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In a video interview with VC Steve Jurvetson, Elon Musk says he outlined these business opportunities while standing in the shower.
The anchor was fed up to here with her employer. That's a feeling familiar to many entrepreneurs.
Liz Wahl, an American anchor for the Kremlin-funded news outlet Russia Today, is the toast of social media this week after leaving her position live on the air. Wahl said she could no longer justify working for a propoganda outfit during the crisis in the Ukraine.
"I'm proud to be an American and believe in disseminating the truth," Wahl said, "and that is why, after this newscast, I'm resigning."
While they might not have reasons so geopolitical, the idea of quitting a day job is hardly foreign to entrepreneurs. I reached out to members of the Young Entreprenuer Council and Entrepreneurs' Organization for the stories of their "I quit" moments before they took to running their businesses full-time. The following are their lightly-edited responses. The breakups range from angry to amicable to laugh-out-loud funny.Craig Fluty, Pinnacle Recruiting and Staffing
Prior to starting my first staffing firm, I was working for one of the nation’s giants. I got together with one of the other guys in my office and we decided to start our own firm. We talked two of our other friends into joining us, set up an LLC, and we were off.
However, I didn’t quit then. I stayed on with the company while we got the other business going. After a few months we built up enough contracts to move into our first office space, but I still didn’t quit. I managed to pull off the double dip because the nature of my position had me out in the field meeting with clients all day. So I could still hit my numbers at my first company and work with my partners to grow our new company.
One afternoon while I was sitting in my new office with my new partners reviewing a contract we were about to close, there was a knock at the office door. And then in walks one of the other reps from my other company, along with our area director, doing a cold call on our new business.
There I sat caught redhanded and we all just kind of stared at each other trying to figure out what was going on. If I was smooth I would have said that I there doing a cold call when I ran into our old colleague and had stayed to talk. Unfortunately, I was not that smooth. All I could think to do was blurt out, "Ummm hi...I quit!"Ralph Dise, Dise & Company
I started up a new division for my employer. They were paying me on a heavily commissions-based comp plan. Once the business got up and running and I was making significant commissions, they changed my comp to a base plus a bonus that I was to share with three other people who had never sold a thing in their lives.
I was heartbroken. Before joining them, I’d worked for a similar company on straight commission for two years, so I felt that I’d sacrificed a lot to get to where I was at their firm. My wife encouraged me and threatened me to start my own business--or else. Our family calls that the "ultimate ultimatum."Gerard Murphy, Mosaic Storage Systems
The last time I quit my job was after launching my company. I had been running my startup for a couple months while being fully employed. The balancing act was getting harder to keep up. My company was growing and needed my attention, and it was affecting my day job. I was torn. I was honestly scared to make the leap to run my business full-time but didn't like the idea of being distracted at work. So I walked into the CEO's office and told him.
I thought there was a 50/50 chance that he would politely walk me to the exit and mail me my personal items. But luckily, after he got over the initial shock, he said that I should work part-time for him for as long as I could. He wanted me around and the part-time salary would certainly ease the transition to running my own startup.
Turns out my boss's old boss did the same for him when he started his company. It certainly helped that I broke the news to him personally as opposed to him hearing it from someone else. Also, our companies were not competitive. He still checks in on me and I count him as one of my mentors.
How did you leave your last job before launching your company? Tell us in the comments.
Most startups, even those helmed by experienced founders, mistakenly seek funding based on their concepts alone.
The winner gets a cash prize, exposure, and connections to capital sources. I recently spoke to Tina Weber, who runs the contest. I asked: What are the most common mistakes you see every year that undermine entrants--and, likewise, what are the positive traits winners typically share?
Her answer shocked me, given that the entrants typically have business school training or previous startup experience. Most entrants make the mistake of trying to compete based on the strength of their concepts alone. The wiser path--what winners always do--is demonstrate customer demand for the concept.How to Demonstrate Customer Demand
All of which creates a markedly important question: If you're a pre-launch startup, what steps can you take to show that your concept has viable customers? Here are two tips from Weber:
1. Before you build your prototype, build a landing page. A landing page could be as simple as a one-page web site with a "buy" button. This basic online form will allow you to quantify prospective customer interest (based on how many people push the "buy" button). You'll also be able to collect contact information from those prospects, surveying them on not only what they're willing to pay for but also what they're willing to pay. That feedback can help you build your first prototype.
You might be thinking that all of the above is obvious. Who wouldn't try to gauge customer interest, prior to building a prototype? But Weber says that the build-it-first-ask-questions-later approach happens far more often than not.
Of course, building a so-called "minimal viable prototype" or MVP is a key stage in lean startup methodology. In their haste to reach it, many entrepreneurs neglect the crucial step preceding it: Specifying the customer problem that needs to be solved. Which is to say, figuring out precisely what customers will pay for.
Weber told me about one experienced entrepreneur who'd run an online brokerage company for 10 years. "He wanted to build something else, and he said, 'I need $300,000 for the MVP,'" she recalls. He was asking for this sum of money before he performed any customer research. To Weber's mind, it was as if he was building the company before he'd even tried to gauge customer interest. That's a mistake.
Moreover, it's possible to learn from potential customers, even if you don't want to spend money building a landing page. Weber worked with one group of founders who went to colleges and stood in front of dorm rooms, interviewing a few hundred students, and persuading them to sign up to receive an email. It was old-school market research, in other words. But it was something tangible.
2. Respond to what you learn from customers. Think of this as the process of finding your niche. And embrace the notion that your initial niche will be smaller than your product's eventual niche.
For example, the winner of last year's contest, Avalanche Energy, developed a new way to collect solar energy that doesn't involve photovoltaic sells. Their device is the size of a satellite dish. Their potential niche--anyone who pays an energy bill--was massive.
Their breakthrough, after performing their customer research, was to fine-tune their offering. They recongized that the specific, most immediate problem they could solve for customers was saving them money on their home hot water heating bills. So they positioned their product as an easy-to-install roof-based device that works with existing hot water tanks.
They did this, even though their product has the potential--with an upgrade--to go one step further and generate electricity, using a slim micro-turbine. The reason? They'd discovered it was much easier to get homeowners to push "buy" on a simpler, more affordable initial investment. "They spoke to customers before going to their MVP," notes Weber.
Another way to look at this, she points out, is that patenting a product can cost upwards of $10,000, considering all of the consultations and billable hours it involves. Before spending on a patent to protect an MVP, wouldn't it be wiser to validate that MVP with potential customers? Or to have customers who've testified that they'd happily pay for such a product, once it becomes available?
The bottom line is, you can't develop your idea in a vacuum, tempting though it can be. "A lot of entrepreneurs are protective of their ideas in the beginning, and they don't want to show it to the world unless it's perfect," says Weber.
"But you really need to break it down--and shop it around--in a way that gives you proof."
Here are three tips from companies that saw their campaigns off to a runaway start.
Ideally, you want contributions to your first crowdfunding campaign to take off like a snowball falling downhill. What's not so obvious is just how crucial the first few hours, even minutes, of the campaign are to getting that momentum going.
Scanadu, which developed a mobile health device to measure vital signs, reached its total funding goal of $100,000 within an hour of opening its campaign last year. By the time the team showed up for work at 9 am that day, they had doubled their objective. At the end of the 30 days that the campaign ran, the company raised a total of $1.6 million -- a record on the crowdfunding site Indiegogo.
"We often encourage campaign owners to raise about a third of their campaign goal in the first 24/48 hours after going live," Breanna DiGiammarino, cause director at Indiegogo, said. She spoke this week before an audience of about 100 at a local HealthTech women Meetup in San Francisco.
While Scanadu clearly had no issues meeting and then exceeding the recommendation, you're certainly in good company if you find this idea daunting.
The good news is, you're not expected to just hit "start" and automatically acquire thousands of campaign supporters. There are a variety of tactics you can use to ensure that you're off and running upon launch. Scanadu Cofounder Sam De Brouwer and other campaign organizers were on hand to share their tips at the meetup. Here's what they suggested:
1. Roundup local supporters and show them a good time. Striving to hit that one-third mark early, concierge medicine startup PlushCare threw a party the night its campaign launched.
"We had booze and food and there were people there that just started contributing -- friends, family. I think that night we hit 15 percent of our goal," PlushCare Cofounder Ryan McQuaid said.
"If people showed up the next day there was no money raised, we probably wouldn't have gotten much," McQuaid added. PlushCare's campaign, still going on now, has about $3,000 of its $25,000 goal left to raise.
2. Design perk offerings with early adopters in mind. Scanadu had the benefit of being a one and a half year old company when it launched its campaign last May. De Brouwer already knew her potential customers and what they were most likely to get excited about. She designed her perk offerings, or rewards for those who contribute a certain amount of money, with that in mind, she said.
For example, the earliest fans of the company were on Scanadu's mailing list. De Brouwer emailed them about three minutes before the campaign went live, and they received the chance claim a Scanadu Scout device for an early bird rate of $149. Within an hour the special had sold out.
Next, De Brouwer designed a package for the quantified self community. "Those are data freaks, they want to try everything," she said. As part of the perk system, she promised quantified selfers that they'd get access to new Scanadu additional features before anyone else. This perk, too, sold out.
3. Acknowledge that you're asking for help. It's not lost on De Brouwer that the well-planned perk system isn't really what generated the support from Scanadu's fans. Crowdfunding allows customers to show a company just how much they want them to succeed. And with those contributions, funders did Scanadu a huge favor to say the least.
"Never be afraid to ask for help," De Brouwer said, recalling some good advice she'd once gotten. "Because if your project, if your company is worth the help you, will get that help," she said.
Take a little time out of your lunch break to do this activity and you can improve your mental function all afternoon, according to a new study.
Just this week on the Buffer blog, Belle Beth Cooper offered a list of ways to put your lunch break to better use backed by science. She offered productivity-boosting suggestions such as snacking on super foods like avocados and blueberries (and dark chocolate… yum!), napping and stepping out into nature to reset.
But maybe she missed one quick and effective way to make your lunch break work harder for you -- take a quick timeout for yoga.
The idea of engaging in a 20-minute yoga session doesn’t come from Eastern gurus or health nuts, but from a recent study out of the University of Illinois at Urbana-Champaign, and the idea isn’t aimed at staying slim, flexible or more grounded, but instead at boosting brain function afterwards.Better Than Going for a Jog
The researchers recruited 30 volunteers for a head-to-head test comparing a quick yoga session with an equal period of moderate aerobic exercise, another frequently recommended brain booster and one also listed by Cooper. Half of the study participants engaged in one kind of activity, half in the other. When the two groups were tested for mental function afterwards, the yogis fared better.
"It appears that following yoga practice, the participants were better able to focus their mental resources, process information quickly, more accurately and also learn, hold and update pieces of information more effectively than after performing an aerobic exercise bout," lead author Neha Gothe said, according to PsyBlog.
The scientists are still unsure why yoga outperforms standard aerobic exercise, but speculate that the breathing exercises that are part of a yoga practice or the meditative nature of a session might be the key. "Meditation and breathing exercises are known to reduce anxiety and stress, which in turn can improve scores on some cognitive tests," Gothe noted.
Perhaps these effects are the reason a parade of business luminaries from Salesforce’s Mark Benioff to author Keith Ferrazzi are avowed meditators. Studies also indicate that meditation can help entrepreneurs beat biases and make sounder financial decision. Perhaps you could start accessing those benefits with just a 20-minute yoga session during your lunch break today.
The SnapRays Guidelight has taken Kickstarter by storm, drawing $12,000 in only two hours. Here's a page from their playbook.
Few things sound less exciting than watching a video about a night light. But after viewing the clip for the SnapRays Guidelight, which drew $101,000 within the first 29 hours of its Kickstarter campaign, you'll be convinced of its life-changing powers.
The campaign launched Tuesday, drawing $12,000 within its first two hours. But unlike most startups hungry for funding, Snap Power took four months to plot its crowdfunding page.
"We felt if people watched [the video] and understood the product, they would want it," Sean Watkins, a co-founder of Snap Power, the night light maker, and former car insurance salesman, tells Inc. "But we knew it could be tough to make a night light cool and not boring."
Naturally, Watkins credits his success with his stellar product. Designed to resemble and replace traditional electrical outlets, he claims it's energy efficient, safe around kids, and will turn on automatically in the dark. But the real selling point is his video, which shows the Guidelight lighting up when a woman returns home late, tucks in her daughter, or enters a dark bathroom.Secret Ingredients
The original video "just showed applications, like a mom tucking in her daughter," says Watkins. But that wasn't enough to get the point across. "We decided to say, 'Let's get all the night lights and review them, look over the competition. Then we said, 'Let's show why ours is better, why we think it's better, and convey that to the customer.'"
The Snap Power team--that is, Watkins, lawyer Cam Robinson, and inventor Jeremy Smith--also researched other successful Kickstarter campaigns before crafting theirs. "Our goal with the page was to explain to people what the features and benefits of the product were, and to do it in as visual a way as possible," Watkins says.
After filming the video, the trio tapped Robinson's 15-year-old son, Kayden, to extract stills and use them to illustrate every facet of the product, from features to installation to applications. "None of us know what we're doing on the Web, but he's the smartest," says Watkins of his young IT guy. "A lot of the edits on the video, he did."
The FAQs on the page were derived from actual questions asked while presenting the product to prospective investors and partners. "One of the big ones was, 'Does it stay on?'" recalls Watkins. "We went through the questions and decided that we heard the most should be [included in the campaign]."Marketing Magic
Plenty of thought was given to marketing as well. "We knew the first 48 hours is really, really important. So we sat down and created a timeline from Hour 1 to Hour 48 and said what has to happen, what has to go out, and how it's going to be shared on Facebook and Twitter," Watkins says. "We had a game plan when we launched: share on Facebook, tweet, email the press, and make phone calls."
The founders, who've bootstrapped the company for the past two years in Provo, Utah, also listed every blog and media outlet they hoped to appear in (Inc. was among them).
Though he describes the pledge levels as a "shot in the dark," Watkins also did his homework before settling on any. "Our product is very similar to hardwired guide lights," he says, "so we looked at the price of those and thought they ran anywhere between $12 and $50."
But since the Guidelight resembles a plug-in night light, they also examined those prices, which can cost anywhere between $1.50 and $12. "We tried to say, 'We're a much better option, but we want to be affordable and get our product to everybody."
With the campaign in first position on Kickstarter's "Popular" page--out of 134,679 campaigns--it seems they're off to a great start.
After years of remaining anonymous, the inventor of the cryptocurrency was discovered living in a humble Los Angeles County home--hidden in plain sight.
The mysterious man behind Bitcoin is a 64-year-old Japanese-American who lives in Temple City, California, according to Newsweek. He is a model train enthusiast and has done classified engineering work for the U.S. military.
The man's name is Satoshi Nakamoto, the same as the name on the white paper that introduced Bitcoin, which had been widely thought to be a pseudonym for a person or a group of people. During a two-month investigation, Newsweek's Leah McGrath Goodman found that the creator was able to avoid being identified in part because he changed his name decades ago to "Dorian Prentice Satoshi Nakamoto." He now goes by "Dorian S. Nakamoto."
Nakamoto changed his name after graduating from California State Polytechnic University. He worked in a series of engineering positions on both coasts, including doing military projects and a stint for the Federal Aviation Administration in New Jersey after the September 11 terrorist attacks. Following that, he never got another stable job, leaving him free, Goodman suggests, to start working on the digital currency.
Although some Bitcoin enthusiasts, especially on Reddit, are upset that someone would unmask the person who gave them "the gift" of Bitcoin--it is the apprent end of a mystery that lasted for years. Below, read three facts about the elusive Nakamoto.1. He won't admit it.
Goodman reports that when she finally found Nakamoto's home in Southrn California's San Bernardino foothills, he called the police on her. After two officers came, Nakamoto came outside. He didn't give her much information, but did obliquely refer to a former connection with Bitcoin. "I am no longer involved in that and I cannot discuss it," he told Goodman. "It's been turned over to other people. They are in charge of it now. I no longer have any connection."
His two brothers, Tokuo and Arthur Nakamoto, say their brother will probably never admit whether or not he is the creator of Bitcoin. "Dorian can just be paranoid. I cannot get through to him. I don't think he will answer any of these questions to his family truthfully," Tokuo tells Newsweek. "He is very meticulous in what he does, [and] he is very afraid to take himself out into the media."2. He doesn't trust the government.
The chief scientist behind Bitcoin, Gavin Andresen, says he never met Nakamoto or even spoke with him on the phone. Still, he feels like he understood Nakamoto's motivations: "I got the impression that Satoshi was really doing it for political reasons," Andresen tells Newsweek. "He doesn't like the system we have today and wanted a different one that would be more equal. He did not like the notion of banks and bankers getting wealthy just because they hold the keys."
Nakamoto's daughter, Ilene Mitchell, 26, tells Newsweek that her father doesn't trust the government. "He is very wary of government interference in general," she says. "When I was little, there was a game we used to play. He would say, 'Pretend the government agencies are coming after you.' And I would hide in the closet."3. His love of model trains influenced Bitcoin's creation.
Nakamoto has been collecting and building model steam trains since he was a teenager--he started after he and his mother immigrated to California from Beppu, Japan, where, according to Newsweek, he was "brought up poor in the Buddhist tradition by his mother." His second wife, Grace Mitchell, says that he buys most of his trains over the Internet from England. Goodman writes that Mitchell feels Nakamoto's initial interest in building a digital currency was borne from his "frustration with bank fees and high exchange rates when he was sending international wires to England to buy model trains."
But other factors may have influenced him to build Bitcoin as well. After being laid off twice in the 1990s, Nakamoto fell behind on mortgage payments and taxes, which resulted in his family's home being foreclosed. His daughter Ilene says that may have given rise to his suspicious attitude towards the government and banks. Today, Nakamoto reportedly is holding on to an estimated $400 million worth of Bitcoin.
With Square and others getting into the business of merchant cash advances, the industry's rates--often in the triple-digits--could tumble.
Square's not offering plain vanilla small business loans. With Square Capital, the San Francisco-based company is offering a more controversial product, called a merchant cash advance. In a merchant cash advance, the financier buys a portion of your future revenues--but at a discount. Technically, it's not a loan, and you're paying fees as opposed to interest. A Square spokesperson declined to comment on the specifics of the program.
Merchant cash advances have been around for a while, but they got a lot more attention after the financial crisis, when more companies started offering them. With banks reluctant to loan to small companies, merchant cash advances--along with other tools such as invoice financing and factoring--became one of the few ways small companies could get working capital.
Interest rates for merchant cash advances can be astronomical, sometimes reaching triple digits. The financing is somewhat risky, the time period of the cash advances tends to be very short, and the transactions aren't governed by usury laws.
Square's offering highlights just how tricky it is to evaluate merchant cash advances. Say you need $7,300. In an example cited by The Information, Square would require you to pay back the $7,300 plus a $1,022 fee. Yes, that $1,022 works out to 14 percent. But it's not a 14 percent annual rate, because there appears to be no fixed time period in which the loan needs to be repaid. Instead, in the example, every time you receive a credit card payment from a customer, Square will take 10 percent of it. If it takes you a year to pay back Square, then yes, you've paid a 14 percent annual interest rate.
Alternativley, say that right after you get the cash advance, your business takes off. Square is still taking 10 percent of each transaction, but now you manage to pay the loan off in only two months. That sounds great, right? But because you paid the whole thing in two months, your equivalent annual percentage rate is now more than 84 percent. That sounds horrible.Defending the markup
At OnDeck Capital, another company that offers short-term cash to business owners, CEO Noah Breslow says that annual percentage rates average 56 percent. He says that business owners don't look at interest rates--they care about the bite each payment takes out of their cash flow. Plus, the amount his company charges is part of what allows it to make small loans in the first place.
OnDeck has built technology that helps it make loan decisions in just a few hours. Amounts under $35,000 can be approved in just a few minutes. That's something business owners care about, says Breslow, and it costs money to develop and implement those tools. Breslow says that as loan volume grows, rates will naturally come down.
Marco Lucioni, CEO of California microlender Opportunity Fund, agrees that rates are headed down. But he says it has nothing to do with loan volume. Instead, he says, it's about competition between lenders, which is increasing rapidly. Opportunity Fund has built an online lending engine too, but it doesn't make on-the-spot lending decisions. It takes about a week to get a loan (in the case of Opportunity Fund, the transaction is technically a loan), and Lucioni wants one of his lending officers to visit each business. As a nonprofit, Opportunity Fund built its technology with grant money, not venture capital. It's not under pressure to bring home tenfold returns.
Opportunity Fund is charging between 15 and 20 percent for loans through its platform. Compared to its competitors, that's low. Lucioni doesn't think he'll be that much of an outlier forever. Eventually, as the industry matures and it becomes easier for businesses to comparison shop for short-term money, he says rates will come down.
"Between 25 percent and 35 percent, including fees, is where it eventually comes in," Lucioni says. "That's doable in any state in the country. Those are rates any regulator will be able to stomach. It will take a while to get there." He declines to comment on what the range might be for a fair price on such a loan at this time. Cleverly, that's a debate Square is managing to stay out of, too--at least for now.
Turning around any company, especially one as big as Yahoo, takes time.
A recently-hired executive might be frustrated if their initial changes aren't felt right away. Over in Silicon Valley, one high-profile company might serve as a useful case study in showing that turnarounds don't happen overnight.
Earlier this week, Yahoo CFO Ken Goldman spoke at an investor conference in San Francisco and told the audience that the company is in much better shape from a cultural and talent management perspective than it has been in some time.
"(CEO Marissa Mayer) deserves the credit relative to changing the attitude and morale and the desire, if you will, to…attract new folks as well as to retain folks we have,” Goldman said, according to Quartz. "So I think--I’m very confident. If you talk to anybody at Yahoo today you would find them, whether they’ve been here for a year or five years, they’re very, very pleased with what they see in working at Yahoo. I’m absolutely, very confident in that relative to attrition and our ability to hire all points to that."Sorting Things Out
Goldman is biased by his position at Yahoo, of course, and his words invite even more skepticism when considering that he was speaking to an audience of investors. But let's give him the benefit of the doubt and say things are cheery at Yahoo these days.
If so, it's fitting to hear about it just over a year after Mayer's most attention-grabbing move as CEO: the day she called all employees back to the office. The business world was set alight and asunder with debate and dissent over the decision to remove telecommuting from Yahoo's employee offerings.
The policy was regarded by many as regressive and anti-parent, and by others as ignorant of the company's core issues. On the other side, people felt Yahoo had little to lose and cited company data showing telecommuting employees hadn't signed in to the company's servers in months.
Even in contempt, though, most observers agreed that the decision was a big splashy move for Mayer, who had at the time been at Yahoo's helm for just over half a year. And quick action from new leaders, previous research has shown, is key to that leader's success.
Over the course of 2013, Mayer would lead a massive acquisition spree, highlighted by its big spend for the popular blogging service Tumblr. While Tumblr remains a standalone product, most of Mayer's 37 acquisitions thus far have served to bring talented engineers on-board--an asset that has been sorely lacking from Yahoo as it went from tech industry leader to cautionary tale.How Long Do You Get?
Now, about 20 months into Mayer's tenure, she's seeing results. If Goldman is to be believed, talent is coming into Yahoo, and more importantly it's happy and it's sticking around. If so, it's happening right on schedule.
In today's age, turnaround execs usually get about eight quarters to make their mark (a pretty drastic shift from the 16 quarters leaders were afforded in the pre-Internet era). Mayer's wrapping up her seventh (with a late start on her first, given her mid-July start date in 2012), and she clearly identified Yahoo's people issues as the one to tackle first. If she's largely erradicated them as the company turns its eyes to product and technical issues, then that's a major turnaround accomplishment.
An improved Yahoo culture might have little do with the work from home policy, or even with the acquisitions. That Yahoo still pays pretty well, and that employees seeing a better return on their stock options due to Yahoo's improved market performance, probably doesn't hurt the mood over there. No doubt, employees still much prefer the option to telecommute.
But nearly at the seven-quarter pole, Mayer appears to have solved a major problem. That only means so much if bottom line success doesn't follow. Still, the Yahoo of today is decidedly more marked by Mayer's actions, and so far those actions appear to have had a positive effect. If nothing else, that serves as a reminder that turnarounds take time--and leaders deserve that time to try and make them happen.
Unlike with startups, larger companies' emphasis on execution often stifles innovation.
In the last few years we've recognized that a startup is not a smaller version of a large company. We're now learning that companies are not larger versions of startups.
There's been lots written about how companies need to be more innovative, but very little on what stops them from doing so. Companies looking to be innovative face a conundrum: Every policy and procedure that makes them efficient execution machines stifles innovation.
This first post will describe some of the structural problems companies have; follow-on posts will offer some solutions.
Facing continuous disruption from globalization, China, the Internet, the diminished power of brands, and the changing workforce, existing enterprises are establishing corporate innovation groups. These groups are adapting or adopting the practices of startups and accelerators--disruption and innovation rather than direct competition, customer development versus more product features, agility and speed versus lowest cost.
But paradoxically, in spite of their seemingly endless resources, innovation inside of an existing company is much harder than inside a startup. For most companies it feels like innovation can only happen by exception and heroic efforts, not by design. The question is: Why?The Enterprise: Business Model Execution
We know that a startup is a temporary organization designed to search for a repeatable and scalable business model. The corollary for an enterprise is:
A company is a permanent organization designed to execute a repeatable and scalable business model.
Once you understand that existing companies are designed to execute, then you can see why they have a hard time with continuous and disruptive innovation.
Every large company, whether it can articulate it or not, is executing a proven business model. A business model guides an organization to create and deliver products/services and make money from them. It describes the product/service, who is it for, what channel sells/delivers it, how demand is created, how does the company make money, and so on.
Somewhere in the dim past of the company, it too was a startup searching for a business model. But now, as the business model is repeatable and scalable, most employees take the business model as a given, and instead focus on the execution of the model--what is it they are supposed to do every day when they come to work. They measure their success on metrics that reflect success in execution, and they reward execution.
It's worth looking at the tools companies have to support successful execution and explain why these same execution policies and processes have become impediments and are antithetical to continuous innovation.20th century Management Tools for Execution
In the 20th century, business schools and consulting firms developed an amazing management stack to assist companies to execute. These tools brought clarity to corporate strategy and product line extension strategies, and made product management a repeatable process.
The Boston Consulting Group 2 x 2 growth-share matrix
For example, the Boston Consulting Group 2 x 2 growth-share matrix was an easy-to-understand strategy tool--a market selection matrix for companies looking for growth opportunities.
Strategy Maps are a visualization tool to translate strategy into specific actions and objectives, and to measure the progress of how the strategy gets implemented.
Product management tools like Stage-Gate® emerged to systematically manage Waterfall product development. The product management process assumes that product/market fit is known, and the products can get spec’d and then implemented in a linear fashion.
Strategy becomes visible in a company when you draw the structure to execute the strategy. The most visible symbol of execution is the organization chart. It represents where employees fit in an execution hierarchy; showing command and control hierarchies--who's responsible, what they are responsible for, who they manage below them, and who they report to above them.
All these tools (strategy, product management, and organizational structures) have an underlying assumption. That is, that the business model--which features customers want, who the customer is, what channel sells/delivers the product or service, how demand is created, how the company makes money, etc.--is known, and that all the company needed is a systematic process for execution.Driven by Key Performance Indicators (KPI’s) and Processes
Once the business model is known, the company organizes around that goal. It measures efforts to reach the goal, and seeks the most efficient ways to do so. This systematic process of execution needs to be repeatable and scalable throughout a large organization by employees with a range of skills and competencies. Staff functions in finance, human resources, legal departments, and business units developed Key Performance Indicators, processes, procedures, and goals to measure, control and execute.
Paradoxically, these very KPIs and processes, which make companies efficient, are the root cause of corporations' inability to be agile, responsive innovators.
This is a big idea.
Finance: The goals for public companies are driven primarily by financial Key Performance Indicators (KPI's). They include: return on net assets (RONA), return on capital deployed, internal rate of return (IRR), net/gross margins, earnings per share, marginal cost/revenue, debt/equity, EBIDA, price earning ratio, operating income, net revenue per employee, working capital, debt to equity ratio, acid test, accounts receivable/payable turnover, asset utilization, loan loss reserves, minimum acceptable rate of return, etc.
(A consequence of using corporate finance metrics like RONA and IRR is that it's a lot easier to get these numbers to look great by 1) outsourcing everything, 2) getting assets off the balance sheet, and 3) only investing in things that pay off fast. These metrics stack the deck against a company that wants to invest in long-term innovation.)
These financial performance indicators then drive the operating functions (sales, manufacturing, etc.) or business units that have their own execution KPI's (market share, quote to close ratio, sales per rep, customer acquisition/activation costs, average selling price, committed monthly recurring revenue, customer lifetime value, churn/retention, sales per square foot, inventory turns, etc.)
HR Process: Historically, human resources was responsible for recruiting, retaining, and removing employees to execute known business functions with known job specs. One of the least obvious but most important HR Process issues--and ultimately the most contentious--in corporate innovation is the difference in incentives. The incentive system for a company focused on execution is driven by the goal of meeting and exceeding "the (quarterly/yearly) plan." Sales teams are commission-based; executive compensation is based on EPS, revenue, and margin; business units on revenue and margin contribution, etc.
What Does this Mean?
Every time another execution process is added, corporate innovation dies a little more. Innovation is chaotic, messy and uncertain. It needs radically different tools for measurement and control. It needs the tools and processes pioneered in Lean Startups.
While companies intellectually understand innovation, they don't really know how to build innovation into their culture, or how to measure its progress.
What to Do?
It may be that the current attempts to build corporate innovation are starting at the wrong end of the problem. While it's fashionable to build corporate incubators, there's little evidence that they deliver more than "innovation theater." Because internal culture applies execution measures/performance indicators to the output of these incubators and allocates resources to them the same way as to executing parts of company.
Corporations that want to build continuous innovation realize that innovation happens not by exception but as integral to all parts of the corporation. To do so they will realize that a company needs innovation KPIs, policies, processes and incentives. (Our Investment Readiness Level is just one of those metrics.) These enable innovation to occur as an integral and parallel process to execution. By design, not by exception.
We'll have more to say about this in future posts.
- Innovation inside of an existing company is much harder than a startup
- KPIs and processes are the root cause of corporations' inability to be agile and responsive innovators
- Every time another execution process is added, corporate innovation dies a little more
- Intellectually companies understand innovation, but they don't have the tools to put it into practice
- Companies need different policies, procedures, and incentives designed for innovation
- Currently the data we use for execution models the past
- Innovation metrics need to be predictive for the future
- These tools and practices are coming…
It's that time of year again when the Oracle of Omaha writes to his shareholders. As always, there's much wisdom in those pages.
Critics gotta criticize, and when you're as successful in your undertakings as Warren Buffett, they're going to look for anything they can find. This year, having combed through Buffett's annual letter to his Berkshire Hathaway shareholders, Fortune noted that S&P 500 returns beat Buffett's over the last five years--but not the past six.
Who gives a flying frijole? Buffett has proven himself one of the greatest investors of all time and someone who understands business like few people can. He gets the basics, the flourishes, and the twists. On an off year in 2013, Berkshire Hathaway pulled in 23 percent growth in pretax profits. It's even more remarkable because Buffett typically holds companies for extended periods of time and is the head of a conglomerate, which, given the history of disasters that have often plagued such entities, makes it additionally impressive.
So, forget about reading the Berkshire Hathaway results for gotchas. Let's take a look at some sound business advice that comes from watching what someone does, not just listening to what he says.1. Know your company's intrinsic value.
People focus far too often on the external measures of a company's value. They look at stock price or the valuation derived from looking at the prices venture capitalists pay for a given percentage of a company. Forget all that, because those are ephemeral measures. Here's how Buffett thinks of it:
Intrinsic value is an all-important concept that offers the only logical approach to evaluating the relative attractiveness of investments and businesses. Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life.
The calculation can be complicated and can change with interest rates or cash-flow projections. But Buffett's definition offers reasonable guidance. Calculating the intrinsic value is an excellent exercise. When you have a sense of the company's real worth, you have a context in which to consider investments, deals, and strategic decisions. Just be careful of the inherent danger of believing your own hype: Look at all the tech companies that twist accounting metrics into pretzels to pretend that they're profitable when they aren't.2. Build business templates.
Ask most businesspeople about templates and they'll mention word-processing documents and spreadsheets. Buffett talks about a partnership template. He has built a new methodical approach to large acquisitions. The specific details are immaterial for an entrepreneur, who isn't buying a company like NV Energy or a big chunk of H.J. Heinz. What is important is the idea of developing repeatable processes. Major deals are always unique, and then they all have common characteristics. Know how to achieve what you need, and you have far more energy available to consider the quirks.3. Know the difference between types of growth.
Many companies are anxious to grow at a breakneck pace. Even large companies will buy other large companies for their revenue. But in a way that's just trading one block of money for another. It can be a wash. Buffett says he doesn't want Berkshire Hathaway to simply grow, but to grow per-share results. Even though your business is probably private, that's a good way to think about it. Are you just bulking up, or are you becoming proportionately more successful?4. Invest in management.
An important reason for Buffett's success is that Berkshire Hathaway only invests in companies if they have strong management. Otherwise, you only subsidize a badly working business. Get the best management you can in your company from people who really know how to run marketing, sales, supply chain, customer service, manufacturing, finance, and any other silos. While providing strategy, let the people who know how to do the work actually do it. Buffett admits that two people working for him handle $7 billion portfolios with returns far outperforming his. Better to have them work for you than compete with you.5. Use your money effectively.
Buffett wrote about the money that Berkshire Hathaway doesn't own but that it can use to its benefit. The idea of float is well known in certain types of businesses, particularly low-margin ones like groceries and distributors. There's the difference between when you get paid and when you pay. Some grocery chains make a significant percentage of their profit on the float made available by being a cash business that has terms from its vendors. Effective use of money can also mean passing on your bonuses or compensation and using the cash to strengthen the weaker parts of your operation. Invest in people and capital smartly. As Buffett wrote, "it's better to have a partial interest in the Hope diamond than to own all of a rhinestone."
That's five points in barely the first three pages of his letter. You can learn a lot from reading a little of the practices and thought processes of successful people.
Most companies don't have policies, and for good reason.
In the list of sure signs of spring, March Madness stands tall alongside fellow harbingers such as daylight-savings time and blooming flowers. And when employees harness that optimism by breaking out the brackets in a couple of weeks, it looks like they won't face a particularly tough defense from their employers.
According to the Society for Human Resources Management, 81 percent of employers say they do not have a policy regulating office pools like those that come with the NCAA tournament. That data was collected during last year's tournament and marks a big shift from 2010, when 67 percent of employers said they had an office policy. (Of the companies that do have policies, only 7 percent claim to have ever disciplined an employee.)
What's more, HR professionals are in agreement that office pools actually have a positive workplace effect. About 70 percent say they play a positive role in relationship building at their companies, 64 percent say they help with team building, and 54 percent said they even increase employee engagement.
Relationship building and teamwork, sure. Employees huddled around, keeping track of scores, talking about something other than work--it's not hard to see how March Madness could ultimately help build these connections.
Some companies even go out of their way to leverage the tournament for relationship building, such as by putting employees into teams that collectively fill out a bracket and compete against other teams' brackets across the company.
But engagement? Shouldn't the tournament serve to hurt engagement, with its potential for distraction and thus lost productivity? Well, maybe. Some studies have shown the tournament might come at the expense of U.S. employers. Another survey says that 62 percent of employers think March Madness has no effect on employee output, and 27 percent even think it boosts productivity.
Whatever the effect of office pools on employees, the focus on productivity belies the discussion at hand. Productivity is an end, not the means, by which we define engagement.
The actual recipe for engagement is a lot more muddled than that. But at some level, we know it comes down to how much employees like their jobs and their co-workers. And suffice it to say that employees tend to like the jobs that treat them like they're adults, and that facilitate those connections with colleagues.
So though you might notice a small downtick in productivity during the Madness, consider your laissez-faire approach to office pools an investment in creating the kind of longer-term engagement that will more than make up for it down the road.
The co-founder of Tesla Motors says money was never the motivating factor for his ambitious ventures.
Elon Musk says he didn't become an entrepreneur in order to be financially successful. He wanted to radically change the world for the better.
In a video recorded on October 2, 2013 at the 36th annual ENCORE Award reception at the Stanford Graduate School of Business, an event honoring Tesla Motors, Musk explains, "When I was in college, I was trying to think what would most affect the future in a positive way."
Musk, whom Inc. named Entrepreneur of the Year in 1997, realized early on that there were five areas he could focus on: sustainable energy, the Internet, "making life multi-planetary," and perhaps artificial intelligence (AI) and rewriting genetics. With the latter two though, he says, "I knew things could go wrong," so he decided not to pursue them.
In 1996, at the age of 24, Musk started his first Internet company with his brother and another partner, Greg Curry. The company, Zip2 Corporation, was an online city guide that provided content to online newspapers such as the The New York Times. Of those lean startup years, Musk recalls, "It wasn't about being wealthy, it was just from the standpoint of wanting to be part of the Internet. I figured if we could make enough just to get by, that'd be OK."
The trio rented a small office in Palo Alto, California--back when rent was affordable--for $450 a month and "we just slept in the office and showered at the YMCA," Musk says. "It was not from the standpoint of what's the best risk and rate of return. It was just, 'These things need to happen; I can try to make them happen.'"
Watch the videos below to learn what motivates Musk.
Creating a Positive Future For Humanity:
Under a new Obamacare extension, companies may be able to hold on to their old health insurance plans through 2017.
Here we go again. Adding to a succession of delays and extensions that has by now become almost comical, the Department of Health and Human Services announced on March 5 yet another significant reprieve for individuals and small businesses struggling to comply with the requirements of the Affordable Care Act.
If you have a group health plan that doesn't meet all the requirements of the Affordable Care Act--a "noncompliant" plan, in industry-speak--you can now keep it for an additional two years. This follows an announcement last November that allowed a one-year extension of such plans, which means that you can keep renewing your noncompliant group coverage up until October 1, 2016, with coverage effective through 2017. That is, if there are no additional delays--yesterday's announcement left the door open for an additional one-year extension.
Because of different coverage and underwriting requirements, older, noncompliant plans are often cheaper than the new Obamacare plans. They don't have to offer coverage in all 10 "essential" benefit categories, for one thing. And they don't have to comply with modified community rating rules. This is significant for small groups with young, healthy employees, who would probably see their premiums soar under community rating, which prohibits underwriting based on health status and limits adjustments for age. On the other hand, companies with less-healthy employees could see greater benefits from the new plans.
What this all means to individual businesses depends largely on location. Regardless of the federal ruling, it's still up to state insurance regulators to decide whether they will allow insurers to continue issuing noncompliant policies. About half of the states--including big ones like New York and California--have decided that they won't. However, the administration's latest notice allows those states to change their minds and reinstate canceled policies for anyone who held them in 2013.
Click here to read the full HHS bulletin, and call your insurance broker or benefits provider for clarification on how these changes might impact your company.
Take a note from this fast-growing startup and focus on the things that will make the biggest impact in your first few years of business.
If you want to change the world, your startup has to grow fast. So why not look into the growth strategy tips of a pair of Stanford MBAs whose startup has expanded its customer base nearly 200 percent a year in the last two-and-a-half years?
The startup is Austin-based Main Street Hub, or MSH--its social-, Web-, and email-marketing service claims to help “merchants get more customers and keep them coming back by spreading word of mouth, extending their customer service, managing their online reputation, and leveraging Main Street Hub’s merchant network.”
Co-CEOs Andrew Allison and Matt Stuart co-founded MSH in 2010. Allison, a Yale graduate with a Stanford JD/MBA, runs its product-development, content-operations, and customer-success functions. Stuart, who has a Stanford MBA and worked at Goldman Sachs, manages MSH’s sales, marketing, and business development.
Targeting the $133 billion local media ad spend market--20 percent of which is being spent on digital/online, MSH raised $14 million in January from investors led by Bessemer Venture Partners to tap that market’s expected 27 percent annual growth over the next four years.
Growing from scratch to 3,000 customers in 50 states with 175 employees across four offices, MSH has its hands full when it comes to managing its growth while sustaining a high level of employee and customer satisfaction.
In a recent interview, Allison and Stuart offered four things you should focus on that could help your startup grow.
1. The customer’s pain. It seems to go without saying that you can’t have much of a business if customers won’t pay you. As a leader, you must spend time meeting with those customers and find a need that competitors aren't meeting.
Then you must rally your troops to do a great job of satisfying that unmet need. MSH did just that--discovering that local restaurants and other small businesses didn't really want to become experts in Internet marketing and managing their social-media presence.
In response to that focus on its customer’s pain, MSH developed a "Do It for You," or DIFY, service using the so-called lean-startup approach. Specifically, MSH built a prototype of the DIFY service, put the prototype in front of the customer, then got feedback on what worked, what was missing, and what needed to be improved. Then the company repeated the process until it had developed a service that customers loved.
2. Your co-founder. Many entrepreneurs seek out co-founders. But picking the wrong one can be fatal for your startup. How do you find a partner with complementary skills who shares your vision and commitment to making it happen?
Allison and Stuart shared goals and values. As Allison explains, “We were both focused on building a company that was for-profit and that had a social purpose. We had strong alignment on values and we decided to work together. We built up trust by making commitments and acting on them.”
Interestingly, they reject the idea that co-founders should work together because they can split up the work. “We're skeptical that co-founders can find each other solely on the basis of complementary skills,” says Allison.
3. Your culture. As a startup grows, founders can’t do all the work themselves. Instead they hire people who they hope will be able to identify opportunities and capture them at least as well--if not better than--the founders would.
As Stuart explains, “A culture is essential to attract and retain talented people. When Andrew and I met at Stanford Business School in 2009, we talked about what the company would be like. We figured out its values and social purpose--to help create thriving local economics. We really wanted people who would care about strengthening local markets. We hire people who are passionate about this mission and share our values.”
4. Adapting. The biggest competitive advantage of a startup over a big company is its ability to attack profit pools faster. That means that if there's an opportunity to deliver value to customers in a new market, the big company will lumber while the startup sprints.
But such quick adaptation to new opportunities doesn't just magically happen. Leaders must have a clear vision for the market and deep insight into customers’ evolving needs. Thanks to these skills, MSH has developed popular additions to its service.
As Allison explains, “We developed our first product then we listened to our customer. We got feedback from every one of our customer touch points--engineers, sales, and customer service. Based on the feedback, we followed lean principles of product development--testing and rolling out prototypes constantly.”
MSH exemplifies the concept of Boundaryless Company Development, which I developed in my book Hungry Start-up Strategy. “We make assumptions or hypotheses and run small tests before we build fully featured versions of a new service. We measure the impact of our prototypes to see whether they confirm or disconfirm our hypotheses. For example, we developed Hub Exchange, a service that lets local businesses that target the same customer--such as an ice cream stand and a toy store--cross-promote each other’s’ products."
PwC's recent 2014 CEO report revealed where business leaders' heads are at.
It's no surprise that technology is top of mind for CEOs as they think about the future of their businesses. Perhaps what comes next on their priority list is though. Nearly 70 percent of CEOs are concerned that demographic shifts will transform their area of business within the next five years, according to a report for PwC. As Americans age, minority populations grow and consumer preferences change, these business leaders will have to figure out a way to market to an ever-changing audience.
Here is a graphic from statistics company Statista, which shows how 162 American CEOs rank today's most influential trends.
How many times should you follow up after a pitch goes unanswered? Chances are, more than you do now. Here's how to redouble your efforts--tactfully.
I once sent a pitch to a former client. I hadn't worked for this client in several months, but she paid well and I was eager to get another piece of business. I was certain I had a proposal she would be interested in. But my contact didn't respond to my first email. Or my second one, a couple of weeks later, or my third, a couple of weeks after that.
We had a strong history together and I really wanted to work with her again. And so, instead of my usual practice of giving up after a couple of tries, I kept at it. After yet another email went unanswered, I called her office and left a message. A week later, I left a message again. (I was feeling more and more like a stalker, but I really wanted the job.) A week after that, I called one more time--and she happened to pick up the phone.
She hadn't read or didn't remember my emails or phone messages, so I explained once more what I had in mind.
"That's interesting to me," she said. And gave me the job.
As soon as I got off the phone and got done whooping for joy, I pulled out a little yellow sticky note. "Persistence pays!" I wrote with a red felt tip, and stuck it to the side of my computer. For years--until I changed computers a couple of times and the stickum wore off--that little note stayed in place as an important reminder that what can feel like obnoxious pushiness might actually be the appropriate behavior needed to get a customer's attention in this busy world. It's a lesson I've often forgotten, but when I've remembered and made the effort to follow up and then follow up again, I've rarely been sorry. More than once, it has led to an unexpected sale.
On the other hand, as someone who receives a lot of pitches, and more than my share of follow-up emails and phone calls, I know that there are effective ways of doing it and ways that will only annoy.
How do you do follow-up right? Here's what works for me:1. If you haven't followed up, you haven't really pitched.
This seems like it should go without saying. But too many people will send one email or leave one phone message and never get in touch again if they don't get an answer. If something's worth going after, it's worth trying more than once.2. Follow up at least two times more than you think you should.
In another case, I sent a pitch, then one follow-up, and then gave up. Four months later the customer got back to me--very apologetically--to ask if I was still interested. I was, and that company has since become one of my best clients. It was sheer dumb luck that this particular customer remembered my pitch or else found it again in her inbox. If she hadn't, I would have missed a really good thing by giving up too soon.3. Assume your customer has forgotten your pitch.
You'll have the best chance of success if you figure on starting over from scratch every time you get in touch. If your original proposal was an email, include that email in your follow-up. If you have a prospect on the phone, or are leaving a message, remind him or her in as few words as you can what you proposed.4. Don't act like you're owed anything.
It can be tempting to get peevish the third or fourth time you've followed up and gotten no response. Keep in mind that no matter how many times you've gotten in touch or how perfect your offer is for that client, no one there is obligated to respond to you in any way. Your fifth follow-up should be as polite in tone as your first one was.5. Try multiple channels.
Not getting a response to your emails or phone messages? Try an @ message on Twitter, or a message on LinkedIn or Facebook. If you have multiple contacts at a prospective client and one isn't answering you, try someone else. (Make sure to let each contact know who else you've contacted, though, or this can backfire.)6. Your objective is an answer.
If you've set yourself a "no" quota, you know that an answer, even a turn-down, is much better than getting a non-answer such as "I'll get back to you." (If you don't have a "no" quota, you should.)
But some people are uncomfortable saying no, so they'll try to put off the inevitable. Fight that tendency by giving the person a reason to give you an immediate answer, such as a limited-time discount. And if your contact says something like "I'll get back to you," set a time when you'll get back to him or her instead.7. Have a plan.
What happens if and when you get that "no"? Have an immediate plan. What other customer can you pitch to next? What other product can you pitch to this client? Getting turned down should just take you to the next step along your planned path. By the way, you should also know what your next step is if the answer turns out to be yes.8. Say thank you.
Whatever answer you get, someone took the time to read your proposal, or speak with you on the phone. They gave you some of their time and attention, which is a scarce commodity for every professional these days. They may have given you information that can help you make your product better, or some ideas about how to sell it elsewhere. And if you thank them, they're likely to remember how gracious you were--and want to do business with you in the future.
Like this post? Sign up here for Minda's weekly email, and you'll never miss her columns. Next time: 10 Things to Stop Doing if You Want to Be Happy
There are plenty of people willing to buy an expensive electric car. Too bad Cadillac has no idea why.
Cadillac is now selling a $75,000 electric car. To get you to buy it, it's created an ad celebrating the unending, joyless pursuit of stuff.
In one sense, the ad has done its job. It's got us talking about Cadillac. To get that conversation going, Cadillac glorifies unthinking adherence to materialism, and plays into stereotypes by casting that materialism as uniquely American. In the ad, actor Neal McDonough (Band of Brothers, Boomtown, Desperate Housewives) strides through a modernist mansion, barely acknowledging his wife and kid (or at least that's who we assume they are), extolling the virtues of nonstop work and mocking people in other countries who take vacation time and stop to sip the espresso. This is not supposed to be ironic. It's supposed to make you want to buy a car.
What Cadillac doesn't seem to understand is that if you really wanted to buy an electric car, it would be called a Tesla.
In the Cadillac ad, the car is clearly intended as a status symbol, up there with the house, the pool, the attractive wife, and the unobtrusive kid. Unfortunately, this isn't what the cool kids are into right now. Sure, Marissa Mayer buys artwork and likes designer clothes, but Mark Zuckerberg is wearing hoodies and slaughtering his own pigs, for Pete's sake. Sheryl Sandberg was recently named to Forbes' billionaires list, but how do we know she's really successful? She could go public with the fact that she leaves work at 5 o'clock.
The one remaining status symbol among the Silicon Valley tech set--and with the exception of Wall Street, that's where the money is--is a Tesla, an electric luxury car from the startup founded by Elon Musk. You don't hear people brag about their vacation homes. No one calls attention to his or her complicated mechanical watch, which can easily cost as much as several cars, unless you bring it up first. Mention Screaming Eagle, and you're as likely to end up in a conversation about the vintner's small runs and marketing prowess as you are the quality of its five-figure Cabernet Sauvignon.
Owning a Tesla is different. It's the one thing left--the one thing--that it's somehow OK to brag about. People will find a way to drop the fact that they own a Tesla into the most unrelated conversations, a propos of absolutely nothing. Even entrepreneurs romanticizing their long hours, huge credit-card bills, and ramen dinners will drop in a reference to their Tesla. When I try to ask, politely, how one can afford a Tesla on a ramen budget, the entrepreneur will confess that actually, he shares a Tesla with someone else, making it no more expensive than say, an Audi. (Somehow, Audi ownership is compatible with ramen. Don't ask me.)
Tesla owners don't love their cars just because no one else can afford one, or at least they're not going to say that. Instead, they gloat over rising fuel prices and the long lines of the great unwashed waiting to fill their cars with--yuck!--gasoline. Tesla owners charge their cars while they sleep, thank you very much. Nothing makes a Tesla owner happier than to explain to an innocent bystander that the car is not only designed and sold by a U.S. company but also manufactured at a plant in Fremont, Calif. The fact that Tesla's founder, Elon Musk, was born in South Africa but became a U.S. citizen is just the icing on the sustainably-baked cake.
For these members of the 1 percent--who can always buy a Prius--success isn't about an expansive kitchen and jingoistic chest-beating. It's about having something fun and beautiful that still seems environmentally responsible. It's about energy independence. It's about embracing the best--not the worst--of this crazy country of ours. Those are the new status symbols.
Tesla gets that. Somehow, Cadillac gets that, or they wouldn’t have made an electric car in the first place. Yet somehow, they missed it entirely.
Managing expectations can help you more seamlessly navigate the choppy startup waters.
Managing expectations is a vastly underutilized skill, in my opinion. Not everyone does it, but maybe if more did, we could avoid a lot of the day-to-day drama that goes on in every office.
Folks who know how to manage expectations are able to more seamlessly navigate the choppy waters of their business. Why? Because they know how to communicate, organize, and direct conversations around things getting done.
Follow these three practical tips to improve your own ability to manage expectations.Make No Assumptions
People often get into hot water when they assume a co-worker, vendor, or supervisor knows what they expect or even what they're talking about. My first piece of advice is making sure you get context.
Don't fall into the trap of assuming someone has the same understanding of a situation, project, deadline, or task that you do. You can avoid this pitfall by having a conversation in which you openly discuss what's expected, how it might be accomplished, and how success will be measured. Remember to leave plenty of opportunities for questions. This is also the time to agree and commit to what will be delivered, when. When something is going to be completed is one of the most common points of miscommunication. Which leads me to my next tip...Communicate, Communicate, Communicate
One of the best ways to manage expectations is to make sure you communicate with everyone on a frequent basis. In the early stages of a new project or as a key milestone or deadline approaches, you may want to even over-communicate.
Sure, it might be more work on your part, but it's especially important if you have a new team that isn't used to working together, or new leadership that may not have developed a level of trust in the team's ability to deliver. Better safe than sorry.
By holding frequent check-ins throughout the course of a project, you also have the chance to provide real-time status updates and manage any delays, risks, or blockers. When you're proactively honest and transparent in your communication, you have room to put a Plan B in place, if needed, or the flexibility of making new decisions as you move toward the finish line. Being honest about a delay is a thousand times better than promising to deliver and then missing your deadline.Pushing Back is OK
A huge piece of managing expectations is the actual expectation, right?
You have to be comfortable that the expectations are realistic and achievable. If they're not, you can--and should--push back. The key here is pushing back in a way that balances the organization's needs and the team's abilities. Being open about what can be delivered and what the plan is to bring in the rest can go a long way in instilling confidence and getting the go-ahead. If you can nail the fine art of pushback, you've won half the battle of managing expectations successfully.
How do you manage expectations? I'd love to hear in the comments.
The results could be amazing--for the people you meet and for you.
One of my clients is famous. Big time famous. Famous in that weird way that even people who don't know exactly what he does or why he's famous still instantly recognize him as somebody. (Unfortunately, I can't tell you who he is since he's a client, and mum is always the word.)
The same thing happens every time people meet him:
- They take a step forward.
- They make eye contact.
- They reach to shake hands in an eager and excited way.
- As they do, they bow their heads slightly, as if to nonverbally say, "I am so glad to meet you."
- They hold the handshake for an extra beat, almost as if they're reluctant to let go.
- They actually say, "I am so glad to meet you."
- They smile. Hugely.
- And they keep smiling and making eye contact...because they clearly feel it's awesome to meet him.
It's pretty cool to watch. And it makes me think.
What if we did the same thing every time we meet someone new? What if we didn't worry about comparative levels of status or pecking order, didn't worry about wearing our emotions on our sleeves, didn't worry about making ourselves vulnerable by possibly coming across a little too sincere or a little too happy?
What if you treat every person you meet with the same enthusiasm you would show if you met one of your heroes?
Most importantly, how would the other person feel if you treated them that way?
That answer to the last question is simple. You would not only make a great first impression but also a lasting impression. After all:
- We tend to like people who like us, and
- We tend to think well of people who think well of us, and
- We tend to remember the people who think meeting us is something they will remember.
Of course I'm not saying it will be easy. I should know, because it definitely isn't easy for me. Unless I feel sure of myself in a particular situation I tend to be fairly insecure. So when I meet people after, say, a speaking engagement, I'm comfortable. In those situations, I'm pretty confident.
Unfortunately confidence is conditional, and I can think of plenty of situations where I'm definitely not confident. Sure, I shake hands and make eye contact, but I know I don't come across as well as I could. Sadly my shyness can even make me seem aloof, remote, or detached.
That's not my intention--but it is what sometimes happens. And the effect on the people I meet can be, at best, underwhelming.
Then I think about the time I met Wolverine. I was thrilled. I forgot all about feeling shy or insecure. (After all: Wolverine!) I didn't worry about coming across as too excited or too, well, anything. Just like the people who meet my client, I was just glad to meet him--and I let it show.
Now whenever I meet someone new, I try to mentally flash back to that moment. I know I can turn loose my inhibitions and be engaging and sincere and genuinely interested. I've done it before. All I have to do is treat every person I meet as someone I'm genuinely delighted to meet, someone I'm genuinely honored to meet, because for that moment they should be.
Try it. Imagine that each person you meet could turn out to be your next customer, your next important connection, or your next great friend. Then treat each person that way.
When you do, the odds are much greater they will turn out to be exactly what you imagine they could be.
Even if they don't, you will still have made another person feel valued and special--and making people feel valued and special is reason enough.