Tag Archives: planning

Soccer, Fighter Planes, and Strategy

In most other countries around the world, soccer (“futbol”) is the national past time and a great source of the good kind of pride. It inspires its observers to sing national anthems, set differences aside, and salute efforts where one or many “put it on the line.” During the course of the weekend, I have been observing UEFA 2012, the European tournament held on the same four year schedule as the Olympic games.

One of the interesting things that occurs in the format of the tournament is the pairing of teams against one another wherein one appears–on paper–to have far superior credentials to another. In many cases, a starting lineup for one side can be stacked with players who have 100+ games (matches) on the international stage. With such vast experience, the veteran side enjoys a presumed advantage over the opposition. Often, the more veteran team enjoys an additional upper hand due to the superior ball-handling, striking, and passing skills of its players.

The scenario is analogous to young or smaller businesses trying to compete against prohibitively endorsed large, mature businesses. Yet, whether in futbol or in business settings, we see the underdog come out on top often enough that we realize competition is not decided through analysis and predictions. What, then, are some of the reasons that a presumably out-manned competitor emerges victorious?

If I may bring in yet another comparison without losing the train of thought, I’d like to reference the story of the Tuskegee Airmen, revived through the recent Red Tails movie produced by George Lucas. In the movie, the African-American pilots are disdained by both their own armed forces as well as the haughty Luftwaffe (German Air Force). The heroes are initially perceived as being less intelligent, having slower reflexes, and lacking the experience to get the job done of protecting U.S. bomber squadrons during the second World War strategic air campaigns to reach Berlin and help the Allied forces achieve victory. What the featured pilots bring to the air battles (at least in the movie version) are the following distinctives:

  1. They were not fighting for individual glory,
  2. They were not afraid to take reasonable risks,
  3. They were (for the most part) disciplined in their consistent approach.

In business, it is very important to observe how applying these distinct characteristics would benefit a company’s performance–whether going against peers or seemingly over-matched foes. In order to build the “esprit de corps” requisite to compete will require emotional intelligence. More self-awareness and significant amounts of empathy and self-regulation are traits that are uncommon in the masses, but very evident in those who are not selfish.

Risk taking and management of the risk-rewards trade-off is a nuance rather than the exact science some would have us to believe. As depicted both in the movie and in a game between Spain and Italy this weekend, there is a “right time” to go for the gusto. Italy was successful playing quick attacks over the top of the Spanish defense and the Red Tails had success in attacking peripheral targets after primary targets were taken out. Business strategies that include both a primary objective and additional (discretionary) targets are wise.

Finally, the commitment to the plan–a resolute determination to dismiss the criticism of others and stay focused–is vital. Don’t mistake this focus, however, for sticking to a bad idea too long. Strategies must be proven to be successful before being implemented far and wide and held up as the “best practice.” Once featured, the strategy should be re-evaluated based on results and feedback. While being pursued, however, there can be no dissension among the ranks.

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.

Resurgence of Manufacturing Entrepreneurs

 

Any study of the world of design reveals that concepts go through cycles of acceptance, falling out of favor, and rebirth. New renditions using different media or materials are brought to market and find life. In the world of entrepreneurship, similar patterns exist. E-commerce stores allow small businesses to compete with acclaimed retailers like Costco. The old-fashioned corner store emphasized personal service. Now, there are customer service “departments” that are outsourced to stay at home mom businesses in the heartlands. Back in the day, before either the industrial or information age, there were many businesses operating out of the home. Now, with internet access, we see a return to “cottage industries.”

One of the sectors that has experienced severe shrinkage and job loss domestically is manufacturing. The decline has been steady over several decades and many have lamented that we can never get back to where we were. What if the principles of design, retail, etc were applied to manufacturing? Could it experience a resurgence that makes it a key economic driver again?  We are living in an age where start-ups are more plentiful and the amount of capital to get into business and keep it afloat is perhaps less than ever before. It stands to reason, then, that we could see a flurry of manufacturing start-ups, but what would have to happen for it to occur?

Bradley Starr writes in a blog for Entrepreneur Country about the (re)new(ed) trend of people who want to make products again, rather than intangible services–he refers to this group as “Makers.” He argues that the Makers are a movement that is good for small business and that many are realizing that they don’t have to become huge to be financially successful. Themes that ignite manufacturing entrepreneurs include technology, networking, and mass customization:

New technology driven tools such as the first of the low cost 3-D printers, numerical manufacturing machines cheap enough for the home and Arduino electronic controllers, enable small organisations and individuals to manufacture components, complete assemblies and machines that were previously the province of large organisations with big machinery.  Collaborating with other Makers, designers and business services amplifies the skills, capability and capacity.

Networked small business is a most powerful force.

So Where’s the Market?

In two places:

1)    Where made to order locally is more efficient than shipping in bulk from the other side of the world
2)    Mass customisation and other small run products

If, for example, you need spare parts for a car, does it make sense to tie up cash and warehousing holding stock?  The new machines can manufacture to order locally at a competitive price, and the low cost of the machines means that an engineer can run their own small business supplying this market.  You just need to hold a relatively small amount of easily available raw material in order to make a wide range of products to order.  Low cost of financing, fast delivery, great service.

The ability to produce small to medium runs of products cost effectively opens up the enormous opportunity of more individual products, giving free reign to design ambition and consumer choice.

Global product uniformity could be on the way out to be replaced by a far more interesting world.

Nothing short of a mini-industrial revolution is on the verge if enough believe what Starr says, in part echoing a Wired magazine article last year celebrating the Maker movement. This may become the “shot in the arm” so needed in former factory towns where “made in America” still carries a swagger and mentors abound with deep manufacturing experience. The potential to pair these experienced mentors with entrepreneurs, utilize new technology tools, benefit from networks and market conditions is an opportunity economic development groups should not ignore. Likewise, our educational institutions and chambers should champion the effort. Who’s game?

 

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.