Tag Archives: Decisions

What Matrix Guides the Artisan Entrepreneur?

Recently, I read the story of a graduate student in her first arts entrepreneurship course. She recounts that the first assignment her class had to complete was to analyze The Matrix with a view towards entrepreneurship. The instructor wanted the students to analyze a.) four key components that converged, and b.) the value created as a result of the convergence. The four components were:

  1. factors within our control,
  2. ones outside our control,
  3. inspiration, and
  4. time.

MatrixUnderstand that the paradigm from which the class was operating had far less to do with the thought of a start-up business venture than the combination of behaviors, attributes, qualities, propensities, and actions requisite to think entrepreneurially. Prior to the assignment, the students had come to a place of agreement that key qualities of the mindset would likely include innovation, discipline, vision, and leadership.

In yesterday’s blog post, we studied the comparative mindset of artisan versus opportunist entrepreneurs. Clearly, the ability to recognize an opportunity is critical to either group to attain optimal revenues. In like manner, organizational skills with regards to people, tasks and ideas are important to possess or acquire. Planning, which is envisioned differently in the mind of some, is a discipline that helps the entrepreneur anticipate and become prepared. Thinking of both conventional and unconventional ways to fund the pursuit of the idea is also generally agreed to be important.

As you look at the paradigm, mindset, skills, and habits listed above, a system emerges. Yet, the system relies on the artisan entrepreneur’s ability to observe a competency model that is unlike any at work in corporate HR circles. This competency model values:

  • intellectual and personal entrepreneurial skills,
  • basic professional skills, and 
  • a general understanding of arts culture, policy, and management.

Students in the class mentioned above pursued their respective competency models through a series of exercises administered by the professor. They were encouraged to develop a vision, produce a comprehensive feasibility plan, write a series of process papers, and prepare “pitches” of their proposed ventures to mock audiences of various forms. The assignments became more challenging when the students found out that they had to work interdependently with one another for the work products. For the average participant, this was an unwelcome wrinkle, as most artisans enjoy their individualism. This is not unlike other types of entrepreneurs, but is a personality trait that we documented in the artisan versus opportunist dichotomy that becomes significant when you think about the components the students had to analyze in their Matrix project.

In order to address factors outside one’s control, there has to be a letting go that is ever so hard for an entrepreneur. Without admitting defeat, one must admit the need for help. Realizing that help may be needed forces the individual to think in terms of team development–not just development, but additional sub-processes like recruiting, training, nurturing, and vision casting. If you’ve had no prior experience doing these types of things, they can become your undoing in an enterprise.

The factors that appear to be within one’s control seem not to present a problem. Yet, as we think about these factors, we realize that we must be delusional to honestly think that, as complexity arrives on the scene in terms of additional team members, the external demands upon the enterprise, and the need to divest ourselves of tasks that don’t match out motivated ability, even the internal environment becomes dicey.

Inspiration seems to come naturally to the creative mind. Finding a way to balance newness and executing on prior thoughts is significant, because being able to do so can determine ultimate success versus floundering. Time is an asset that gets swallowed up despite out best intentions. As we build teams, boards, advisory experts, etc, we are able to free up time to focus on the truly important. 

Value has been created, but not without some proverbial “blood, sweat, and tears.” Please don’t be dismayed. You can do this–but you need to embrace a competency model that guides the members selected for your team to collectively represent the diversity you will need to pursue your vision!

Artisan Opportunists Make Great Entrepreneurs

Having served entrepreneurs for years, I tell my consulting clients that I have worked in almost every industry niche possible. Until my recent involvement with an incubator in Raleigh, North Carolina that is serving artisan entrepreneurs, however, I had not worked with many artistic types in a business setting. A group of Baylor University scholars wrote Small Business Management: An Entrepreneurial Emphasis a few years ago in an effort to define what small businesses need in terms of critical success factors. The authors borrowed some thoughts from a forerunner of management thought, Norman R. Smith. Smith held that there are 2 styles of the entrepreneur; the craftsman (artisan) entrepreneur and the opportunistic entrepreneur. He developed a 14 characteristic scoring system to classify entrepreneurs into one of the two categories, including qualities such ranging from breadth of education to employee relations.

Artisans were observed to possess a skill or talent that drives their initiative to open a business (vs. the tendency of an opportunistic entrepreneur to amass resources needed to respond to a market need.) Many grew up in an environment that values tasks and hard work, often as a result of exposure to the work world very early in life. With a preference for mastering the mechanics of machinery, they tend to become production-oriented early in their work lives. Many have become frustrated with management or unions and take the start-up route only after some critical event occurs.

Other key distinctions include a reluctance to delegate authority and a preference to develop customers by personal contacts only. Often, growth plans are hard to identify in the way they conduct business. This entrepreneur has a paternalistic attitude and tends to think of employees as part of the family. Accordingly, operations are focused inwardly with little engagement of the community around the artisan. With concerns about losing control over a “good” situation, artisan entrepreneurs have been known to resist involving others in key management decisions and shun interaction with outsiders. Traditional forms of financing and marketing are the rule here.

As I think about the artisans whom we serve at Kindred Boutique (the incubator in Raleigh), I see many of these factors at work. While many characterizations are stereotypical, there are enough patterns to validate the mindset of artisan entrepreneurs whom we encounter as being very similar to what is described. We work with the artisans to establish better cooperation–the boutique itself is intended to show the benefits of collective marketing and “product” testing. Often, an artisan entrepreneur has chosen this new career because of frustration with his prior one. Non-traditional forms of marketing and funding their ideas are not well received.Opportunist

What is desirable is to help the artisan think more opportunistically. (This line of thought is not meant to denigrate artisans in favor of non-artisans, who often need to think more creatively and divergently.) Smith found  that opportunistic entrepreneurs come from a background of predominately middle- to upper-economic status; their fathers are typically skilled and professional workers and own small or family businesses. As a result of the household income, these entrepreneurs have been groomed for success through formal education and exposure to other cultures through travel and attending fine arts events. This type of entrepreneur is observed to have significantly more marketing, selling, general administration, and merchandising skills.

Having watched their fathers in the business world run organizations, this group understands and appreciates management practices like delegation, advanced segment marketing techniques, and the value of strategic planning. As a rule, this group enjoys competitive situations, and may be more likely to burn their bridges. There is no critical event that decides when they should go into business. instead of competing on price and personal reputation, the opportunist relies on product development and strategy. 

Artisans can benefit from the experiences of opportunists and vice versa. Take a moment to think about which group represents your basic worldview. Modify the way you start and run your business to incorporate an approach that your counterpart from the other group may employ. You will be more successful in life and business as a result.

Ingenuity Expressed in Art(isan) Entrepreneurship

John Bogle, founder of Vanguard mutual funds, attended Princeton University and was fascinated with entrepreneurship. In his senior thesis in 2006, he cites Joseph Schumpeter as the first economist to recognize how start-ups are so vital to the national economy. Schumpeter was understood to advocate for the fact that entrepreneurs are motivated by the following two characteristics (more so than materialism):

  1. “The joy of creating, of getting things done, of simply exercising one’s energy and ingenuity,”  and
  2. “The will to conquer: the impulse to fight,…to succeed for the sake, not of the fruits of success, but of success itself.”

Certainly, these characteristics are resonators for many entrepreneurs; perhaps most especially so for art(isan) ones. What? Art(isan) entrepreneurs? What is meant by this juxtaposition of terms? Heretofore, many have considered the creative types to be an island unto themselves, rather that a subset of he entrepreneurial movement that is sweeping our land. Yet, if we were to characterize creative types as right brain entrepreneurs and those who pursue STEM education, career opportunities, and new enterprises as left brain, we can create a new construct that is helpful to understand how to encourage the greater number of people to flourish in what is generally regarded as the Creative Age, successor to the Information Age.

Creative thought processes may be said to represent divergent thinking at its essence–the ability to hold an idea without passing judgment of any type. Systematic and analytical processes, therefore, tend towards convergent thinking-a deliberate effort to arrive at a conclusion based on facts and data. In the Research Triangle Park area of North Carolina, we are seeing nothing short of an epic surge of entrepreneurial fervor, much of it trumpeted as helping our economy–both local and beyond–to improve through enhanced job creation, capital flow, and value creation. Yet, virtually all of the media attention is on savvy technology start-ups that seem to rely almost exclusively on the left brain mindset.

Thankfully, there are overlaps such as the digital art required for serious gaming that brings the two sides of the brain together. Outside of such obvious blends of thinking modes, most who inhabit the incubators, accelerators, and entrepreneurial playgrounds of our region are tuned out as to how art(isan) talent can establish entrepreneurial enterprises. 

The art(isan) population has been challenged to find itself, both locally and nationally, as economic recession has caused many galleries, academies, and the like to cut back on programs, space, and staff. Those who have graduated with degrees in various creative fields from design to fashion, studio arts to music, have found employment hard to come by. In times past, many graduates became instructors in the arts or pursued employment in businesses that served entertainment venues. In order for the creative class to find optimal professional engagement, however, new ways will need to be discovered to help art(isan) entrepreneurs convert their passions into their professions. Like a hero on a journey (think of epics like The Odyssey), artists and artisans must set out to manifest her ideals in her creation. 

Creative types do not need skills training from career development types in order to become successful (and more readily accepted) entrepreneurs. What they need is to find people who appreciate their contributions. Just as indie music has shown huge demand for music that is not recorded in an album format, carried on mainstream radio, and performed in huge concert venues, there exist niches for virtually every type of created expression if the artist/artisan will labor to identify the target market. 

The opportunity to showcase one’s talent in a coffee shop, a multi-artisan boutique, or a street show are all vital to artisan entrepreneurship. By inviting others to experience one’s proof of concept, feedback can be gleaned that shapes the creative offerings going forward. Once enough traction is gained within a target market, the artisan can make decisions about what part of the production and delivery of talent she wants to play without fear of being unable to earn a living just as powerfully as any other entrepreneur.

Artisan holiday support

Iterate Instead of Analyze for Innovation Success

Intrapreneurship is needed in large companies.  Commonly, these companies tend to have plenty of data that has been collected to document market dynamics. Whether it is corporate strategy or corporate development, larger businesses have departments that constantly evaluate opportunities for growth–be they organic or inorganic.  Encouraging innovation and breakthroughs can be hard. The main reason big business becomes stagnant is that the mindset required for disruptive advances is very different than the risk management and mitigation approach of many market leaders.

Kevin McFarthing, who leads the Innovation Fixer consulting firm, suggests in a recent blog that “These companies also have a very rational approach to the assessment of investment opportunities. Of course, they find that the expenditure line has a much higher level of confidence than either the timeline or the scale of revenue. For that reason large companies want to increase the level of confidence in the income stream. Various techniques are used; for example, many consumer goods companies will undertake a fairly standard sequential program of qualitative and quantitative market research. This will relate to a database of similar products launched in the past. So, as long as you do the market research correctly, you can reduce your uncertainty and proceed.”

As is pointed out above, the traditional analytical tools used to evaluate comparable opportunities are somewhat like the comparables sought out when buying a new residence: intended to estimate what already exists instead of what has never been built. Relying on historical information rather than anticipating future demand is like driving down the road only looking in the rear view mirror!

On the opposite end of the spectrum, small businesses being run by visionary entrepreneurs tend to rely far less on the projection techniques of their larger counterparts. These start-ups rely on gut instinct, passion, and drive rather than systems. Instead of evaluating a market based on dozens of data points, the executive teams of thriving young businesses gather market information, develop a proof of concept, test it on a limited basis, revise the offering, and are nimble in their adjustments to feedback so that they can quickly bring something new to the marketplace. 

leap of faith

Large companies find what is done in the entrepreneurial space to be akin to a leap of faith. It’s very hard for a corporate type to operate from a place of judgment rather than logic. The willingness to produce something that is not perfect is much less in an organization with extensive quality initiatives.  The whole concept of try…try…try again that is the mantra of an entrepreneur is eschewed in favor of taking calculated risks. While it sounds stereotypical, it is not at all uncommon for the large company approach to be one that avoids undertaking projects without tons of documentation and extensive project and/or product planning down to minute details.  This predictable approach has severe shortcomings in an environment where responsiveness can make the difference between producing an offering that resonates versus one that is a “me too” alternative.

Instead of performing market and buyer research that resembles a canned, rote methodology, what is needed is flexibility, customization, and the ability to constantly iterate. Instead of sequence and a step-wise stage gate process, truly innovative organizations are far more willing to engage in trial and error.

McFarthing says that many large organizations lack the right mindset to explore potential. Changes he advocates that they make to become more innovative include: 

–   Rely much more on judgment to move projects ahead rapidly;

–   Don’t apply the same criteria to incremental and radical innovation;

–   Use a fast and iterative sequence of prototyping and market testing to learn and reduce uncertainty;

–   Go to market as soon as you can, don’t wait for all the facts.

Follow these suggestions and you will change your culture to become more intrapreneurial!

 

 

 

Traffic Schmaffic – Get Conversions

In the course of advising startups (and some existing clients) on how to gain traction with their business proposition, I ultimately have a conversation about target buyers. Notice the word “buyer” –it is a different word altogether than “shopper” and “viewer.” When we obsess on trying to get web traffic, foot traffic, and the like–but not on conversion–we have lost sight of what is ultimately most important.

If given the choice between 100 website visitors of whom 20 become buyers or 1000 of whom only 15 become buyers, most would actually choose the 1000. Their reasoning would likely be that 1000 impressions is better than 100 and that they hope that the other 985 could be targeted for future conversion or word of mouth marketing. Yet, your business would have 5 fewer sales and a significantly lower conversion rate (1.5% vs 20%). Better, we would argue, to have a high conversion rate, more revenues, enhanced cash flow, and the opportunity to build relationships with five more people.

So much effort is wasted among entrepreneurs to get traffic–and not just in an online sense–that very little is left to think through conversions. Conversions are a better predictor of long term success than impressions. Get this thought into your psyche. It can make the absolute difference between success an failure.

Matthew Toren, founder of Young Entrepreneur, offers the following 5 tips for lead nurturing:

1. Be a problem solver. You have to admit that at least part of business success has to do with the timeliness of your products or services. You must answer people’s needs. The key is settling into a business that has problems you really love to solve, with customers whose pressing needs you are very good at addressing. When you’re able to identify your niche, you don’t only go out there to earn, you have a unique passion and an offering that suits the needs of those people.

2. Get into your customers’ psyche. People buy not only because they need things, they often buy to satisfy something deeper in them. It’s often the feeling they associate with a product that they finally make the decision to buy. Everybody needs a pair of shoes, but not just any shoes can satisfy that need. This is when branding, reputation and customer service come into play. In fact, this is why there is marketing in the first place. Get into what excites and interests your target market. This is the only way you can tailor-fit your campaign to the people who would not think twice of paying for what you have to offer.

3. Where are your customers? In online marketing, determining how your market interacts with the Internet is very important. It gives you leads to “where” they are online. Online behavior can point you to what sites they frequent, the social-media networks they prefer, the news they’re more likely to read and so on. If you know where they are, you can be sure to focus on places you need to have a commanding presence. This assures you of a steady stream of traffic of ready-to-pay customers, and it prevents you from effectively barking up the wrong tree. We all know how costly and time consuming that can be.

4. Do you really know them? To really pinpoint who your target customer is, you’ll want to dig in deep… find out how they tick, if you will. The key is to learn about them, even change with them over time. So basically, this means you can’t just buy one customer list and operate off that in perpetuity. You’ll need to continuously find out about your target audience. Are they reading things you should be reading? Do they shop at stores you’ve never heard of? All of these puzzle pieces could fit together and help you identify the bigger customer picture, if you’re willing to spend time accumulating them.

5. Close in on the deal. Once you know your customers and understanding where they are and how they think, you can specifically design an online marketing campaign that appeals to those people who would love to pay for your products or services. By being a problem solver, you’re forced to know yourself and understand your brand’s strengths and weaknesses. But understanding who you want to engage with online really seals the success of your business.