Cutting the corners

March 9th, 2014 → 8:43 am @

I bought a car for my children to use to practise driving. My daughter smashed in the rear, then the right hand side.  When she came home with the left side stove in, I asked her what had happened.  She snorted with 17 year-old derision. “They put the pillars in the mall carparks in such stupid places!”

She had, once more, been cutting corners.  She was a reasonably capable driver, and was fine on the open road.  When she got off the road, she immediately forgot about careful driving and began to focus on her next objective (usually buying stuff, or meeting her friends at the mall).

A lot of entrepreneurs show similar behaviours.  When they’re out selling, or pitching to investors they play by the rules.  They practise the trial close, the elevator pitch, and many other techniques of selling and build methodically toward their goals.  When they return to the office, they crash into operational pillars.

The pillars they hit are as predictable as the ones my daughter hit:

The recruitment pillar – rushing to hire “cool” people, who are not suited to the company

The product release pillar – releasing products before they are ready

The communication pillar – not keeping team members and shareholders up to date with what’s going on

…. and so on…  each one of them avoidable and, just like my daughter, the entrepreneurs hit the same pillars repeatedly.

And, like my daughter, they usually find someone else to blame because, they are no more interested in operations than she is in safe parking.  My daughter, thankfully, moved past her corner-cutting stage and began taking responsibility for all her driving behaviour.  Some entrepreneurs also begin to take responsibility for delivering methodically on all aspects of their business.  Others wisely recognise that they will never have a flair for operations, and hire managers to run their businesses.  But some keep cutting corners until a pillar collapses and their business fails.

There are entrepreneurs who are also careful, methodical operational managers.  But I have found these to be the exception.  Most need to learn how to deal with the ‘boring’ operational pillars.

 

Entrepreneur behavior

Pay equity as a measure of a person’s worth

January 7th, 2014 → 6:22 am @

Entrepreneurs tend to measure their worth through their achievements.  They see close links between their actions and outcomes… “I work more, and I get more”, “I find a new product/sales model/market and I make more sales.”  They also spend a lot of time negotiating and fulfilling contracts, so the link between agreement and delivery is also clear.  In the entrepreneur’s world, “I eat what I kill” or “I stand by the deal I made” often sums up his/her view.  And the ultimate measure of performance (and often self-worth) is the value of the company which is created.

The employee often does not have such clear measures.  Individual performance is often hard to measure in a team, and the employee seldom gets the satisfaction of being able to say “I built this company.”  So entrepreneurs should not be surprised to find that employee self-worth may be tied to quite different factors, with “relativity” being one of the commonest. (more…)

Employees

Monitoring performance in start-ups can compensate for entrepreneur over-optimism

November 21st, 2013 → 6:56 pm @

Entrepreneurs tend to be bullish about their performance.  They need extreme optimism to keep them motivated, but that optimism can easily turn to self-delusion.  I thought about  that the other day when Henry rang to tell me he was about to ‘crack’ the Japanese market.  I was sceptical.  I remembered him being about to ‘crack’ the USA a couple of years earlier, and New Zealand a year before that.  I dismissed his comment as just more puffery. (more…)

Entrepreneur behavior

“Mentoring” is easy to offer but not always easy to deliver

September 23rd, 2013 → 11:31 am @

A while ago I engaged with an aspiring entrepreneur to drive a new company.  The business model had been proven to work, and I just needed someone with energy and a sense of ownership to make it happen, in exchange for modest income plus equity.

The entrepreneur had already started a small business in a similar space and said that a key motivation for taking this role was to get mentoring from the Board.  I was happy with that.  It explained why an entrepreneur who had their own thing going might put it aside to work on my business for a couple of years.  I have mentored a lot of entrepreneurs, and was happy to help one who would also be helping me at the same time.

My experience with entrepreneurs is that they are opinionated, self-motivated, and impatient.  The mentoring they seek is usually of two types:  Most often it’s about problem solving.  They call up at any hour to ‘run an idea past me’.  We analyse the situation together, and they quickly decide how they will handle it.  The second, less common, type of mentoring they seek is the ‘meaning of life’ type… often when things are going badly for them.  They’ll usually come round to my house, drink coffee, and ask whether the pain they’re inflicting on themselves and their family is all worth it.  Will they get the business built before their life falls apart? (more…)

Entrepreneur behavior &Mentoring entrepreneurs

Entrepreneurs make bad step-parents

June 9th, 2013 → 7:55 am @

I was working with a young entrepreneur recently.  The formula looked simple…. The business model had been proven by a founder who wanted to move on to a different venture,   the young entrepreneur had come in to build the company after already having success in getting another similar start-up going, so there was no reason why this new business couldn’t get going quickly.  But it didn’t.

For several months one problem after another, and one delay after another, came up.  Eventually the business got into serious trouble, and the entrepreneur left.   The original founder stepped back in and fixed the problems within a few days.

In the early days the entrepreneur’s stories had sounded plausible as various reasons for the recurring problems were given, but towards the end the explanations sounded more like the excuses of a demotivated employee with no initiative.  The founder’s intervention had proven that the business model was not at fault, but I found it hard to accept that the entrepreneur’s behaviour had changed so quickly.  It had.  Despite expressing initial enthusiasm, the entrepreneur had never really ‘owned’ the business… not being the founder seemed to remove any sense of commitment, and I should have realised it earlier.

A big clue came when the entrepreneur had suddenly taken up a very time-demanding sport.  I had allowed myself to be reassured that it was all about keeping fit, but by the time the pack of cards crashed down the sport was clearly more important than the business.

The experience reminded me that entrepreneurs don’t often make good step-parents to a business.  If it’s not their ‘baby’, they soon lose the hunger to keep it going.

 

Entrepreneur behavior

Fear of failure

April 16th, 2013 → 1:20 pm @

There are lots of things to be afraid of on this planet.  Business failure isn’t one of them.  Yet many would-be entrepreneurs are paralysed by the fear of failure.

As I write this, the TV is showing the first reports of the Boston Marathon bombings.  Such events are now commonplace around the world and are so frequent in some countries that they barely make our news.  Then we have car accidents, disease, muggings… there are plenty of things to be afraid of if we’re prone to fear.  For most of us, these events are just risks we live with.  We shrug, take some precautions, and carry on.

Starting a business offers a substantial up-side in financial security and in a sense of accomplishment.  The down-side is unpleasant; bankruptcy, anger from investors and family, perhaps some ridicule… but that’s all.  So why are so many people who want to start businesses prone to paralysing fear?

Unlike things which can happen to us, like muggings and car accidents, starting a business is a matter of personal action and presumed control.  We think we are totally responsible for the outcomes, and our egos become hugely invested in the process.  Failure is a sign of personal inadequacy. (more…)

Entrepreneur behavior

Back on the road again

February 4th, 2013 → 10:35 am @

I’m helping a young entrepreneur to get a franchise business going.  The business model relies on franchisees having sales reps knocking on the doors of local businesses.  But before we can recruit franchisees, the entrepreneur has to prove that the sales model works.  That requires her to make the first sales herself.  And that’s where the problems started. (more…)

Entrepreneur behavior &Mentoring entrepreneurs

Developing entrepreneurs’ skills

July 30th, 2012 → 5:58 pm @

Many entrepreneurs I’ve worked with become trapped in patterns of behaviour.  They’ve tried a certain sales style, a way of interacting with staff, or a planning process, and it worked.  So they keep doing things the way they always do them.  Then, because they’re self-confident and opinionated people, they start to see their way as the only way.  They preach the mantra of ‘learning by doing’ but they have lost the ability to learn, because they fail to reflect on their own behaviour (using all their reflection time to think about business problems). I help entrepreneurs to regain their flexibility of thought by encouraging a cycle of action, reflection, then more action.  That’s pretty standard stuff, and it can be very helpful, particularly if they have to account to me or their Board for the outcomes of the reflection.  But now I’m trying something else. (more…)

Entrepreneur behavior &Mentoring entrepreneurs

An impatient entrepreneur

May 7th, 2012 → 3:13 pm @

The entrepreneur brought me his plan a few months ago.  I agreed it looked achievable, and was ready to go… a nice web-based business.  I suggested that he generate some sales before the investors committed their money.

Six weeks later he was back to report the first $30,000 or so in sales…. A good start!

The entrepreneur signed our papers, committing him to the deal.  Before the investors would sign, I analysed the actual costs against budget.  The costs were much higher.  The entrepreneur explained that the model he had originally proposed wouldn’t work, and he had modified it.  The modified model had a gross margin of 22%… not enough to build a profitable business. (more…)

Entrepreneur behavior &Entrepreneurship

After success, do I do it again?

February 16th, 2012 → 10:24 am @

Often technology entrepreneurs can choose between attempting to build a larger business, probably requiring external capital and a significant team of people, or focusing on a smaller opportunity which is easily controlled but typically has less upside.  I was reminded of this recently when a software developer came to visit me.  He’d enjoyed a successful exit after a typically agonising company-building process, and had done the usual post-exit activities (paid the mortgage off, traveled, bought a nice car, and chilled out).  Now he was ready to go again. (more…)

Entrepreneurship &Start ups