I had the pleasure to read Steven J. Spear's "Chasing the Rabbit" during my Summer vacation, in which he discusses the unique attributes of industry leading companies like Toyota and Alcoa. What Mr. Spears wanted to understand is why these companies have maintained and even extended their competitive advantage over their peers, even as these peers have learned from these leaders and themselves improved. Interestingly, what he singles out as unique about these companies is not that they apply methodologies such as Lean and Six Sigma, although they do, and very effectively, but the fact that they apply these methods in the context of a business culture which is focused on learning and improvement, from the 'highest' to the 'lowest', in everything they do.
What these companies do is simply to recognise that their businesses are complex systems which it is impossible to design perfectly from the outset. So instead of pretending that the system is perfect, and making do as best they can, they accept that there are going to be opportunities for improvement, and invest in their ability to spot, understand, address and learn from these opportunities. As a result, whereas their competitors come to work on a Tuesday at a similar level of performance as on Monday, and expecting to have to overcome most of the same problems as faced them on Monday, the High Velocity Business is coming to work having solved at least some of Mondays problems for ever, and therefore is starting the day at a higher level. These improvements quickly accumulate over time, propelling the High Velocity Business forward even as competitors repeatedly attempt to catch up.
Monday, August 17, 2009
Thoughts about Starting a Technology Business: Final Thoughts
It always takes longer than you thought, so don’t be impatient, but do plan and provide for the long haul, whether that be by recruiting investors with deep pockets, or having another line of business that keeps you going. Do try to make your mistakes as early as you can. You are going to learn from your mistakes, and the only way you are going to succeed is by taking the risk that you might fail. Don't be too worried about what other people will think of you, or that they will remember your failures. In my experience, people are too busy with their own lives, and just aren't interested anyway, so take advantage of that and don't worry too much!
Thoughts about Starting a Technology Business: People
Hiring and managing people in your own business is different from doing the same as a manager in a large corporation, so here are some thoughts about that.
Firstly, you will be anxious to hire people to help you, and may find it difficult to imagine that people will actually want to come and invest their futures in your improbable little venture. Don’t hire the first willing candidate just because he or she is there! There are many adequate to good people in every profession. It is rare to find great people. It is also rare to find people who want to work for a small start-up, but these are the people you have to find, and you are better off hiring no-one if you can't than to hire a journeyman or someone who would prefer the "safety" of a large corporation, but needs a job right now.
Understand and specify clearly what you need the person to do. You are starting the next great business, so anyone you hire should be excellent at their job, should be willing to work to demanding targets, does not bring baggage (i.e. avoid the brilliant but trouble types!), and is willing to accept risk for reward (typically equity), which you should be prepared to give willingly and reasonably generously to the right people!!
One important point: don’t hire just for company! Being an entrepreneur is lonely. Being an entrepreneur who hired a less than stellar person so you wouldn't feel so alone is lonely and a pain in the neck.
When you have hired, remember: you are the boss. Don’t be afraid of confronting issues. Raise then respectfully with the aim of resolving them, not beating people up. Remember you are under a lot of stress, so it will be tempting to blame other people, especially your team. That said, be prepared to fire / part company quickly, especially early on if you find one or both of you have made a mistake. It's best for everyone if done with dignity.
In all your dealings with your employees, partners, consultants and other team members, be consistent, honest and empathetic. Remember you are the boss, and the reason they are there: it’s your job to inspire them, not theirs to inspire, reassure or comfort you. Finally, lead, don’t drive! You'll get some results by threatening or manipulating people. You will get much more by making them want to do their best for you and the company.
Firstly, you will be anxious to hire people to help you, and may find it difficult to imagine that people will actually want to come and invest their futures in your improbable little venture. Don’t hire the first willing candidate just because he or she is there! There are many adequate to good people in every profession. It is rare to find great people. It is also rare to find people who want to work for a small start-up, but these are the people you have to find, and you are better off hiring no-one if you can't than to hire a journeyman or someone who would prefer the "safety" of a large corporation, but needs a job right now.
Understand and specify clearly what you need the person to do. You are starting the next great business, so anyone you hire should be excellent at their job, should be willing to work to demanding targets, does not bring baggage (i.e. avoid the brilliant but trouble types!), and is willing to accept risk for reward (typically equity), which you should be prepared to give willingly and reasonably generously to the right people!!
One important point: don’t hire just for company! Being an entrepreneur is lonely. Being an entrepreneur who hired a less than stellar person so you wouldn't feel so alone is lonely and a pain in the neck.
When you have hired, remember: you are the boss. Don’t be afraid of confronting issues. Raise then respectfully with the aim of resolving them, not beating people up. Remember you are under a lot of stress, so it will be tempting to blame other people, especially your team. That said, be prepared to fire / part company quickly, especially early on if you find one or both of you have made a mistake. It's best for everyone if done with dignity.
In all your dealings with your employees, partners, consultants and other team members, be consistent, honest and empathetic. Remember you are the boss, and the reason they are there: it’s your job to inspire them, not theirs to inspire, reassure or comfort you. Finally, lead, don’t drive! You'll get some results by threatening or manipulating people. You will get much more by making them want to do their best for you and the company.
Thoughts about Starting a Technology Business: Sales
Which brings us to sales. Let me sum this up for you: good Sales People are different from Engineers. Sales is a complex and difficult profession. It requires the sales person to follow a rigorous process methodically. It requires an ability to build a profile of likely target Customers, so that efforts are focussed on people who are likely to buy, not just those willing to talk to you. It requires the discipline to track progress against objective criteria, and the ability to maintain confidence while being realistic about each lead or prospect's likelihood of buying.
Good Sales People can tell you what their goal is for each Prospect, and what their goal is for each communication -- mail, letter, document, meeting, demo -- with that Prospect. These goals are specific, and achieving each goal removes a reason why the Prospect won't buy, or won't buy from us.
Sales is a skill. It requires an ability to make human connections with Customers. Bad Sales People make superficial, manipulative connections. Good Sales People show genuine interest in identifying and understanding the Client's needs, help the Client articulate the value of what they are trying to achieve, and guide them to a decision without forcing them. Because sales is about people: needs must have owners who care about the value they -- personally as well as organisationally -- will achieve from addressing the need, otherwise there will be no sale. And remember, sell to those able to buy, not to those willing to listen!
Thoughts about Starting a Technology Business: Marketing
Marketing
First of all for my fellow technologists, let's be clear about what marketing is. You'll hear lots about brand, collateral, communications, etc, etc. These are merely the day to day tools of marketing. Simply put, marketing is "discovering a need and communicating your ability to satisfy it better than anyone else."
Notice I did not mention your technology. Technology is essentially irrelevant to marketing. Business is about satisfying a need. That need must be specific and have value. If your Customers are businesses, this value must be expressed in $ and €. In fact, if you cannot find the line on their P&L or Balance Sheet that you increase or reduce, then you have not identified their need yet. Go look again! If your Customers are individuals, then your value may be in $ or €, or it may be emotional. Not being an expert on consumer marketing, I'll leave you with that.
In large markets, like the United States, the opportunity is much greater for an entrepreneur to meet visionary, risk tolerant Customers who can understand the value your product provides, even if you don't. These Early Adopters give start-ups in these markets a foot hold and early sales. However, given that I believe it is particularly difficult for technologists to think of their products from a Customer perspective, the risk is that the entrepreneur never internalises the need they are satisfying or the value they are providing, and therefore they cannot articulate this to the mass market. So they hit the chasm, and they die. Or maybe they achieve some understanding, but never fully realize what they could provide, and putter along, with their full potential never achieved.
In a small market, the chance of happening on one or more of these early adopters is much, much smaller. Buyers also tend to be more conservative, and often have to justify their decisions to parent organisations far away. This means that, from the start, the entrepreneur must do that hard work of understanding and crystallising the need they satisfy, how their solution does it better, and the value their Customers will receive. Therefore there is a higher risk that the start-up will run out of cash before it achieves "traction" -- the disadvantage. On the other hand, because the entrepreneur is forced to think harder than their competition in more "favourable" locations, it can take their offering to a value higher than that which their competition has been able to identify and articulate, and allows them to develop a proposition that will bridge more effectively from the early adopter to mass markets. If you live this long, this could be a great advantage!
Achieving this, of course, requires that the entrepreneur be an unusual person. They must understand:
First of all for my fellow technologists, let's be clear about what marketing is. You'll hear lots about brand, collateral, communications, etc, etc. These are merely the day to day tools of marketing. Simply put, marketing is "discovering a need and communicating your ability to satisfy it better than anyone else."
Notice I did not mention your technology. Technology is essentially irrelevant to marketing. Business is about satisfying a need. That need must be specific and have value. If your Customers are businesses, this value must be expressed in $ and €. In fact, if you cannot find the line on their P&L or Balance Sheet that you increase or reduce, then you have not identified their need yet. Go look again! If your Customers are individuals, then your value may be in $ or €, or it may be emotional. Not being an expert on consumer marketing, I'll leave you with that.
Crossing the Chasm in a Small Market
I started Fraysen Systems here in Ireland, a small island of 5-6 million people far from the large markets at the centre of Europe. This fact has an effect which can be viewed as an advantage / disadvantage. I have found that Customers are, in general, unwilling or unable to articulate their needs, or to bridge from your solution to their need. When you think about it, it's perfectly reasonable -- it's not their job! I believe this is the reason for the famous "chasm" that new technology products must bridge from their early adopters to their mass market.In large markets, like the United States, the opportunity is much greater for an entrepreneur to meet visionary, risk tolerant Customers who can understand the value your product provides, even if you don't. These Early Adopters give start-ups in these markets a foot hold and early sales. However, given that I believe it is particularly difficult for technologists to think of their products from a Customer perspective, the risk is that the entrepreneur never internalises the need they are satisfying or the value they are providing, and therefore they cannot articulate this to the mass market. So they hit the chasm, and they die. Or maybe they achieve some understanding, but never fully realize what they could provide, and putter along, with their full potential never achieved.
In a small market, the chance of happening on one or more of these early adopters is much, much smaller. Buyers also tend to be more conservative, and often have to justify their decisions to parent organisations far away. This means that, from the start, the entrepreneur must do that hard work of understanding and crystallising the need they satisfy, how their solution does it better, and the value their Customers will receive. Therefore there is a higher risk that the start-up will run out of cash before it achieves "traction" -- the disadvantage. On the other hand, because the entrepreneur is forced to think harder than their competition in more "favourable" locations, it can take their offering to a value higher than that which their competition has been able to identify and articulate, and allows them to develop a proposition that will bridge more effectively from the early adopter to mass markets. If you live this long, this could be a great advantage!
Achieving this, of course, requires that the entrepreneur be an unusual person. They must understand:
- People: their Customers, both as organisations and individuals;
- Business: the need they are satisfying;
- Finance: to articulate the value they are delivering; and finally,
- Technology: presuming theirs is a technology based business!
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