Tag Archives: innovation

Midlife Entrepreneurs Better Prepared Than Younger

One of the most gratifying things I get to do is work with entrepreneurs and business owners to optimize their businesses. In the area where I live, most of the media attention is focused on technology startups usually run by people in their 20s. What I find interesting about the new businesses in our area is that the founders who are willing to rent an office and hire a consultant or take some classes tend to be mid-life entrepreneurs. These older entrepreneurs actually are more prevalent than the younger ones. Dane Spangler, a researcher at the Ewing Marion Kauffman Foundation wrote in a 2009 report, “in every single year from 1996 to 2007, Americans between the ages of 55 and 64 had a higher rate of entrepreneurial activity than those aged 20-34.” Also, according to the 2011 Global Entrepreneurship Monitor U.S. Report — a survey of a representative sample of the U.S. adult-age population — 15.4 percent of Americans aged 55-64 and 12.8 percent of Americans aged 45-54 run their own business, compared with 0.8 percent of Americans aged 18-24 and 4.9 percent of Americans aged 25-34.midlife entrepreneur

Bureau of Labor Statistics data on both incorporated and unincorporated self-employment show an even more extreme pattern. The rate of self-employment is higher among people in their 60s than even those in their 50s, let alone those in their 20s or 30s. In fact, the bureau’s surveys of American workers reveal that people aged 65 to 69 are self-employed heads of corporations at four times the rate of people aged 25 to 34. 

The Small Business Administration reports in its recently released publication Small Business Economy that, from 2000 to 2011, self-employment among people under 25 dropped 9 percent. Among those aged 25 to 34, it fell 8 percent, and for those between 35 and 44, it declined 24 percent. By contrast, self-employment among those aged 55 to 64 rose 54 percent, while it increased 36 percent among those over 65.

Scott Shane (A. Malachi Mixon III professor of entrepreneurial studies at Case Western Reserve University) shares an interesting observation that, even in high technology, entrepreneurs are much more likely to be over 50 than under 25. Research by Vivek Wadhwa, Richard Freeman and Ben Rissing shows that these older entrepreneurs, while they fly under the media radar, are very prolific and on the rise.

Shane asks (as you might), “Why are baby boomers more likely than their kids to be entrepreneurs?” He goes on to answer his own question:

Researchers have two hypotheses, the second more plausible than the first. The first explanation is a cohort effect: Today’s young people don’t want to run their own businesses as much as their parents did were when they were young. The more plausible explanation is an age effect.

The reason Shane provides for the cohort effect being a weaker argument is a body of research conducted at UCLA within the Cooperative Institutional Research Program (CIRP). CIRP points to a trend over the past quarter century whereby college freshmen are less likely to want to be a “business executive,” “accountant,” or “actuary.” Instead, a higher percentage want to own a business now than previously.

So, while more freshmen want to be business owners, fewer people in their early twenties are actually starting businesses. This is where the age affect provides an explanation. Those who prefer this argument would say that the experience gained and savings accumulated over a period of fifteen years or more give one more confidence to start a business later in life. While there are certainly more responsibilities for the stereotypical midlife entrepreneur on the home front, this age group appears to have figured out how to address those responsibilities and still be willing to start businesses at a higher rate than the younger counterparts.

What’s holding you back? Start a business as a second career!

 

Failure to Innovate Spells Decline

History has a way of repeating itself. JP Nichols, the CEO of Clientific, recites a passage from Theodore Levitt’s 1960 treatise “Marketing Myopia“ to illustrate how railroads missed a window of opportunity in their business life cycle:

“The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because that need was filled by others (cars, trucks, airplanes, and even telephones) but because it was filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry incorrectly was that they were railroad oriented instead of transportation oriented; they were product oriented instead of customer oriented.”

railroadThen, Nichols makes the connection of this faulty business strategy to the modern banking system. As an industry, he feels the banks have become product rather than customer focused. Here’s how he describes the slippery slope slide into irrelevance:

Mature industries erode subtly at first. Hungry upstarts nibble at segments too small or unprofitable for entrenched incumbents to waste much energy protecting. But eventually the new entrants gain traction and move upmarket to larger and more profitable segments. And new categories are invented along the way.

Then, as it relates to banking, he writes:

Economic cycles wax and wane, but people will always look for ways to save and borrow, to move money from one place to another, and to occasionally get some advice from someone they trust. Traditional financial institutions like banks and brokerages held a near-monopoly on those activities for generations, but banks that continue to be bank-oriented will continue to lose to an increasingly broad group of competitors that are truly customer-oriented.

Think about what’s been happening around the edges of the banking industry. Peer-to-peer lending platforms and retailers’ captive financing programs have taken lending business that once was nearly the sole province of banks. New payments ventures like Square and Dwolla provide services that people want to use because of their great design and ease of use. SigFig is an online registered investment advisor with over $50 billion in assets tracked on its platform. Innovative startups like Simple and Movenbank are reinventing the whole notion of what it even means to be a bank.

The scariest part? None of those companies even existed five years ago.bank

In contrast to the banks’ inability to anticipate the needs of consumers as well as these new enterprises, Nichols salutes another highly regulated industry, healthcare, which he says, reinvests 10% to 15% of its revenues back into research and development, and “represented 21% of the $603 billion spent globally on R&D in 2011, according to a Booz & Co. study. Financials don’t even make the list, lumped in instead with the 2% of “other” industries, collectively in tenth place.”

Nichols, who was the first chief private banking officer for US Bank, challenges the industry to redefine what business they are in, as the railroads should have but didn’t. He feels that a redefinition of the industry to become more responsive to consumer needs and niche services to serve them would be revolutionary.

But, set aside railroads and banks. Look at your own organization now. How can you become more innovative? How can you light the fire of intrapreneurship so that it burns brightly a generation from now? Very simply: begin with the customer in mind and build something that will blow their socks off in terms of its ability to resonate with deep seated needs. Go do it!

Entrepreneurial Field of Dreams

Many communities across the United States are scrambling to come up with an agenda for entrepreneurship. With significant success stories in the San Francisco Bay and Boston areas, others have jumped onto a bandwagon. Each community pursuing the elusive prize is making wagers with a combination of public and private dollars to try and effect economic growth through encouraging start-ups. While the models being used are very different, the common denominator is that each effort, like a start-up itself, must determine where to focus to obtain the best trade-off of investment versus anticipated benefits.

Go For It Start a BusinessInstead of one of the “hotbeds” of entrepreneurship, I like to look at what is working in the hinterlands. Columbia, Missouri certainly seems to fit that categorization at first blush. Mike Brooks leads REDI (Regional Economic Development, Inc.) in an effort to “promote positive economic expansion and provides increased economic opportunities in the Columbia area, assisting entrepreneurs, developing businesses, and companies relocating.”

His group sees the following as Benefits for Local Communities committed to the process:

  • Employment and Opportunity: Cities are places where people live, work, and play. Cities need opportunities for employment so citizens can afford to enjoy the metropolitan lifestyle. Harvard Business School professor Howard Stevenson defined entrepreneurship as “the pursuit of opportunity without regard to resources currently controlled.” Prosperous cities work to understand this dynamic, since entrepreneurs will establish their businesses in locales that support business growth. The jobs created by entrepreneurs not only support current citizens’ lifestyles, but they also make specific cities more attractive for future businesses to establish themselves in that location.
  • Tax Income: Communities require governance to provide a structured environment. The infrastructure of successful cities would not exist without money coming into local economies from the sale of products or services. The necessary public works and amenities that sustain a city depend on businesses, as well as resident taxes and purchases.
  • Identity and Character: Entrepreneurs help create the unique character of a community. This character enhances the sense of place and belonging that adds to the overall quality of life. Most entrepreneurs start businesses where they live, which allows companies to develop deeper connections to the community. Apple, Google, Dell, and HP started as entrepreneurial companies that were identified with, and formed a strong relationship with, their surrounding communities.

In order for these benefits to accrue to the community, an entrepreneurial ecosystem has to be built. In Raleigh, the Innovate Raleigh initiative is the rallying cry for such dedicated efforts, though many others are tackling the challenge in differing ways. The important thing is to, as Brooks recommends,

Support Entrepreneurs

  • Recognition and Shared Goals: Already-established entrepreneurs in the community can greatly help city organizations focus on effective economic development, prioritizing incentives, and planning strategies to encourage business growth. The presence of colleges or universities can also be a great channel for enticing businesses to launch or expand in a community. A diverse population of students, professors, visitors, and residents allows for more variety in business ventures.
  • Community Programs: Several communities around the nation continually find successful ways to encourage local entrepreneurs. In the 1980s, the city of Littleton, Colo., decided to focus on homegrown businesses as a community growth strategy. They established “economic gardening,” which focused on bringing sophisticated, corporate-level tools like database research, geographic information systems, search engine optimization, and social network mapping to small businesses within Littleton. This nurturing environment proved successful and serves as a model for similar communities throughout the nation.

Other best practices for supporting entrepreneurs have less to do with cool co-working spaces and meetups and more to do with helping someone who’s never run a business sort through what they will face. A proven entrepreneurship curriculum, complemented by personal mentoring of the founders by experienced start-up veterans, is so needful and should be a part of every community’s offering to all entrepreneurs they hope to serve.

Climbing Your Management Everest

Stretching oneself to the maximum can reveal what we are made of. Whether the subject matter is a test of mental strength or physical, it is exhilarating to overcome a daunting obstacle. Sir Edmund Hillary is celebrated for his perseverance in conquering Mount Everest. One of my LinkedIn contacts and an internationally known innovation resource is Gijs van Wulfen. Van Wulfen states that, in the 1950s, the route to Everest was closed by Chinese-controlled Tibet. Nepal allowed one expedition per year.

Sir Edmund Hillary had been part of a British reconnaissance expedition to the mountain  in 1951. The 1953 Everest expedition for which he is now famous consisted of a huge team of over 400 people. Expedition leader Hunt named two assault teams. Hillary and Norgay were the second assault team. The first team only reached the South Col, about 100 meters below the summit. Then Hillary and Norgay got their chance. They reached the 8,848-meter high summit, the highest point on Earth, at 11:30 a.m. on May 29, 1953.Mt Everest

Gijs says the following 10 management lessons came to mind as he read the Hillary accounts:

1. Passion. As a youngster, Hillary was a great dreamer, read many adventure books and walked many miles with his head in the clouds. He was unaware his passion for adventure would make him, together with Tenzing Norgay, the first man to set foot on the highest point on Earth.

2. Urgency. In 1952 the British heard that in 1954 the French had been given permission to attempt Everest. The British wanted more than anything to be first. The expedition just had to succeed.

3. Teamwork. Getting to the summit of Everest is all about teamwork. As Hillary wrote: “John Hunt and D Namgyal’s lift to the depot on the South-East Ridge; George Low, Alf Gregory and Ang Nyima with their superb support at Camp IX; and the pioneer effort by Charles Evans and Tom Bourdillon to the South Summit. Their contribution had enabled us to make such good progress.”

4. Courage. The higher you get on Everest the more courage you need. At 7,800 meters Hillary wrote in his diary: “Even wearing all my down clothing I found the icy breath from outside penetrating through my bones. A terrible sense of fear and loneliness dominated my thoughts. What is the sense of this all? I asked myself.”

5. Test. On the 1951 reconnaissance expedition, team members tested oxygen equipment and did research on high-altitude physiology. The results of both studies were important in determining the right approach for Everest in 1953.

6. Initiative. While in India, Hillary read in a newspaper that the British were taking an expedition to the south side of Mount Everest in 1951. He contacted expedition leader Eric Shipton and suggested that a couple of New Zealanders could make a substantial contribution to the team. And they were invited!

7. Choices. The British Himalayan Committee replaced the 1951 expedition leader Eric Shipton with Colonel John Hunt, a climber. After eight failed attempts on Everest they needed someone to the top first, before the French would have their chance.

8. Overcome setbacks. Along the way there are always major setbacks. After finding a new route up Everest during the reconnaissance expedition of 1951, the British heard that the Swiss had obtained permission for two attempts on Everest the following year. The only thing the British could do was wait and see if the Swiss would succeed.

9. Competition. Hunt proposed that Evans and Bourdillon should use the closed-circuit oxygen equipment to reach the South Summit and Norgay and Hillary would push to the top with the open-circuit oxygen. The competition fueled the eventual success of Hillary’s team.

10. Luck. Hillary, a New Zealander, was lucky to qualify as a British subject and be invited to join the British team. Secondly, in 1952 the Swiss failed to climb Everest on their two attempts. 

How do you view these management lessons in light of your own organization’s efforts to be innovative and competitive?

 

 

How to Start Blogging As a CPA or Lawyer

Professional services firms have been very good clients for me over the years. With many firms, I am charged with improving their marketing results. One of the topics that often comes up is social media. Many billable hour professionals struggle with making the commitment to initially launch a social media presence; others with how to optimize what they have. Kevin O’Keefe, who blogs about the need for lawyers to blog, is someone I follow on Twitter. Kevin wrote a blog post some time back wherein he referenced Steve Robinson, a small business specialist for Constant Contact, whom I also follow.law firm library

O’Keefe summarizes Robinson’s top recommendations to small business bloggers, with an emphasis on how to apply the principles to a professional services firm:

  • Find your target audience. Before you set up a Twitter account or create a Facebook Business Page, research who’s participating there and ask your clients and their influencers (reporters, bloggers, association leaders) which forums hold their attention. You may find they like blogs and email as opposed to Twitter and Facebook. Once you determine where they are, follow them to their preferred destinations.
  • Focus your efforts. Identify the top two places where your audience is most active and fully engage them there as opposed to spreading yourself too thin across a variety of social media platforms. Professional services firms often want to do a little bit of everything resulting in going a mile wide and an inch deep. Following relevant sources and subjects via readers such as Google Reader or Flipboard; truly using LinkedIn; and blogging will enable professionals to build relationships and enhance their reputation. Other social media tools can follow.
  • Identify the most active participants on your target social media platforms. Then initiate conversations, respond and repost their messages, follow their feeds, comment on their blogs, and cite their blog posts on your blog. Third parties have tremendous influence over your clients and prospective clients. If you can get these third parties (bloggers, reporters, business association leaders etc) referencing and sharing what you are saying online, your stature and reputation is only going to go up. When people get your name from a referral source, they’ll Google you and see positive references by the influencers to what you have shared via social media.
  • Balance social media with other marketing efforts. Social media should be part of a balanced marketing effort that includes online and offline activities. Leverage the enhanced reputation you are establishing by going to networking events, speaking to groups, or even asking to have coffee or lunch with someone you’ve met via LinkedIn or other social media. Share your blog posts via email to relevant clients now and again to show them you are thinking of them. Social accelerates relationships and reputation, but talking with and meeting people is needed.
  • Don’t mistake silence for disengaged. A lot of social media is built around listening and responding only when it makes sense. If you aren’t getting a lot of responses to your blog posts or items you share online, don’t assume that your audience has tuned you out. Ask questions, inquire about your followers specific interests, and reach out on a one-on-one basis.
  • Position yourself as an expert resource. This is what it is all about. Individuals, businesses, and trusted advisers to your clients are looking for a reliable authority in their field. Don’t be afraid to focus on a niche area, industry area, or client issue that you truly enjoy working in or on. What may have taken 15 years or more, if ever, to establish a strong word of mouth reputation in a niche has been greatly accelerated via social media.

All of this makes such great sense that I chose to excerpt it almost verbatim from an O’Keefe blog post. Hope it’s helpful for you!