Tag Archives: professional services

Bureaucracy: The Entrepreneur’s Kryptonite

As Dan Sullivan says in The Strategic Coach® Program, “The human brain cannot do extraordinary things, only normal things.” “So the trick,” he says, “is to make the extraordinary normal.”

Corporate employees operate based on policy: that’s what keeps them from having to think. Entrepreneurs depend thrive on having the freedom to constantly grow and change, to make new connections, and to ask questions that shake everything up. To an entrepreneur, groupthink (i.e. bureaucracy) is like Kryptonite.

Just because we don’t like being bogged down by over reliance on structure doesn’t mean that we are always creative. Following established patterns and trying to approach every issue with the same solution is a bad habit even for an entrepreneur. Rather than seeing opportunity, we can become fixated on solving a problem.

When Jim Collins wrote about Big Hairy Audacious Goals (“BHAGs”), he was challenging small thinking. Simply considering an aggressive goal causes the mind to see the environment differently. Unable to stop thinking about the “What ifs,” we are empowered to consider new concepts,  linkage and alternative ways of viewing the same issue. Divergent thinking is modeled by the likes of Richard Branson, who tweeted, “My interest in life comes from setting myself huge, apparently unachievable challenges, and trying to rise above them.”

Your definition of “normal” daily experience becomes unique when you think in terms of BHAGs.  Dream for a moment about what life could look like in 5-7 years. Can you imagine performing at 10x today’s level? Earning 10X what you do today?

Bureaucracies are based on keeping everything the same so they can preserve their status. Policy and rules “protect” the structure from the effects of individuals, whose participation is measured in hours on the clock, not in results. In an entrepreneurial organization, by contrast, change is life, because “holding your ground” means stagnating and falling behind. Individuals are sought out and rewarded for their ability to think, create, and make a unique contribution.

Make a habit of  what Sullivan terms the “10x Mindset,” and innovation, risk-taking, and teamwork will all come together for you in a completely new way. Bureaucratic thinking and structures simply won’t survive in your environment because you and the people around you will be entirely focused on building, adapting, and expanding a path toward your “bigger future” vision.

Cultivate a creative mindset that makes growth and progress “normal.”

Successful Business Plans: 5 More Keys


EntreDot Executive Director Bill Warner wrote a blog post this week for the Raleigh Emerging Designers Innovation Incubator website about business plans. In it, he shares keys to success.  Yesterday’s post here dealt with 5 keys; 5 more are offered below:

“Have a compelling value proposition.”

  • Solve a truly important problem with an attractive return on investment.
  • Make sure it fits into your buyer’s priorities.

The Challenge: You must fit within your buyer’s priority list for planned purchases. The benefit of your product has to be at the forefront of your customer’s needs. The best way to express the value of your product or service is to present a return on investment (ROI) analysis. You should be providing either higher revenue or lower cost/expense, and it should take less than a year to pay the investment back. Anything else is probably a “nice to have,” and is unlikely to win in a market where buyers are only purchasing “must have” solutions.

“Have a targeted marketing plan.”

  • Know how to reach your buyer to gain awareness
  • Establish a cost effective lead generation plan

The Challenge: Select the right way to deliver your message to your potential buyer: advertising, trade articles, mail or email campaigns, telemarketing, distributors, value added remarkets, dealers or direct sales force. Many companies are over-reliant on franchises as offering a silver bullet strategy for support and getting started. They don’t sufficiently analyze what the franchiser brings to the table that you can’t do for yourself. Franchisees sometimes over-estimate the value of the support from the franchiser; in that, is it worth the franchising fee and the royalty payment? Can those costs be made up by efficiencies offered by the franchiser? Can those costs be passed on to your customer? If not, the franchisee is at a competitive disadvantage. Those with a “brand” that can bring customers in the door on “day one” and provide active business operation assistance, rather than arms length promises, are particularly worth looking into. Once you have generated qualified leads, manage them through the entire sales process.

“Create the most efficient sales channel and excellent customer support.”

  • Ensure the sales approach is affordable
  • Build satisfied customers

The Challenge: Establish a sales forecast. Hoping for sales is not planning. Sales forecasts are based on understanding the buyer in your selected market segment and on the experience of others in it. Many new companies underestimate the time it takes to build a business to the point where it is profitable. As a result, many new businesses are under-financed and have insufficient working capital to sustain themselves in the initial growth period or during seasonal downturns. Being new and small is no excuse for cutting corners in dealing with customers. Would you go into a shop in the mall with cheap looking furnishings and lighting? Don’t try to save money there. Your sales and support efforts should be guided to create a satisfied customer who is willing to be a reference to other potential customers and give you repeat business as well.

“Understand your entire financial model.”

  • Establish realistic sales, cost, capital and expense plans
  • Understand cash flow and profit dynamics

The Challenge: Establish a solid financial plan. Many new companies are unplanned or under-planned. Planning cannot deal with all the surprises in the real world, but why be surprised by things you can anticipate and deal with beforehand? Planning requires a highly detailed and kinetic vision of the future of the business that reduces that vision to the language of business, dollars and cents. A financial plan is required to raise money from banks and investors in addition to helping you set financial objectives. Many new companies try to save money by avoiding the costs of lawyers, accountants and insurance agents. One mistake can cost you many times the small cost of relying on experts. Operationally, the most important financial dynamic to understand is cash flow. Know how money comes into and goes out of your company and when the transactions occur. The penalty for not managing your financials well is running out of money and probably losing your business.

“Ensure you have a winning team.”

  • They should have the passion for success
  • Attract the best experience and know-how

The Challenge: Pick the best people for your company. Many new businesses reach too far in a single step; for example, starting a trucking business without any prior experience. Take it “step-by-step”. Often the first step is to get a job in a business similar to the one you want to start. Learn the business from the inside out. Then start your own business.  With the right experience under your belt, build your team with people that fill out the strengths that you need to run your business. Pick only the best people that can get the job done. Avoid hiring friends and family.

Reverse the Mentoring Stereotype

In its most common context, mentoring is understood as someone with experience (and a few grey hairs!) showing someone younger how to perform key job functions. Yet, one of the hottest trends in human resources is termed “reverse mentoring.” Whether due to job loss and the need for new training, or “Second Act” entrepreneurship, or simply the precipitous amount of change being introduced in organizations trying to compete globally, there has arisen a need for this practice where younger workers are now showing the older ones “the ropes.”

While the concept is that exposure to those outside the corporate suite may be good for staying in touch with the values held by newer workers, there are several other benefits. Higher employee retention rates among younger workers are cited as an unexpected, but welcome outcome. Exposure to management issues and how decisions are made are additional upsides.

When Jack Welch was the CEO of General Electric, he  was mentored on how to use the internet by a young employee in her 20s. He saw such promise from the process that he mandated that 500 of his top executives reach out to younger employees to do likewise. These days, mentees are learning how to use social media effectively from their younger mentors. Even at top ad agencies like Ogilvy & Mather, a worldwide managing director admitted that his more youthful mentors had shown him how to enhance his Twitter posts to be less boring. His eyes have been opened to new possibilities and he now plans to utilize Skype and videoconferencing to facilitate distance mentoring across the firm’s 450 offices. HP & Cisco also have reverse mentoring programs in place.

Michelle Rafter, in a blog post entitled “8 Ways to Make a Reverse Mentorship Work For You,” suggests the following guidelines:

1. Find a compatible partner –someone with skills in areas you’re lacking

2. Set expectations- create ground rules for what you want out of a partnership, such as how often you’ll meet and what both parties will get out of it

3. Get your boss’s OK- A lot of reciprocal mentoring can happen on an informal basis. But if you want or need to set up a formal program, you’ll need your manager’s or company’s approval.

4. Be open to suggestions and criticism- learn in days from someone else what one could take decades otherwise by having a thick skin

5. Make it more than just about tech- maybe a younger person could help you learn about sushi, Chinese, popular music, or even how to lead the next generation more effectively

6. Give as much as you get-the relationship should be mutually beneficial

7. Experiment with approaches– a single department, a program that crosses departments, and a multitude of variations

8. Don’t stereotype- not every 45-year-old has the same knowledge or expertise, so don’t assume every Gen Y worker does, either.

Better Mousetraps Require Divergent Thinking!

One of the people I follow in leadership blogs is Dan Rockwell, aka Leadership Freak. His post this morning cautions against working hard versus working smart:

It doesn’t matter how hard you work if you’re working on the wrong things.

He goes on to discuss how doing business without thinking strategically can be harmful to your business and personal health. While it’s needful to get work out the door (think lawyers focusing on billable work, carpenters hammering nails), to only do so is to lose sight of the bigger, value adding activities that distinguish great businesses from ordinary ones. Your efforts are not as productive as they could be because you are displacing the benefits of your focus and inertia that could be applied to thinking about what would make you more successful and pursuing those activities that promise reward for another day–not just the current one!

Some of the activities that suffer when you are not working on your business include:

  • Planning
  • Goal-setting
  • Brainstorming
  • Delegating
  • Organizing
  • Dreaming
  • Alliance building
  • Networking

When our attention is shifted to “working on the business” (thanks Michael Gerber for the E-Myth insights), we are thinking innovatively. Our efforts are building something that will stand the test of time. Net worth/business value soars as we are refining the business model instead of just trying to work harder. Think about franchise systems. The value is in the documented processes and controls. Even if you never plan to sell through a franchise agreement, you would do well to consider the genius behind the movement. Instead of being the person who only makes money off the sweat of his or her brow, you find a way to make money off others’ labors.

Rockwell suggests the following to help you get unstuck and more productive in creating a business with greater value:

  1. Create a weekly “working on” appointment with yourself. Identify and take a next step.
  2. Make small adjustments. You’ll never shift toward working on your business in one giant leap.
  3. Find new eyes. Discuss systems, strategies, and vision with experts outside your field.
  4. Listen. Many leaders and business owners have too many answers and too few questions.
  5. Try something. Waiting for stunning success prevents progress.
  6. Delegate more even if it takes longer at first.
  7. Follow-up and follow-through. Frustrations inspire conversations regarding improvements but follow-through changes things. Perhaps some form of accountability would help?

For entrepreneurs, mentors can be extremely valuable in holding one accountable to a process like the one commended.  Going it alone, without the benefit of outside advice and counsel, makes us technicians without hope of escaping the rat race.  You can change your future today–be daring to do so!

Put Your Money Where Your Mouth Is

Do your customers feel like you have “skin in the game?” Many times the answer to that question is not an affirmative one. Professionals who bill by the hour or some other common fee arrangement are perceived by their clients as making money whether the clients do or not. Ad agencies, law, CPA, architecture, engineering, consulting and advisory firms all face this uphill battle to demonstrate their understanding of the client’s economic model while simultaneously delivering a service of their own at an acceptable profit margin.

Take the advertising world as an example. The old model was charging clients a percentage of the paid advertising spend. When clients pushed back against the pricing model as a disincentive to do necessary promotion, some agency execs switched to an hourly billing model. There was a disconnect under this model in terms of quality and outcomes. Jaynie L. Smith describes the migration to a new model by Andy Berlin, co-CEO of WPP agency Red Cell this way:

     He stunned advertisers and agencies alike at (a) management conference of the American Association of Advertising Agencies by suggesting a radical change in the way advertising is priced. It boils down to pay for performance: The better the ads do for the buyer, the more the agency gets paid.

     When you stake your claim on your own ability to come through for the client, you and your firm take a calculated risk. Doing so will transform your service delivery model. No longer will “good enough” be acceptable when the client’s success is the focus. By making the client successful, your firm becomes successful as well. Getting your people to make the cultural shift to this paradigm will require strong leadership, courage, and perseverance.

You carve out an enduring competitive advantage when you are bold enough to depart from the strategy of the category killers and pursue client focus and concern. Differentiation on your own terms rather than price or something that undermines rather than builds up your company’s financial position is good business!

To have “skin in the game” means to have greater commitment than anyone else. Show your commitment to your clients by going above and beyond the call. By letting them know that you won’t get paid unless they receive what they seek, you have told the clients that you have their backs–that you are watching out for what’s best for them. That is unique and sustainable and gives you the ability to win people over with whom you would like to do business.