Small Business News
Business is going well, you're making all the money you need, and yet... you're not happy. If any of these signs sound familiar, you might be sacrificing too much for success.
As a founder, your job is never done. It comes with the territory of starting a business that you'll need to sacrifice a little blood, sweat, tears (money, time--the list could go on) to achieve success.
But at a certain point, if all you're doing is making sacrifices, perhaps you're paying too high a cost for that success.
Check out the list below. Do any of these signs sound familiar? Maybe it's time to rethink your priorities:1. You sacrifice your family time for work.
I've lived this one. Using the excuse that you need to feed your family might seem acceptable at an early stage, but it's still an excuse. Take a serious look at your overall time investment. Don't count the hours you are in the office. Count the hours you answer emails on your phone, the time you drive to work, the time you spend thinking about work, and the time you have left for everything else.2. Your work and leisure time always intersect.
Here's one that is hard for me as well, mostly because my job can be fun at times. Playing around with a new app on the iPad doesn't seem like work. No matter which field you're in, it's best to figure out where the delineation lies between actual work and actual relaxation. Sometimes, you have to be intentional about this: take up tennis as a recreational sport because it has nothing to do with your cooking business. While work is changing and some entrepreneurs have to work extremely long hours to kickstart a company, having no margins means you are not working that smart anyway.3. You can't take time off.
I've been reading the book "The Everything Store" about how Jeff Bezos became such a celebrity entrepreneur. In his early days, he had a cot in his office in case he needed to sleep at work. (I bet he has better margins in his life now.) If that's you, think long and hard about whether it makes sense. Maybe in an early-stage startup it seems reasonable. But the truth is that your inability to take time off from work is a sign that you have poor boundaries. Someone is paying for that extremism.4. You're constantly living in stress and anxiety.
There's scientific proof for this one. Constant stress is chipping years off your life, and it's not worth the strain. By thinking about work from sun-up to sundown, you are fixating your brain on one thing. Extremism at work is a way to control the work, but it usually backfires. In most cases, business needs time to grow and evolve. If it's 9 p.m. at night and you are thinking about a sales meeting the next morning, then you don't have good margins. If raking in the cash means a shorter life, live on less.5. Your gadgets are always on.
I seem to always have an iPhone at the ready, which is easy to justify. But letting the plastic gizmos die once in a while is a good thing. When your phone or tablet is not available to you, it forces you to look outside once in a while, to have a conversation with someone, to think about something besides work. In science jargon, this is called sensory dynamism. When you stare at the iPhone, you are only experiencing a few planes of reality. When you look outside, you are seeing millions. Your brain needs a reprise from the gadgets, and overuse is not advised.6. You have no friends.
If the only relationships you have are at work, you might have a problem. Workaholics have plenty of income and no social life. In some cases, that's okay for a while. But take a long look at whether you are actively developing friendships outside of work. True friends will tell you when you are working too much; business colleagues will just encourage you to work more because they reap the rewards. You might end up with a big successful company, but life is about more than just financial success.
Peter Pham, one of the co-founders behind the much-hyped and well-funded but failed photo-sharing startup Color, explains what he's learned about raising money.
Inc. runs stories constantly on the challenges of getting funding for your business. You have to get your pitch right, approach the right investors--but even when you do those things well, there are a host of potential pitfalls in the process.
Peter Pham is one of the rare entrepreneurs who has had a very good track record landing money from VCs. His resume includes stints at successful startups like Photobucket and Billshrink, but he's perhaps most well known for co-founding Color--a photo-sharing startup that received a lot of hype and $41 million in VC funding but ultimately failed. But Pham is quick to point out that he's received plenty of rejections along the way, and even the successes come with important lessons, particularly in the case of Color.
I recently spoke to Pham, who's now chief business officer of the Santa Monica-based startup accelerator Science, to get his insight on what startup founders should do before they seek funding. Here are his tips:Check your expectations.
Getting startup funding is more competitive than ever--so it helps if you don't fool yourself.
"Just two years ago, seed investors used to raise half a million," Pham says. "People investing on the seed level want to see much more in a business than they used to--traffic, conversions, sales. If you're an e-commerce company you already need to be earning $100k per month to get seed funding."
As for the Series A round, "investors want to see a path to profitability," Pham explains. "Most e-commerce companies are seeking $3 million to $5 million in capital in the Series A round, so VCs want to see half a million in sales and growing before they commit."Solidify your brand.
Your business won't sell if your idea and brand image are murky. Identify your company's goals and values, then bring them to light through a solid social media presence, dedication to snagging media attention, a well-maintained blog, and reliable customer service and engagement. The founder(s) also need to embody the brand, so don't throw personal branding out the window, either.
"E-commerce is no longer just about revenue--it's about the brand. And building a brand means caring about your net promoter score," Pham says. "It doesn't have to be luring in a million people, but you need to have a decent amount of customers who are passionate about the brand. That extra attention spent on customer service and measuring customer satisfaction will go a long way."Know your traffic and conversion metrics.
Revenue is the No. 1 question Pham fields from venture capitalists when seeking funding for a new Science company. You need to have steady (and improving) traffic and conversions that are ultimately leading to increased revenue. However, remember there's no revenue without a brand--your brand is what will further your conversions and traffic. Sales and marketing go hand-in-hand.
If you target your audience right, traffic and conversions should follow. But thanks to new technologies, creating a startup is cheaper than ever--and that means competition is fierce. You'll need to create a delicate marketing balance.
"Investors are taking the social presence score seriously," he explains. "You can see it when people write about the brand on Twitter, on blogs, etc. You should always ask yourself--who are my repeat visitors, and are they spending more?"Answer this question honestly: Do I really need VC funding?
Pham suggests bootstrapping until you reach $100k a month in sales. Ouch. If that's not possible, think about crowdfunding or seeking the support of a mentor, family, and friends. Pham believes you need to have this level of revenue before seeking seed funding, or investors simply won't take you seriously. And when bootstrapping, don't forget about foundational resources, either--that means securing a partner, talent, advisors, and workspaces.
When I started Ciplex, I reinvested every penny back into the business. I spent more money than I earned from customers to create a better product. Don't focus on profitability too soon--avoid hiring full-time employees early on, and find efficient ways to get leads (like Craigslist). Be cheap, but smart.
Getting your startup off the ground takes a lot of work. Don't shoot yourself in the foot by seeking funding before you get the basics in place.
What are some other things startup owners should focus on before seeking funding?
Users expressed their outrage over a change to one of the social network's features. Fortunately, the company listened.
When Twitter unveiled a new feature on Thursday that triggered an overwhelming negative response, the newly public company taught everyone a simple, but important lesson: When everything goes wrong, the right thing to do is listen to your customers.
Within 24 hours of making a change to its "block" function, the company undid the move in response to a large volume of complaints. Users even started a petition with the hashtag #RestoreTheBlock after the company announced the update.
The fleeting change to the feature allowed people to block other Twitter users, but blocked users wouldn't be informed that they had been blocked, as they had been previously. Blocked users could still view or tweet at the person who blocked them, but their interactions would be invisible to the blocker, Reuters reported.
The backlash to the change was nearly immediate. Some users did not understand the change. Others claimed that the social media site was effectively enabling harassers, while leaving victims in the dark about abuse.
Wrote one user, @edcasey,"New @twitter block policy is like a home security system that instead of keeping people out puts a blindfold on YOU when they come in."
Another, @alainagrey14h, expressed similar disdain for the change, tweeting, "Don't make it easier for men to stalk our tweets and threaten us. We shouldn't have to be silent to feel safe. #RestoreTheBlock"
When it became clear to the company that users were strongly against the change, Twitter announced that it would restore the original block function. In a company blog post, Twitter executive Michael Sippey apologized on behalf of the company.
"We have decided to revert the change after receiving feedback from many users--we never want to introduce features at the cost of users feeling less safe," Sippey wrote. "Any blocks you had previously instituted are still in effect."
Sippey explained the company had tried making the change to protect users from abuse without having to deal with the implications of blocking another user.
"Some users worry just as much about post-blocking retaliation as they do about pre-blocking abuse," he wrote.
The company's fast action and follow-up apology were a textbook example of how to respond after inadvertently alienating customers, says Danielle Gano, the CEO of the bi-coastal public relations firm Elle Communications. "The key to successfully overcoming a crisis is to act quickly and not bury your head in the sand," she says. "Ultimately, customers are telling you what you need to know in order to retain their business, so start by listening to their feedback and then craft a plan and accompanying message that addresses what went wrong and how you plan to handle it."
Twitter's response appears to have paid off. After the social network made the announcement that the original block function would be reinstated, there was a positive outpouring from users on the site. Many thanked the company for addressing their concerns about the failed update.
"Whatever your opinion, it's refreshing to see a social media giant listening to users. #RestoreTheBlock #welldone", one user, @CColeshawDBS tweeted.
A lesson to us all--when you listen to your customers and respond to their concerns, they will be appreciative.
Don't rule out MBAs as a source of talent. Today they are focused on Main Street, not Wall Street.
There is a lot of hand-wringing among observers of the business-school scene these days. At the recent Thinkers50 awards ceremony in London, no less an eminence than Clayton Christensen (rated the world’s #1 Management Thinker and a big observer of the disruptive scene) proclaimed that those of us in the business-school orbit should "be very worried" about the future of business programs. Six months after the esteemed professor earned tenure at Harvard in 1999, in fact, he began to predict the demise of the entire enterprise, much to the chagrin of his Dean.
But bad news for the traditional way that business schools have operated may well mean great news for startups. Business schools, as we know them today, enjoyed a period of explosive growth beginning in the 1970s right through the 2000’s, in many cases paralleling the expansion of financial services as a portion of the total economy. Indeed, if you chart the growth of finance and the growth of MBA admissions, they follow almost identical curves. If a student got into business school, particularly a top-tier one, they were practically guaranteed a big salary bump upon graduation, especially if they got on the train headed straight for Wall Street.
One of the unintended consequences of both the boom in the financial services sector and the rise of the MBA as a hot credential is that it sucked a lot of talent out of other sectors-- and out of businesses that actually produce things. That era now seems to be at an end. The Wall Street Journal recently reported on findings from Michigan State University’s Collegiate Employment Research Institute, which found that hiring for financial services at the undergraduate level is expected to be "down by 40% across all degree programs." The forecast for those with an MBA is even worse: The report suggests a 58% drop in the posts offered by financial services firms for those with the degree.
But the implosion in financial-services jobs has triggered a fascinating new development: business schools are discovering entrepreneurship in a big way. While such programs have existed since the '80s, the entrepreneurship curricula was always seen as a niche. Indeed one of my professors at Wharton used to complain that the admissions office systematically discriminated against the independent non-team working students who had what it takes to start a business. Well, no more. Schools are promoting entrepreneurship and investing serious resources in making employment at smaller, growing businesses a viable career option. My own school has launched an incubator, the Columbia Business Labs, a co-working space for (get this!) MBA graduates.
So, if you’ve been thinking that no MBA from an elite school would deign to look at opportunities with your company, you might want to revisit that assumption. Your growing business may be the destination of choice for some of the best and brightest we’ve got.
As you take your company to the next stage, change management becomes a major challenge. Here's how to help your employees keep up (or move on).
As a second-stage CEO, one of your responsibilities is to orchestrate change. This includes everything from reacting to economic, technological, and regulatory shifts in your industry to establishing new policies and procedures within your organization.
Whatever change you're implementing, big or small, you need to consider how employees will react. Change looks a lot different when you’re sitting in the orchestra rather than standing behind the podium.
When it comes to change, people typically respond in four ways:
Eager beavers These folks embrace change easily. They usually have the skills to make the change, and, perhaps even more important, they have the right mindset. Their response is one of enthusiasm and excitement: "It's about time. Let's go! I'm right there with you." We love these people! They’re critical to successful change management and second-stage CEOs should be on the outlook for them when hiring.
Tentatives These employees are cautious or even downright nervous about making a change, usually because they know they'll need some new skills. They may not have kept up with training and are embarrassed that they've fallen behind. For these folks, provide training and professional development and see what happens.
Psychologically challenged For these individuals, the idea of change activates some deep fear, and it's going to lock them up. Rather than professional training and development they may need professional counseling if they’re going to be able make the change. Encourage them to leverage your employee assistance program, but be prepared: You may need to help them find a position that's less demanding.
Recalcitrants These people are the most damaging to your change initiatives. They will sabotage your initiatives and smile at you while they're doing it. They may have the skills to make the change, but not the right attitude. The change makes them feel threatened, and they resent you for it. You're moving their cheese. If you recognize these individuals, fire them as quickly as you can. Even better, send them to your competition.
This personality framework doesn’t just apply to frontline employees. It includes your management team, your suppliers, and other stakeholders. Recognizing how people respond to change is important for a second-stage CEO to know because change is not the exception in second stage, it's the norm.
Incremental versus radical change
How people embrace change also depends on severity and urgency, i.e., how much change is required and how quickly it needs to be implemented.
Incremental change is easier to initiate because it's gradual and usually proactive. It keeps people on their toes and helps the organization learn. Even so, not everyone is going to be happy.
Case in point: Bridget Lorenz Lemberg launched Forensic Fluids Laboratories in 2005 and has quickly expanded the Kalamazoo, Mich.-based drug-testing lab from a one-woman show to more than 60 employees and $12 million in revenue. To continue scaling, she has begun to introduce structure, including formal job descriptions and performance metrics. "We've gone from a free-for-all to holding people accountable," she says.
"Most employees have welcomed the structure," she adds. "The people who are doing a good job and care about the company absolutely love it. They realize that structure will weed out the people who don’t want to be here. The only resistance has come from employees who are falling behind."
Radical change, especially when it happens in a compressed timeframe, is more stressful for employees and is much more likely to trigger resistance.
Take Nancy Fisher, CEO of Data Distributing LLC, a reseller of IT medical imaging and storage solutions in Santa Cruz, Calif. When Fisher joined the family business in 1996, Data Distributing was selling optical disks and making less than $1 million in sales. Since then Fisher has not only accelerated revenue to about $10 million, but has also prevented the company from becoming a victim of industry commoditization by shifting its business model from optical disks to sophisticated hardware, software solutions, and installation services.
This shift required salespeople to dramatically change their approach. "And that didn’t go over well -; especially at first," Fisher says. "They were used to making quick sales over the phone. Selling complex solutions instead of widgets was not only a longer sales cycle but required different skills. Instead of doing inside phone sales, salespeople now had to go into hospitals and medical centers for face-to-face meetings."
When she outlined the necessary changes, "the backlash was tremendous," Fisher recalls. "Some felt they weren’t valued. Others resented being asked to do new things, so they rebelled and left. Things had been so good for so long, there was a sense of loss with some and entitlement with others. They felt like I was dictating to them: 'You will change or else!'"
Go overboard on information
Be aware that whenever you start talking about change, people will look at it from a position of loss. For some, it may be about loss of status or loss of control. In other cases you may be breaking psychological contracts that have been formed with employees, such as being able to operate in an environment without metrics (Lorenz Lemberg’s situation) or selling a particular product in a particular way (Fisher’s predicament). Even though altering these contracts can produce positive results, leaders should expect to encounter faulty assumptions, blame, anger, and frustration along the way.
When talking to your employees about change, especially radical, reactive change, be open and honest. Explain why you need to make the change and what you think the outcome will be. Tell them that it's normal to be apprehensive, but that you need their help to keep the business alive. Often when there is a major threat, business owners take the burden upon themselves and don't want to tell anyone about the big bad bear. If you have a bear at your door, tell your employees. If they decide to leave that’s their choice, but they need to know.
Remember, leading organizational change is not a popularity contest and you often have to make tough calls. Your challenge is to maintain your team’s productivity, and morale, during such periods. The more you understand how employees might react, the better you can mitigate resistance and motivate positive action.
If the agreement passes, government spending will increase--welcome news for beleaguered small businesses that rely on government contracts.
The budget agreement approved by the House of Representatives on Thursday could free up more money in government spending--and mean that government contract businesses will see some extra cash coming their way.
The two-year budget, which also is expected to pass in the Senate, raises domestic and defense spending, eliminating more than $60 billion in spending cuts while not raising taxes. Repealing the sequestration cuts from early 2013 means government agencies will have more to spend. Considering that the U.S. government is the biggest purchaser of goods and services in the world--spending an estimated $500 billion annually, 23 percent of which goes to small businesses--this could be great news for small government contractors.
Many small contractors lost business during the spending freeze and the October government shutdown. "A lot of our contractors have been getting pushback from the government under the sequester this year. This is an enormous opportunity for small businesses," says Lourdes Martin-Rosa, who owns a business that does project management and event planning for government clients. Martin-Rosa is also the adviser on government contracting for American Express OPEN, which provides financial services for small businesses and offers programs that help them land government contracts.
The biggest piece of the contract budget will go to defense. IT and fiber security will receive the second-largest amount, followed by construction, training programs, and pharmaceuticals.
Other small contractors are taking a wait-and-see attitude about the budget, which would provide $45 billion in sequester relief next year and another $18 billion in 2015.
"It is hard to tell until the budget bill is passed. It will still take a few more months for the government customers to figure out procurement strategies and directions," says Michael Lin, the CEO of Farmington Hills, Michigan-based LinTech Global, which provides enterprise software consulting and IT security for federal agencies and commercial enterprises. "But we think this is a positive direction."
From around Inc.com, here this week's best advice.
It's almost time to break out the party hats and raise a toast to the New Year, but there's still half a month left until we bid 2013 adieu. Author Kevin Daum says that's plenty of time to check off seven items on this end of the year to do list. Tying up loose ends now will prepare you for what's to come in 2014.
To start, make a list of three obstacles you can reasonably eliminate. If there was something that got in your way this year, chances are it will get in your way again next year. Remember to add to the list the things that are in your control -- for example: your own bad habits. Read more.
Eliminate Buzzwords From Your LinkedIn Profile
There's a reason why clichés are used so often. They're descriptive and help to clearly make a point. However, their over-use is the reason why they lose their impact over time. The same happens with some of the words you're using to describe yourself on LinkedIn - "strategic," "effective" and "driven" to name a few. Eliminate buzzwords to ensure that whoever is reading your profile doesn't skim over the entire thing. Read more.
Big Decision and Not Enough Time?
It's certainly more comfortable to make decisions that are based on data and evidence, but sometimes you just won't have that luxury. When you're given a deadline to make a decision -- and it's long before you feel ready -- ask yourself these three questions: What was your day one hypothesis? Do you at least know the general direction this decision will bring you? What do you have to believe for this to be the right choice? Read more.
Stop Worrying About the Future
For peace of mind, remember this: best and worst case scenarios never happen. "Everything is a continuum between what you'd like to have happen and what you dread might happen," Inc. contributor Geoffrey James wrote in a recent piece. Understanding this prevents you from feeling extreme disappointment when the outcome falls short of your dream scenario. Read more.
Build a Better BS Detector
If you don't have that built-in intuition allowing you to know when someone is lying, you're not alone. Follow these two steps to identify when someone is feeding you plain nonsense. First, ask the person to walk you through their thinking. Second, ask them to define their idea of success and see if they reach a logical outcome. Read more.
You have more opportunities than ever before to raise seed financing. Here's what you need to understand first.
Many assume that the archetypal venture capital firms around Silicon Valley and Boston--the likes of Kleiner Perkins and Sequoia Capital--supply almost all the initial financing for high-growth startups.
If that was ever true, it's becoming less so by the day. Angel investors have been muscling in on traditional venture firms. In fact, they're shifting the financing landscape--making it harder for a seed-funded firm to raise a Series A round of VC money.
Angels Are on the Rise
Thanks in part to the plunging cost of technology, angels have enjoyed a growing competitive advantage in funding very early stage companies. That's because the capital required for a tech startup today is often a fraction of what it was 10 or 15 years ago. Using open-source software and cloud computing, for example, a startup that might have once required $5 million to get off the ground can often do it for just $500,000 today.
This plays to the strengths of angels, who both prefer smaller deals and are typically quicker to make decisions than venture firms backed by institutional investors. In fact, angel investors now supply the overwhelming majority of high-growth startups with their first money after the founders have tapped family and friends.
According to Jeffrey Sohl at the University of New Hampshire, angels invested $22.5 billion in more than 60,000 high-growth U.S. ventures in 2011. Traditional venture capital firms invested slightly more total money, about $28.4 billion, but they poured it into just 3,673 deals--a tiny fraction of the number of companies financed by angels.
Get to Know Angels
All this offers major new opportunities for entrepreneurs seeking seed capital. But it's easy to misunderstand how angel investors work and what they want. Having studied and watched many angels firsthand, I offer seven important insights:
1. Don't be fooled by the word 'angel.'
These investors aren't donating to charity. Most are disciplined investors; they are often successful entrepreneurs and high-tech professionals in their own right. It's important to understand an angel's personal priorities. Angels may be willing to take slightly more risk with startups in a field of particular interest to them, or in companies for which they can provide specialized expertise and guidance.
2. Understand angel networks.
Angel investing is a personal business, and angels rely heavily on personal networks of like-minded investors. Many angels work in groups, jointly vetting proposals and putting high value on others' opinions. Even when angel investors work separately, they share ideas and listen closely to one another. The most important key to raising money from an angel is often the good word from another angel.
3. Look close to home.
Most angel investments are within 50 miles of the angel investor, and angel networks are often in geographic clusters. There's no mystery here: Early-stage investors need to stay close to the people they are betting on. Silicon Valley and Boston have particularly big clusters, but many other cities have them, as well. If you don't live near an angel cluster, consider moving.
4. Shared roots matter.
Maxim Faldin and Kamil Kurmakayev, two Russian-born Stanford graduates, had no luck raising seed money from traditional VCs for Wikimart, an eBay-like site in Russia. Then they targeted their search for investors with natural affinities: those with Russian roots or international experience, and people with experience in e-commerce. That led them to Fabrice Grinda and Jose Marin--professional angels with extensive expertise in e-commerce and global markets. Today, Wikimart is thriving.
5. Angels will hunt for the fatal flaw in your plan.
You may have a perfectly reasonable plan for a $10 million business. But angel investors are looking for companies that can ramp up to $50 million or $100 million in revenue. Likewise, they aren't looking for incremental improvements over the competition. They want "disruptive" ideas that will upend existing business models. If your idea is disruptive, however, can you hold on to it? Can copycats and incumbents jump in as soon as you've shown the way?
6. Your team may be more important than your concept--or even you.
Angel investors want people who can execute the plan. They will place heavy weight on not only your track record, but also your management team. Beyond looking at résumés, angel investors want evidence that your team can work together when the going gets tough.
7. Angels are evolving fast.
The success of traditional angels has spurred a new breed of "superangels" or "micro VCs." Like traditional angel groups, these funds invest in seed-stage companies but are structured more like traditional VC firms that raise capital from outside investors.
You also hear a lot these days about startup accelerators like Y Combinator and 500 Startups. Their approaches also seem to work well; for example, Y Combinator has graduated approximately 430 companies, including top-notch startups like Dropbox. Saeed Amidi, founder of accelerator Plug and Play, is now setting up similar structures around the world.
This may just be the start. The Jumpstart Our Business Startups Act--or JOBS Act--now allows small companies to market directly to individual investors through crowdsourcing over the Internet. This regulatory change could be the biggest shift yet for early-stage investing. One thing is for sure: Brand-name venture capital firms are not the only game in town.
This piece was originally published by Stanford Graduate School of Business and is reprinted with permission.
When's the best time to think of the biggest business lessons? Just before the start of a new year.
It's the most wonderful time of the business year. We're in the midst of that sweet temporal spot--right after Black Friday and just before Christmas--when we work frantically, party merrily, and reflect on what we've learned.
This year, the take-aways are writ large. There are many things we should have learned, especially when it came to rolling out websites. Read on for the biggest takeaways of 2013 and speak up in the comments if there's something I missed.
Measure twice, cut once.
The rollout of the Healthcare.gov website was a total disaster. How on Earth did anyone think it was a good idea to roll out a project of this scope without even beta testing it first?
It remains to be seen whether the website, and the new health insurance law, can fully recover. While waiting for perfection is rarely a great market strategy, it's hard to recover from an introduction that isn't even "good enough for government work."
Privacy? That's so passé.
He didn't quite make Time's "Person of the Year," but Edward Snowden's actions made our list.
With the rise of Facebook over-sharing and personal data-compilation companies, maybe it shouldn't have been a surprise. No matter what you do, someone, somewhere is probably watching.
Fear drives action (and markets).
Shortages in civilian ammunition, attributed to gun owners' fear that the 2012 Sandy Hook school shooting would lead to more gun control, meant boom times for ammunition manufacturers. All of which serves as a reminder that it's often easier to get people riled up about what they're afraid of losing, rather than what they might win.
Nostalgia is a force multiplier.
One smart entrepreneurial strategy is finding a compelling solution for customers' problems. But a better one is fixing pains your customers don't even realize they have.
This year, we got a reminder that sometimes it's "the pain of an old wound" that customers need cured the most. What else would explain Twinkies' hype?
After sales plummeted, Hostess filed for bankruptcy and the 80-year-old snack disappeared. But in the wake of a consumer uproar, an investment firm stepped in, reintroduced the sugary snacks and enjoyed a massive wave of publicity.
Go above expectations.
The year ended with the death of Nelson Mandela and wall-to-wall coverage of his funeral. Selfies and fake sign language interpreters aside, the lesson of Mandela's life was to give and forgive more than anyone expects.
A more modern business rationale for this lesson comes from WestJet, the Canadian airline that played Santa for a planeload of unsuspecting passengers. The company's generosity may have been a marketing ploy, but it paid off big time in the form a viral video.
The new pope, Francis, has been at the forefront of the news in large part because of his overt humility, from living in a small apartment and cruising around in a five-year-old Ford Focus to his "who am I to judge?" remarks in response to a question about gay priests.
This lesson in humility kept popping up for me personally this year. It really does pay to be humble when you set out to change the world.
Don't take time for granted.
The typhoon that struck the Philippines and left nearly 7,800 people dead or missing is but one example of a world where things cannot be controlled. For an entrepreneur, the scarcest resource isn't money, ideas, or people. The only truly finite resource is time.
We'll have 365 days to play with in 2014. Let's use them well.
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Yes, you can have a weekend.
That principle, though, runs up against what we know to be true about something else: the value of adequate work-life balance. Making sure that you spend a healthy amount of time not working has been shown time and again to lead to higher levels of productivity, engagement, and satisfaction.Do Weekends Exist for Entrepreneurs?
This contrast was at the heart of a conversation started by consultant Dorie Clark on Quora, who asked, whether for entrepreneurs, weekends exist? Serial entrepreneur Michael Wolfe answers with a resounding yes. His belief: Balance is not just possible, but necessary.
"Rules like 'weekends don't exist' are ridiculous unless you plan to die a fat, lonely, loser or unless you want your first company to be your last," he writes.
Wolfe doesn't deny that entrepreneurism requires a lot of work. But he goes on to detail how he manages his own personal balance, approaching the question in chunks.Your Day
Wolfe says that each day, he chooses a few things that he needs to get done during the day and focuses on them, putting all other tasks onto a to-do list to be accessed later.
He gets some exercise by walking, running, or biking to work, and he makes time to eat dinner with his family, though he sometimes has to do a business or networking meal. He might get some additional work done after dinner, he says, but doesn't take on anything too big because it will cause insomnia.Your Week
Wolfe admits to getting a little bit of work done over the weekend. But most of Saturday and Sunday are spent with family and friends--including a date night on Saturdays with his wife. The family also has one night out each week, and also meet on Sunday nights to discuss plans for the forthcoming week.Your Year
Wolfe is able to make some room for vacation, with time off during the holidays and schedules weekend ski trips in the winter. He also travels with his family in the summer, but says he works a lot during that trip.Your...Decade
This is where things get real interesting: Wolfe writes that he makes sure to take a sabbatical every few years. While this is more easily accomplished for a serial entrepreneur who might find himself between projects and flush with money after executing on an exit, the principle behind taking extended time off is still a strong one:
"Work hard followed by long break is a much better pattern than the year in/year out slog of one frantic summer vacation per year until you retire or die," he writes.
The idea here isn't to replicate Wolfe's schedule, but instead to recognize that by approaching your work-life balance from several different angles you should be able to find the pockets where you can take some needed time away from your company.
Uber's long-term prospects dwarf cool cars and an easy-to-use app. That's the model every company should have in mind.
The key to any company's long-term growth is its ability to identify how its products and services of today can form the infrastructure of a bigger, better business model tomorrow.
Take, for instance, Uber. The on-demand car service has become beloved by consumers in urban areas for its sleek cars and easy-to-use app, but does innovating upon a basic taxi service really warrant the kind of hype--including $100 billion projections--it's gotten in tech circles?
That's a question Kevin Roose explored recently in an article for New York Magazine. The answer, Roose explains, is no. What warrants that projection is that Uber's car service of today could form the backbone of a landscape-changing logistics, delivery, and travel company of tomorrow. Uber's Christmas tree delivery program serves as an early example.Looking at the Big Picture
"Eventually, like Amazon, it can become something akin to an all-purpose utility--it'll just be a way you get things and go places," Roose writes. "There's a reason the company recently changed its tagline from 'Everyone's private driver' to the much broader 'Where lifestyle meets logistics.'"
The Amazon comparison is an easy one to make. What started out as an online bookstore in the early days of the Internet would eventually follow its nose to become one of the world's more prominent retailers, web hosting services, and tablet maker--not to mention that whole drone thing.History Repeating Itself
This comparisons spread offline. In November, The Atlantic compared Amazon's model to that of Sears in the early 20th century. The retail powerhouse leveraged the burgeoning rail and road systems--as well as its hefty catalog--to dominate the retail marketplace as something far greater than a department store for the better part of the century, Derek Thompson explains.
And the comparisons hold on smaller, less global scales--where they might be most of use to you. Dating service HowAboutWe.com launched a new service that helps already-lovestruck couples plan date nights. L.L. Bean, the Maine company that made its name as an outdoor clothing manufacturer, eventually broadened its footprint when it began offering outdoor adventures as an extension of its core business. In both these cases the company found ways to become useful in other parts of its existing ecosystem.
Uber's case is potentially global. The hype makes a lot more sense if it eyes becoming a global logistics powerhouse. As Roose writes, "In ten years, we might be scratching our heads: Wait, Uber used to be a car service?"
To make better decisions, set a deadline and stick to it.
Noreena Hertz talks about the difference between making instant and drawn-out decisions.
Noreena Hertz has found that experts who appear the most confident are those who underperform.
Often, your employees on the ground can tell you more about your business than management.
Unexpected things can change your decision-making, even if you don't realize it.
Noreena Hertz explains the importance of carving out time to think.
The author of Eyes Wide Open talks to Inc.'s Allison Fass about what entrepreneurs can do to make good choices under pressure and conquer indecision.
Do your leadership skills pass the Peter Drucker test?
Peter Drucker is to management literature what J.R.R. Tolkien is to fantasy fiction. Drucker did it first. He did it best. And almost every theme explored by today's practitioners was prefigured in his writing.
Earlier this year I reached out to Rick Wartzman, executive director of the Drucker Institute at Claremont Graduate University, to ask whether any of the ideas Drucker espoused over his 60-odd years as our preeminent business thinker had proved wrong. (The conclusion: not really.) We then wandered onto the subject of traits that define a Drucker-like company. Inspired, Wartzman assembled a list of 10, which appeared on Inc.com.
Wartzman recently sent me a second list: the 10 traits of a Drucker-like manager. He used "manager" instead of "leader" because Drucker--who fled Nazi Germany--worried about people conflating leadership with charisma. Eventually, Drucker grew comfortable with the concept of leaders, drawing the famous distinction that "Management is doing things right. Leadership is doing the right things."
In essence, Drucker saw leadership in terms of performance and effectiveness. That is true for both CEOs and middle managers. Wartzman's list, below, applies to both. Phrases in quotation marks are Drucker's own words.
You are a Drucker-like manager if you:
1. Make sure your own objectives and your team's objectives are in alignment with the company's overall mission. Start with an unequivocal answer to the question "What business are we in?" Then make sure everyone, from the bottom up, is pursuing only activities that advance the cause. Drucker recommended using a "manager's letter," which employees write for their supervisors twice a year. In it, they state their perceptions of the organization's objectives, their own objectives, their understanding of how their performances will be measured, what they must do to reach their objectives, the barriers they must overcome, and how the organization might help or hinder them. "Then the manager sits down with his reports and asks, 'Why did you think that was our objective?'" or 'Why are you pursuing this?'" says Wartzman. "It's a great way to catch misunderstandings and make sure everyone is on the same page."
2. Maintain a clear list of priorities--never more than a few, and always tackled one at a time--as well as "stop doing" and "never start" lists. Limiting priorities and addressing them one at a time improves focus and the probability that something will get done. As for the "stop-doing list," adherents often credit Jim Collins with this idea. But it was Drucker who introduced the concept of "planned abandonment:" urging managers and leaders to jettison processes or activities not worth the time and effort. ("If you want to start something new, you have to stop doing something old," Drucker wrote.) Sometimes the better bet is to not start something in the first place: for example, turning away a customer not in line with the company's strategy. Drucker used the term "posteriorities" to describe items on both stop-doing and never-start lists. "Time was the most precious resource back then, and it’s even more true today," says Wartzman.
3. Carefully track where your own time goes and never waste others' time by triggering the "recurrent crisis" through lack of foresight, overstaffing projects, holding too many meetings or sending out information that is either irrelevant or hard to understand. CEOs find it eye-opening when they try the experiment of tracking their activities hour by hour over the course of a week or two. "When you ask people where their time goes what they tell you--and what they tell themselves in their heads--is often wrong," says Wartzman. "You may realize you are spending a quarter of your time on something that gets no results." Even worse than wasting your own time is wasting the time of others. Drucker reminds us that leaders can be their own organizations' worst bottlenecks. "In a knowledge organization, if something sits in the leader's in-box for two weeks, it's like the line being down in a factory for two weeks," says Wartzman. "No one would tolerate that."
4. Favor the future over the past and focus on opportunities, not problems. We've all heard the motivational saw about turning problems into opportunities. But an opportunity can become a problem if you spend too much time trying to get something unbudgeable off the ground. "We keep pushing on things because of our ego or because we've invested so much in it," says Wartzman. "We believe if we can just give it one more push it will happen. Instead, we should be focusing on the things that have a better chance of creating tomorrow."
5. Staff and promote by, first, gaining clarity around "What are we trying to do?" and then matching people's strengths with those key activities. Drucker and Collins agree on setting priorities but part ways on hiring. Rather than get the right people on the bus, Drucker believed managers should choose people with the right skills and experience for specific jobs. "Peter believed in putting 'what' before 'who' rather than 'who' before 'what,'" says Wartzman. Business leaders are split on this one. Some argue that when talent rears its head you should snap it up--the right role will come along. Others would rather define job descriptions in strict adherence to the company's objectives and hire accordingly. "You staff for the mission," says Wartzman.
6. Invite dissent and be confident that important decisions "should be controversial" and "acclamation means that nobody has done the homework." In the 1940s, Drucker embedded at General Motors, where he observed Alfred Sloan's disdain for dissent-free meetings. Drucker and Sloan thought that if you get smart people talking, they will naturally have their own opinions and come at problems from different angles. Easy consensus suggests failure to think through other options or fear of incurring the boss's wrath. "You have to create a culture of trust where everyone feels free to disagree," says Wartzman. "You can't just tolerate dissent. You must invite it."
7. Remember that every decision you make is "like surgery. It is an intervention into a system and therefore carries with it the risk of shock." When leaders make big decisions they affect the entire organization. When leaders make little decisions they are often perceived as big--because of their provenance--and so have an outsize effect. Particularly as companies grow, leaders lose track of all the connections among people and projects, the delicate balance of co-worker relationships, the human sensitivity to change. "A very senior person may make a decision that is good and sensible and, on its face, completely non-controversial," says Wartzman. "Then it's carried out, and people are really taken aback." Identifying and consulting with those most affected can mitigate some of the ill effects.
8. Don't blame others when things go wrong. "Accountability" and "responsibility" are Drucker watchwords. Middle managers, in particular, are liable to protect their necks at the expense of their underlings' necks. But "even people at the top will turn around and blame others," says Wartzman.
9. Understand that the critical question is not, "How can I achieve?" but "What can I contribute?" For middle managers, the message is clear: advancing the company's mission trumps advancing their own careers and fortunes. For CEOs, the opportunity to contribute--to their customers, to their employees, to their communities, and to the world--are greater. "Drucker saw companies as organs of society," says Wartzman. "Maximizing shareholder value or making a profit are not unimportant. But they should be the consequence of making a meaningful contribution to the world."
10. Routinely demonstrate that "leadership is not characterized by the stars on your shoulder. An executive leads by example." "It's probably too trite to say Drucker was a 'walk-the-walk' kind of person," says Wartzman. "But that's the heart of it."
To keep up with where digital marketplaces are going, invest in tech, people, and a few decent dinners.
When I want to talk about the future, the first thing I do is sit down to dinner.
At my company, we frequently organize small group dinners to generate discussion about the future, particularly the future of technology. I like to invite a cross-section of potential futurists from within 1-800-Flowers.com and the wider technology community. I might ask a new recruit from our web operations team, a manager in customer service, and someone I heard speak on a technology topic at a conference. I might ask members of my Celebrations.com team, a technology entrepreneur I met on the road, and a veteran of my marketing team. These dinners are a mix of youth and experience, technology and tradition. My point is to gather the group and get them talking. Then I sit back and listen and take notes. Because I know I’m watching the future unfold.
Predicting the future can produce a lot of anxiety in business leaders, but I’ve learned there’s a trick to it. The "future" that we, in established companies, are planning for is likely already happening in emerging areas of technology. If you can find the people who are trying, testing, and imagining that emerging technology, they will tell you what the future holds.
I like frequent dinners, but any small gathering will do. I recall one enlightening brown bag lunch I had with the summer interns of the investment bank Allen & Co. I was the invited speaker, but I split my time between gabbing about my own career and asking this group of smart, young ambitious people about the technologies they prefer. They gave me an earful about Twitter (old news), texting (essential!), and Facebook (good social media platform but new ones are coming on strong.) They were happy to tell me what was coming up next. I was happy I’d taken the time to ask.
As you gather intelligence, remember that in order to meet the future you will have to invest in two key (and connected!) areas: technology and people.
Technology as an investment has become a given. In its 2013 Retail Technology Spending Report, eTail found that more than 60 percent of retailer respondents planned to boost tech spending in the next 12 months. Areas of investment include search, personalization, mobile, and social media engagement. A.T. Kearney's 2013 Assessment of Excellent in Retail Operations report found more than 85 percent of respondents plan higher investments in self-serve terminals, mobile apps, QR code-enabled information, and mobile point-of-sale technologies.
The people part of the tech revolution is also critical. Some advice:
Recruit tech-heads. Look for people who love and use technology, whether or not they need to have such skills in their jobs. These are individuals who are thinking about the future on a daily basis. Their experiences will be your crystal ball.
Give them the right kind of space. Sometimes, a new, future-facing idea has difficulty taking hold in an old-school environment. When we wanted to launch Celebrations.com we didn't put the team in our Long Island headquarters but in its own offices in Manhattan. That physical space allowed new ideas to flourish.
Talk to technologists who don’t work for you. Read the blogs, attend the conferences, engage in the social media discussions about what is new and emerging in technology. Don’t wait for the information to trickle down to you; join the digital conversation and soak it up.
The new digital marketplaces will be built by the right mix of technology and people. Invest in both or miss the future.