Minggu, 16 Desember 2012

Innovation Is About Arguing, Not Brainstorming. Here’s How To Argue Productively

At Continuum, innovation’s secret sauce is deliberative discourse. Here’s how you do it.

Turns out that brainstorming--that go-to approach to generating new ideas since the 1940s--isn’t the golden ticket to innovation after all. Both Jonah Lehrer, in a recent article in The New Yorker, and Susan Cain, in her new book Quiet, have asserted as much. Science shows that brainstorms can activate a neurological fear of rejection and that groups are not necessarily more creative than individuals. Brainstorming can actually be detrimental to good ideas.

To innovate, we need environments that support imaginative thinking, where we can go through many crazy, tangential, and even bad ideas to come up with good ones. We need to work both collaboratively and individually. We also need a healthy amount of heated discussion, even arguing. We need places where someone can throw out a thought, have it critiqued, and not feel so judged that they become defensive and shut down. Yet this creative process is not necessarily supported by the traditional tenets of brainstorming: group collaboration, all ideas held equal, nothing judged.

So if not from brainstorming, where do good ideas come from?



Big Idea 2013: Learning Fast From Failure

The philosopher John Dewey once wrote that “the person who really thinks learns quite as much from his failures as from his successes.”

As president of the World Bank Group, where we work every day for a “world free of poverty,” I come face to face with the problem of how to turn failure into learning. Every mother or child who dies of a preventable disease, every country that can’t feed its people, reminds us that when we fail, often tragically, we don’t learn from it as much as we should.

In the last decade, many international leaders have put great emphasis on measuring results and learning from success and failure. At the Bank, the challenge now is to develop tools that accelerate our ability to learn from mistakes and successes. I’m convinced that revolutionary advances in communications and information processing, when linked to an enlightened approach to failure, can help transform our pursuit of ability to achieve development results, even in the poorest countries.

Let me give you two examples. Not long ago, I was in South Africa. There, leaders spoke to me at length about their struggle to improve the education of young people. They said that they had attained great success in enrolling nearly all eligible schoolchildren in primary school, but they also said that too many children fail in school, and that they are not preparing young people well enough for the job market. I was impressed with their openness, and I left Johannesburg feeling hopeful that South Africa would make progress in improving education. They were determined to learn from their mistakes and find solutions that would work in their country.

Another country I visited recently is China, which is experiencing a historic migration of rural villagers into cities. This has led to significant problems like pollution and traffic congestion. Still, China has made enormous innovations in urbanization that should be shared more broadly, and the Chinese leaders I spoke with also were eager to learn from other countries’ experiences, particularly in the transportation sector. Like the South Africans, the Chinese were eager to learn from the success and failures of others and were both justifiably proud of their achievements in urban planning and very much aware of areas in which they needed to make more progress.

To help China, South Africa, and all of our member countries, the World Bank Group will be setting up what we’re calling delivery knowledge hubs, which will begin by collecting and distributing case studies of both success and failure in tackling the most important development challenges from throughout the world.
When I was president of Dartmouth College, a CEO of a Fortune 500 company gave me some advice that has stayed with me. When thinking about tackling complex, difficult problems, he told me: “It’s not how much you know, it's how fast you learn.”

Learning from failure is hard, complicated work. But all leaders could be well served if they admit what they don’t know and learn from their own and others' experiences. We at the World Bank Group stand ready to work with leaders in both the public and the private sector to learn from success and failure. To take a page out of Google’s playbook, if we “fail fast and learn fast,” we will have a much better chance to end extreme poverty and build shared prosperity in every corner of the world.

Minggu, 18 November 2012

Social Media Is Making You a Smarter Leader

It's easy to point to the problems with social media: lost productivity from employees checking Facebook at work, new "personal branding" responsibilities to tend online, and a general deluge of information that's impossible to keep up with.

When we do hear about the benefits of social media, it's usually in a business context (praising the rise of "viral marketing on steroids") or focused on a macro, societal perspective (NYU professor Clay Shirky has famously cited the "cognitive surplus" resulting from online tools like Wikipedia, which allow people to contribute small amounts of time or effort, but in the aggregate create vast new informational resources).

There's less focus on the individual benefits of social media. But I believe it's actually prompting us to become better people and smarter leaders. Here are three often-overlooked results I've seen in my own life, and in professionals I admire.

We sell better. In my previous career, I was a journalist. Every week, I'd pound out a 3,000 word story — and leave the title to someone else. Coming up with a snappy headline wasn't my responsibility, I figured, so I let the copy editor handle it. But today, we're forced to understand that the packaging — the title — matters. Without a good one, no one will even bother to click on your link.

Thanks to the Internet, we've all become data scientists, assiduously measuring what works and what doesn't, and what will pique a customer's curiosity. (The website Upworthy is actually founded on the premise of spreading meaningful news through the use of sexy, curiosity-inducing headlines).

I'm not simply saying, however, that social media has forced us to focus on surface-level concerns. Rather, it's sharpened our awareness of a fact that has always been there: to succeed in life, we have to know how to persuade and intrigue others. Now we have the tools to do so.

We listen better. What's the sign of a top-notch social media user? I recently conducted a workshop for a client seeking to build relationships with elected officials. Together, we trawled the web examining their targets' online habits.

Some traditional pols weren't on Twitter at all. Others had dipped their toes in the water, using the service as a PR message board, blasting out links to press releases and favorable news coverage. The most sophisticated users, and not surprisingly the ones with the most followers, had twitter feeds littered with @ replies — evidence of their engagement, responding to and commenting on others' posts.

It's hard to quantify your listening skills in the real world: do your employees feel heard? Does your spouse think you're paying attention? But online, every comment you respond to, retweet you send, or question you answer is a structured form of practice for one of the most important skills a person can have: listening, and truly engaging.

We move faster. Some would question whether moving faster is actually better. What about the value of reflection? Or the danger, as Stephen Covey put it, of mistaking the urgent for the important? Those are real concerns, of course. But there's also a real benefit in, for the first time, being able to participate in (and add value to) the news stream as it unfolds.

One recent example was the massive number of Twitter messages about Hurricane Sandy, which allowed individuals to share updates and help others, cognitive surplus style. (It's true there were a malicious few who used the opportunity to spread false rumors — but are there any environments that can guarantee the absence of bad seeds?)

This summer, upon hearing the news that Marissa Mayer had just signed on as Yahoo's new CEO, I immediately wrote a blog post about it. Clicking the "refresh" button and seeing, every few seconds, that hundreds more people had read it was a powerful example of being able to add to the conversation in those critical first moments when people were actively seeking information and guidance.

When you're able to delight a customer by responding right away on Twitter, help a colleague by crowdsourcing an answer to a problem they're having, or simply "fail faster and iterate," as HBR blogger Len Schlesinger and his colleagues write about, that's the same phenomenon: the benefits of speed.

Any tool is only as good as the person operating it. Of course you can fritter away time on Facebook, or descend into a rabbit hole of clicking Wikipedia links. But I'm convinced the very structure of social media — the skills it requires — is prompting us to develop valuable leadership strengths. And if social media really can make us more nimble, more interactive, and more persuasive, we should stop wringing our hands about whether to let employees watch YouTube at work, and focus on ensuring all of us are leveraging social media to become our best selves.


Dorie Clark

Dorie Clark is a strategy consultant who has worked with clients including Google, Yale University, and the National Park Service. She is the author of the forthcoming Reinventing You: Define Your Brand, Imagine Your Future (Harvard Business Review Press 2013). You can follow her on Twitter at @dorieclark.

Source

Rabu, 07 November 2012

Change Consumer Behavior with These Five Levers

Any consumer goods company trying to reduce its environmental impact faces this challenge: your footprint is largely determined by what customers do with your products, not what you do directly. At Unilever, nearly 70% of the greenhouse gas impact of our products occurs when consumers use them to wash their hair or do their laundry.

The success of the Unilever Sustainable Living Plan — our strategy for sustainable, equitable growth, tied to 50+ time-bound targets we've set for ourselves — depends on external factors like these, where we only have so much influence. While we can drive down the energy and water consumption of our factories directly, an entirely different approach is needed to reduce the greenhouse gas impact of our products across their lifecycle.

Fortunately for us, we engage directly with consumers through our brands, and it is these brands that have huge potential to be agents for change. As the renowned environmentalist Jonathon Porritt argues: "Brands are so much better placed to narrow that frightening 'values-action' gap that politicians have to confront (where voters say one thing and promptly do another) and are somehow more trustworthy precisely because they are so clearly in the business of making money out of doing the right thing."

This point is illustrated by our Lifebuoy soap brand, which spearheads our efforts to reduce childhood mortality through the simple act of handwashing at key hygiene moments throughout the day. Handwashing promotion is an extremely cost-effective intervention: a $3.35 investment in handwashing brings the same health benefits as an $11 investment in latrine construction, a $200 investment in household water supply and an investment of thousands of dollars in immunisation.

But it is the fact that this brand is critical to our business's future growth that gives NGOs and governments the confidence that our handwashing programmes are not flash-in-the-pan philanthropy. As for consumers, as our Global Social Mission Director for Lifebuoy, Myriam Sidibe, pointed out recently on this blog, "using local brands that people know and trust can actually be one of the most comfortable and easily accepted approaches to educate them about a topic like hygiene."

Brands can be even more powerful agents for change when we understand exactly how people use products, and what values, habits or motivations influence this use. We synthesized our own knowledge and experience as a marketing company with insights from experts from psychologists to academics and those out meeting the people who cook, clean and wash with our products every day. The result was Five Levers for Change, a set of principles brought together in a new approach we believe can increase the likelihood of achieving sustained behavior change:

The five levers are:

Make it understood. Do people know about the behavior, and do they think it is relevant to them? This lever is about raising awareness and encouraging acceptance. Lifebuoy soap's 'glo-germ' demonstration uses ultra-violet light to help children understand that washing hands with water alone isn't good enough to get rid of invisible germs.

Make it easy. Do people know what to do and feel confident doing it? Can they see it fitting into their lives? This lever is about convenience and confidence. In many parts of the world, laundry is washed by hand, but it is typically in these countries that water is scarce. Our Comfort One Rinse fabric conditioner only requires one bucket for rinsing, not three. But it took live demonstrations and samples, not just TV commercials, to establish consumer confidence that one bucket of water was really all that was needed for effective rinsing.

Make it desirable. Will doing this new behavior fit with their actual or aspirational self-image? Does it fit with how they relate to others or want to? We are social animals, and we tend to emulate the lifestyles and habits of people we respect, and follow social norms. Recycling has reached a tipping point in some countries because the bag or box outside the house is so visible. To tackle infant mortality, Lifebuoy taps into desire of new mothers to be a good mum, and to be seen that way by others.

Make it rewarding. Do people know when they're doing the behavior 'right'? Do they get some sort of reward? This lever is about demonstrating 'proof' and pay-off. Our Suave shampoo brand encourages people to turn off the shower while they lather their hair and showed how families could save up to $150 a year through cutting their energy bills.

Make it a habit. Once people have made a change, what can we do to help them keep doing it? This lever is about reinforcing and reminding, 'refreezing' people in their new habits so it becomes unconscious again. Lifebuoy's handwashing campaigns run for a minimum of 21 days and include quizzes, posters and songs to encourage repetitive behavior.

Using these five levers, marketers have an incredible opportunity to positively shape the lives of consumers and their impact on the rest of the world. But can brands do it all? We would argue no. Whilst brands are perfectly placed to tackle some of the five levers, such as "Make It Desirable," they can struggle to tackle others alone, because there are still so many factors that are out of our control.

It is difficult for a brand to help make recycling easy, for example, if there is no recycling infrastructure for a consumer to use. Similarly, while we've tried to make the case to customers that shorter showers can save them money, it is a hard sell because consumers' energy bills are difficult to understand, and it isn't clear to them what sorts of activities cost them the most money.

Brands will have the most positive influence when they work with these 'structural' factors, rather than against them. This is why we are also working to influence the broader factors that shape our behaviour: the presence of good hygiene education in the school curriculum; the availability of recycling infrastructure; and energy and water policy that incentivizes efficient use. These are just some of the things we believe would enable our brands to act as multipliers to achieve the transformative changes needed for a sustainable world.

Keith Weed

Keith Weed is Chief Marketing and Communication Officer for Unilever, a role that also includes leading Unilever’s sustainability work, its drinking water business (Pureit) and the Unilever brand. Prior to this he was Executive Vice President for Global Home Care & Hygiene.

Source

Selasa, 30 Oktober 2012

Memo To Micro Managers: STOP! The 10 (Hardest) Steps To Effective Delegation

Memo To Micro Managers: STOP! The 10 (Hardest) Steps To Effective Delegation:
image thumbnail - see full story for attributions
Stop it! In my world as an investor, I find entrepreneurs who can?t let go of any task.  For various self-declared reasons, they alone can complete a given assignment.  Or even worse, they micro manage someone else?s work.  Sadly, this personality type frequently delegates a task to a subordinate only to

Top 5 Management Lessons I Learned While Doing Burpees

Top 5 Management Lessons I Learned While Doing Burpees: When my trainer Vanessa asked me to do 10 burpees during our first session, I had visions of those white rectangle cloths I used when my kids were infants. Vanessa was talking about the squat-push-up-n-jump burpees that go by the same name, but the reference was apt since the last time I worked with a physical trainer was when my second son was born nearly five years ago. Losing the baby weight was the justification I needed for what can otherwise seem like the unnecessary expense of hiring a professional trainer ("just do it" comes tauntingly to mind). This time the training sessions resulted from a bet with myself, “If you raise the the venture capital for Little Pim, you’ll get a trainer for 8 weeks.” I wasn’t exactly sure if this was a motivator or a deterrent to raising the capital, but either way, the capital had been raised and now I was stuck doing burpees at 7:15 on a Wednesday morning.

Minggu, 14 Oktober 2012

Business Plans Are a Waste of Time. Here's What to Do Instead

Business Plans Are a Waste of Time. Here's What to Do Instead:
Throw your business plan in the recycling bin. Instead, focus on your team and on getting to market as quickly as you can.
If you're taking time to carefully perfect a business plan to help ensure your company's model is sound and that it will be a success--stop. That's the word from William Hsu, c0-founder and managing partner at start-up accelerator MuckerLab.
Hsu, who's been both a successful entrepreneur and an executive at AT&T and eBay, says that starting a company is "a career for really irrational people. In all probability, whatever the idea is will fail. Building a reality distortion field is how entrepreneurs convince themselves and their employees that this is a good idea."
With that in mind, he advises:
1. Think people, not ideas.
A great team trumps a great idea every time, Hsu says. "None of us is perfect, and entrepreneurs are usually great at a couple of things, such as having vision and being willing to take risks." Entrepreneurs--especially tech entrepreneurs--come in one of two flavors: Either they're like Steve Jobs, visionaries who understand the market but aren't technically proficient, or they're like Steve Wozniak, technical geniuses who don't understand how to market to customers.
In either case, having great team members can fill in any areas where the entrepreneur lacks strength, he says. "We look for three things in a potential start-up: market, team, and concept. The team is by far the most important element, and the second is market. The idea itself is the least important."
2. Think speed, not perfection.
"Whatever hypothesis you have about the market, it's probably wrong by definition," he says. "One out of every 30 venture start-ups succeeds--and that's after getting funded. What that means is that entrepreneurs need to take a product to market as fast as they can in any form, even if it's 10% of the original vision. They have to test it to see if it's a market fit, if it resonates with customers, and is something they'd eventually pay for."
Then, he says, pivot and reconfigure on the basis of that market response. "You have to iterate as fast as you can. I don't mind if a batter has a .100 average--a 10% success rate--if the batter gets 10 or 20 at bats. The more chances you have, the better. So the team that can execute the fastest and build the most relationships with customers by listening to them will win."
Because of this need to iterate quickly, Hsu advises building an in-house team that will have all the design, technical, and product capabilities you need. "You don't want the entrepreneur outsourcing these types of functions, because it means there will be a cost in dollars to each new iteration that will drain capital. Every pivot should get you closer to success, rather than closer to failure."
3. Think vision, not plan.
"A lot of entrepreneurs have a perfect deck of slides, a perfect business plan, and a perfect financial model. But that's all they have," Hsu says. "They think starting a business is having a business plan. But being an entrepreneur is about creating the future one step at a time."
Does that mean you should never look ahead? Not quite, he says. "Where you have two or more co-founders, it's important for them all to put down on a piece of paper, or a whiteboard, the canonical things they all agree on. They need to agree what the vision is and what the path to success will be. But don't spend time trying to put that into a 40-page document. I'd rather you take that time and talk to 10 more customers instead."


Case Study: 500% Growth Rate? Yeah, It's Possible

Case Study: 500% Growth Rate? Yeah, It's Possible:
Check out how one tech company took four simple steps to grow at a phenomenal rate.
How fast would a new venture have to grow in order to earn the title of history’s fastest growing storage start-up?
The answer, according to my recent interview with Ash Ashutosh, Founder & CEO of Actifio, is “500% year-over-year growth for the last five quarters.”
And that’s the rate at which Actifio, a start-up that makes “copy data management (CDM) radically more efficient,” is growing. Through a combination of skillful strategic choices and good luck, Ashutosh’s venture is growing so fast that an IPO could be as close as five quarters away.
Here are the four key choices Ashutosh made and what you can learn from them:
1. Target a huge market with no competition.
He told me that CDM is a $34 billion opportunity with no competition. The reason that there is no competition at the moment may be that the incumbent storage hardware companies like EMC and IBM would have to take a big bite out of their core business in order to match Actifio’s offering.
The lesson for your venture is that you can boost your odds for rapid growth if you target a big market where the incumbent competitors hold a big price umbrella over the industry. Simply put, this means that the competition is charging customers so much money that if you can come up with a less expensive solution, you may be have customers clambering for your product.
2. Offer customers a quantum value leap.
Just offering a lower price than competitors will not win you a rapidly growing share of a big market. For that, you have to offer customers what I called in my about-to-be-published eleventh book, Hungry Start-up Strategy, a Quantum Value Leap--a huge improvement in bang for the buck.
Based on the rate at which it’s adding customers--Ashutosh expects Actifio to grow from 200 to 800 customers by the end of 2013--Actifio certainly does that. According to Ashutosh, Actifio’s product can cut by 95 percent the “data footprint” that companies create in their CDM process while reducing by 75% the amount of “network bandwidth” required to move it around their data centers.
Some customers save “at least $20,000 per month in tape management and $15,000 per month in backup costs. And the inefficiencies [Actifio can eliminate] are astounding--some companies pay $32 million a year now just to maintain their backup software.”
And while chief financial officers like the idea of reducing such costs from $890,000 to $150,000, the users love how “dead simple” the product is to use.
If you can offer customers that kind of Quantum Value Leap, they will flock to your door.
3. Build a world-class team.
No CEO can achieve these things alone. Rather, an entrepreneur must have the ability to build a world-class team.
Ashutosh has also done that. His top executives have all had prior experience running their functions--such as sales, product development, service, and finance--in other successful companies.
And he was able to attract them to Actifio and create an environment where they are happy to work together to achieve future success. The reason? They are excited to join a company with “the opportunity to capture a leadership position in a $34 billion market with no competition that is growing at 500% annually,” according to Ashutosh.
You can take two key insights from Actifio’s ability to build a world class team. First, top people who have achieved prior success are eager to take another opportunity to see whether they can do it again. Second, if you can persuade them that your start-up’s odds of success are far better than average, you just might persuade those A players to join your venture.
4. Fight complacency.
Finally, if your company has achieved any success, it will become vulnerable to the belief that it can start coasting. And once that idea takes hold, it’s just a matter of time before your start-up begins a fatal tailspin.
Actifio is remaining alert to those dangers. As Ashutosh explained, “2012 is our break point.” By that, he means that as the company “is going from start-up to grown up.” And that means, he has been talking to his employees about how important it is “to consolidate our focus on quality when we release, sell and service our products.”
He expects that another such break point will occur after Actifio’s IPO. By then, it will have revenues “between $100 million and $150 million and will control 10% of the market.”
He expects that these results will make other companies aware of the size of the opportunity and attract competitors. And then Actifio will be tested to see whether it can innovate to stay ahead or turns into a company that squanders its early lead.
So think about the future challenges facing your start-up and prepare your people to overcome them. And if you learn this and Ashutosh’s other lessons, your start-up probably won’t surpass Actifio’s growth - but it will be much better off.

Want Loyal Customers? Let Them Customize

Want Loyal Customers? Let Them Customize:
It used to be, only big businesses could afford to let customers customize their products. But here's how one small operation makes it work.
You've probably heard of mass customization: It's when businesses use e-commerce to let consumers order customized versions of products. The idea is to delight customers by providing exactly what they want and need.
Typically, only large companies like Levi Strauss have the necessary infrastructure and resources to put into the customization systems. But Sarah McIlroy, CEO of FashionPlaytes, Inc. of Beverly, Mass., is proving that a young company can make mass customization work for its needs and budget.
The Idea
Initially funded in 2009 and publicly launched in 2010, FashionPlaytes has a target audience of "tween" girls. It lets them "interact and engage around fashion and style," not only through a FashionPlaytes social network, but also by letting the girls order customized versions of clothes at reasonable prices.
The concept came to McIlroy when she remembered how, as a child, she'd ask her mother, an experienced seamstress, to modify her clothes so she'd stand out from friends and schoolmates. When the grown McIlroy's own daughters asked for something similar, she could still point to their grandmother, but she figured many children don't have such an outlet.
So she raised money--more than $12 million to date--and devised a way to build a company around such a service. McIlroy realized that if she brought a line of clothing in from Asian factories to keep the basic expenses down, she could get a U.S.-based factory to take those existing clothes and add ribbons, extra layers, appliques, rhinestones, and other materials. An online system could let the young customers choose basic clothes and specify the modifications they wanted. The domestic factor would create the customer variations and ship the final product to the customer approximately two weeks after the order was received.
The Business Model
However, investors wanted to know that FashionPlaytes could keep pricing in line with what customers would find in a store like the Gap so it was available to a broad market, not an upscale niche only.
Ultimately, the answer was yes. The price of a product goes up with the number of customizations, but customers can get something custom for just over $20. The fully decked-out version might be $45.
It's the two-tier manufacturing approach that makes this possible. Like any clothing vendor with unique offerings, FashionPlaytes creates the basic designs (they call them silhouettes), colors, and materials. Even there, customers have a say. The company asks the girls to vote on its choices and uses that information to help inform size, color, and design mix and improve forecasting.
The take-up has been significant. About 500,000 girls have already signed up to become members and created 6 million virtual designs. They spend more than an hour when they visit the site. Design contests can attract as many as 50,000 votes. "Girls are spending over an hour on our site every time they come and coming back two times a week, sometimes more than that," McIlroy says.
Why It Works
Impressive growth for just a couple of years. McIlroy attributes it to a strategic shift: "We shifted our marketing, messaging, and architecture to be girl-focused. Prior to this we were aiming at the gift givers and adults."
It's a good reminder to entrepreneurs that sometimes the most ambitious types of business plans are as possible for a small company as for a large.


How to Be a Fierce Competitor

How to Be a Fierce Competitor:
While you are busy being friendly, your competitors are racking up wins. Learn these simple rules to erase them from the game.
It sounds cynical to say that every day is a competition, but like it or not, now more than ever, it's true. Job seekers aggressively compete for a few positions, employees compete for promotion and recognition, and executives and entrepreneurs fiercely compete for resources, talent, and market share. Every day, everyone gets up and enters the ring. A small number of people are better prepared than others. They are generally the winners, the gladiators, the lions. Most other people go into battle unexpectedly, armed with just their wits and without a clear picture of the rules of battle. These poor souls are sadly doomed to a work life of disappointment and mediocrity.
You don't have to be lion fodder. Here is my gladiator guide of six simple rules that will make you as fierce a competitor as any opponent in the ring.
1. Respect Your Opponents
Hubris will surely get you killed in the ring. Dismissal and disparagement of your competitors will only keep you from identifying and addressing your weaknesses. Always assume that your competitors are smarter, better, and more creative. This way, the pressure is on them to meet expectations, and a victory elevates your position. Who cares if you trounce a weakling? The world is much more impressed if you, as David, take down Goliath.
2. Push Yourself Creatively
Often days are so busy that it's tough to find time and energy to think outside the box. In fact, most people try and create routine to make their job easier. If only your competitors were doing the same. You can beat them by dedicating time and energy every week to creative exploration of your current products and process. Learn how to deconstruct an idea or the status quo, and you'll constantly come up with new and exciting ways to impress those around you. If you need some guidance, contact me, and I will send you my soon-to-be-released e-book of Competitive Creativity Exercises for teams and individuals.
3. Pursue an Awesome Experience
Business lions feast on mediocrity. If you simply strive for good or good enough, you will be quickly consumed by the competition. Being great simply allows you to stay in the game with the other great competitors. You need to strive to create the Awesome Experience. Simply put, you must meet the need, do it in an entertaining way, and gain attention with the unexpected by surprising your world in a relevant way.
4. Use All Available Resources
Who goes to battle supported by an empty armory? Losers, that's who! Make no mistake, this is war, and you need every resource you have to win. That means the knowledge you have in your head is probably insufficient to win. Look around; there are online resources that can help train and prepare you to be battle ready. All you have to do is proactively explore. There are people who can help you learn and connect with other powerful people who can give you a major competitive advantage. All you have to do is ask. Don't be an unprepared force of one. Build a well-trained army to snuff out the competition.
5. Put Your Ego in Your Wallet, Where It Belongs
There is nothing wrong with being proud of the ideas you generate, but just because you love your concepts doesn't mean they will work. Be self-critical, and be open to criticism from others. Don't get emotionally attached to new ideas or stake your reputation on them. Be ready to happily walk away from seemingly good ideas that won't generate maximum profits. That way, you'll always strive for improvement and inspire your team to do the same.
6. Play to Win
In business, survival is not an admirable or desirable goal. Winning consistently in competition requires a clear strategy and near flawless execution. You can't just rely on raw talent. You must give time and thought to all aspects of the game and constantly adjust to gain advantage. There is little room for niceties that don't create competitive advantage in some manner. Don't hold back on your efforts. This is not the venue for conservatism. Be strong. Be prepared. Be bold!






Senin, 08 Oktober 2012

Why Good Products Don't Equal Success

Why Good Products Don't Equal Success:
Andrew Strube, inventor of Strube Stink Bug Traps, is an example of why you need a sound business model, not just a well-designed product, to create growth.
Budding entrepreneur Andrew Strube had a stinky problem, so he wrote to us about it:
"What do you do when you're an accidental entrepreneur and your idea is worth so much that several multimillion-dollar corporations jumped in and start designing around your concept before you ever have a chance to follow a business model? This has happened to me recently... I accidentally moved into a house that was inundated with stink bugs in 2009. After not being able to find a solution to stop the problem , I invented one... I am credited for inventing the world's first indoor stink buglight trap (www.stinkbugtrapsonline.com). [After some positive media attention], orders started pouring in from around the country for our stink bug traps. In two months we took in almost $100,000 in sales [but sales have been flat ever since].
If I had to pinpoint the biggest problem it would have to be that I did not have any time at all to plan a business model...It would be nice to find someone to help me build the business...I have tried to pitch to some of the biggest companies but I think maybe our financial status has held us back from any big deals."
Strube's problem is a classic one that stymies many first-time entrepreneurs. They have a good product and solid customer demand from a proven market. Strube says he has a better product, which is patented, and his market is large. But corporate competitors are taking all the market share with what he feels is an inferior product, and this makes him mad.
Instead of getting mad, Strube should get even. All CEOs who seek to build a growing business need to ensure that they have a solid, logical business model, one that an investor or a corporation would want to invest in or partner with. As a lone entrepreneur, you have limited ability to compete, so you need to build the components of a business model that will make your product a success.
Alex Osterwalder identifies nine elements of a successful business model:
1. Customer Segments
For whom are we creating value?
2. Customer Relationships
What type of relationships do we need?
3. Channels
Through which channels do our customers want to be reached?
4. Value Propositions
What value do we deliver to the customer?
5. Key Activities
What activities does our value proposition require?
6. Key Resources
What resources does our value proposition require?
7. Key Partners
Who are our key partners?
8. Revenue Streams
What value are we adding to customers and what are they willing to pay?
9. Cost Structure
What are the necessary costs in our business model?
    Given that Strube has limited resources and a product with the potential to grow quickly, his best bet is probably to find a strategic partner that can build the business model for him. A reputable company in the space that already has manufacturing and distribution partnerships would be ideal. If that's not available, our sense is that he would be best served by partnering with an experienced entrepreneur and/or investor willing to build the business on his behalf.
    Do you have a product or a business model? Send us your thoughts and questions at karlandbill@avondalestrategicpartners.com.


    Adding Value -- By Getting Out of the Business

    Adding Value -- By Getting Out of the Business:
    No one will pay big bucks for your company if they don't believe it can run without you. Here's how to show it can.
    When you started your business, the chances are pretty good that someone handed you a copy of Michael Gerber’s The E-Myth and said, “Read this.” Ever since, you have appreciated the importance of building systems into your business so that it can run without you. But there is another benefit to systematizing your business and documenting your processes: It will help you get paid more when you’re ready to cash out.
    Take, for example, Robert Verdun’s Computerized Facility Integration, LLC (CFI), which has sales of about $20 million a year. Verdun and his team help big companies manage their investments in real estate; clients include Dow Chemical and Pfizer.
    Verdun is not looking to sell, but he was willing to allow me and my colleague, John Duguid, managing director of Gallium Corporate Finance, to look at his company and give him advice about how he could prepare CFI to be sold if and when the time ever comes.
    When we got to know Verdun’s business, we realized just how well Verdun had standardized the squishy business of moving offices. “You don’t just move a person,” says Verdun. “There are many people involved. We have to take into consideration movers, construction, permits, artwork, IT, security, capital planning, and more.” Verdun says his company can save its clients about $300 to $500 for each move it takes on. ”Most big companies move more than 40 percent of their people every year,” he says, “so it adds up quickly.”
    Verdun has cross-trained his staff so that most of his people can do more than one job in the company. That way, in the event of an employee departure, a cross-trained staffer can slip into the open spot, follow the instructions the company provides, and get the work done.
    Not only has this helped Verdun scale his company--which was number 3,052 on the 2011 Inc. 5000 list--but it will also help him get out cleanly when he’s ready to sell. Most service businesses are overly reliant on a couple of key personnel, which is risky for a buyer. When it comes time to sell, most acquirers of service businesses are reluctant to offer a decent multiple upfront. Instead, they prefer to pay the principal(s) the bulk of their money in an “earn out.” This requires the seller to hit certain targets over the next year or two (or even three) in order to get paid for the sale, effectively shifting the risk from the buyer to the seller.
    For example, I know one multinational advertising agency that has a standard formula for acquiring marketing businesses: 10 x earnings, three of which are paid on closing, with the other seven available--potettentially--if the owner(s) hits a series of targets in the future.
    Imagine you’ve worked your entire adult life to build an advertising agency up to a million dollars of EBITDA and a buyer comes along and offers you $10 million for your life’s work; only to take most of it away in the fine print by putting $7 million at risk in what amounts to a potential bonus for three years of your life spent as a middle manager in a multinational conglomerate.
    Most CEOs would rather get paid on closing, which is what Verdun is poised to do when he’s ready to sell. “Assuming CFI’s business systems, processes and key employees stand up to buyer due diligence,” says Gallium’s Duguid, “the necessity of having Robert stay on is significantly reduced, and his mergers and aquisitions advisor would be resisting an earn-out.”
    Yes, your systems will help you scale up, but the hidden reason to focus on systems has nothing to do with running your business. Instead, it has everything to do with being able to make a clean break when you’re ready to hit the eject button.


    Minggu, 07 Oktober 2012

    Kill Your Business Model Before It Kills You

    About a year ago the U.S. Postal Service ran an ad campaign warning about the dangers of email and proposed paper-mail as a safer and more reliable alternative. When I saw this ad, I thought that I had accidentally switched to a comedy station. But it wasn't a joke. This was a serious (and misguided) attempt by the U.S. Postal Service to stay in business.

    Fast forward to last week, when Postmaster General Patrick Donahoe revealed the mail agency will default on its second payment of $5 billion to the US Treasury. Still the agency drags on with its year-old push to end Saturday delivery, the most powerful innovation they can muster — which to be implemented would still take 2 years.

    This vignette raises a key leadership question: Why do leaders wait too long to modify or abandon their business models? The Postal Service, even with the constraints of its government mandate, has known for years that its traditional model was coming apart; Kodak realized that film was being replaced by digital media long before it changed its investment strategy; AOL knew that dial-up subscriptions were fading years before it took action. Even a company as sophisticated as GE waited too long to reorient its lighting business away from incandescent bulbs.

    On the other hand, some firms seem to tackle business model changes head on even before anyone else realizes there's an issue. When IBM sold its PC division to Lenovo in 2005, many people questioned the wisdom of divesting a successful business, especially one that IBM had worked so hard to create.

    Yet in retrospect it was far better to exit early rather than struggle (as Dell and HP have) with pricing pressures, commoditization, and supply chain issues. Similarly, Intuit realized over a decade ago that it could not continue to grow as simply a financial software firm and began to consciously create, acquire, and incubate new businesses. These businesses now make up more than half the company.

    Of course, none of these shifts are easy. IBM's stock (and reputation) did not take off immediately, and many people questioned the wisdom of becoming a services and knowledge business. Intuit had many failures as part of their innovation process. Yet leaders of both companies persevered despite these headwinds, setbacks, and challenges.

    From these cases, and others over the years, it seems to me that there are two keys for getting ahead of the business model curve, both of which apply to managers at all levels:

    First is to remember that no business model lasts forever. The most dangerous trap that any manager can fall into is complacency. Peter Drucker reportedly once said that the biggest curse for any business was twenty years of success. Markets, environments, and technology can change so quickly that no amount of profit today guarantees success tomorrow.

    Years ago, during the dot-com boom, Jack Welch required each of his businesses to go through an exercise that he called "Destroy Your Business.com" in which he asked them how dot.com competitors could possibly put them out of business. In other words, long-term success is more likely when we welcome the anxiety of competition instead of avoiding it.

    The second key is to continually and actively be on the lookout for new business opportunities that can potentially replace the current model. If you only invest in refining today's business model you'll get locked into it. Testing, incubating, and investing in alternative models hedges against that possibility. Sure there will be failures, but with enough persistence and creativity, some viable alternatives will emerge.

    Nobody wants to be in the position of the U.S. Postal Service, trying to defend a business model that has little runway left. So instead of assuming that it can't happen to your business, take the lead in looking for alternatives — long before the competition leaves you in the dust.


    Ron Ashkenas
    Ron Ashkenas is a managing partner of Schaffer Consulting and a co-author of The GE Work-Out and The Boundaryless Organization. His latest book is Simply Effective.

    Senin, 01 Oktober 2012

    When to Grow and When to Cut

    When to Grow and When to Cut:
    Companies need to be strategic about growth investments as well as strategic expense reductions. The timing of each is not always obvious.
    Economic conditions often drive growing companies to invest on the upswing and cut on the downturn. But for the best-run companies, deciding to turn on and off growth investment is much more of a pinpoint approach than a blunt tool. In some cases, it makes more sense to cut investment in relatively good times and or sustain investment in bad times.
    One of our clients, a large enterprise technology provider, decided it needed to continue growth investment through the Great Recession of 2008-2010. They were fortunate enough to build up a significant cash position prior to the downturn, which gave them more options than most companies. Their market was negatively affected by the downturn in corporate technology spend during the recession, but they saw the opportunity to invest into the economic headwinds because their offering gave customers significant cost savings relative to competitive products. They had a chance to gain share while their competitors were struggling.
    Another company we work with is going through some strategic cuts despite participating in a growing market. They've realized that their market has become more competitive and less profitable as it has matured. Most of their mainstream business is commoditized and the client has realized that they don't offer much of an advantage relative to their competitors.
    However, in a smaller, more specialized segment of their business, they have an opportunity to make significant profits because they can offer something much more attractive than competitors. So they are cutting investment in their mainstream business while investing to significantly grow their specialized business. This will result in overall profitability growth, despite lower revenue.
    Even though most businesses follow the simple rule of grow in good economies and cut in bad economies, we prefer the following approach:
    Invest for growth when:
    • You have access to growth capital
    • You know you can create significant return on investment from investing that capital in the business--i.e., the investment will more than pay for itself in the future
    • You have the opportunity to improve your competitive position in a specific market--either by enhancing your customer offer or improving your cost position -to create higher share or profitability in the future
    Cut investment when:
    • You don't see a clear return- i.e., you'd make just as much money or more on less revenue or there's no clear future benefit from the investment
    • You see an opportunity from focusing on a limited segment of your market
    • You believe that improving your profitability in the short term will better position you to invest for growth in the longer term
    The mistake many growth businesses make is to believe that gaining market share is always good. Every business has profitable segments and unprofitable segments. Almost always, the most profitable segments are ones where the company is offering its customers a distinctive, advantaged offering. These are the areas that businesses can invest to fuel growth over the long term.
    Send us your comments and questions on where to invest for growth. We can be reached at karlandbill@avondalestrategicpartners.com.


    Kamis, 27 September 2012

    Why Good Products Don't Equal Success

    Why Good Products Don't Equal Success:

    Andrew Strube, inventor of Strube Stink Bug Traps, is an example of why you need a sound business model, not just a well-designed product, to create growth.

    Budding entrepreneur Andrew Strube had a stinky problem, so he wrote to us about it:

    "What do you do when you're an accidental entrepreneur and your idea is worth so much that several multimillion-dollar corporations jumped in and start designing around your concept before you ever have a chance to follow a business model? This has happened to me recently... I accidentally moved into a house that was inundated with stink bugs in 2009. After not being able to find a solution to stop the problem , I invented one... I am credited for inventing the world's first indoor stink buglight trap (www.stinkbugtrapsonline.com). [After some positive media attention], orders started pouring in from around the country for our stink bug traps. In two months we took in almost $100,000 in sales [but sales have been flat ever since].

    If I had to pinpoint the biggest problem it would have to be that I did not have any time at all to plan a business model...It would be nice to find someone to help me build the business...I have tried to pitch to some of the biggest companies but I think maybe our financial status has held us back from any big deals."

    Strube's problem is a classic one that stymies many first-time entrepreneurs. They have a good product and solid customer demand from a proven market. Strube says he has a better product, which is patented, and his market is large. But corporate competitors are taking all the market share with what he feels is an inferior product, and this makes him mad.

    Instead of getting mad, Strube should get even. All CEOs who seek to build a growing business need to ensure that they have a solid, logical business model, one that an investor or a corporation would want to invest in or partner with. As a lone entrepreneur, you have limited ability to compete, so you need to build the components of a business model that will make your product a success.

    Alex Osterwalder identifies nine elements of a successful business model:

    1. Customer Segments

    For whom are we creating value?

    2. Customer Relationships

    What type of relationships do we need?

    3. Channels

    Through which channels do our customers want to be reached?

    4. Value Propositions

    What value do we deliver to the customer?

    5. Key Activities

    What activities does our value proposition require?

    6. Key Resources

    What resources does our value proposition require?

    7. Key Partners

    Who are our key partners?

    8. Revenue Streams

    What value are we adding to customers and what are they willing to pay?

    9. Cost Structure

    What are the necessary costs in our business model?

      Given that Strube has limited resources and a product with the potential to grow quickly, his best bet is probably to find a strategic partner that can build the business model for him. A reputable company in the space that already has manufacturing and distribution partnerships would be ideal. If that's not available, our sense is that he would be best served by partnering with an experienced entrepreneur and/or investor willing to build the business on his behalf.

      Do you have a product or a business model? Send us your thoughts and questions at karlandbill@avondalestrategicpartners.com.