Category Archives: Entrepreneurship

Do you REALLY need a vision statement?

VisionMost companies have a vision statement somewhere on their website. However, how much effort do business leaders really put into their vision statement? Isn’t a vision statement just “fluff” and really not relevant for a company to grow and succeed?

A vision statement is sometimes very generic. It is in those instances, when the vision statement is indeed nothing more than fluff, probably created by the marketing department, without giving thought to the “raison d’être” of the business.

You want an example? Sure: ““Our vision is to develop, deploy, and manage a diverse set of scalable and strategic knowledge management tools to serve our customers, improving the possibility of overall satisfaction among our diverse customer profiles.” – YUCK. What the heck does it even mean?

By doing so, a huge opportunity is wasted. Without a very clear and concise vision statement, people may not even know what the company they work for, stands for.  “So what” – I hear you say. My people come to work, they do the job they get paid for, and all is swell. – Is it really? Are your people just motivated by the money you pay them, or are they excited to be part of your organisation?

One reason – and often in business very neglected – for people to come to work is the ability to participate and contribute to a higher cause.

Non governmental organizations (NGO’s) don’t pay very well. Neither does the (non-profit) church. Journalists, teachers, nurses, firemen and other every day heroes are not paid riches at all. Why do people still pursue those jobs? Because those jobs make them feel good about themselves. They contribute to a higher cause, and money suddenly plays a significantly lesser role.

I believe that this motivation is not limited to people in social functions, but applies across the board. Just ask yourself: do you really only work for money? You probably don’t. And neither are your employees. They work for recognition, for status, for pride.  If you can give them that in their job, then money itself is no longer so important.

Instead of paying more, try to give your employees other reasons to stay and to work at optimum performance: Rally them behind a higher cause. Find a high and lofty goal that you as an organization would want to achieve, and focus your internal communication towards this higher goal.

A great example of this can be found by looking at Apple’s history: In the early 80’s, Apple focused their organization to “fight for the control of computer technology against Big Blue (IBM)”. Have a look at their 1984 Super Bowl Commercial.  

Steve Jobs earlier introduced this fight against Big Blue during a keynote address in late 1983 “Apple is perceived to be the only hope to offer IBM a run for its money. Dealers, initially welcoming IBM with open arms, now fear an IBM dominated and controlled future. They are increasingly and desperately turning back to Apple as the only force that can ensure their future freedom

Strong words. But with such direction, wouldn’t you want to be part of a “movement” (rather than being a minion in an organization) to “help mankind break free from the shackles of a giant computer company controlling the world”? Ok – this may be exaggerating, but it does hit the point. So what if I pay you slightly less than your peers at Compaq, IBM, or other similar companies during this time? Wouldn’t you still rather “save mankind” or “built another box”?

So think about  it when you put together your vision statement. Make it clear, compelling and above all give your employees a reason why they work for the company beyond the monthly paycheck.

Your employees don’t want your money

Your payroll cost is probably one of the largest items in your P&L on a monthly basis. It is critical for the profitability of your business to keep the cost down, yet your employees seem to always request for another raise in their salary. Is money really the only thing in your employees mind?

More MoneyThe answer – unsurprisingly – is no. People are motivated by different things, and money is just one of those. As a matter of fact, it is not even money per se, but what comes along with it: The ability to buy better things, prestige, status. And having status is important for many or most people. For employees whose first job this is, they may have to justify to their parents how much salary they are getting. Married employees may be questioned by their spouses, and “buddies in bars” may boast about their take-home pay.

But it is not money by itself that people really want. What they really want, is to feel good. And money allows them to potentially achieve this objective. If I get more money than my neighbor in my job, I feel good about myself. If I can prove that I have sufficient income to afford a nice vacation, I again feel good. But “feeling good” isn’t purely and only driven by money, but often by status and recognition. Being recognized for a job well done compensates for slightly less salary. This recognition doesn’t have to be in the form of a raise. It can be a couple of extra days vacation, public recognition in a company event, permission to work from home or similar. In too many cases, managers don’t even say “thank you” or “well done” to employees for completing certain tasks, implicating that “they are just doing the job they are being paid for anyways.”There are many ways to provide people with sufficient motivation. Many of them – such as salary, promotions, titles – are extrinsic motivators. However, intrinsic motivators are much more powerful, and companies fail to acknowledge this.

Driven by intrinsic motivation, people want to do things because they want to do them, not because they are being paid for them. This requires people to be given the right tools for the job, sufficient freedom on how to get the job done, responsibility on making choices impacting the quality of the job – in short, allowing your employees to be self-guided, responsible peple capable of doing the job they are hired to do, and making them feel good about it. If people are proud of what they are doing and have been given sufficient training and the right tools, they will do the job well and with responsibility without continuously asking for more money.

HR improvement  without raising salariesAnd this is where companies, managers and HR organisations sometimes fall short. We forget that driving factors for doing a job well are not necessarily money and financial rewards, but status, recognition and pride. W. Edwards Deming said: “All anyone asks for is a chance to work with pride”. If you give your employees a chance to be proud of what they do (and ensure they get recognised accordingly), you might be able to convert extrinsic motivation (salary) into intrinsic motivation. Your employees and your CFO will thank you.

Think about this before your next appraisal meetings, and you will find many ways to motivate your employees while keeping salaries at reasonable levels.

 

GER – BRA 7:1 – and what it means for Success in Business

As everyone else on this planet for the last weeks, I have been watching the world-cup. Lucky for me, I spent the last couple of weeks in Germany, hence I was able to watch the semi-final during a reasonable time (i.e. 10 pm rather than 4 am). After having seen the host country not only defeated, but crushed, I then started to think about what lesson can be learnt from this game for business success. The answer: teamwork wins, not heroism.

I have seen it too many times: there are always players (in business as in sports), who think they are just very good (sometimes justified so), and thus believe they have a free pass at doing things.  This often goes at the expense of other members of the team, who then feel unappreciated, and as a result may not perform at the top of their respective game. They feel unfairly treated, as the hero may be able to get away with behaviour that would not be tolerated with other players. Result: disharmony in the team, and disengagement of the rest of the team.

Another problem with heroes is, that sometimes the rest of the team relies and depends on them. This is all good, for as long as the hero is around and plays his / her designated role. If the hero goes missing (in the case of Brazil: due to injury or yellow card), the rest of the team is lost. There are no back-ups, no alternatives, no substitutes that can just take over the ball and run with it. In such cases the strategy is built around a person (the hero), not around a working business model irrespective of the individual. And thus the whole business falls and rises with the individual.

In again other cases people try to be hero. They have seen successful heroes, and how they have been applauded (promoted). They believe, that rather than asking for help, they should try alone to fix a problem or find a solution. They want to be a hero, because they (falsely) believe that this would be in the best interest of the team (or the company). Instead of asking for help, or passing the ball, they just try to do it themselves, even if they may not be the best for the specific job, or may not have the relevant qualifications or training to do so. In the end, the team looses.

It is the role of the business leader or the coach to ensure that the team functions as a team, comprising out of a set of qualified and skilled players in individual roles, who work according to a system, rather than having a hero surrounded by helpers, who don’t know what to do in the event the hero is lost.

Brazil v Germany: Semi Final - 2014 FIFA World Cup Brazil

In this case, Brazil had Neymar and Thiago Silva, but Germany had a team. And Germany won – deservedly.

Getting Investors to Invest in Your Tech Startup

startuponline

Having a great idea is one thing. Having the money required to transform your business plan from concept to commercialization and to move your company from startup to IPO – that’s a completely different matter altogether.

Many people do have great ideas but fail to grasp that others may not share their enthusiasm, sometimes simply because they don’t understand what you are trying to achieve. In order to convince other people – specifically Angel Investors and VC’s – to invest into your business, you need to be able to understand exactly what those people are looking for when evaluating a business.

Too many technopreneurs fall in love with their idea and expect everyone else to immediately “get it”, once they start talking about their business. They sometimes forget one simple yet very important point about business: the only reason for a commercial business to exist is to make profit. And any investor in your business will want to see how you can create profit, and by doing so ensure a healthy return on investment for them. So if Angel Investors and VC’s are interested in your company you need to remember that your presentation should be focused on how you can make money for them, and not how great the technology is behind your business idea.

With this in mind here are 8 important messages you want to convey when meeting with a potential investor:

    1. What is your business all about? Investors usually have a very short attention span. You need to be able to convey the essence of your business idea to them (and anyone else you meet for that matter) within 1-2 minutes.This is where the elevator pitch comes in.The elevator pitch has its origins in the idea of meeting the CEO of the customer you are targeting while stepping into an elevator of a high-rise office building in the ground floor, and using this opportunity to convince him to invest in your company while riding the elevator up to his office – presumably on a high floor in this office building.

      If you can’t convince someone within 2 minutes that your business may be worth investing in or at least interesting enough to listen further, then you won’t be able to do so in 45 minutes either.

 

    1.  What is the problem you are trying to solve? Before you embark on explaining the intricate detail of your Tech Startup you need to ensure your counterpart understand the problem you are trying to solve. The bigger the problem, the more important your potential solution and the more exciting your business proposition. Don’t assume everyone understands the problem as well as you do, and don’t cut short on this part. Make your audience and your potential investor understand how big the problem is, make them feel the pain of the problem and get them really interested in what you can do to solve the problem.

 

    1. What is the solution that you offer? Now you can expand on how exactly you plan to solve the problem you have just explained in detail. Try not to go into too much technical detail unless your counterpart is as technically savvy as you are (and most probably they are not). Investors usually don’t want to know the exact programming language, database or API’s you use to solve a specific problem. They just need to be convinced that you know what you are doing, and if you are able to keep it simple, you come across more confident – which is potentially more important than coming across as a tech geek.

 

    1. Why are you the best team for this job? Once you explained the problem and the solution you may want to give the potential investor more background about yourself and your team. VC’s invest in people more than they do in a technical solution, and they really would like to know what you bring to the table with respect to experience and expertise that should convince them to part with their money and invest in your business. If you have started a few companies before that made money and were sold at a healthy profit – now would be a very good time to mention this and give examples.

 

    1. How big is the market? Here the usual principle applies: the bigger, the better. Investors would like to know that the potential target market is big enough to build a sizeable business that can create the returns investors are looking for. Don’t necessarily limit your target market to your local environment, but think big and see how you can create an offering that might be attractive to a larger audience.

 

    1. Who is the competition? An answer like “we are so unique, we have no competition” is not the answer you want to give. If there is no competition to provide a solution to a bigger problem, then you most probably don’t have a viable business. Remember that competition can come in many forms and variety. Air Asia build their business plan not competing with other airlines, but competing with busses and all other travel means. Your competition can and will come not only from companies doing exactly the same as what you might propose, but from related industries.

 

    1. How will you make money? Investors like to see that you have thought through your revenue model in detail, and understand how you will commercialize and monetize your business idea. Having many fans, customers or visitors will get you started, but only profits will make you rich.

 

    1. What do you want from the investor? You need to have a fairly clear idea what your expectations are from the Angel Investor or VC. Do you just need money to fund your regional or global expansion? Are you looking for subject matter expertise to complement your existing board? Do you need access to networks and potential partners, or do you need a strategic partner providing guidance in your growth?

 
There you have it – 8 questions that angel investors and venture capitalists will ask you for before investing into your business. If you can answer those questions in a convincing manner, then you have significantly increased your chances of securing funding and getting your investor on board.

 

 

Pole Position

Whatever the product or service is that you offer – you will have competition. If you don’t have competition you need to be worried that you may not have a market. For you to succeed in your business, you need to convince the customer to buy from you instead of the competition. And that is easier if you are the market leader.

Market leaders not only have a significant advantage in terms of credibility over the other competitors in a specific segment, but there is also a positive correlation between profit margin and market leadership. Simply put, if you are the market leader in your segment, you will be able to have higher profit margins, everything else being equal. So how do you become the market leader, specifically if you are just a small and growing enterprise? The answer is surprisingly simple: Define the market that you want to serve in such a way that your specific offering makes you the leader in your chosen market segment.

In order for you to be the market leader, you have to be very clear and concise about exactly what it is that you offer to your customers. For example: You have decided to create a new type of soap based on all-natural materials. If you now choose to define your target market as “everybody who needs soap”, you will find that your growing enterprise has a market share that is so insignificantly small it’s not even worth mentioning. And it will be extremely difficult to stand out of the competition for people to choose your product over all the other soap manufacturing companies.

So you might take the next step and limit your service offering to only those people that choose soap made of natural raw materials over chemically produced soap.

Even with this limited market definition you may find that you are still just one of many other companies competing for the same business. By further limiting your market to only customers that support “Made in Malaysia” or “proudly homegrown by a women entrepreneur” you will eventually find a market in which you have the biggest share. That market by itself may be small, but you are the market leader nonetheless.

From here you may want to pursue two strategies: Firstly, defend your chosen market so that you remain the market leader in this segment. Secondly, expand your market definition slightly so that you operate in a market where you are not the market leader any longer, but you are number two or even three. Be careful not to widen the market definition too much, as your goal should be to become market leader in this expanded segment. Once you have achieved that, this new widened segment should become the market that you will have to defend for you to stay in leading position.

Using this strategy, you will continuously grow the markets that you serve, while remaining market leader in your chosen segment all the time – and over time this chosen segment will become big enough for you to have a very sizeable business.

Run an Ironman to succeed in Business – Part 6: Passion

(here is the link to Part 1: Run an Ironman to succeed in Business)

Finish - Source: Wiki Commons

Finish – Source: Wiki Commons

In order to finish an ironman race, an average person will have to continuously train every week between 10 to 20 hours, for a period of at least 1 year. It will be very difficult to see this through if you are not passionate about achieving this objective. You must really want it. Badly. Passionately.

When your friends ask you out for drinks, and once again you decline because you have to get up early in the morning for a long run, you need to have a reason for doing so. You started to train for an ironman for a reason, and you need to hold on to that reason throughout your training. When times get tough –and they will – this reason will allow you to make the decisions required to “do the right thing” up and to continue on your quest. You need to be able to answer that one critical question over and over again: “Why am I doing this?”

So question your motive when you start your business. If you start your own company just because you want to earn more money, you will be in for a surprise and a rude wake-up call in time to come. You need to have an overall goal for your business, a reason for its existence, a desire to build something that you really feel passionate about. Only then will you be able to get yourself through the tough times, and have the answer to the question “Why do I not just give up?”

IM Langkawi 2010 - Finish

IM Langkawi 2010 – Finish

Those 5 attributes are defining attributes for any entrepreneur. They are by no means exhaustive, as starting and growing a company is not the same as completing an ironman race. For starters, once you have completed your first ironman within the allocated time, you have achieved your objective, whilst there is no such clearly defined target for a company. In addition, training for or running an ironman doesn’t necessarily require you to be a team-player. You don’t need other people to succeed, and you can achieve great results while only relying on yourself – try this in business, and you won’t get far.

But if you have those five attributes, you stand a good chance at succeeding in your business.
Best of luck!

Run an Ironman to succeed in Business – Part 5: Flexibility

(here is the link to Part 1: Run an Ironman to succeed in Business)

Natya Yoga - Source: Wiki Commons

Natya Yoga – Source: Wiki Commons

There will be setbacks in training for an ironman and in growing your business. You may have an important business trip on the weekend that you have planned your 200 km cycle, or you got the flu and can not exercise for one full week. Those things happen, and it is important to be flexible and adjust your plan accordingly. In such instances where a change of plan is forced upon you, you need to be able to reschedule certain activities.

A detailed task-oriented plan that you have created initially to support your overall strategy needs to be adjusted as and when required, without changing the overall strategy or framework put in place. Preparing for an ironman is a set of smaller goals and milestones. The task and individual exercises that you plan are there to enable you to meet those interim goals and milestones, but as long as you hit your milestones, you’ll be just fine.

So you need the flexibility to adjust your detailed plans when circumstances demand, combined with the determination to achieve your interim goals and milestones no matter what.

The same is true in your growing business. The business plan that you have created at the beginning of the year is just a plan, and as you start executing the tasks required to achieve the milestones on the way to your overall goal, you will hit obstacles. Your senior engineer suddenly quits, your most important customer cancels his contract, your product has bugs that require a re-call or major modifications. Shift happens.

Look at your overall goal, and see how you can adjust your detailed plan to still meet your interim goals and milestones. Be flexible to adjust what can be adjusted, and have the determination to continue on your journey towards your next milestone, no matter what obstacles are thrown in your way.

(Click here for Part 6: Passion)

Run an Ironman to succeed in Business – Part 4: Perseverance

(here is the link to Part 1: Run an Ironman to succeed in Business)

Desaru 116 - Swim

Desaru 116 – Swim

Giving up is easy. And just taking the short-cut home on a cycle tour or a long run is very tempting – after all you already ran 2 hours. Do you really have to run 2.5? Is that another half hour going to make a difference? Can I just swim 70 laps instead of the planned 80 as stated in today’s plan?

Preparing for an ironman is a set of small steps and small successes over a long period of time – just as starting and growing a building. Every day you need to run just a little bit longer, cycle just those few kilometers more, swim just another couple of laps. You need to have the determination to not give up, and to continue just that little bit more.

Desaru 116 Swim Finish

Desaru 116 Swim Finish

And in business it is exactly the same . If you have planned to make 5 appointments for next week, call as many people as you need to secure those 5 appointments. And unless you have reached your goal for today, don’t stop. Just continue until you have reached your planned objective for the day.

Rome was not built on one day, to train for an ironman takes at least a year, and to build a business does take even longer. But only if you work on your long-term goal every day, and every day put another brick onto the wall, make that one more phone call or e-mail, and take another step forward, only then you have a realistic chance to eventually succeed and achieve your goal.

(Click here for Part 5: Flexibility)

Run an Ironman to succeed in Business – Part 3: Discipline

(here is the link to Part 1: Run an Ironman to succeed in Business)

IM CyclingThere will be days in your training for an ironman, where you just don’t feel like getting up at 5 am to run 20km, or to get into the pool at 7 am to swim 80 laps. It is so much easier to just ignore the alarm clock and give yourself another one or two hours of sleep.

After all, you did train yesterday, right? And one day won’t make much of a difference after all, correct? And you may have many other valid excuses and reasons NOT to train. But that is exactly what they are: excuses and cop-outs, unless you are at risk of an injury through overtraining.

So you must have the discipline to train no matter how much you’d like to sleep in or do something else, as well as the discipline to stop before you get injured – and the wisdom to know the difference between “don’t want to train” and “should not train”.

This discipline is critical in your growing business as well. You have to get up early every morning, work harder than before throughout the day, and continue with business related activities in the evening. You have to have the discipline to “get up and go to work” every day, and do whatever is required and needs to be done. If you golfing buddies ask you for a game, do you give in and come along (after all, nobody will miss you at work)? Or do you politely decline and write that other letter, make that next phone call and just continue to work on your business?

If you want your business to succeed, you must have the self-discipline required to put in the daily amount of work required to achieve your goals, irrespective if somebody is looking over your shoulder or not.

(Click here for Part 4: Perseverance)

Run an Ironman to succeed in Business – Part 2: Commitment

(here is the link to Part 1: Run an Ironman to succeed in Business)

Phuket Pros

Phuket 70.1 2011 – Swimstart

In order to run an ironman you first need to register at an ironman event. Those registrations usually open between 9 – 12 months prior to the event and are usually sold out within a very short time.

The 2013 Ironman Competition in Melbourne takes place in March. The registration for this event was in March 2012, and the event was sold out in 4 minutes.

 

While this may be an extreme case, you need to register for an ironman event (and pay about 800 USD) at least 9 months prior to the event.

So you need to commit to participating in an ironman race between 9 to 12 months prior to the event. In addition, if you want to succeed in finishing an ironman event in under 17 hours you will need at least one full year of  training and a detailed training plan at least for the last 6 months to get there (unless you are already have finished a couple of marathons in under 4 hours, and are used to cycling 5 hours non-stop)

That is one year of training, suffering and putting your social life pretty much on hold. One year is not much to be able to brag for life, and to belong to the very small percentage of people that have finished an Ironman, but that is what it takes. If you are not prepared to make this commitment, chances are you will not finish the race in the 17 hours allocated.

Starting a new business will require at least the same level of commitment.  You will need to put in at least 3 – 6 months of your time on a full-time basis in order for your business to have a chance of success, and most businesses take significantly longer to get off the ground. You most probably will have to work around the clock during this time, unless you have the financial means to outsource or hire enough employees to take care of the various tasks that need to be done when starting and growing your business.

Your social life will suffer (unless your friends are in the same line of business), and you will have to get used to rejection and criticism. You will also have to spend more money on the business than you planned.

Take all that into consideration before you take the plunge.

(Click here for Part 3 : Discipline)