this period was the most challenging in my life, and I was the most unprepared for the moment.  All of the business cases that I had studied in school, read in books, and heard first hand from entrepreneurs focused on how to handle business success.  How would I deal with failure emotionally and mentally?

Range of Initial Reactions

In China, I saw a lot of failed businesses, both from local Chinese and foreign entrepreneurs.  Through my years in Beijing, I have met many entrepreneurs and witnessed their responses when their businesses fail.

Based on my un-scientific observations, initial reactions fall into a few categories:

  • Reflect and move on
  • Disappearing Act
  • Denial (negative energy)
  • Oblivious (optimistic)

There are probably many other common responses to a failed business venture, but these were the ones that I encountered most often.

What happens now?

My foolish pride was quickly replaced by an immediate concern:  I needed to support my family, as my wife had just given birth to our first child.  Perhaps this urgency snapped me out of a potential downward spiral into depression. I had to quickly figure out how to generate an income for my family.

I experienced many mixed emotions as I evaluated my options and next steps.  Here were some of my main take-aways:

  • Personal reflection:  I started writing anecdotes, detailing each of the memorable stories from our four years.  I relived them in my mind and tried my best to put them on paper with the same intensity as I experienced them.  That was how I learned to move on from my experience.

Bottom line, I wrote a book (The China Twist) that reflected my experience.  The book contains the most vulnerable moments in my career, so I am facing my fears and my ‘shame’ head-on.  I am proud of what I wrote and what I have experienced. 

  • Job opportunities:  I did not realize that my degrees and background experience in consulting and technology were such a strong security blanket.  My options were actually quite varied and better than I had expected when the business ended.  
  • Another shot at entrepreneurship:  Growing up, I could think of nothing else I wanted to do except start something from the ground up.  My priorities definitely have changed but my dreams have not. One thing I know for sure is that I will be back in the entrepreneurship game sooner or later.

Some great advice from someone else who has lived the highs and lows. Take it to heart…stick a copy of it in a file and read his book –“just in case” you ever need the encouragement!

Entrepreneur Faith – Future, Attitude, Improvisation, Timing and Help

Reading outside one’s usual list of publications, blogs, and websites can be very eye-opening. Perspective emerges as familiar subjects are addressed in differing ways. When worldview is, in fact, only hemispheric or nationalistic, it is incomplete to say the least. Asia is exciting in the business world today, as can be parts of Europe. One European publication draws my occasional attention: Entrepreneur Country.

Entrepreneur Country recently held a forum in, of all places, the Royal Institution of Great Britain. (Same location where the first Industrial Revolution began.)  Contrast this austere setting with the arrival of Madonna as a guest lecturer and you get the sense that this was not “business as usual!”

Writing about the event, Peter Cook commented that “the day was characterized by entrepreneurs telling real life stories of their hopes, fears, successes and failures.” below he shares some of his observations and take-aways, with a few musical references (Cook is the leader of the Academy of Rock) for good measure:

iTrigga(Much) discussion was .. around what entrepreneurs do to avoid burnout. Ed Bussey of iTrigga was a prime example, having come to the conference after an all night vigil at hospital on the occasion of his wife giving birth! He did however point out the importance of pressing the OFF button from time to time to avoid the possibility of crash and burn entrepreneurship.  Others talked of rituals and routines such as working out in the gym, taking forced holidays, running the London Marathon, going to the North Pole (that’s hardly chilling out!) and so on. Seemingly obvious advice, yet not always taken by busy entrepreneurs.

Several speakers also gave witness to the importance of maintaining naivety if you are to succeed as an entrepreneur. Madonna’s contribution to this area is via her blockbuster hit “Like A Virgin”, which translates to the need to treat each new business situation like it’s the very first time. In particular, Sir William Sargent of Framestore painted a picture of the importance of intuition, creativity and the ability to remain adaptive and flexible as your company grows, saying, “If I stand still for 12 months, I will be out of business 12 months later.”

Entrepreneur Country Founder Julie Meyer and Dr Mike Lynch (offered opening remarks.) Julie presented her ideas about entrepreneurship clearly, concisely and without apology for wanting to create an enterprise economy, which produces both economic and social benefit. Business gets enough hard knocks and we need to start seeing it as an engine of improvement, rather than an evil empire as it is frequently portrayed by Governments and a self-righteous public sector. Mike Lynch extended Julie’s strident start to the day by giving us some home truths on entrepreneurship:

“Without good marketing you can have something amazing and no one will know.  Marketing is not cheating”

“Avoid the myth of doing things properly”

Another speaker, Stephen Linnecar, suggested that we gotta have FAITH – Not an allusion to George Michael, but the summary of his presentation which focused on five factors which he regarded as key to success as an entrepreneur: Future, Attitude, Improvisation, Timing and Help. Improvisation featured strongly throughout the day, a point that resonated personally with me, having taught creativity, improvisation and innovation for the Open University MBA for 18 years. However, what impressed me most of all about the speakers at the event was a real and unusual sense of authenticity.  Truths were told about successes. Much more importantly, we gained an insight into mistakes and outright failures. It’s much more important for an entrepreneur to learn from their mistakes than their successes and many speakers were candid about their regrets. 

 

 

 

 

anti-Innovation Sentiment and Intrapreneurship Collide

In order to stay current in a subject area that is constantly changing, one must be well read and, beyond that, follow the bets though leaders around. Last week, I had the opportunity to discuss intrapreneurship in person with one of my favorite innovation bloggers, Jeffrey Phillips. Tonight, I read a blog post by one of my other favorites, Gijs van Wulfen.

Gijs tackles the subject of anti-innovators in his recent post.  His writing echoes some of what Jeffrey and I discussed last week. As we  looked at different models for commercializing business ideas last week, we camped out for a while on what stultifies innovation. While many leaders acknowledge that innovation is a top priority, they would also be quick to add that implementation of innovative practices can be a challenge. The consequences, according to Phillips, include: 

 Poor execution of innovation goals
 Failure to achieve strategic goals
 Limited organizational design to sustain innovation
 The growth of disbelief or cynicism when innovation isn’t pursued.

Stubborn personvan Wulfen describes personnel as a main hindrance. He writes of employees who “are stuck in their habits.. ignorant the world is changing fast and (thinking) they have nothing to fear.” He goes on to describe the anti-innovator as a (negative) contributor to team culture:

There are often quite a few anti-innovators. Everybody knows this extravert guy or woman who is anti-everything. They have “the biggest mouth” at the lunch table in the company restaurant. Their influence on the company’s culture is often quite substantial. Don’t underestimate their impact. The herd goes as fast as the slowest animals. If the anti-innovators lean back nothing moves. So how do you get them up and running. That’s the question.

You can try to convince them. Unfortunately that often fails because they are experts in coming up with idea killers like: “We are too small for that… There is no budget… We need to do more research… We don’t have time… It’s too risky… That’s for the future. Everything is OK now.”

You can try to do it without them. But that won’t work either. You need an awful lot of colleagues and bosses to share your vision before a big change can truly take place. You need R&D engineers, production managers, IT staff, financial controllers, marketers, service people and salesmen to develop the product, produce it, get it on the market and service it. You can’t do it without them: you can’t innovate alone.

The way to get anti-innovators up and running is to respect them, to understand them, to connect with them and to let them experience change is necessary. They will only change their attitude if they get new insights themselves. So, you have to give them a chance to discover what’s happening out there. Invite them to join your innovation team and take them out on an expedition to discover how markets, customers, competitors and technology are changing.

If they, as the slowest animals of the herd, find out there’s a group of hungry lions following the herd they stop leaning backwards. They start running too as necessity is the mother of invention. They will spread the urgency to innovate among their colleagues. And that’s good news because If the slowest animals start running, your organization’s innovation power really gets up to speed.

Think about the anti-innovators in your organization. What motivates them? Do they travel in herds? How can innovators infiltrate their ranks yet respect them and build bridges for collaboration? As a mentor in an upcoming venture challenge competition, I will be working with teams that must have creatives and analysts. Often, including an anti-innovator on your launch team can bring helpful perspective. Stew on it!