Business Ownership and Management
Commentary on an HBR article about Start-ups & Entrepreneurship
A friend posted this article on LinkedIn.com. Due to character limitations for comments, I decided to post my response here. Below is a link to the article referenced: https://hbr.org/2019/07/building-a-startup-that-will-last
The article is interesting, but emphasizing “second and third acts” assumes that the start-up will successfully navigate the first act. Even with addressing what the author views as key points this is still a very big assumption. The reasons for Longevity and Success are far more complex and multi-dimensional, but it highlights some of the more important areas of focus.
Long-term success requires several things: The right combination of having a unique goal that has the potential to make a big impact (think “No software” from Salesforce.com); Innovative ideas to achieve that goal; A diverse team to build the product (a mix of visionaries, insightful “translators,” technical experts, designers, planners, adept doers, etc.); Very good sales / business development / marketing to describe a better way of doing things and converting that to new business; and ultimately a management team focused on sustainable and scalable growth.
The point about the need to “Articulate a value framework oriented toward societal impact, not just financial achievement” seems superficial and too tactical.
First, there are unintended consequences to most new technologies. Social Media is a recent example, but Genetic Editing and AI are two areas that are likely to provide more examples over the next decade. Not every societal impact will be positive, and having a negative impact could very well lead to the untimely demise of that company.
Second, the two ideas (societal impact and financial achievement) are not mutually exclusive. When I owned my consulting company, we aimed to fund $1M of medical research to find a cure for Arthritis. We allocated half of our net profits to this goal. Every employee was on board with this because there was a tangible example of why it mattered (my daughter). We invested $500K and helped launch a few careers for some brilliant MD/Ph. Ds and at least one national protocol came out of their research.
Mission and Vision are important to a company, yet many fail to view this as anything more than a marketing effort. Those companies fail to realize that this is as much to motivate and inspire their employees as it is to grab a prospective customer’s attention. These should be inspirational and aspirational, such as the “BHAG” (Big Hairy Audacious Goals) Collins and Porras wrote about 25 years ago.
Regarding Endurance and the assertion that “…the best businesses are intrinsically aligned with the long-term interests of society,” my take is slightly different. The best businesses are always looking for trends and opportunities in an ever-changing global competitive landscape instead of looking to their competitors and trying to ride on their coattails. Companies with a culture of fostering innovation as a way to learn and grow (Amazon and Google are two great examples) are able to find that intersection of “good business” and “positive societal impact.” It is much more complex than a simple one-dimensional outlook.
But it was a good article to help reframe ideas and assumptions around growth.
Creating Customers for Life (4 minute read)
The goal for any business, regardless of the products you sell or the services you provide, should be maintaining a satisfied customer base that is loyal to your business. The idea is to create a mutually beneficial relationship that motivates people to want to continue working with you despite the availability of competitive products or motivations (e.g., those pushing for a “Corporate Standard” involving another product.)
The best part is that this concept applies to all companies and all Product Life Cycle stages. Whether your company is on a rapid growth trajectory towards ‘Unicorn status,’ your offerings are mature and viewed as ‘less exciting.’ The approach will also help if your products decline and you seek the ‘longest tail’ possible. At each phase, there are credible threats from competitors that seek to grow through the erosion of your business.
Several years ago, I was responsible for two product lines in two major geographic regions (Americas and APAC/Japan). Our attrition rate (“churn”) was traditionally slightly below the industry average. We began seeing an increase in churn and a corresponding decrease in organic growth. Both were indicators that something needed to change.
After discussing tactical approaches to address this, our small leadership team agreed that this was a strategic issue we needed to address. The result was an understanding that we needed to create ‘Customers for Life.’ Everyone agreed with the concept, but due to various differences (culture, who our customer was – end customer vs. channel partner, buying patterns, etc.), we agreed to try what was best for each of our regional businesses and share the results and lessons learned.
My approach focused on developing strong relationships that fostered collaboration and ultimately led to growth and success for both parties. The basic premise was simple:
- People tend to buy from people they like, respect, and trust. Become one of those people for your customers.
- Helping companies achieve better business outcomes leads to greater success for our customers and us.
How did we do it? It was a systematic process that my team used that included the following:
- Develop simple profiles for each customer (e.g., products used, date of first purchase, size of footprint, usage and payment trends, industry).
- An optimal size – based on the size of the product footprint, annual amount spent with us, or size of the company- was used to prioritize companies and organizations with the most significant potential impact.
- Make contact multiple times yearly, not just when you want money.
- These “out of cycle” contacts became very important.
- Ask questions about key initiatives, milestones, and concerns.
- We documented the responses, which helped seed following conversations and demonstrate a genuine interest in what they were doing.
- Follow-up!
- Request meetings to understand how they use our products and get a brief update on what our company has been doing.
- Meeting people face-to-face is always good.
- Learning more about their business, systems, goals, and challenges created opportunities to add value and become more of a partner in success with that customer.
- Look at what they were doing with our products and offer suggestions to do more, do something better or more efficiently, call out potential problems and offer suggestions, and discuss best practices. Often, we would have a technical expert follow up and provide an hour or two of free assistance relating to those findings.
- Look for opportunities to congratulate them.
- It demonstrates that they are important enough that you are paying attention. Google Alerts made this easy.
- Regularly ask our customers if there is anything that we could do to help them.
- They would often reciprocate, leading to increased references and referrals.
- Continuous Improvement – Analyze the results and refine the process as needed on an ongoing basis.
Before the meeting, we would spend an hour or two researching the company, its history, and significant events for it and within its industry, and identify its top 2-3 competitors. My consulting background came in handy as I “looked between the lines” to better understand the situation as we planned the meeting, focusing on what we wanted to walk away with and what we wanted the customer to walk away with from that meeting.
As we met with our Customers and Channel Partners, we would explain what ‘Customer for Life’ meant to us and the potential benefits to them. Before the meeting, we would check to see if we had (or they wanted) an NDA so they could speak freely and with confidence. Trust was important. The information disclosed would help us understand their situation, and we would map this against other customers in search of actionable trends. Showing interest and understanding created credibility. Asking relevant questions allowed conversations to progress to substantive issues in less time. From there, we focused on specific points that would positively impact that customer.
Over the course of two years, my team and I helped our customers innovate by providing different perspectives and ideas, modernizing (e.g., moving to spatial analytics to get a more granular understanding of their own business, cloud-enable their systems to increase responsiveness to their business and often control costs), improve their systems and grow their businesses, and more. We also received feedback that helped us improve our products and a variety of processes – something that benefitted all customers. Occasionally, we learned about problems they were having. We took ownership of the issue, brought in the right people, and helped the customer find a resolution. Collaboration and success created strong relationships with many customers – especially in the segment with the largest customers and companies.
From a business perspective, our customer churn decreased by 50% over the same period, and organic growth increased slightly more than 20%. We had achieved our objectives and improved our bottom line. The concepts behind Strategic Account Management, Voice of the Customer, Customer Experience, Customer Loyalty, and Customer Success had blended into a manageable practical approach and provided a great ROI.
One of my biggest lessons learned was that adopting this mindset and creating a repeatable process should be started sooner rather than later.
Every day you are not creating your own ‘Customers for Life,’ there is a good chance that your competition is. Don’t let that happen to your business.
Edit: Added category and tags
Good Article on Being an Entrepreneur
Nearly every morning, I start the day out by reviewing news on business, technology, and finance / markets. Occasionally there is a general interest article that I stumble across. Today it was a short article about Curt Culver, Co-Founder of Culver’s Restaurants.
Several great points seem like common sense in hindsight but are often well out of focus during the “heat of the battle” as you build your business. Mr. Culver touches several of them:
- The Importance of having the proper Work / Life Balance
- For me personally, this was one of the toughest aspects of growing my business. I worked 100+ hours a week, traveled at least 50% of the time, and was often “not there,” even when spending time with my family.
- My habits also set the expectations for others on the team, and I later realized that this also created some strife at home for them.
- The turning point for me was when my youngest daughter, then 4 years old, told her twin brother and older sister, “Daddy really does love us; he just works all the time so that we can live here and have all of this stuff.” It was painful enough to hear that, but it was a wake-up call about what is really important in life – people (especially family and friends), not “stuff.”
- For me personally, this was one of the toughest aspects of growing my business. I worked 100+ hours a week, traveled at least 50% of the time, and was often “not there,” even when spending time with my family.
- The Need to Develop others on your Team
- From past experiences, I understood the need to hire the best people you could afford – people with complementary skills (not just clones of yourself) and who were better than you in at least one aspect. That diversity added value, while the similarities made it easier to “get on the same page” quickly. From there, it was important to understand their goals and work together on career planning early – something that adds value to both parties.
- One of my goals in developing my team was to have everyone understand the big picture and empower them to make good decisions for the business.
- While most of this occurred, my goal was to have each and every person think and act like owners of the business. That level of engagement and accountability only happened with my most senior person, who was also my first hire and owned a small part of the company.
- The moment when I recognized success was during a mission-critical ERP system upgrade for our largest customer – a multi-billion dollar semiconductor reseller. I sat in on project and team meetings, reviewed reports, and asked a few questions, but that was it. It was a very proud and empowering moment for me.
- The weekend of the pre-migration test, I received a call telling me that everything had been successful and that the migration was going forward the next weekend.
- The following weekend I received a nightly summary email, and on Sunday afternoon received a call telling me that the new system was operational and supporting production with ease.
- Culture
- Mr. Culver states, “Culture is all about people.” From my perspective, that is mostly true, but there are other important dimensions of culture based on my experiences.
- To me, the Cultural Identity of your company starts out as something aspirational and later grows into the glue that bonds every member of your team. It helps bring out the best in everyone, including the camaraderie and support from working with people you like and trust.
- There were two unexpected consequences of actively focusing on culture, which were:
- We quickly transformed into a High-Performance Organization. Everyone pushed to continuously “raise the bar.” There was healthy competition between people, but each team member was a “safety net” for others. Having the team win was far more important than winning as an individual.
- New Hires that were not a good fit recognized that very quickly and usually quit within the first 2-3 weeks. I only had to terminate one person who wasn’t a good fit during the probationary period.
- There were two unexpected consequences of actively focusing on culture, which were:
- Having a Support System
- Mr. Culver addresses failure and the importance of family to help support you in times of need.
- One of the biggest lessons I learned was that nothing that I did or accomplished with my company would have been possible without the support of my wife, children, parents, and in-laws (the latter two providing financial support during the early years in times of need).
- With understanding comes humility.
These are lessons learned that can be applied to any size organization and in my opinion, are a great investment in the future growth, value, and longevity of your company.
Non-Linear Thought Process and a Message for my Children
I have recently been investigating and visiting universities with my eldest daughter, a Senior in High School. Last week we visited Stanford University (an amazing experience) and spent a week in Northern California on vacation. After being home for a day and a half, I am in Texas for a week of team meetings and training.
On the first night of a trip, I seldom sleep, so I listened to the song “Don’t Let It Bring You Down” by Annie Lennox, a cover of a Neil Young song. That led to a YouTube search for the original Neil Young version, which led to me listening to “Old Man” – a favorite song of mine for over 30 years. That led to some reflection which ultimately led to this post.
I mention this because it is an example of the nonlinear or divergent thought process (generally viewed as a negative trait) that occurs naturally for me. It helps me “connect the dots” faster and more naturally. It is a manner of thinking associated with ADHD (again, something generally viewed as negative). The interesting thing is that to fit in and succeed with ADHD, you tend to develop logical systems for focus and consistency. That has many positive benefits for me – such as systemic thinking, creating repeatable processes, and automation.
The combination of linear and non-linear thinking can really fuel creativity. The downside is that it can take quite a while for others to see the potential of your ideas, which can be extremely frustrating. But, you learn to communicate better and deal with the fact that ideas can be difficult to grasp. The upside is that you tend to create relationships with other innovators because they think like you, making you relatable and interesting to them. The world is a strange place.
It is funny how there are several points in your life when you have an epiphany, and things suddenly make complete sense. That causes you to realize how much time and effort could have been saved if you had only been able to figure something out sooner. As a parent, I always try to identify and create learning shortcuts for my children so they reach those points much sooner than I did.
I started this post thinking that I would document as many of those lessons as possible to serve as a future reminder and possibly help others. Instead, I decided to post a few things I view as foundational truisms in life that could help foster that personal growth process. So, here goes…
- Always work hard to be the best, but never let yourself believe you are the best. Even if you truly are, it will be short-lived, as there are always people doing everything they can to be the best. Ultimately, that is a good thing. You need to have enough of an ego to test the limits and capabilities of things, but not one that is so big that it alienates or marginalizes those around you.
- Learn from everything you do – good and bad. Continuous improvement is so important. By focusing on this, you constantly challenge yourself to try new things and find better (i.e., more effective, more efficient, and more consistent) ways to do things.
- Realize that the difference between a brilliant and a stupid idea is often perspective. Years ago, I taught technical courses, and occasionally someone would describe something they did that seemed strange or wrong. But, if you asked questions and tried to understand why they did what they did, you would often identify the brilliance in that approach. It is something that is both exciting and humbling.
- Incorporating new approaches or the best practices of others into your own proven methods and processes is part of continuous improvement, but it only works if you can set aside your ego and keep an open mind.
- Believe in yourself, even when others don’t share that belief. Remain open to feedback and constructive criticism as a way to learn and improve, but never give up on yourself. There is a huge but sometimes subtle difference between confidence and arrogance, and that line is often drawn at the point where you can accept that you might be wrong or that there might be a better way to do something. Become the person people like working with and not the person they avoid or want to see fail.
- Surround yourself with the best people that you can find. Look for people with diverse backgrounds and complementary skills. The best teams I have ever been involved with consisted of high achievers who constantly raised the bar for each other while simultaneously creating a safety net for their teammates. Those teams grew and did amazing things because everyone was very competitive and supportive of each other.
- Keep notes or a journal because good ideas are often fleeting and hard to recall. Remember, good ideas can come from anywhere, so keep track of the suggestions of others and make sure that you attribute those ideas to the proper source.
- Try to make a difference in the world. Try to leave everything you “touch” (job, relationship, project, whatever) in a better state than before you were there. Helping others improve and leading by example are two simple ways of making a difference.
- Accept that failure is a natural obstacle on your path to success. You are not trying hard enough if you never fail. But you are also not trying hard enough if you fail too often. That is very subjective, and honest introspection is your best gauge. Be accountable, accept responsibility, document the lessons learned, and move on.
- Dream big, and use that as motivation to learn new things. While I funded medical research, I learned about genetics, genomics, and biology. That expanded to interests in nanotechnology, artificial intelligence, machine learning, neural networks, and interfaces such as natural language and non-verbal / emotional. Someday I hope to tie these together to help cure a disease (Arthritis) and improve the quality of life for millions of people. Will that ever happen? I don’t know, but I do know that if I don’t try, it will never happen because of anything I did.
- Focus on the positive, not the negative. Creativity is stifled in environments where fear and blame rule.
- Never hesitate to apologize when you are wrong. This is a sign of strength, not weakness.
- And above all else, honesty and integrity should be the foundation for everything you do and are.
Hopefully, this will help my children become the best people possible, ideally early on in their lives. I was 30 years old before I had a clue about many of these things. Until that point, I was somewhat selfish and focused on winning. Winning and success are good things, but are better when accomplished the right way.
Ideas are sometimes Slippery and Hard to Grasp
I started this blog with the goal of becoming an “idea exchange,” as well as a way to pass along lessons learned to help others. Typical guidance for a blog is to focus on one thing and do it well to develop a following. That is especially important if you want to monetize the blog, but that is not and has not been my goal.
One of the things that has surprised me is how different the comments and likes are for each post. Feedback from the last post was even more diverse and surprising than usual. It ranged from comments about “Siri vs Google” to feedback about Sci-Fi books and movies to Artificial Intelligence.
I asked a few friends for feedback and received something very insightful (Thanks Jim). He stated that he found the blog interesting but wasn’t sure of the objective. He went on to identify several possible goals for the last post. Strangely enough (or maybe not), his comments mirrored the type of feedback that I received. That pointed out an area for improvement, and I appreciated that as well as the wisdom of focusing on one thing. Who knows, maybe in the future…
This also reminded me of a white paper written 12-13 years ago by someone I used to work with. It was about how Bluetooth would be the “next big thing.” He had read an IEEE paper or something and saw potential for this new technology. His paper provided the example of your toaster and coffee maker communicating so that your breakfast would be ready when you walk into the kitchen in the morning.
At that time, I had a couple of thoughts. Who cared about something that only had a 20-30-foot range when WiFi had become popular and had a much greater range? In addition, a couple of years earlier, I had a tour of the Microsoft “House of the Future,” in which everything was automated and key components communicated. But everything in the house was all hardwired or used WiFi – not Bluetooth. It was easy to dismiss his assertion because it seemed to lack pragmatism. The value of the idea was difficult to quantify, given the use case provided.
Looking back now, I view that white paper as having insight. If it was visionary, he would have come out with the first Bluetooth speakers, car interface, or even phone earpiece and gotten rich, but it failed to present practical use cases that were easy enough to understand yet different enough from what was available at the time to demonstrate the real value of the idea. His expression of idea was not tangible enough and, therefore, too slippery to be easily grasped and valued.
I believe that good ideas sometimes originate where you least expect them. Those ideas are often incremental – seemingly simple and sometimes borderline obvious, often building on another idea or concept. An idea does not need to be unique to be important or valuable, but it needs to be presented in a way that makes it easy to understand the benefits, differentiation, and value. That is just good communication.
One of the things I miss most from when my consulting company was active was the interaction between a couple of key people (Jason and Peter) and myself. Those guys were very good at taking an idea and helping build it out. This worked well because we had some overlapping expertise and experiences as well as skills and perspectives that were more complementary. That diversity increased the depth and breadth of our efforts to develop and extend those ideas by asking the tough questions early and ensuring we could convince each other of the value.
Our discussions were creative, highly collaborative, and a lot of fun. We improved from them, and the outcome was usually viable from a commercial perspective. As a growing and profitable small business, you must constantly innovate to differentiate yourself. Our discussions were driven as much by necessity as intellectual curiosity, and I believe this was part of the magic.
So, back to the last post. I view various technologies as building blocks. Some are foundational, and others are complementary. To me, the key is not viewing those various technologies as competing with each other. Instead, I look for potential value created by integrating them with each other. That may not always be possible and does not always lead to something better, but occasionally it does, so to me, it is a worthwhile exercise. With regard to voice technology, I believe we will see more, better, and smarter applications of it – especially as real-time and AI systems become more complex due to the use of an increasing number of specialized chips, component systems, geospatial technology, and sensors.
While today’s smartphone interfaces would not pass the Turing Test or proposed alternatives, they are an improvement over more simplistic voice translation tools available just a few years ago. Advancement requires the tools to understand context in order to make inferences. This brings you closer to machine learning, and big data (when done right) significantly increases that potential.
Ultimately, this all leads back to Artificial Intelligence (at least in my mind). It’s a big leap from a simple voice translation tool to AI, but it is not such a stretch when viewed as building blocks.
Now think about creating an interface (API) that allows one smart device to communicate with another, like the collaborative efforts described above with my old team. It’s not simply having a front-end device exchanging keywords or queries with a back-end device. Instead, it is two or more devices and/or systems having a “discussion” about what is being requested, looking at what each component “knows,” making inferences based on location and speed, asking clarifying questions and making suggestions, and then finally taking that multi-dimensional understanding of the problem to determine what is really needed.
So, possibly not true AI (yet), but a giant leap forward from what we have today. That would help turn the science fiction of the past into science fact in the near future. The better the understanding and inferences by the smart system, the better the results.
I also believe that the unintended consequence of these new smart systems is that they will likely make errors or have biases like a human as they become more human-like in their approach. Hopefully, those smart systems will be able to automatically back-test recommendations to validate and minimize errors. If they are intelligent enough to monitor results and suggest corrective actions when they determine that the recommendation does not have the optimal desired results, they would become even “smarter.” There won’t be an ego creating a distortion filter about the approach or the results. Or maybe there will…
Many of the building blocks required to create these new systems are available today. But it takes vision and insight to see that potential, translate ideas from slippery and abstract to tangible and purposeful, and then start building something cool and useful. As that happens, we will see a paradigm shift in how we interact with computers and how they interact with us. It will become more interactive and intuitive. That will lead us to the systematic integration that I wrote about in a big data / nanotechnology post.
So, what is the real objective of my blog? To get people thinking about things differently, to foster collaboration and partnerships between businesses and educational institutions to push the limits of technology, and to foster discussion about what others believe the future of computing and smart devices will look like. I’m confident that I will see these types of systems in my lifetime, and I believe in the possibility of this occurring within the next decade.
What are your thoughts?
Where Ideas, Experiences, and Lessons Learned Intersect 