November 14th, 2012 → 7:24 am @ Norman
I was at the first meeting of an ‘Entrepreneurs Club’ the other day. The discussion focused around how to get into international markets, and specifically whether we should use a traditional goal setting/marketing driven systematic approach, or should instead focus on chasing ‘easy wins’ to build credibility and cashflow.
One academic suggested that entrepreneurs are timid because we often focus on markets we know and contacts we can leverage. An advisor from a large consultancy firm supported that view, arguing for more market-focused planning to ensure we find and understand the best market to address.
Their views reflect a common opinion of entrepreneurs. We’re seen as unstructured and often undisciplined, like hounds chasing rabbits in a field of opportunities. The evidence cited is the lack of a complete plan, and a tendency to abandon opportunities when better ones come along. But that’s not what I see happening. Entrepreneurship is more like surfing, and the more innovative the business opportunity the more a surfing analogy applies. (more…)
July 30th, 2012 → 5:58 pm @ Norman
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…)
May 7th, 2012 → 3:13 pm @ Norman
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…)
October 10th, 2011 → 1:07 pm @ Norman
David the tiler is laying new floor tiles in my kitchen. His wife, Frances, is crouched outside the back door cutting the tiles. Steve the gardener is trimming bushes in the back garden. It’s cold and windy, and I feel sorry for Frances and Steve. Their miserable work environment reminds me of a time many years ago when I was a Lineman, sitting atop the cross-arms of poles on bitterly cold mornings, and trying to keep my fingers warm as I worked on the wires.
Yesterday, David and I had a coffee break together. He told me that he’d thought about expanding his tiling business but didn’t want the added risk that came from employing staff. Steve also prefers to keep his business a ‘one-man-band’. In their efforts to minimise their hassle and risk Steve, David and Frances have become dependent on other people taking risk… and succeeding. This year the farmers are doing well and, thankfully, spending. Without the risk-takers… the farmers, manufacturers, and entrepreneurs, times would be very tough for David, Frances, and Steve.
It’s appropriate that risk-takers, including entrepreneurs have the opportunity to earn a lot of money from their efforts. But it’s more than ‘appropriate’… it’s also necessary. Without the ‘excess profits’ (to use the economic term) from entrepreneurial activity few people would bother taking all the risk and enduring the hassles of building innovative businesses. And without the successful entrepreneurs, there would be less work for David, Frances, Steve, and the many thousands of other people who benefit from discretionary spending by value-creators.
There’s certainly nothing novel in the idea that the excess wealth created by entrepreneurs ‘trickles’ through the economy. But I was reminded of it again today. If I was still a Lineman, then David, Frances, and Steve would be worse off… and I’d have cold fingers.
September 26th, 2011 → 10:20 am @ Norman
My wife and I sat in the conservatory this afternoon, enjoying a cup of coffee and watching the light sparkling on the water of the harbour beside which our house is nestled.
She asked me about an entrepreneur I am working with… what was he like? I probed her questions to understand what she was really asking. She had seen the drive, energy, persistence and other desirable behaviours shown by the entrepreneur; but she also saw his weaknesses. He sometimes seemed out of synch with other people’s ways of seeing the world, leading to communications problems and to people distrusting him. He was impatient and had unrealistically high expectations of other people. He talked of what could be as though it already was… did that verge on lying?
I reminded her that entrepreneurs are typically an unbalanced bunch. Nobody can be everything to everybody, and it’s unrealistic to expect someone as focused and driven as a high-growth entrepreneur to be ‘normal’. Nor would many ‘normal’ qualities be of much use: Great patience, and acceptance of the frailties of others are admirable traits in school teachers, but they won’t get a high-performing team assembled and able to deliver dynamically developed products with inadequate resources and against near impossible deadlines.
She accepted my answer, but I felt she was waiting for more. So I said, “Take me for example…” Her reaction showed me that I’d hit on what she was really thinking about, so I continued, “…. Look at the way Stephen [name changed] behaved when I was building company X. He was afraid that he’d be held responsible for any failure, so his focus was on avoiding blame, and ass-covering. I was focused on sales, and on building the team. It was inevitable that he’d see me as a cowboy who wanted to drive forward regardless of the risks, while I saw him as an anchor slowing us down. So friction was inevitable [actually, it came closer to open warfare].
She thought about this and nodded… so I ploughed on…”Now which one of us was normal? Stephen was making deep pronouncements about managing risk, was demanding endless reports, and refused to make decisions until he was very sure he was right…. pretty normal behaviour. I was making decisions on the fly, with less supporting information than I would have liked, was taking calculated risks, and was asking the team to trust that my plan (being developed as we went) was going to work… not very ‘normal’ behaviour.
Entrepreneurs aren’t normal… no wonder that even our wives don’t understand us.
May 17th, 2011 → 8:23 am @ Norman
Investors spend a lot of time keeping young entrepreneurs focused on the critical tasks. Like a dog in a field full of rabbits, the inexperienced entrepreneur tends to run from one opportunity to another without closing any of them. That behaviour, and the techniques used by investors and Boards to keep the founders focused, are well known.
But sometimes the need for focus can be overemphasised, particularly in the seed and start-up phases of company development.
Typically, in the seed phase, the idea is still being turned into a marketable product. In the start-up phase a company is being organised to get that product to market. In each case, there are typically many variables which are unknown… these may include optional features which may be important, extent of functionality validation required, size of each potential market, specific customer needs, correct segments to target, and many other factors. Now that many companies are “born global” the variables are multiplied as geographic, cultural, and other issues become more immediate. (more…)
April 1st, 2011 → 12:57 pm @ Norman
We spend a lot of time in business, and in personal relationships, trying to ‘get our message across’. Relationships fall apart, and deals are lost through communication failure. I thought this morning about the difficulty of communicating simple messages about how to build a company.
An aspiring entrepreneur was sitting in my office. I had just advised him to get his team focused around an achievable target, allocate tasks with agreed delivery dates, and manage the delivery of the target (in this case, trial customers for the product). He was confused; “But you told me once before that entrepreneurs have to be innovative and flexible, and change the plan dynamically as they build the business. Now you’re telling me we need to decide exactly what to do, and stick to it. Which is right?” (more…)
February 23rd, 2011 → 10:40 am @ Norman
I’ve just come across some interesting research on how entrepreneurs think. Leigh Buchanan (http://www.inc.com/magazine/20110201/how-great-entrepreneurs-think_Printer_Friendly.html) quotes some Carnegie Mellon research, saying:
“Sarasvathy concluded that master entrepreneurs rely on what she calls effectual reasoning. Brilliant improvisers, the entrepreneurs don’t start out with concrete goals. Instead, they constantly assess how to use their personal strengths and whatever resources they have at hand to develop goals on the fly, while creatively reacting to contingencies. By contrast, corporate executives—those in the study group were also enormously successful in their chosen field—use causal reasoning. They set a goal and diligently seek the best ways to achieve it.”
This research confirms what I call ‘Goal-seeking behavior’ in my book, and relates closely to what Steve Blank calls ‘Pivoting’.
Regardless of what it’s called, the behavior of entrepreneurs is fundamentally different to that of managers. (more…)
February 4th, 2011 → 12:08 pm @ Norman
I have been doing some research with my team into Universities who are teaching entrepreneurship classes. This has been very interesting indeed.
We believe that
We have published the list on Google Docs if you are interested in downloading a copy – or editing and updating our information.
September 13th, 2010 → 8:10 am @ Norman