entrepreneurial thinking

Jan 12, 2015

Why entrepreneurship by necessity scares the hell out of me

Originally published on December 4, 2014 as a Guest Column in The Globe and Mail: http://www.theglobeandmail.com/report-on-business/small-business/starting-out/entrepreneurship-by-necessity-scares-the-hell-out-of-me/article21876071/

You won’t often see me get upset over the rise of entrepreneurship in Canada. But this is one time, in my 25 years as an entrepreneur, I feel I have to voice my opinion.

You shouldn’t have to become an entrepreneur because you’ve been downsized. You should want to become an entrepreneur because starting your own business is the one thing that you want or need to do more than anything else in the world. Entrepreneurs should start businesses because they see opportunities to do something different, something better than the competition. They’re in business to leverage new ideas to shake up sleepy markets. The function of an entrepreneur is to disturb the status quo, to blaze a new trail and to make a difference.

Unfortunately, that urge to build a business isn’t what’s driving the many people who have been forced to seek self-employment in the wake of the 2008 recession.

Over the past five years, much has been written on the resurgence of entrepreneurship. I was particularly struck by a recent article published on CNBC.com entitled, “After recession, wave of ‘accidental’ entrepreneurs.” “Last year, almost 13 per cent of the U.S. working-age population was in the process of starting or running a new business, according to the most recent Global Entrepreneurship Monitor study by Babson College – a slight decrease from 2012 but a jump of 67 per cent from 2010,” writes Nancy Mann Jackson. “And more than one in five of those starting a new business in 2013 said they did so out of necessity rather than opportunity.”

I know the old saying, “necessity is the mother of invention,” but necessity in the form of entrepreneurship – starting your own business, finding clients, meeting payroll, and working ridiculously long hours in the process – just shouldn’t be.

Why? Entrepreneurship is not for the faint-hearted, because all too often it leads to stories like the one Ms. Jackson shares in her article. She tells the story of Angela Daidone “who became a freelance writer and marketer after being downsized three times from public relations and marketing jobs.” For Ms. Daidone, self-employment has been an emotional roller coaster. “You go through bouts of depression because you’re always worried about paying the bills,” she said. “When jobs don’t come through, you see it as a failure.””

Ms. Daidone’s concerns should be taken to heart by anyone considering the path of self-employment, and maybe – more importantly – by our political leaders. I’m not a political animal, but I believe we as a society need to step up and provide greater opportunity for retraining, co-op, apprenticeship and related programs to help to reconfigure people’s skill-sets and open up their frame of opportunity – not force them onto a path of ‘necessity’.

We’re not all cut out to be entrepreneurs. I remember one meeting with a very bright, articulate client. She had created a good product that was just beginning to build traction in the marketplace. She was talking to a number of people to find the “easiest” way to take her business to the next level. One option was to raise capital and open her own plant, but she didn’t want the financial risk. The second option was to contract an overseas plant to manufacture the product for her, but she knew this would entail a lot of due diligence, travel and personal time spent overseeing quality control in another country. She did not want to spend that much time abroad. So she asked me, “what do you think I should do?”

I thought about it for a nanosecond. As hard as I searched my instincts and experience, I could only come up with one answer: “Go to bed and get a good night’s sleep. When you wake up, go find a job.”

This may seem glib, even rude. But it isn’t. Business, especially entrepreneurship, is all about attitude and will, the things that drive us to make a difference in the businesses that we build. The truth is – as any entrepreneur knows – that building a business means sacrifice, risk and tremendous uncertainty. This life isn’t for everyone.

Early in my career as an entrepreneur I had the good fortune to sit down to dinner with a gentleman who was nearing retirement from his own 40-year entrepreneurial journey. I asked him one simple question, “when does this get easier?” His reply spoke volumes: “Sorry Ken. I don’t know yet”.

I wish that I had the perfect solution for those that have found themselves necessarily self-employed. I don’t. I do know, however, that we can’t get dazzled by fantastical statistics that promote the near-term rise in entrepreneurship as a completely positive trend. For some people it’s a trap.

How can accidental entrepreneurs escape their circumstances? Stay in touch with friends and colleagues. Tell them the truth about your business. There’s no shame in struggle. Let them know you’re open to all offers. If you’re lucky enough to be offered another job, stress how much you’ve learned and stretched as an entrepreneur. And remember: Your next boss will be lucky to have you.

 

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Category: Entrepreneurship, Icicle, Spyder Works

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Nov 17, 2014

Why you can’t be all things to all customers

 

Originally published on October 14, 2014 as a Guest Column in The Globe and Mail: http://www.theglobeandmail.com/report-on-business/small-business/sb-marketing/customer-service/you-cant-be-all-things-to-all-customers/article21016160

When you first start your business, the ideal customer is simple – she’s anyone who walks through the proverbial door with money in their pocket. How do you decide what services to offer her? Usually, you’ll take on anything that sounds even remotely close to what you think that you can do.

This is what I might call the “yes, absolutely we can do that” phase. Of course, once the client is out the door, “yes absolutely” is quickly followed by, “who do we know that actually knows how to do what the customer is asking for?”

Saying yes to customer requests is a very exciting phase of building a business (or a new business division). And, frankly, that excitement should never completely go away.

Customer requests do two things: they identify market needs, and they push entrepreneurs to think about their next product or service offer.

As your company matures, you tend to realize that you can’t be all things to all people.

But that’s okay. As you figure out what it is you do best, there may even be some existing customers that you have to let go – and that’s okay, too. The key to sustained business success is to identify a substantial, pre-qualified group of customers who are willing to purchase your products or services at a profitable price-point.

Identifying your core clients – so that you speak their language, support their interests, and listen to their feedback – is the most important job in business. Here are three steps I like to suggest:

1. Generate a comprehensive list of both your current and the potential target customers that you have in mind.

2. Once you have that universal customer list, identify the target groups that you think have the highest potential. Study the wide range of attributes that you believe are important for a prospect to become a customer of your company. You need a cross-section of criteria that include demographics (characteristics such as business sector, title, age, gender), psychographics (psychological factors such attitudes, values, likes and dislikes) and geographic attributes (proximity to your business or its distribution network). To be clear, you must go deeper than simply describing where your customers live or how old they are. You need to work across all the ranking areas to create a useful customer profile. For example, simply specifying adults aged 18 to 49 who live in Washington D.C. is too broad. Create profiles of your various target groups based on what they like and don’t like, and on what they think, watch, eat, wear, visit, experience, and so on. Essentially, you need to think of your customers not as points on a graph, but as people.

3. Create a ranking system to measure the quality of the leads (potential customers) that you are trying to sell to. At my company, we use a tool we created called the Lead Quality Index™ (LQI). Essentially, it’s a grid. We list potential customers down the left-hand side and our ranking criteria across the top. We use categories such as corporate sector (e.g. retail, consumer goods, services), title (co-ordinator versus CEO), location (Toronto, rest of Ontario, rest of Canada, or beyond) and mindset (forward-thinking, pioneering versus market follower). The LQI is no guarantee of success, but it helps us think through and stay focused on our highest potential opportunities.

We only have so much time in a day. Staying focused on who we are selling to and what we can offer them is all-important in establishing long-term, mutually beneficial relationships.

The voice of the customer needs to be heard throughout your business. Remember, you don’t buy what you make — you create your products and services to sell to other people, so it’s their vote that counts.

I was once on a conference call to plan the relaunch of a national store brand for a leading retail chain. Because many of the client’s products required explanation to shoppers, a member of the chain’s merchandising team asked if they should set up the stores’ ‘help’ section to suit the needs of the company, or the shopping behaviour of the customer. One of the owners piped in to say, “set up the section to the liking of the customer, and I’ll adapt.” He had it right.

As Wal-Mart founder Sam Walton famously said: “There is only one boss; the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”

Bottom-line: Know your customer. Think like a customer. Delight the customer. In return, they will delight your bottom line. And they’ll point you in the right direction for the future.

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Category: Entrepreneurship, Icicle, Spyder Works

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Sep 22, 2014

Employee happiness matters more than you think

Originally published on September 16, 2014 as a Guest Column in The Globe and Mail: http://www.theglobeandmail.com/report-on-business/small-business/sb-digital/innovation/employee-happiness-matters-more-than-you-think/article20600181

I remember the flight well: It was 2010 and our first book on innovation had been successfully released. I was on my way to Cannes to deliver a workshop at the annual World Innovation Convention, and was excited to be making the trip.

What struck me was the fact that the companies attending this conference didn’t just represent billions of dollars in spending and revenue – they represented tens of billions of dollars. My business wasn’t even a rounding error for them.

In my workshop, I focused on the generation of small, incremental ideas: those ‘little things’ that leave a big footprint on your organization and most importantly on revenue. Following my presentation, the chief innovation officer of a major U.S. company approached me. He told me that the company had grown to such a mammoth size over the years that it cost more to submit an internal proposal for a new idea than it did to start the company in the first place.

This was a business-changing conversation for me. As an entrepreneur, I gained insight into the value that a boutique consulting firm can bring to the global marketplace. As an innovation thought leader, this encounter made me recognize the importance of intrapreneurship: eliminating the barriers that squelch bottom-up internal innovation.

Intrapreneuring, of course, is all about empowering your work force to think like owners, and identify and implement ideas to move the business forward. It’s about managers doing less telling and more listening. It sounds simple and should be intuitive. But true intrapreneurship has been surprisingly slow to emerge.

Its importance was recently reinforced by LinkedIn founder Reid Hoffman in his new book The Alliance: Managing Talent in the Networked Age. “Companies need entrepreneurial talent throughout the organization in order to respond to rapid changes.” The importance of intrapreneurship, however, goes further than idea generation. Empowering your people has an additional benefit: besides new ideas to improve products, services and process, it helps to surface new ways attract, engage and retain great people.

Why is this important to all of us? Because if business success depends on happy customers, happy customers come from energized, engaged employees. A recent article co-authored by McKinsey and the Disney Institute offers this important insight: “The secret to delighting customers? Put employees first.” When employees are encouraged and motivated to do their best work, they will continually delight your customers with new and better products and services.

The same article goes on to say, “companies that had a 1-percentage-point lead over their peers in key customer journeys typically enjoyed a 2-percentage-point advantage in revenue growth. In addition, companies that deliver excellent customer journeys increase employee satisfaction and engagement by 30 per cent.”

It’s all intuitive, really. Who’s better positioned to recognize new opportunities for better products and processes than those who meet customers every day? And what better way to motivate and engage your workforce than to listen to them and respect their insights?

Having spent many years in manufacturing, I’m impressed with American Airlines’ Fuel Smart program. Founded in 2005, the program aims to reduce fuel consumption by implementing employees’ suggestions. Through simple ideas from employees, like using one engine during taxiing, American Airlines has saved billions of dollars in reduced fuel costs. This concept resonates with me because I have always engaged my employees to help my company do things better, and saved thousands of dollars along the way, which for small businesses is a big deal.

As an entrepreneur, I’m also moved by Adobe’s Red Box innovation program. As a 2013 Adobe blogpost, “Imagination Sparks Innovation,” explains, “at Adobe, we truly believe that anyone in the company, irrespective of title or function, can innovate.” To bring employees’ ideas to life with minimal management interference, Adobe developed its KickStart Innovation Workshop. “Employees are given a red box. Inside is everything they need to become an Adobe Innovator, including some seed money on a pre-paid credit card with a step-by-step process to originate an innovative new concept, and then use that money to validate that concept with customers.” Imagine that: A suggestion box that offers recognition, process and capital.

As entrepreneurs, we may not be able to give everybody in our organization a ‘red box’ to test new ideas. But we can certainly take the time to listen, mentor and fund a few choice ideas percolating within our organizations.

The good news is that companies large and small are ripe with entrepreneurial talent. Generation Y employees, and the younger millennials (born after 1980), were not raised like the generations that came before them. They were not told to keep their heads down, put one foot in front of the other and not to cause problems. They were raised to think independently and make a difference. Growing up with social media, millennials are accustomed to interaction, dialogue, opinion and debate about anything and everything, at work and at play.

Today, smart leaders drive innovation by making their workplace more appealing, stimulating and engaging. It’s no small change – you want to attract and retain the best of the best. But it’s all based on basic skills: listening, sharing, empowering and collaborating. Ready to get started? Have a positive attitude. Build a culture of belief. Blow up the barriers that divide the thinkers from the doers. Success will follow.

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