Tag Archives: Development

Execute The Idea

Many businesses start these days by vetting a good idea in front of an audience. We present at conferences, competitions, and events like the IdeaSlam at Cary Innovation Center. For some, the whole process of deciding what idea to pursue can be daunting. (The director of a small business center at a local community college who has been asked to tell an inquirer what kind of business to start validates this fact.) Those who never start a business, but envy those who do, will say that they could have been rich if only they had thought of a concept first. Whichever category above fits you, know this: the initial idea is not the key to success–execution is!

Herein lies the “rub” — that many entrepreneurs expend enormous amounts of energy, financial capital, and (often) human capital in an effort to make an idea work that needs to be rethought. Frequently, we call in favors and have been know to burn bridges in the headlong pursuit of our personal holy grail. Emotionally, it is easy to become consumed with the idea to the point that we are blinded to any and every other thing around us–even important things! Along with the emotional “sunk cost,” we often lose our objectivity because of the amount of money invested in the initial idea.

Far more important is a rock-solid business model that creates value for a customer, especially relative to existing solutions. When the business model is battle tested through the incubation process, it becomes invincible. Very few businesses end up creating billions of dollars of value based on the initial idea – superstars such as Facebook, Apple, and Microsoft changed their business models many times before settling on a scalable solution.

-Karl Stark & Bill Stewart

Stark & Stewart go on to say that too many folks are afraid to share their idea with others for fear it will be stolen/copied. They are quick to point out that the true value lies “not in the idea, but in the execution.” Their approach is to share the idea broadly enough with others with different points of view, more experience, and who can offer healthy skepticism that will help you to re-work the idea. It is the supreme compliment to have your idea “stolen.” But, fear not–you still win the competition with superior execution. Three tips they offer for improving execution:

1. Stop perfecting the idea, and get out in front of customers.

The business you develop through a test and learn approach will be worth multiple times more than your original idea.

2. Don’t focus on things that don’t exist.

Instead, look at existing solutions and figure out ways to create more customer value than what those solutions offer.

3. Positively differentiate yourself from the competition.

Most products can’t be all things to all people. A differentiated product will attract a segment of customers that value different things. An innovative start-up is almost always advantaged when chipping away at a market leader if they can offer something different that appeals to a small group of customers.

What is needed, in the final analysis, is a process to create value. One process that I’ve observed to work is the Six Steps to Success program being used with mentees of EntreDot:

  • Ideation – Determine if the idea has any commercial merit
  • Conceptualization – Complete the concept development and determine market value
  • Creation – Perform R&D and establish proof of concept
  • Evaluation – Complete the business plan and determine business value
  • Preparation – Prepare the launch plan for the business
  • Commercialization –  Commence business operations

As the business owner goes through the steps, sustainable customer and shareholder value is created. When the process is “complete,” it is, in fact, just beginning as entrepreneurs are encouraged to go back to the drawing board with the next idea. The commitment to executing idea after idea creates a strong market position that is hard to duplicate.

A Cord of Three Strands For Start-Ups

You know the old saying…that a cord of three strands is not easily broken. Yet, a cord with only one strand has much less strength. In the sports world, we see this concept played out most clearly in tournaments or playoffs. During the regular season, a dominant athlete can carry the team on his or her shoulders to seemingly improbable heights. Yet, under the microscope of postseason competition, the stakes are higher, the other team has similar talent, and the group with the most balanced attack with strong chemistry usually wins. Think Michael Jordan early in his career versus mid-career. Or, Robert Griffin III more recently. There are many stories of similar outcomes.

In the world of entrepreneurship, the principle rings true as well. Rare is the company founder who reaches great success who hasn’t enjoyed some substantial help along the way. Sometimes, it can be a co-founder. At other times, key employees. Externally, the founder may rely on a mentor or some key strategic allies. Whatever the dynamic, it is important to recognize our need for objectivity, resources, and expertise that we personally lack. 

Steve Olsher, the author of Internet Prophets, writing for Under30 CEO, espouses the virtue of serving before being served, and explores joint ventures versus alliances as a way to build a company. In the article, “You Can’t Do it Alone,” Steve defines joint ventures as being a more short-term relationship established for mutual benefit. He compares this approach to  the real estate market where someone invests in a condominium development, expecting a return as soon as the unit is built and sold. Alliances, continuing the analogy, are more like apartment investing because the return is longer-term and the fundamental math lends itself to retirement of debt early and increasing profits later.

Olsher offers the following advice on how to build a strong alliance:

Developing and maintaining strong alliances requires understanding the art and science behind the magic.

The first step is to know yourself. Grant yourself time and permission to understand who you are. Devote focused, quiet time to identifying your WHAT—that is, the one thing you were born to do. In order to form powerful alliances, you must know who you are. The reason is simple: an alliance is predicated upon providing value to others. If you’re unclear about what you have to offer, providing meaningful value will be met with consistent incongruities. The successful know exactly who they are and how they can best serve the world.

Before seeking to form alliances, understand who are the most likely beneficiaries of your knowledge and identify partners who can provide access to those who fit your desired profile. Ideally, the more you choose to live like a sniper and takes aim for the center of the bull’s eye, the more success you’ll realize. The successful focus on forging alliances with perfect partners and bring tangible value to the relationship. Like marriage, creating long-term mutually beneficial alliances takes work—a lot of work. The time and effort required for this to happen represents the single biggest difference between a joint venture and an alliance.

The “fiber’ of the strong cord is recognizing that one does not have a corner on knowledge–that there are others who have just as much–if not more–knowledge and/or experience in other areas. Taking the time to truly understand those with whom you need to build a strategic relationship is the “yarn” that is woven into your approach to business, and hopefully, your company culture. If you can systematically seek to know what will make others successful and determine to play a role in their success, you add strength to  their efforts as well as your own. Strands, then, are the individual interactions that you have with these allies, mentors, etc. They are periods of time when a significant exchange of ideas, perhaps monies, occurs and the interaction reaffirms the value of the relationship. While it is more allegorical than empirical, I’d argue that three mutually beneficial “strands” of interaction are a minimum for long-term success. Don’t be in a hurry to get an immediate return, as would a condominium investor–think about who and what you need for the long-term!

The Great Urban Entrepreneur

Five years ago, a pair of adventure loving buddies found a way to bring their love of thrills into an urban environment. They since have grown Red Frog Events into an $85 million business that hosts competitions during which teams solve clues and complete mental and physical challenges while discovering their city in a fresh way. Joe Reynolds and Ryan Kunkel have parlayed their $5,000 initial investment into a successful Chicago-based company with more than 60 full-time employees, three signature extreme races and a serious following.

The company’s most popular event, Warrior Dash, a 5K race packed with obstacles like a pond filled with logs, a rock wall, a tunnel of flames and a sinking mud pit, made appearances in 35 cities across the country in 2011 and drew 600,000 participants. This year the company is going international for the second time, taking its events to Ireland and Great Britain. Reynolds says, “When you’re really passionate about your business, you can see lots of tremendous opportunities.”

Nancy Mann Jackson says (in her Entrepreneur magazine article about him) “Reynolds had previously owned a house-painting company, but had no idea how to contend in the event-production business. What he did know was that he loved competing and creating fun experiences–and he wanted to share his passion with the masses. With hard work and dedication, he’s now doing just that. If, like Reynolds, you’d like to turn what you love into a viable business enterprise, start with these six tips:”

1. Don’t count on passion alone.

“Sometimes passion can blind you to the potential downside of your idea,” says John Torrens, a serial entrepreneur and an entrepreneurship professor at Syracuse University. “The one non-negotiable factor for any sustainable business is that they solve a problem for a specific customer segment in a way that is appreciably better than the next best alternative. Get as much feedback from potential customers as possible. No matter how great you think the idea is, you still need to understand what your market thinks.”

Remember the details. There are tons of ancillary functions that go along with running a business that must be performed well for it to succeed.

Dole out responsibility.  You’ll either have to delegate the primary work to others, or you may choose to delegate managing the operation to someone else so you can continue to focus on the primary work yourself.

2. Hire passionate people.

Having employees who share your zeal for the business will help your company succeed. For instance, at the Warrior Dash Louisiana in 2010, a series of tornadoes tore through the landscape during the event. Neither Reynolds nor Kunkel were in Louisiana, but the staffers who were managing the race stayed up through the night to repair the course and get all the obstacles ready again, so the competitors who weren’t able to finish could complete the course the following day.

3. Share your passion.

If you have a hobby, likely there are others out there who share that interest and would like to learn more about it. Sharing your knowledge can be a great way to build your business.

4. Keep the passion alive.

Reynolds and Kunkel make a point to continue competing in races themselves so they can maintain their love for running and recreation. Rather than feeling responsible for thinking of everything and micromanaging their employees, Reynolds and Kunkel empower their staffers to develop solutions to their own problems.

5. Prioritize fun.

Torrens says, “In the authentically passionate companies, everything grows from that passion, including the people, policies, branding and community relations. That obsessive focus on whatever it is that gets you out of bed can’t be faked, but it takes work to create the circumstances under which it can thrive. “

6. Expand your passion.

Reynolds launched Red Frog Events because he wanted to combine his love for adventure travel and competitive runs. But over the past five years, he and Kunkel have realized they are excited about producing recreational events in general, not just runs. This year they plan to enter the music festival industry, starting with their own Firefly Music Festival, which they hope will compete with some of the world’s largest such events.

How Raleigh Can Learn From Chile

In the May issue of Entrepreneur Country, Joe Haslam of Stratemic Capital enlightens readers about the start-up scene in Chile. Most Americans know Chile for its rich produce, not its economic strength in South America, and definitely not for the ecosystem that has been created for entrepreneurship that is paying off handsomely.

Going back to the 1970s, Chile has taken a progressive stance on key economic decisions. Milton Friedman and a number of his associates from the University of Chicago inspired free market systems that have been customized by local conditions. Nicolas Shea and Vivek Wadhwa in the past decade have sought to make Chile a destination for entrepreneurship. Shea attended Stanford University and set about to do a Southern hemisphere version of Silicon Valley. Wadhwa challenged the start-up model of some groups who provide office space near a university and hope for something wonderful to happen. Instead, he advocates a people-centered approach:

To create a tech center like Silicon Valley, you need to first attract smart entrepreneurs from all over the world. Then you have to create entrepreneurial networks; instill a spirit of risk-taking and openness; and build mentoring systems. You also need to provide seed financing to start-ups. The money is easy; everything else requires a change in culture that usually takes decades.

Wadhwa and Shea launched Start-Up Chile at the beginning of 2011. Here’s the concept:

  1. Anyone from anywhere can apply
  2. Winners would be required to move to Santiago, Chile
  3. A one-year visa is provided to facilitate entrepreneurship
  4. $40,000 in seed capital is offered as a prize
  5. The Chilean government would NOT take an equity stake

When Haslam met with the director of Start-Up Chile and a representative from CORFO, the government agency tasked with improving competitiveness in global markets, he asked a lot of questions about how the program was put together. They admitted that bureaucracy had to give way in recognition of results.

  • The website for the contest received more attention than the official national tourism site. 
  • Visitors of the program spent about as much in tourism dollars as the awards themselves.
  • Well-known entrepreneurial icons are “dropping in” on the Chilean scene these days.
  • 1600 applications from 70 countries.
  • 220 foreign start-ups in Chile now, employing 180 locals and 143 abroad.
  • $8 million in VC money has been raised by the first batch of award winners.

Chile has realized some important economic development principles. Notably:

  1. Start-ups are a strong job creation tool.
  2. Large companies are more costly to attract and retain.
  3. Diverse populations experience economic growth.

Earlier this past week, we blogged about Pittsburgh’s Experienced Dreamer contest to attract entrepreneurs to town.  Whether the locale is Santiago, Pittsburgh, or Raleigh, the principles work. We need to do all that we can to foster entrepreneurship–it just may be the key to a healthier world economy!

On a purely local note, Innovate Raleigh has followed some of the steps in the blueprint. We need help from Raleigh Wake Economic Development, mentoring organizations like EntreDot, and fresh sources of seed capital. Additionally, more collaborative workspaces like some of the incubators in our area (Cary Innovation Center being an example) will help foster the natural network nurture necessary. We can do this–but it requires “all hands on deck!”

 

 

Raleigh Needs Experienced Dreamers

This week, I became aware of a very unique contest held in Pittsburgh that recently concluded. The Experienced Dreamers contest was born out of a survey taken by residents in 2009 that indicated that the city must rely on young residents to drive growth. The recommendation of the survey team was that, if the city could attract 1250 entrepreneurs who are 45 and over to move to the area and start a business, the economic impact over the next two decades would be $2.5 BILLION!

Here were the rules:

  1. The applicant must be 45 or older as of the date of application,
  2. The applicant may not have lived with 100 miles of the city for the past 10 years, and
  3. The applicant must be a U.S. citizen or permanent legal resident as of the application date.

The applicants were charged with locating a new business, philanthropy, or artistic endeavor in Pittsburgh upon award of $50,000 in cash and an additional $50,000 in charitable trust in the recipient’s name. This year’s winner is Tess Almendarez Lojacono, a 55-year-old artist who has been living in East Aurora, NY. Her proposal was to move and enlarge Fine Art Miracles, a five-year-old company she started that teaches fine art classes to residents of assisted living facilities and nursing homes. Lojacono has  a stated objective to provide intellectual stimulation for older people and to help them tap their creativity.

In her own words, “I like to show people that they’re still able to create.” “We’re offering something a little more intellectually challenging for them than painting between the lines, and a lot of them really like that. We have older gentlemen who sign up for our classes who wouldn’t do crafts.”

An article at http://www.SecondAct.com told a little more of her story:

She incorporates art history and a lot of visual aids into her classes. After showing participants reproductions of Georgia O’Keefe’s floral portraits, for example, she invites them to create their own versions on black art paper. She’ll provide as little or as much assistance as her students need.

“We find that even people in their eighties and nineties are interested in learning something new,” Lojacono says. “I’ve developed a lot of respect for their intellects.”

Part of her job is helping people who haven’t previously tried making art to get over their perception that it’s an activity only for a creative elite. “They’ll say, I can’t draw a line with a ruler,” she says. “I’ll say, ‘that’s great. I don’t want any straight lines in here.’ We start with a blank sheet of paper. What I find, though, is that when I help them to draw, pretty soon they’re sitting up straight and smiling.”

The amazing thing that occurs to me is “why aren’t more cities doing this?” Raleigh, North Carolina, where I live, is a top-rated city and part of the Research Triangle Park region, known to be a hotbed of entrepreneurship, but with little emphasis on attracting “boomerpreneurs.” Clearly, experience counts in running a business. Older start-up founders are seemingly more likely to have more capital than their younger counterparts. Since under-capitalization is the bane of many new businesses, an effort to attract entrepreneurs with greater net worth would make good sense as part of an economic development strategy.

Innovate Raleigh has identified a number of initiatives to foster greater cross-institutional cooperation for the betterment of the local economy. While we need to continue to foster business start-ups coming out of the education of our young students, we should also have a strategy for the bigger demographic of “Experienced Dreamers!”