The Entrepreneurial Problem Solver by Christian Tafur

I N S I D E

T H E

M I N D S

Inside The Minds: The Entrepreneurial Problem Solver Entrepreneurial Strategies for Identifying Opportunities in the Marketplace â&#x20AC;&#x201C; For Corporate Executives, Managers, Salespeople & Entrepreneurs

Published by Aspatore Books, Inc. For corrections, company/title updates, comments or any other inquiries please email info@aspatore.com. First Printing, 2002 10 9 8 7 6 5 4 3 2 1 Copyright ď&#x203A;&#x2122; 2002 by Aspatore Books, Inc. All rights reserved. Printed in the United States of America. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, except as permitted under Sections 107 or 108 of the United States Copyright Act, without prior written permission of the publisher. ISBN 1-58762-229-7 Library of Congress Card Number: 2002091106 Cover design by Kara Yates & Ian Mazie Edited by Jo Alice Hughes, Proofread by Ginger Conlon Material in this book is for educational purposes only. This book is sold with the understanding that neither any of the authors or the publisher is engaged in rendering legal, accounting, investment, or any other professional service. This book is printed on acid free paper. A special thanks to all the individuals that made this book possible. Special thanks to: Kirsten Catanzano, Melissa Conradi, Molly Logan, Justin Hallberg The views expressed by the individuals in this book do not necessarily reflect the views shared by the companies they are employed by (or the companies mentioned in this book). The companies referenced may not be the same company that the individual works for since the publishing of this book. The views expressed by the endorsements on the cover of this book for the Inside the Minds series do not necessarily reflect the views shared by the companies they are employed by. The companies referenced may not be the same company that the individual works for since the publishing of this book.

Inside the Minds: The Entrepreneurial Problem Solver Entrepreneurial Strategies for Identifying Opportunities in the Marketplace – For Corporate Executives, Managers, Salespeople, and Entrepreneurs

CONTENTS Gary L. Moulton LIFE LESSONS: BUILD YOUR TEAM OF ENTREPRENEURS

Douglas P. Bruns DID I SAY ENTREPRENEURIALISM? I MEANT CREATIVITY!

Rodney Kuhn 45 THE CONTAGIOUS ENTREPRENEUR Peter J. Valcarce 55 IT TAKES TWO: HUMAN AND FINANCIAL ENTREPRENEURIAL RESOURCES Dave Hegan 67 STEEL DETERMINATION: HANGING TIGHT IN A ROLLER-COASTER ECONOMY

Aaron Kennedy 77 ENTREPRENEURIAL SPIRIT AND PASSION FOR PASTA: A WINNING COMBO Greg Wittstock 89 ESSENTIAL NUTRIENTS FOR GROWING A WATER GARDENING ENTERPRISE Kurt Thomet 105 TOOLS, TRICKS, AND TACTICS THAT WORK David Law SHOOTING FOR THE MOON

121

Patrick Smith SUCCESS MAKES YOU JUST LIKE EVERYONE ELSE

133

Daniel A. Turner 147 LEADING A VIRTUAL ORGANIZATION FOR PLEASURE AND PROFIT Russ W. Intravartolo 167 BACK TO BASICS: SUCCESS THROUGH ETHICAL AND SOUND FUNDAMENTALS

Mark Esiri SEIZING THE GOLDEN MARKET OPPORTUNITY

179

James D. Murphy 191 LEARNING TO FLY IN BUSINESS COMBAT Acknowledgements & Dedications

239

The Entrepreneurial Problem Solver

LIFE LESSONS: BUILD YOUR TEAM OF ENTREPRENEURS

GARY L. MOULTON Glyphics Communications Chief Executive Officer

Inside The Minds

The LIFE Method: An Overview The LIFE Method will help your organization build and sustain a team of “thinkers,” who, in turn, will bring to your business the very thing for which the method is named – life. Too many companies, through poor leadership, build an environment that can literally drain the life out of their employees. By focusing on four areas, a leader can ensure he or she is creating and supporting a working environment that breathes life into its employees. The four stages of the LIFE Method are: Leadership Information Follow-up Execution Just as a plant needs a specific environment to develop and grow – the right type of soil, light, water, temperature, etc. – so does the entrepreneurial company. The LIFE Method will help create the specific environment for entrepreneurial thinking within a business. Leadership Leadership is like the soil. If it is full of nutrients (motivation, creativity, integrity, etc.), it will support the continued growth and development necessary for business to blossom. If it is full of poisons (control, finger-pointing, dictatorship, etc.), nothing can or will grow. It all starts at the bottom. I know what you’re thinking. Don’t I mean the top? No. Why?

The Entrepreneurial Problem Solver

True leaders are great supporters. They are motivators. An entrepreneurial environment requires great leadership. When you think of leadership, throw out the old mindset of a hierarchical pyramid with the executive at the top. Invert that pyramid. Did you know the majority of Abraham Lincoln’s letters were signed “Your Obedient Servant”? He didn’t sign them “Your Commander-In-Chief,” nor did he sign as “Your President.” This speaks volumes about the leadership style of one of the world’s greatest leaders. The number one killer of the LIFE Method is ego. I call ego the morning glory of leadership. Once it has been introduced into your entrepreneurial environment, it can quickly spread, feeding off the nutrients needed for more productive aspects of business to flourish, until it has suffocated everything in its path. There is nothing wrong with taking pride in a job well done; in fact, you should promote team pride because it leads to confidence. You want confident employees. But if pride and confidence turn into ego, if one becomes focused more on the “me” than the team, that pride turns into arrogance. Contrary to popular belief, there is no such thing as an arrogant leader. There are only arrogant dictators. I often hear people refer to “entrepreneurial management,” but I believe that to be a contradiction of terms. Entrepreneurs think outside the box, while managers work within it. Entrepreneurs focus on breaking barriers and developing new methods, while managers protect barriers like guard dogs to ensure that only “approved” methods are applied. I prefer the term “entrepreneurial leadership.” This promotes an environment built upon creativity and thinking – the two prettiest perennials that can grow in your entrepreneurial garden. An entrepreneurial leader will continue to push for better processes and methods and encourage thinking outside that box.

Inside The Minds

Information You have probably heard the phrase, “Knowledge is power.” This is especially true with an entrepreneurial team. They have to know the whys, whats, wheres, and whens of each project. Unless you want a garden full of mushrooms, don’t fill it full of manure and keep it in the dark, because nothing else will grow. Information is like water and, if your want life to continue, you must keep it flowing. Without it – just as a plant will wilt and ultimately die – so will your entrepreneurial team. You must keep them informed by giving clear objectives from the start and continuing that flow of information as each project develops. Follow-up Follow-up is like the gardener, and the gardener’s tools are the measurables established for each project. When I was a kid, I had to weed our family garden. I hated it. At the same time, I knew if the weeds went unchecked for any given period of time they would take over, and there would be no harvest. Execution This is where you reap what you sow. If you have been focused on life in your garden, then you can ensure a great harvest – if not, well, you reap what you sow.

The Entrepreneurial Problem Solver

Leadership: Step Up, Then Step Aside Entrepreneurial leadership – not management, but leadership – is the most important part of the LIFE Method. “Attitude reflects leadership,” to quote a line from the movie Remember the Titans. There are a many traits I respect about leaders. Foremost, I respect leaders with a passion about what they do. When you are around these kinds of people, their passion is contagious; it helps you lift yourself to the next level. If you’ve been around people like this, you know what I mean, because you’ve benefited from it, as well. Another trait of a great leader is integrity. One person who exemplified both passion and integrity was Abraham Lincoln. Numerous books have been published about his leadership abilities, and I highly recommend reading them all. He really cared about people and led by example through making suggestions and telling stories. At the same time, he knew when to draw the line. If people wouldn’t step up, he had no problem taking the reins to get things done. Knowing exactly when that needs to be done can be challenging, but it’s one of the great things about being an entrepreneurial leader. I learned an important lesson about integrity and its worth through a stranger when I was about 19. I was in California serving in the military and had lost my wallet at the beach. About three days later, I got a phone call from a man who spoke only broken English. He told me his home address so I could come and pick up my wallet. He lived in a very rough, nearly impoverished area. Kids were everywhere, running in the streets, and I couldn’t imagine how the families were able to support them. I went up to the door, and the man returned my wallet. I looked inside to find that everything was there – cash and credit cards – all there. I had about $80 in cash in my wallet, which could have made a difference in his life, but he didn’t take it. I tried to give him some money to thank him for returning my

Inside The Minds

wallet – he was speaking his broken English, and I was speaking what little Spanish I knew – but he wouldn’t accept it. The entire experience had a profound impact on my life. I had always been taught about honesty and integrity, but this was the first time I truly understood their meanings. How valuable is your integrity? Would you sell it for $80? $100? $100,000? How about $1 million? I think about that experience whenever my own integrity is on the line and try to ensure that my entrepreneurial leadership reflects lessons I’ve learned like this one. Leadership can be taught. It’s not something you have or don’t have. To learn to be a strong leader requires self-evaluation. You need to be able to look at yourself and what you’re doing. You need to be able to see where you have faults and take the necessary actions to improve. Strong leaders are not arrogant or egotistical, but they are willing to take charge and make things happen when the time is right. The whole purpose of life is to make yourself better today than you were yesterday. You need to maintain a constant progression. That does not mean, however, that you do everything yourself. Entrepreneurial leadership means allowing people to do their jobs, not managing with an iron fist. The entrepreneurial leader outlines the objective, then steps aside and lets the employee get it done. This includes allowing employees to make mistakes. That’s not always easy, but it’s critical to the long-term success of your organization. There are plenty of times I’ve bitten my lip about a minor issue, but I let it follow its current course because the experience would help the employee learn how to understand the issue from all angles. As a result, if the same problem comes up again in the future, it will be handled even more efficiently. This practice also allows the entrepreneurial leader to learn each employee’s talents and offers the opportunity to recognize your

The Entrepreneurial Problem Solver

people for their successes. Recognition is critical to continued achievement. The challenge in motivating people is figuring out what they need to get their motors running. Some people need to be whipped to get the most out of them; that may destroy others. That’s the most important part of employee motivation, and motivation is key to getting your employees to think like entrepreneurs. Getting your employees to think like entrepreneurs is a good thing. The entrepreneurial leader does not have the monopoly on entrepreneurial thinking; however, the entrepreneur is critical to getting employees to think like entrepreneurs. In this case it does start at the top. As I stated earlier, entrepreneurial leaders offer leadership, not management. You set objectives, then back away. It’s important to think through the entire process, and that needs to be conveyed to your employees. They need to look at a problem from A to Z, which means weighing the various and extended repercussions of their actions. Often, employees are not allowed the freedom to think, so all they do is follow directives. In that scenario they’re robots, not people, let alone entrepreneurial thinkers. At the same time, finding and hiring entrepreneurial people can be a challenge. One element I’ve found is key to the search is a positive attitude. I have never met an entrepreneurial thinker who does not have a positive outlook on life. Plain and simple, it’s not hard to convince yourself you’ll fail. When I’m hiring, I want people who look for ways to succeed, not people who see only how things can fail. Just pay attention and you’ll see what kind of people they are. What I notice most about people are their personalities and personal drive. I actually pay more attention to these things than their individual talents because you can teach skills. It’s not so easy to teach someone to have drive and maintain a good personal attitude. Once they’re hired, you have to create an environment in which they can thrive without squashing the entrepreneurial spirit out of them.

Inside The Minds

That’s not to say that entrepreneurial thinking is something you have or you don’t have. Just as with leadership and specific skills, entrepreneurial thinking can be taught. If I have employees whom I want to take the next step toward entrepreneurial thinking, I may give them assignments here and there to see how they carry them out. If they pick up the ball and run with it, then they fit the entrepreneurial mold. If they’re unwilling to step out of their comfort zones, then they will probably never learn entrepreneurial thinking. Entrepreneurial thinking is teachable, but not all people are entrepreneurial, and the entrepreneur needs to accept that. Just pay attention and see how each employee responds. Hire and cultivate the right types of people, and they can help you and each other grow and progress. This may sound like common sense, but I’ve seen plenty of executives surround themselves with people who just praise everything they do. When this happens, it’s no longer about success; the focus of the entrepreneur has shifted to stroking his own ego. You don’t want a “yes man” – particularly when you’re in a creative mode. You want people to question everything when it’s time to be creative. You want them to look at a problem from all angles. That’s why I may not even attend meetings where employees are evaluating a specific problem because I want their true thoughts, not the ones they think I want to hear. But when a decision is made, I expect the same employees to stand behind it and move forward. This is an important distinction to make. When it’s time to move forward, your organization must make progress. There is a huge value in giving clear direction, and then letting your employee teams make decisions and take action. At smaller companies decisions tend to roll up to the entrepreneur. The larger the company gets, however, the less feasible this becomes. The entrepreneur needs to hire good people, but also ensure that good procedures are in place, with plenty of checks and balances.

The Entrepreneurial Problem Solver

With appropriate checks and balances, an employee can make a mistake, learn from it, and improve for the future without costing the company too much time, money, or other resources. With good procedures in place, the entrepreneur can feel confident the company is heading in the right direction as it grows, which will make it easier to step back and let your people do their jobs. This, in turn, helps your employees take on a sense of ownership in a project and loyalty to the organization. In most cases I think being an entrepreneurial thinker shows more of a sense of loyalty and ownership in a business. This can be a very positive thing, unless people begin to feel things would not happen without them. That’s ego, poking up its ugly head again. Nothing happens because of a single person. Every business is made up of a team of people, and a true entrepreneur knows when to step aside. An entrepreneur is like a perfect Marine. He storms the beach and moves on. If he stayed, he would just be in the way. Some entrepreneurs are great at storming the beach, but can’t step aside and let their people do what they were hired to do. That damages any sense of ownership the employee may have developed. Entrepreneurs are great for creating, but true entrepreneurs see the project through creation, then hand it off when the time is right. It’s not always easy. In fact, the worst part about being an entrepreneurial leader is that people are always looking to you for leadership – and everyone’s human. On some days you may not feel like being in leadership mode. But you have to be. To get around this type of block I try to find a situation in which I have to take charge and take on a job, and then force myself to get past it. In other words, I force myself to get into leadership mode. This is particularly important when things are not going well. It’s easy to be a leader when things are good. When things

Inside The Minds

are not going well, it’s hard to be the one in charge, but that’s when it’s the most critical to do your job and do it well. Information: Positive Input The “I” in the LIFE Method can stand for two things: information — both the gathering and the dissemination – and innovation, which can be reached through information. This is not to say, however, that innovation only results from deluging your employees with information; in fact, doing so can have the opposite effect. You want people to be able to see things through, but too much information shared too soon can fuel a feeling that things never get done. I stated earlier that information is the water feeding your garden. Remember that too much water can drown the very things you’re trying to grow. For example, there may be 500 implementations planned over the next five years. But after two years, only two of the hundreds implemented may have had an impact that employees could perceive, because they don’t understand the big picture. As a result they arrive at the conclusion that the executives don’t know what they’re doing. Although your intentions were good in presenting the big picture at the start of a long campaign, it ended up having a detrimental effect on the company. In cases like this the entire company may not need the whole story at the onset, but would be better served by receiving it piece by piece over time. You water a plant every few days. Giving it a year’s worth of water all at once just creates a flash flood. At the same time, if things are not going as planned and you receive negative feedback, you need to acknowledge the intent behind it. The employee went to the trouble of voicing his or her opinion, which shows the person cares at some level. So acknowledging the employee’s input will go a lot further than

The Entrepreneurial Problem Solver

saying, “It will happen this way or not at all.” This approach lends itself to an environment free for the sharing of ideas. Your job as the entrepreneur is to create the environment in which people can ask for input and share their thoughts without fear of reproach or ridicule. If people ask for input, provide it, but be careful not to get into a situation where someone will never make a decision without your input. I avoid this by asking questions to guide the employee toward a solution. I know it can be difficult, but calling an idea foolish or useless kills a person’s incentive to try. Asking questions and guiding them toward a more effective solution teaches them to go through the same process on the next go-round without coming to me. Next time they may bounce ideas off other managers or their coworkers, rather than the entrepreneur, getting everyone more involved. More direct involvement then results in more personal vested interest. More vested interest in a company and its projects is a goal in itself. You want your employees to care. You want them to take initiative. How to foster these types of behavior should be part of a company’s strategic plan. True entrepreneurs look forward to strategic planning. It can be difficult, and it requires discipline, but there are ways to develop the needed discipline. One way to look forward to strategic planning is to anticipate the chance to fix things that may not have been executed well in the past. The start of every strategic planning session should begin with looking at where you were and where your planning may have been off the mark. Then go into an information-gathering mode, and don’t underestimate how much time this might take. Never assume anything. You may learn that the realities of providing a product or service are very different in the trenches than at the conceptual level. You need that information so you don’t move forward with a halfbaked plan.

Inside The Minds

Gathering and understanding information is critical to being an entrepreneur. If there were two golden rules for maintaining entrepreneurial thinking, I’d have to say they’re as follows: 1. Don’t be afraid to ask questions. Many great things come from people questioning the way things are done. Why? How? Can’t it be done better? It’s not being difficult or abrasive; it’s looking for ways to improve. 2. Be aware of the situation around you. Look for or create a niche. I’ve had the opportunity in a short time to surround myself with some talented entrepreneurs. If there is one thing they all agree on, it is find a niche and fill it. Just pay attention and keep looking for opportunities. Once the information is gathered, go into a creative mode. This is where it gets to be fun – you have the opportunity to turn a past shortfall into a success story. When entering the creative environment, I implement crossfunctional teams, where the people hit a project from all angles. In the development stage even negative people can help point out weaknesses in a project that others may overlook. When I assign teams, I make sure they understand the end goal. I appoint a chairperson for the team and ensure the chairperson has an assistant or backup. I also require that every meeting have an agenda. The chairperson and his or her backup are critical because, even in a team environment, someone needs to be held responsible. I personally believe people will grow and innovate naturally if you give them the room to do so. If they need help, you give them help, but you don’t do the work for them. The team, however, does not need to hold the reins the whole rest of the way. When the project moves out of the creative mode, the cross-functional team may do more harm than good. Once the creative stage is complete, the teams need to be more focused on succeeding stages, such as development, financing, and sales.

The Entrepreneurial Problem Solver

You’re simply not going to hit the mark 100 percent of the time, but with proper planning up front, your misses will be closer to the mark. Information feeds not only your employees, but also the entrepreneur. This is another trick a few of my mentors taught me early on – read, read, read. A ton of reading helps me stay on top of my knowledge base, which helps me keep my edge. And most of my reading is not business-related materials. I like historical books about presidents, generals, and leaders; inspirational and self-help books; and of course, newspapers and trade magazines. When choosing my reading material, I use a little trick a close friend taught me. If the book doesn’t require you to have a pen in hand (for underlining the important stuff), then the book probably isn’t worth reading. I cannot emphasize enough the importance of positive input in your daily life. There are so many bad things going on in the world that I honestly can’t see how people get through the day without seeking out some positive message. If you can make something this important to maintaining your sanity part of your personal work ethic, you’re already a step ahead of the game. Why? Because being positive is crucial to selling your vision. Being positive results from confidence. The best way to start building that confidence is to ensure you understand the vision completely. If you don’t understand it, then you can’t sell it. People need to buy into your vision. Your personality can play a big part in this. Two of the most useful classes I took in college were public speaking and acting. They taught me how to deliver a message in ways people would understand and feel on a personal level. For example, using a little humor to warm up the audience is something businesspeople often overlook. Humor has its place in business, just as it does in life. You have to be

Inside The Minds

real. You have to be. If you’re not passionate, then you need to go into a different business, where you can be passionate, because people will see through you if you fake it. People are smart. They’ll know if you’re not sold on it – which will make it next to impossible for you to sell it. Follow-up: Measure and Reward I stated earlier that follow-up is where you weed your garden. It can be tedious and may not be the most fun part of the LIFE Method, but it’s absolutely critical. Ensure the strategy is shared and communicated accurately. Also ensure the phases of implementation can be measured. Business writer Barcy C. Fox wrote, “What gets measured gets done. What gets rewarded gets done repeatedly.” Establishing measurables for each project is critical to success. Unfortunately, I had to learn this the hard way. I know that on the surface you may think every organization understands this simple technique, but the reality is just the opposite. Consultants around the world get paid a lot of money to teach companies this simple strategy – measure your successes and failures, and align them with your corporate strategy. You also need to create a reward system for individual and team performance. This does not necessarily have to be a financial reward. It can be simple recognition for a job well done. Numerous studies show people crave public recognition. It also never hurts to tie performance bonuses or other incentive programs to executing well. Of course, having measurables in place to quantify success will help you see improvement and focus on execution. You need objectives at all levels – individual, team, and corporate. You should first establish corporate objectives and expectations that fall within your corporate strategy. Then set objectives at the

The Entrepreneurial Problem Solver

individual and team levels to outline how you will reach your strategic goals. You also reevaluate your goals periodically to ensure they remain in line so you don’t get off-track. So it follows that the measures attached to performance are truly quantifiable. There’s nothing wrong with challenging people; in fact, I think people enjoy it, as long as the challenges are fair, and the goals are understood. Assigning goals to employees that they can’t achieve will only act to demoralize them, and nothing positive can come from it. Execution: Go for Continued Improvement You reap what you sow. Just as a farmer receives satisfaction during a bountiful harvest, so should you when a plan is executed to perfection. Remember that great entrepreneurs measure success by continued improvement, not by financial accomplishments. To progress means to learn from each experience, whether it was a success or a failure. I think it was Louis L’Amour who failed to get a book published 16 times before his 17th attempt was finally accepted. What lessons do you think he learned at each failure? Yet, because of his tenacity, he continued writing and making submissions to publishers – and look what he accomplished. Another lesson from this is that some failures are simply caused by bad timing. What do you think happened to those 16 unpublished manuscripts, once Louis L’Amour became a published author? Always realize that execution is a dynamic – not static – process. You may find that you move back and forth between follow-up and execution as you implement a project, learn that something needs to change, go back, make adjustments, and relaunch. It can happen 20 times. Or it may be a perfect plan, executed flawlessly, resulting in the birth of a new leader in your organization. These are the moments that make it all worth it.

Inside The Minds

The greatest reward a leader receives is to watch the progression of individuals as they blossom into great leaders themselves. How you can help is by being clear in what you expect from your employees, then backing off and letting them do their jobs. If you have set clear objectives and offer them the support of a true leader, then they will find a way to accomplish them. Entrepreneurial Legacy I do not recall where I heard it, but isnâ&#x20AC;&#x2122;t it interesting that a sixfoot-tall man can have all the agility in the world, while an eightfoot-tall man can barely move? It is the same in business: Large companies tend to be lethargic. They get caught in the corporate web, where employees are simply faceless numbers. This is sad. Tapping into employee wisdom is tapping into one of the greatest assets a company has; yet so few take advantage of it. Because of the rapid changes in technology, companies that think entrepreneurially will thrive, regardless of size. The big thing today wonâ&#x20AC;&#x2122;t be the big thing tomorrow. Entrepreneurial companies will make adjustments to shifts in the market and make necessary changes to accommodate new technologies and needs. Doing so will ensure that the company will survive and thrive. The best entrepreneurs are those who can see a project from the 50,000-foot level. There are a lot of ideas in the world, but they get nowhere unless they are put on paper. Translating the idea to paper forces the entrepreneur to think it through in detail; then he or she has to communicate it well to the employees. I have met a lot of people with amazing ideas, but, sadly, they end up justifying why itâ&#x20AC;&#x2122;s not the right time to move forward with them. Justification is the great killer of entrepreneurialism. If you can

The Entrepreneurial Problem Solver

think of one reason something should not be done, look again and think of five more reasons it should be done. Gary L. Moulton is cofounder of Glyphics Communications, Inc., where he currently serves as its chief executive officer. In this role he is responsible for developing and implementing corporate vision and strategy. He also plays a critical role in establishing new products and maintaining client relations. With his extensive experience in operations and customer service, he brings a unique perspective to the companyâ&#x20AC;&#x2122;s overall direction and vision for the future.

The Entrepreneurial Problem Solver

DID I SAY ENTREPRENEURIALISM? I MEANT CREATIVITY!

DOUGLAS P. BRUNS Atlantic Corporate Interiors Chief Executive Officer

Inside The Minds

Creativity Rules I do not practice “entrepreneurialism,” whatever that may be. I understand that in a book about the mind of the entrepreneur, this is heresy. But the word is heavy with meanings about which I frankly am not sure. Like many overused words and phrases, it has lost something in the generalities of common usage. It is my nature to reduce things to a simple level. The word entrepreneur is derived from the French word meaning to undertake and is closely related to the word enterprise. All undertakings are acts of creativity. A journey, a career, a marriage – they are undertakings creative in nature; that is, at the outset you cannot be sure of the end result. And getting from outset to completion will test your resilience and your discipline, but most of all your creativity. The undertaking will be rife with challenges, over which only creativity masters. That is my long-winded way of saying that creativity rules in the business arena. This was first impressed on me when I was toying with the idea of starting a business. Over beers with a successful business owner, I was inspired with the simple advice: “Make something out of nothing.” If ever there was an idea to captivate an imagination! It was the best advice I ever received. Thinking creatively is the standard at our company. All challenges are subject to passing the creative test. I have yet to find a challenge (read: problem) that cannot be solved by a creative approach. You Can Be Creative – So What? For purposes of this monolog, if we agree the word entrepreneur (with its derivatives) is synonymous with creativity, we can perhaps approach our business questions from a different (dare I say, creative?) angle. For instance, how do you make a business

The Entrepreneurial Problem Solver

creative (entrepreneurial)? Or how do you find people who are creative? Or my personal favorite: How do you think creatively? Once I was bitten by the challenge of making something of nothing, I had to wrestle with the realities of the task at hand. Sure, you can fancy being a creative thinker, but how does that translate into paying the rent? History is filled with stories of starving artists. Being a creative businessperson is hardly different. Statistically, start-ups fail at an alarming rate. Eventually all businesses have to sell something – a product, a service, an idea, or even a vision. Identifying an opportunity is a fancy way of saying you need to sell something and are wondering how to market it. And the sooner you figure this out, the sooner your business will start to generate its own red blood cells – that is, cash flow. (Cash flow, which results from selling or billing for something, is the blood of all business.) The biggest trap in the early stages of start-up is to forget the inspiration of creativity and fall into the trap of thinking like everyone else. We started our business in one of the most saturated markets in the country, home to two of our industries’ giants. Competing on their terms was not an option. Now, after almost a decade of successfully practicing business, we understand we are – and will remain – most successful when competing on our own terms. Going to market in a mainstream way was not a creative option for us. The moral of the story? Staying the unique course, being creative, and competing in a fashion of our own design consistently wins the day for us. The creative challenge is: How can we be different in a better way? If you base your answer solely on a product platform, you will eventually be disappointed. Products are static. They remain unique for only a finite period. Creative organizations are dynamic, ever challenging the pull toward the static.

Inside The Minds

Embrace the Challenge of Change Change forces creative choices. It creates opportunities. It seems that organizations, like people, either like change or are afraid of it. Fear of change is related to control: If things change, will I lose control and lose business? If there is a competitive change, a customer change, or a marketplace change, will my company lose business, market share, or money? We teach the opposite. We practice the theory that change creates opportunities, that control is ephemeral in a dynamic market. The only constant is the ever-moving target of opportunity. Let’s say, for example, that a company with which you have no relationship acquires your largest customer. The immediate concern is that you have lost a customer, that you have lost control – a natural reaction. The discipline to look at the situation creatively requires effort but is worth it. The situation is rife with opportunity, obviously oriented toward expanding market share to a new customer, rather than losing share. So pull your team together, share knowledge and information, develop a strategy to approach the new customer, publish some marketing information specific to the acquired customer, touting your company’s past performance or products. In other words, accept the challenge of change. It is good to remember as an organization that control is elusive. You will never get everything buttoned down, never have your arms around it all, or get everything set. It is like squeezing a balloon: Squeeze it here and it will bulge there. The sooner you understand this, the sooner you can peer into the future of change before you and search for the opportunity you know is out there. The Creative Leader In the spirit of being contrary, we don’t think much about management or management style. We focus on leadership. We

The Entrepreneurial Problem Solver

practice under the impression that everyone has an element of the leader in them. Some people are comfortable with their personal sense of leadership, others less so. It is the responsibility of those in charge to discern individuals with a sense of leadership about them and nurture that sense. The stronger the leader, the more risk the individual is capable of assuming, and the more responsibility that individual must marshal to creatively (and successfully) manage the risk. People talk about entrepreneurs as risk-takers. On the contrary – good entrepreneurs are masterful at identifying risk and developing a plan to manage – and offset – risk. They must be creative to think in this fashion, and they must convince others (leadership in action) of the correctness of their perception and plan. The more frequently they practice this discipline, the better they become at it. There is much banter about “empowerment” in the workplace. This is especially true in what are deemed entrepreneurial environments. It is our opinion that individual leadership equals empowerment. That is, the more leadership an individual exhibits, the more responsibility they will assume. Responsibility is what makes an individual feel empowered. People like creativity. Creative people are often leaders for that reason. When such an individual emerges in your organization, exploit them! Or, to be more PC, encourage them. Good leaders are made. Great leaders are born. If you find a great one, more power to you. In the meantime, make leaders by challenging the creative instinct in your workforce. We have all heard stories of the line worker who engineers a better way to install a widget, takes the idea to management, and subsequently reduces the manufacturing time and cost. The line worker is profiled in the company quarterly and gets a raise or some other reward. The worker’s creative insight into the manufacturing process is an act of leadership. He was thinking about a process

Inside The Minds

and improving it. He was challenging the status quo. And he was doing so because he worked in an environment that encouraged and rewarded such energies. Good leaders get better and better. Creativity, like ambition, feeds on itself. The more you experience it, the better you become at it, and the more frequently you want to exercise it. It is cliché to say good leaders inspire, but as with all clichés, there is an element of truth to it. Leadership by definition does not work in a vacuum. It requires interaction. Leadership is a wave that shapes the beach it breaks against. It is extremely satisfying to see the results of good leadership. Confidence in the good leader is always present. A good creative leader will understand perceptions that are not apparent to others; they will see and think in a way that distinguishes them from others. This comes with experience and confidence. A leader will assume the risk for decision making. Once risk is identified and managed, it is minimized, and the leader will stride forward with confidence. Risk aversion will hinder the creative leader. Leadership is a responsibility not to be taken lightly. The understanding of risk to the project must be identified and a plan for management designed. It requires discipline and warrants seriousness. The idea that the creative leader (i.e., entrepreneur) flies in the face of risk and, “damn the torpedoes,” moves forward is outdated. Believing too much in one’s individual effort creates an ego that negates the value of good leadership. Good leaders know they are good because of the people who follow them. Without a team, there is no leader. The plan to address and manage the leader’s understanding of risk is the leader’s first team project. Guiding the team to victory over risk to the successful completion of the project is the ultimate goal. Creative leaders will always be on the lookout for changing conditions and will respond quickly. That is why many smaller companies are the envy of large organizations: They can

The Entrepreneurial Problem Solver

respond quickly and are guided by creative leaders who have the capacity to address risk and change efficiently. A good leader is a team builder. Teams are built on shared goals and aspirations. It is the job of the leader to creatively show the team how the goals will be accomplished and how the team will personally contribute to the process. If your business were a sports team, who would write the playbook? The creative leader would. Who calls the plays? It depends. Some plays get called in from the sidelines, but the best calls are made on the field, where the view of the goal line is most direct. In this manner good managers and good employees are developed, as they are the ones not only running the plays, but calling them, too. If the leader/coach calls in all plays from the sidelines, the team will always depend on the leader/coach. But the true team works together most effectively â&#x20AC;&#x201C; and creatively â&#x20AC;&#x201C; addressing the challenge on the field. This is how vision is shared and leadership is passed among the team. Moving forward the most diverse team of decision-makers will be the most successful. Prepare for the Climb As I noted earlier, the general perception of entrepreneurial endeavors is one of risk taking and independent thinking. I have a friend who is a high-altitude mountain-climbing guide. He has by all accounts an occupation with a very high degree of risk. There is no question that this is the case compared to, say, being a receptionist. Mountaineering is inherently more risky than answering a phone. But the mountain climber has not set about his task recklessly. He simply must have a more risk-inclusive plan than the receptionist. The good climber, like the good business leader, will be prepared with a plan to address what could possibly go wrong. The good climber will not set out for a summit push until conditions are on his side in favor of victory. He is not reckless, despite the general perception to the contrary.

Inside The Minds

The good creative leader, the superior entrepreneur, will be likewise prepared for unknown challenges. He does not set out recklessly on his endeavor. All industries and even most businesses are different and unique, each with its own time line and business cycle. We joke that our crystal ball gets cloudy beyond six months, which, for our planning purposes, defines long-term thinking. Our cycle is defined by our sales cycle. Other businesses are subject to their own terms. The cycle does not matter. What matters is that an organization, lead creatively, will attempt to manage identified risk within its working time frame. The climber takes enough food and supplies for the allotted time to summit. Should conditions within the time frame change because of weather or injury, for instance, the climber will have a contingency plan: bail, set about a different route, or bivouac until the storm clears. The creative organization is no different. It will have set out on its defined route anticipating potential problems and challenges. For instance: Is cash flow sufficient? When will this competitive window close? How long will it take to make the widget or write the code? Asking the questions is important. Having a plan to answer them is absolutely necessary for survival. The better the leader, the more insight he or she will have when considering the risks that might arise as the business moves forward. Lastly, there is, of course, no way to fully anticipate all potential risks. Many are outside your control. In mountain climbing this is called objective danger. Objective dangers are the things that can potentially go wrong over which the climber has no control â&#x20AC;&#x201C; a loose rock, an avalanche, a deadly storm. As in climbing, objective dangers in business present unique challenges to the creative leader and to the organization. Objective dangers might include a lawsuit, a distribution shift, or a technology breakthrough. Properly viewed, some objective dangers, like change itself, present opportunities for creative thinking and action, but some, frankly, will force you off the mountain to base

The Entrepreneurial Problem Solver

camp. Some will force you to hunker down and weather the storm. This is not a failure of leadership or a breakdown of the organization. It is a fact of life. Survival is paramount, and such conditions will bring out the best in the leader and the organization. We ask what our goals are. The balance of risk against reward applies here, too. The most difficult summits, the most technical climbs, are the most rewarding. They also carry the most risk. Is your organization fit for the goal you, the leader, have defined? Has your team trained sufficiently? Are they technically capable of the goal you have chosen? If the answer to any of these questions is no, then you have either not chosen a realistic goal, or your team is lacking. Face it, any leader worth his or her salt will aspire to lofty goals. There is nothing wrong in this, with the understanding that the goal and the time frame are in balance, and that the risk and the risk-management plan are in sync. When the balance is off, the results will be off, too. I have heard of failed start-ups that were “undercapitalized.” There is no such thing as being undercapitalized. The reality is they overspent. Or, as grandma was fond of saying, “Their eyes were bigger than their stomachs.” We are speaking in financial terms, but being “undercapitalized” is a not only a problem of dollars. The goal must fit the resources and the vision. The fitness level must equal the challenge for success to happen. Vision and resources are types of capital, too. The creative leader will know what is within reach of his team and stretch them to that goal. If the goal is out of sight, the leader has failed. If the energies necessary to accomplish the goal (not enough capital or manpower or time or talent – the list goes on) are insufficient, then the goal is unrealistic. Knowing the capacity for challenge is the leader’s responsibility, as is being a good route finder or map reader. Being creative and of sufficient vision to determine the route within the team’s capacity is the mark of the good leader.

Inside The Minds

Nurture the Creative I mentioned finding individuals with a sense of leadership and nurturing them. I could as easily talk about getting people to think creatively, or “entrepreneurially.” Leadership and the ability to be creative are not universal qualities. Some people are not meant to be leaders. Some people, even if they could think creatively, would rather have someone else do the thinking for them. There are places for such people, but they are not usually found in a highly creative or strongly entrepreneurial environment. They tend to migrate to the largest of organizations or government agencies. Creative people seek out opportunities to be creative. If a leader develops an organization sensitive to such people and their needs, feeding them opportunities to express their leadership and their creativity, they will flourish, and so will the organization. My friend, the mountain climbing guide, recently turned back from a summit attempt with a client. “He didn’t want to succeed,” he said of his client. “Physically, he was capable, but mentally, he did not want it enough.” He went on to say that in climbing, every quality – good and bad – is on the surface, exposed. In business, things are more subtle, but the perceptive leader will still discern the good and bad. And the excellent leader will filter the bad out of the organization and replace it with good. That is the first step to nurturing the creative: Know who wants the summit. Second, make the aspiring creative leader work hard; that is, give the individual tasks in excess of those given to his or her peers. Don’t be afraid to test their mettle, challenge them, and force them to exceed in ways they had not previously thought possible. Force them to condition themselves for their summit bid. Third, reward them. Pay them well, and give them authority. Be slow to give them advice when they seek it. What do they think? Tell them to act on their intuition. Be candid with them. Share information. Include them in discussions. Ask their advice. Every turn in their direction

The Entrepreneurial Problem Solver

builds their confidence, underscores their authority, and teaches them to stretch themselves. Soon the summit will be within their reach. When that happens, stand back: You have a creative leader on your hands. These are simple ideas, really. The focus is no more complicated than bringing out the best in people. Hire for the Best Fit Hire everyone who walks through your door who brings you value. Practice this even if you don’t have a position for them at the time. A good hire, someone who is creative and ambitious, will find a place in any organization that values creativity. We had an early hire, a person of value, and we couldn’t figure out exactly how to pay him. We both knew it was a good fit, but the mechanics were uncertain. He came in on Monday, holding his Rolodex, and said he was ready to work, trusting we would work out the details. Five years later, he remains a valued employee, making, incidentally, more money than he ever made before. I share this story because it speaks to a number of qualities we value, qualities that have served us well. First, all parties – the new hire and the company – must be confident of the fit. Hemingway described a writer’s most essential gift as a “builtin, shock-proof shit detector.” Hiring is very much the same. A lot of people interview well but disappoint later. Whoever is hiring must know the real thing when it walks through the door. In the example I shared above, the hire was first and foremost based on shared values, not economics. So hire first because you are convinced of the person’s intrinsic worth to your organization. This is a difficult thing to determine through the interview process; consequently, whoever is doing your hiring needs a pretty good you-know-what detector.

Inside The Minds

Second, the hire noted above was a creative risk-taker. This spoke volumes to us about his ability to function and perform without having to have the job laid bare for him. The best hires are the ones who understand the position will be different tomorrow than it is today. Most important, they accept the challenge of changing it directly. Base the hire on the individualâ&#x20AC;&#x2122;s commitment to change the nature of the position, the department, and ultimately the organization. Last, build teams. Our early hire saw a position where both of us were putting skin on the table. It was less a company hiring an employee than it was two people rolling up their sleeves and getting a job done. We donâ&#x20AC;&#x2122;t have people working for us; we have people working with us â&#x20AC;&#x201C; an important distinction. Loyalty Through Ownership One can be loyal to a company, a person, a country, or even an idea. A process will garner loyalty, too, as will a method. Loyalty is created when a person believes in someone or something. The process of creative hiring rewards the organization with loyal employees. They believe in the organization because they deem their individual contribution valuable to the organization as a whole. We all like to be loyal to a thing we have helped create. It is in our nature to believe in our portion of that which we have helped create. The organization that is filled with individuals who have been challenged to contribute in creative ways is an organization filled with people who believe in the organization and share in its goals. Like all things of value, work is required to ensure the success of this endeavor. Upper management, owners, and every leader in the organization must on a regular basis demonstrate their interest in, and commitment to, the contribution of others in the organization. Some organizations pay lip service to this idea.

The Entrepreneurial Problem Solver

Such practices are quickly sniffed out, though, and cynicism gains a foothold. Take notice when creative practices are employed by those less likely to contribute. It will send the message that everyone is part of the process. We have a practice of putting our service managers in front of potential customers. In our business, the service managers are where the rubber meets the road. They make it happen, often taking months of effort in design and sales and putting it into action on the customer’s site. Who can best talk about creative solutions to potential customers? There is a place for the executive sales pitch, but is there a person in your organization whom your competition will overlook in their effort to impress with their suits? Don’t underestimate your resources, resources which for entrepreneurial organizations are often less developed than larger and less dynamic organizations. We have been told on many occasions that meeting our in-field guys finalized a deal for us, usually at the expense of our competition’s failure to do so. Obviously, securing the business is important. Of equal or even more value is the enthusiasm everyone in the process experiences. Here are some “golden rules” that briefly summarize the art of being an entrepreneur: Be creative. Imagine “What if?” Challenge the status quo. Train for the summit every day. Quest for leadership where it is not apparent. Where leadership is apparent, strive to make it better. Do not give up until it is physically impossible to satisfy a business need. ❏ Fill the organization with complementary talent. ❏ Be lean and never spend more than you have. ❏ Honesty will earn trust. ❏ ❏ ❏ ❏ ❏ ❏ ❏

Inside The Minds

❏ Expect more. ❏ Have fun. The Entrepreneurial Difference Creative people are different from most people. Most people are not creative, so to be creative is to be different. As I’ve argued, entrepreneurs are creative people in a business environment. I think you can learn to become creative, just as you can learn to paint or garden or cook, all having elements of satisfaction for the creative individual. Business is a disciplined approach to puzzle solving. The creative practitioner of puzzle solving will learn to see the picture from the fragments on the table before him or her. Just as there are people more or less talented at painting, there are entrepreneurs who are more or less creative puzzle-solvers. Therein lies the distinction, measured in degrees of marketplace success. Often the individual who starts the business, the original creative founding member(s), is not the leader who grows the company beyond the mature stages of start-up. Management is hired, not only because the organization requires additional leadership, but also because the talent that started the organization is the not the talent necessary to move it forward. Let’s say a business problem presents itself – a competitive threat, a takeover, a distribution challenge, or a logistical problem – the nature of the problem does not matter. What does matter is the approach to the problem taken by the individuals charged with solving it. The world rewards the creative thinker in the business environment. Better mousetraps are built by challenging conventional design. If the same or a similar problem presents itself to several organizations, or, say, to an industry, the most creative approach to solving the problem will rule the day. Of course, government and legal intrusion will

The Entrepreneurial Problem Solver

usually trump, but even there lies opportunity for creativity. Whether the original creative leader or subsequent leadership takes on the challenge does not matter. Creative puzzle solving is the solution. History is filled with creative leaders. It is an old saw that there are three types of people: people who make things happen, people to whom things happen, and people who wonder what happened. Creative leaders make things happen. Individuals and organizations that have developed the discipline to lead in creative ways will always fill history. Success will follow them. Large-scale or mom and pop, these businesses will, through their acts of creativity, define their times. Doug and Carole Bruns started Atlantic Corporate Interiors, Inc., in their home in 1993. Now, covering the mid-Atlantic region with offices outside Washington, D.C., and Herndon, Virginia, ACI provides design and specification, sales, and installation of modular workstations and office furniture. Mr. Bruns is chief executive officer of ACI, and Mrs. Bruns is president. ACI has appeared three times on Inc. magazineâ&#x20AC;&#x2122;s list of 500 fastest-growing private companies in America. In 2000 ACI appeared on the FastTrack 2000 list as the 41st fastestgrowing company, private and public, in the D.C. metropolitan area.

The Entrepreneurial Problem Solver

THE CONTAGIOUS ENTREPRENEUR

RODNEY KUHN Envision Telephony

Founder and Chief Executive Officer

Inside The Minds

The Entrepreneurial Culture A trusted friend and former executive in a very successful company once told me you can’t really learn about entrepreneurship from a book, from a class, or from watching others. You just have to experience it for yourself. He was right. Books and courses exist to help guide entrepreneurs to build products, services, business models, etc., but nothing can teach you how to develop the instinct of an entrepreneur, how to handle the inevitable failures that will come along, how to use your gut to make choices, and how to take risks to become successful. You learn all that from living entrepreneurship daily. Many people think of entrepreneurs as risk-takers – people who don’t fear anything in business. But most successful entrepreneurs are risk-averse and don’t take unnecessary risks. Unnecessary risks lead to unnecessary consequences. What entrepreneurs do possess is the unique ability to not be afraid of failure. Failure is, in fact, a necessary step on the road to success, and without it, an entrepreneur will never know if he or she is as successful as it’s possible to be. Entrepreneurs do take calculated risks. Successful entrepreneurs are able to set goals and hit them, usually with less information than they’d like to have. A decision must be made with the information available, but it must always take into account the business goals you have identified. The decisions you make should be based on the options that will help you achieve those goals, as well as the impact the decision will have on the company. I tend to look first at areas of impact. Then I ask myself whether I’m betting too much on this decision, based on where the risk is located and what it will affect. We all make decisions based on less information than we’d like, but the key is to focus on your goals and then determine which path will help you achieve them successfully.

The Entrepreneurial Problem Solver

You become a successful entrepreneur first and foremost by focusing on the customer. I believe if you focus on the customer, believe passionately in solving real customer problems, and execute well-designed plans, then you have the road map for a successful growth strategy. The customer must always remain the focus, and helping solve their problems must drive your business across all departments. Solving problems in an entrepreneurial manner requires the ability to think flexibly and adopt the perspective of the customer. You can choose from only a limited number of options, and you must explore them, evaluating the risks in the face of the rewards and making your decision. An entrepreneur must be able to trust his or her intuition when making decisions. The entrepreneur must remember that intuition is the competitive edge that assists with decisions. Sure, you might make a mistake or two along the way, but people who live through failure come out of it stronger and better able to identify risk and reward when making future decisions. Being an entrepreneur also means encouraging an entrepreneurial culture within your company. The longevity of a company lies in building the right culture. You must create a culture that allows other people to help identify opportunities. Risk must not be feared. It must be a culture focused on delivering value to customers, and your employees must know that every idea needs to support this priority. Companies with an entrepreneurial spirit are more nimble, more customer-driven, more innovative, and better positioned to add value for the customer. They are more likely to diversify, grow, and continue to add more customers. From this, the company will provide better returns to employees and shareholders and be more successful. Create value for your customers first; value for your shareholders will automatically follow. This will provide a deep foundation for the long-term survival of the company.

Inside The Minds

Details, Details To be an entrepreneur, you must want to be a leader. An entrepreneur always wants to erase a need, improve a life, or fix a problem. This takes massive amounts of drive and passion that cannot be taught. You must have a high tolerance for failure and never become a critic of yourself. These qualities must fall into line when the right opportunity presents itself. As an entrepreneur, you must have the knowledge necessary to deliver the product or service and the business skills to understand what it takes to build a business model. It is important to build a solid business model, one that takes into consideration financing, planning, hiring, and managing, and to be able to execute against that model. Build a model that starts small and can grow large. For example, profits are often left as an afterthought in many entrepreneur business models, but it is absolutely critical that you have a well-defined plan to achieve a profitable business, or you will fail. After youâ&#x20AC;&#x2122;ve established a business model, it is essential to execute the business plan as efficiently as possible. Execution must be stressed from the top of the corporation down. Keep your eyes on the details. This requires the ability to rally individuals to execute according to the model. I am a firm believer that the devil is in the details and that good businesses are run by managing details. Managing details while still focusing on the customer is the key to running a good business. The first thing I do to ensure efficient execution is to establish a clear and direct process. The goals must be articulated simply, and there must be a clear way to measure progress. An integral part of any execution is the management team. I believe that behind every great entrepreneur is a strong management team. There are too many details for an entrepreneur to do it all alone.

The Entrepreneurial Problem Solver

A successful entrepreneur knows his or her strengths and weaknesses and hires top-notch people to help execute the plan. The Entrepreneurial Team An efficient management team must be made up of people who understand and know their particular parts of the businesses very well. If the entrepreneur does not have marketing professionals who really understand marketing, sales professionals who can sell, or product development people who know what it takes to deliver a quality product, then the vision will never be realized. It is necessary to build the skills of the team and empower them to do their jobs to the best of their ability, according to the goals of the company. To be an entrepreneur, you must always be planning for the future, and that means keeping communication open and continually reiterating the business goals. While engulfed in dayto-day business, entrepreneurs sometimes do not take the time to put a plan in place to ensure the business remains on track. As a result, a company may lose its direction. You must execute today, but you must also plan for tomorrow. In planning for the future, it is important to ensure growth by doing several things. First, I believe it is crucial to have regular off-site meetings with the management team, where you can escape, take a step back, and assess where you are and where you need to be. You need to ask: â&#x20AC;&#x153;Where are we going? Are we on the right track? Should we be here now? What alternatives do we have?â&#x20AC;? If you are lucky enough to build a company so that it has a long future ahead of it, then getting away from the daily details to plan for growth will become that much more important. Break down your objectives into financial, market share, and customer satisfaction. Put plans in place to grow; then communicate the plans to the entire company and execute.

Inside The Minds

Next, for each department, you have to set clear objectives that support the overall corporate goals. And it is important to consistently measure progress. For example, I have set a goal to have 100 percent customer “reference-ability.” To achieve this, we communicate a clear customer lifecycle that defines the steps every department and employee will take when working with a customer. We have also developed a program to measure the level of customer satisfaction. Having well-defined objectives and continually reviewing progress are vital to achieving results. Communicating objectives to the company is also critical. The corporate vision must be clear, concise, and easy to understand, or your employees, customers, and investors will not grasp the direction of the company. Goals must be clear and objectives measurable. This is essential, no matter the size of the company. When you are a small company, you are primarily striving to create the niche that will gain your initial customers, or what I call “launch” customers. As the company grows and more people become involved, the entrepreneur loses the direct contact that brought early success. This is a hard transition for the entrepreneur because he no longer has daily contact with people who are now integral to the execution of the initial plan. Now it is vitally important to expose every part of the company to every aspect of the business. This is why there must be regular company meetings that inform employees about the financial progress of the company and outline short-term goals, as well as the long-term plan that keeps the company on target for optimum opportunities. This will ensure people are not isolated. When employees are isolated, they will start to play politics and focus internally on their own career paths, rather than externally on the customer, which is where the focus of an entrepreneurial company should be. Good entrepreneurs are excellent at articulating corporate objectives and understanding how the company as a team is performing to reach these objectives. They must then make sure the employees keep an external focus on the customer and work as a team to succeed.

The Entrepreneurial Problem Solver

Building Entrepreneurial Spirit Acting entrepreneurial is essential in pursuing opportunity and building a flexible company that can achieve both initial goals and those developed along the way to sustain the future growth of the company. The opportunities you pursue should be only those that make good business sense. Is there a customer? Can I reach them with my current infrastructure, or do I need additional capital? Can a profitable business model be built to address the opportunity? It is important always to put yourself in the customer’s shoes when determining whether to pursue opportunities. For example, if there is something that needs to be bridged, simplified, delivered, or provided I constantly ask myself if it makes sense from the customer’s point of view. I always ask the question: “Would I buy it if I were the customer?” If the answer is yes, I will pursue the opportunity with due diligence. Then if the initial hunch continues to make sense, and it fits into the overall business goals, I will pursue it. Acting entrepreneurial means managing both people and the business entrepreneurially. For me, this means touching every aspect of the business. It means keeping in touch with customers and traveling with the sales force to understand how we are positioned competitively and what our customers are facing when trying to reach their customers. It also means being involved in the financial details and getting the product developers to understand the big picture of where the product is going and how important their contribution is. You have a management team in place, and you must trust them implicitly, but always reserve the right to go further to understand how things are working and to help identify how they can work better. A successful entrepreneur is interested in all parts of the business and is involved in building the entrepreneurial spirit throughout the business.

Inside The Minds

Building the entrepreneurial spirit has to be contagious. This is why it is important to ensure that the vision and spirit are reinforced in every employee in the company. Innovation is critical not only to the growth of a company, but also to the effectiveness of employees. Employees who have the entrepreneurial spirit take more initiative and tend to have more efficient approaches to doing their jobs. This is difficult to inspire; it requires keeping the right perspective. Again, if employees become isolated, their goals will turn in on themselves; whereas, if they stay focused on the big picture and common goals, they will be more productive and more willing to innovate and succeed. Employees cannot adopt an island mentality. They must all be out touching the customers in some way. For instance, the marketing team must not get away from the customer and start viewing the market as an entity instead of as people. Building entrepreneurial spirit throughout the company makes for innovative employees who promote growth by bringing new products and new ideas to the people who buy them â&#x20AC;&#x201C; the customers. A leader can do many things to set the tone for the company. You can, for example, bring product developers to visit a customer so they know that what they are developing is for an individual, a person who uses the product daily and whose use of the product is critical to their success. The customer puts his or her livelihood on the line to do business with us, and everyone involved in the process must understand this. I believe the whole organization must be focused on the customer to keep it entrepreneurial. The entrepreneurial spirit must also be reinforced by the willingness to take risks. Employees must be encouraged to innovate and change. I try to make sure our employees know their ideas will be challenged along the way, but any good idea that will make things better for our customers will be pursued.

The Entrepreneurial Problem Solver

This is why it is critical to hire employees who are innovative and willing to take calculated risks to drive forward. These are â&#x20AC;&#x153;Aâ&#x20AC;? players, and they are vital to an entrepreneurial company. They must be drivers, be self-motivated, and have a strong work ethic in combination with a high degree of integrity. An entrepreneur can build a great company with great products and people. Once this is established, the entrepreneur should build for the future. As the company grows, too many new opportunities will arise for one person to make decisions alone, and it will be up to the individual employees and their own entrepreneurial spirits as to whether or not they pursue certain courses of action. It is sometimes hard to find those willing to take risk, but itâ&#x20AC;&#x2122;s important to surround yourself with those with an entrepreneurial spirit who will keep the company fresh and exciting. The great minds within the company will sustain its entrepreneurial pulse and allow the company to maximize its ability to provide the best possible products and services for the customer. These types of employees make the difference between a good company and a great company. Hire the smartest people you can find. Overall, fostering support for a vision is most difficult at the start, but success breeds dedication and commitment among the employees. Everyone likes playing on a winning team. Entrepreneurs should know that what they do is contagious. Getting people to believe in the vision of an entrepreneur takes two things. First, it takes a high degree of credibility built by example. And second, it takes a huge amount of humility, combined with passion, to transcend failure and the fear of failure. Remember, nothing can teach you about entrepreneurship except experiencing it for yourself.

Inside The Minds

Envision Telephony has been built from the ground up through the vision and leadership of its founder and CEO, Rodney Kuhn, a pioneer in the field of computer telephony integration (CTI) and call-center technology. Throughout his career Mr. Kuhn has identified industry trends to create first-to-market solutions in support of Envision’s mission: To provide software applications, knowledge, and expertise to help Envision’s customers maximize every contact with their customers. Mr. Kuhn introduced Envision Telephony to the market through the launch of its initial product, SoundByte Enterprise, in 1996 to improve the performance of customer-facing agents. In seven years, and several industry awards later, including Product of the Year and Users’ Choice Award distinctions, Mr. Kuhn’s vision continues to help some of the world’s most customer-focused organizations retain loyal customers and achieve optimum performance in their customer contact centers. Before founding Envision Telephony, Mr. Kuhn helped develop computer telephony standards while developing CTI-enabled voice-messaging products for Active Voice, a leading manufacturer of voice processing systems.

The Entrepreneurial Problem Solver

IT TAKES TWO: HUMAN AND FINANCIAL ENTREPRENEURIAL RESOURCES

PETER J. VALCARCE Arena Communications President

Inside The Minds

A Tale of Two Resources In any organization there are only two types of resources – human and financial. Managing them appropriately, especially at a company’s inception, is a difficult, but entirely necessary, task for a company to be successful. If a company is funded correctly it can hire the right mix of people. But many times a company does not have sufficient funding and must rely on finding people who will become part of the enterprise on an ownership or commission basis. Let’s examine some of the issues surrounding the two basic types of resources and ways to make them both more cost effective and efficient. Entrepreneurial Thinking - Finding and Keeping the Right Employees I never liked working for someone else. I need to make decisions. My first job out of college was working for a very conservative U.S. Senator who was surrounded by several power-hungry people who jealously hoarded all the power and decision making in the politician’s office. I remember being reprimanded by my superiors on several occasions for being, as they described it, “overly aggressive.” I always felt they were threatened by what they saw as an ambitious, young political nerd with a college degree. The result of this lack of power-sharing was a stagnant, unproductive office, where staff was intimidated into being quiet for fear of being reprimanded. Junior staffers were not allowed to have contact with the Senator without one of the senior staff present. It is a great irony in the political and business world that one who hoards power ultimately loses that power because they lose the loyalty of subordinates. The great leaders of today and

The Entrepreneurial Problem Solver

yesterday seem to be those who know how to delegate and allow others a role in decision making. Take a look at past presidents of the United States. Americans routinely list John F. Kennedy and Ronald Reagan among the great leaders of the 20th century. It is no coincidence that both of these men believed in the power of delegation. They routinely delegated tasks to staff members who participated fully in the decision-making process. They trusted people, and in return, the people who worked for them trusted the leaders and served them diligently. When I started my business I vowed I would follow the leadership models of Reagan, Kennedy, and so many others. The axiom goes, give a man enough rope to lead but not enough to hang himself. At Arena Communications we have tried to create an environment in which employees are given a task, with just enough information to get started on it but not so much that creativity is stifled. The next lesson is to create a culture that is employee-friendly, fun, and non-threatening. If it’s a slow day at our company, we let our workers take the afternoon off. Liberal leave is given to employees in the slow months that follow an election. I always try to remember how much I disliked the structure and stifling environment of my first job and treat my employees the way I wish I had been treated during that first employment experience. We give our employees a task and say, “Here is the bottom line; see what you can come up with to get there.” While succeeding at a task empowers employees with the knowledge they can do a good job, failure can also be a valuable experience. Employees need to understand most failures can be fixed, albeit with a price that is either emotional or financial in nature. But we make sure that with each failure an employee is given the incentive to learn from the failure and strive for a greater level of success.

Inside The Minds

We also try to get our employees to think entrepreneurially by offering incentives. Election-year bonuses have become an integral part of our employeesâ&#x20AC;&#x2122; overall take-home pay. We want them to feel they are an integral part of what is going on daily. This is easier in a small company, because everyone can have at least some idea of everyone elseâ&#x20AC;&#x2122;s role in the functioning of the company. In a large company there are so many facets to what goes on that flexibility is lost. We, however, can be nimble and flexible. The niche of our business is so specific that it is critical once we find the right mix of employee skills, we make sure those employees stay. We must retain the services of those who are willing to eat, sleep, and breathe politics. In our friendly environment we hope we have stimulated our employees in such a way that they know there is no limit to what they can do and what they can make. They have a personal stake in the growth of the company. We let our people know that if they work hard, and the business prospers, they will gain the financial success they desire. This creates a sense of ownership in our employees. We recently had our first employee dismissal in the company because the worker did not fit the entrepreneurial mode of the rest of our employees. We want employees who understand there will be benefits for them if they participate in the process of our business enthusiastically and passionately. Financial incentives are the best and most tangible way to inspire a personal link between an employee and the company. This, in addition to an office atmosphere that fosters creativity and freedom, creates an enthusiastic entrepreneurial spirit that continues to bring success to our company. When hiring new workers we look for those who will enjoy politics â&#x20AC;&#x201C; which is our niche. No matter what you do, you need to surround yourselves with employees who believe in what you do and who are motivated by the importance of your product or

The Entrepreneurial Problem Solver

service. This is especially true in the political consulting world, since so many people enjoy political participation as an avocation, as well as a vocation. Additionally, politics is unique because it has such a high level of gamesmanship. Like a sporting event, there is a final score that allows you to know whether you have failed or succeeded at the task at hand. How many companies sign on clients – in our case, campaigns – with the knowledge that, within one year or so, they will be out of business? Politics is retail, but the store is open only one day – Election Day. Everything we do is based on preparing for that one big day. While other advertising agencies sell themselves to businesses that will be around for decades, or possibly even centuries, we seek out clients who may be with us for a number of months before disappearing into the world of the defeated candidate. This uniqueness attracts a unique type of employee – an employee who is a risk-taker, a gambler. Our employees, for the most part, are political junkies who sleep, eat, and live the world of politics. Employees must enjoy their specific tasks and enjoy the surrounding issues. As a leader, it is important to develop trusting relationships between yourself and your employees. The trust must extend into a willingness to help one another in any possible way. We try to operate our company as a family, where everyone understands everyone else’s strengths, while also acknowledging weaknesses in a non-judgmental way that we hope helps each employee overcome his weaknesses. We value and admire hard work, determination, and an eternally positive personality. If those attributes are present, I believe anything else becomes possible. Such a personality will never lose its edge. Rather, it will rise to the occasion if a problem presents itself and help solve the problem in a positive and efficient way. I often reflect on my first employment experience, where power sharing was not the modus operandi of the management. That

Inside The Minds

first experience allows me to be a better employer. In the business of creating businesses, it is always important to remember that failures and bad times are important ingredients in learning how to succeed. Entrepreneurial Maneuverings - Finding and Creating Opportunities for Success Simultaneously to creating a positive and productive environment for employees, a company must obviously concentrate on making money. This sounds blatantly simple, but it is amazing how much activity is pursued that is not dedicated to the basic goal of making money. Before Arena Communications, I participated unsuccessfully in a public relations venture with a man who saw the creation of a business more as a source of personal pride than as a moneymaker. This man was vice president of a large steel mill, where his position gave him prestige and was a source of great personal pride. Not wanting to lose any of his community standing, he made sure his lifestyle was maintained in the creation of his business. The result was a company where, instead of paying the employees, all income was used for his personal assistant, a country club membership, designer office furniture, and a Lexus payment. These things are all fine, but a company should consider them all luxuries to be pursued as the reward of success. I see many small businesses that put personal triumph over financial success. Personal triumph must follow financial success. To reverse the order of these two things is to put any new venture in harmâ&#x20AC;&#x2122;s way. It sounds simple, but making money is matter of looking at everything from an opportunity standpoint. Every activity of a business must be analyzed in the context of whether it makes money for the company. Before you spend money on

The Entrepreneurial Problem Solver

advertising, make sure the advertising actually reaches the intended audience. Join a trade association only if it adds to the value of the company by providing training unavailable from other sources or it if gives you a network of potential clients. Create a plush conference room only if it gives you credibility with potential clients. Everything you do must be done with an eye toward eventual return. If something will not add to the bottom line, donâ&#x20AC;&#x2122;t do it until it becomes a need. If something adds to the bottom line, it is a high priority. Early in my career I used to do pro bono work for political campaigns to network. That was important to show people our organization had the ability to get the job done. Pro bono political work is no longer a necessity; in fact, it is a liability because it distracts from paying clients and cheapens our service. Now we spend all our time on directly finding and keeping a strong client base. It is a matter of identifying correctly what is needed to increase the bottom line of the company at any given time. Once customers are gained, it is necessary to please them first and foremost. This is the most important thing you can do to ensure business success. A happy client will recommend you to others, while a disgruntled client will do all he or she can do to keep business from coming your way. When you have a new marketing idea, experiment with it. Donâ&#x20AC;&#x2122;t buy 12 months of advertising until youâ&#x20AC;&#x2122;ve tried one or two months. Carefully measure the result of every expense and every activity of your company to ensure it benefits the top line. From an administrative point of view, keep an eye on the bottom line to make sure you receive the most value out of your phone service, your shipping, and so on. Dollars wasted on the wrong vendor quickly add up and can mean the success or failure of a new business.

Inside The Minds

To efficiently use marketing dollars, it is important to simplify your marketing message. In other words, what does your company do that will help your customers? In our business the bottom line is winning. If we can show political candidates we can help them win, we have won the marketing battle. I recently attended an awards luncheon during which I asked the person next to me what her company does. She replied the company was into “top-down integration of automated point-of-purchase hardware.” When people outside of our industry ask me what we do, I usually tell them we produce high-quality junk mail that helps political candidates win elections. For those inside the industry, I explain that we produce direct mail that has successfully elected dozens of people to public office. Clarity is the key to a successful marketing campaign. Once you have refined your marketing message, the next step is to determine the best form of marketing that reaches the best mix of people who will buy your product. Nothing can sink a business more quickly than a poorly placed marketing tool. Such a tool that comes to mind is the bus bench ad that reads, “Don’t Know How to Read?” followed by a number the person can call to learn to read. In this instance I think radio would have been a better medium. Before any advertising is placed or a marketing effort is launched, you must ask yourself the following question: “Am I reaching my potential audience?” In our business we have learned long ago that direct marketing – one-on-one marketing – is the only medium we should use. With such a limited office, few sources of mass marketing are available to us. Another important function of financial success comes from surviving. You must organize your personal life to be able to withstand the downside of risk – failure. This doesn’t mean you should enter a new venture haphazardly. You must take a risk only after thinking through it and analyzing the good and the bad

The Entrepreneurial Problem Solver

surrounding it and determining that if the worst happens, you are financially and mentally ready to bounce back. No market is stable, and the political advertising market is no exception. You need to understand your market and prepare for the down times. For us, that means making sure we have enough money in the months following an election to be able to pay for our employees and other related administrative expenses. Another simple yet vital part of the marketing side of a business is making sure the product or service you offer is unique and fresh and that it fills an important niche. So often, companies forget that the first key to survivability is to ensure you have a good product. A good product will get you through the door of potential customers and will ensure you are able to stay with them over the long term. Another aspect of creating a good product is to install quality controls early. Employees must be taught that no matter how good the creation of a product is, it is important to check and double check to make sure every product that goes out the door is of high quality. Once you have developed a product that is needed and wanted by somebody, you must also be prepared for changes in the market. That means video stores should be prepared for the onslaught of cable TV and satellite â&#x20AC;&#x153;movies on demand.â&#x20AC;? Phone companies will have to learn to compete with Internet companies that offer Web-based long distance. We in the political world will have to learn to live with the new campaign finance reform bill that just passed Congress. We have looked at ways the bill will affect our business and what we will need to do to survive under a new law that adds more regulation to our industry. After the events of September 11 and the ensuing anthrax scare, we had to make adjustments to the way we address our mail. We

Inside The Minds

could no longer use a return address from Washington, D.C. Doing so could have created more panic in an already panicstricken public. But instead of seeing the anthrax as a downfall to the business of producing political mail, we saw it as an opportunity for members of Congress to reassure their constituents of the safety and stability of the American government. We stay abreast of the news to know what is happening and what can happen, so we are poised to lunge at opportunity when it presents itself. We look at past election cycles to help determine our future strategy. We use history as a predictor of what will happen next year. If we create great mail, then we will be used again. Capacity is what we apply to growth. We ask, “What can we handle?” We then assess what it will take to reach our maximum without surpassing it. We monitor execution by constantly assessing our long-term goals in the face of our short-term goals. If we are not going to meet budget we push to get more work. The most important part of selling ourselves to potential clients is creating political mail that is effective: We make sure our candidates win elections, helped in no small part by our mailings. We make sure our product is of high quality and is priced right and that it reaches people in an effective and efficient manner. If we do this, regardless of the surrounding circumstances, we will succeed. The client needs to be able to work with our product. It must be responsive and alert to the amazing time constraints that exist in the world of politics. This is true of any business. Create a good product and market it correctly, and the world – or at least your part of it – will come knocking at your door.

The Entrepreneurial Problem Solver

Words of Advice â&#x20AC;&#x201C; Putting It All Together The right mix of people is the best key to success in starting a business. Find good people, be loyal to them, and treat them right financially. If they understand the big picture and how it can ultimately benefit them, they will do all they can to help the company become successful. If you have the right mix of employees, you will also find your company will be better suited to ensure that money is spent frugally and that the right financial decisions are made early. A company can quickly lose its edge if it does not know how to use its financial resources appropriately. Make sure you stay on top of your industry by understanding the events that affect your market significantly. I keep my edge by reading prolifically. I read numerous political publications. I read several magazines and newspapers daily and weekly. I also read state-by-state accounts of what is going on with political candidates. In addition, I try to keep my network fresh, so when something of interest happens politically, I hear about it through a phone call or an email. As an entrepreneur, you must be ready to do as much as possible for your company to survive in tough times. But keep your ego in check. Survival is not about ego; it is about making money. It does not matter who gets the credit. If you are a company, you will share the credit. It is important to stay within your bounds. Financial expenditures must only add to the bottom line â&#x20AC;&#x201C; make sure the money you spend contributes somehow to making money. A nice office will come later, on the heels of success; it is not necessary to have a nice office when you are just starting out.

Inside The Minds

In addition to having the right mix of employees and focusing on your goal of making money, you must put your life on hold to dedicate yourself to your business. Time management is essential for your personal well-being, however, so you must recognize what time you have for yourself and take it. But be willing to make the necessary sacrifices to make the idea work, so the future is more secure and prosperous. Peter Valcarce is the president and cofounder of Arena Communications, a national advertising firm that specializes in creating direct mail for Republican political candidates and members of Congress. In its six-year existence, the Salt Lake Cityâ&#x20AC;&#x201C;-based firm has produced mail for the Bush-Cheney presidential campaign, the Green Bay Packersâ&#x20AC;&#x2122; Save Lambeau Field effort, and more than 50 members of Congress. In 2001 Arena was named to the Inc. 500 list of fastest-growing companies in the U.S.

The Entrepreneurial Problem Solver

STEEL DETERMINATION: HANGING ON TIGHT IN A ROLLER-COASTER ECONOMY

DAVE HEGAN MAJAC Steel

Chief Executive Officer

Inside The Minds

From Golf to Steel My parents were divorced when I was young, and I’ve been working ever since – at golf courses, restaurants, anywhere I could possibly make money. In 1986 I quit my job as a tax accountant to become a golf pro. I spent three years as a golf pro, lost all my savings, and went into debt. When I could no longer get cash advances to pay my credit card bills, I had to get another job. I couldn’t find work as an accountant because I had been away from it for three years, so I ended up with jobs in sales. I ultimately found a position selling burglar alarms, and I was terrible at it. One day, when I was playing golf, I realized that if I trained as hard at sales as I had at golf, I could be successful. That day I went to the library and started reading books on how to sell. Within four months, I went from the worst to the best salesman in the burglar alarm company. I soon learned the next important lesson in sales: You have to deliver what you sell. I ended up leaving the burglar alarm company because their lead times were too long, and I went back to the company where I had been a tax accountant, this time as an inside steel sales representative. After two years I became an outside sales representative. Selling steel is very different from selling alarms. You have to forecast demand, buy months in advance, and persuade people to spend millions of dollars. Once again, I went from the worst sales representative to one of the best. During the next five years I spent a lot of time with the owners of the companies I sold to. One owner in particular complained that his biggest problem was getting the steel he bought cut into squares to be used in the production process. I told him I’d see if I could help find a solution, but when I looked for people who did this kind of work, I couldn’t find anyone.

The Entrepreneurial Problem Solver

In 1994 I found myself sitting in a bar with Darryl Washington, wondering how much it would cost to get a steel shearing operation started. I mapped out a preliminary business plan on some napkins and figured it would take about $19,000 to $20,000 a month to buy the equipment, pay for workers, and jumpstart the overall operation. I took the plan to Carl Horst and asked if he knew anyone who would make the investment. He called back a few days later and said he wanted to do it himself, and he began conducting due diligence into the specifics. I did not officially work at MAJAC in the beginning, but I was there to witness how exciting and scary it is to start a business. When the shear finally arrived, three weeks behind schedule, the company was already committed to getting orders out the next week. The installers showed up on Christmas Day and worked throughout the afternoon. When they finally turned on the machine, we heard a terrible noise, and I knew something was wrong. It turned out they had wired the machine incorrectly and had blown up the motor. Somehow they got the machine fixed, and the orders went out. The first full month was a lot of hard work, and every penny was counted. At the end of the month, there was a profit of approximately $1,200 after payroll. Let the Good Times Roll When I started working at MAJAC in September 1996 the company had brought in about $300,000 in sales for the first nine months. By the end of the first year we were up to $980,000 in sales. Late in the first year we were able to obtain a $100,000 line of credit from the bank, and the business took off. I take a three-pronged approach to â&#x20AC;&#x153;sellingâ&#x20AC;? our business to customers. First, I sell service. Second, I sell convenience: I buy steel, shear it, and sell it. This saves customers the burden of buying and maintaining the machines, hiring the workers,

Inside The Minds

dealing with the scrap, mistakes, accidents, and other issues involved in shearing. Many large service centers outsource their work to us for these reasons. Third, I sell expertise: I buy steel, have someone else process it for me, which is similar to our service of shearing for others, then ship it. I buy more steel than my customers do and maintain a low overhead, so I can keep prices competitive. It is essential that the people who buy from me make money; my biggest competition is from customers who choose to do the job themselves. In 1997 we completed $2.2 million in business, cutting steel for other people, as well as selling steel ourselves. The company kept growing, and we could afford to hire new employees. These new hires included an accountant and a plant manager. During 1998 sales went to $3.6 million. I bought out Carlâ&#x20AC;&#x2122;s share of the company, and he left the business. In late 1998 an old customer provided us with some work supplying steel for large truck parts. Sales for 1999 exploded to more than $6 million. In 2000 sales were at $9 million, and our staff grew to 49 employees. August 2000 marked the first time our sales exceeded $1,000,000 for a month. At one time, operations had expanded to two buildings, plus a third storage building, and an office at another location. It was too much to handle. Rolling Downhill Around the time of the 2000 presidential elections, everyone in the manufacturing business knew the economy was going south. Businesses started losing money left and right at the end of 2000. Over a five-month period, I watched all the hard work of five years slide though my fingers.

The Entrepreneurial Problem Solver

Managing through the radical shift from growth to decline was tougher than anything else I’ve worked through in my adult life. The anxiety was horrible, and one night I had a panic attack so terrible I was afraid I’d have to call 911. What bothered me the most was laying people off. I had to lay off more than 20 people to take the company back to profitability. Fortunately, this strategy worked, and surviving those dark days actually helped us develop a more solid business. By the end of the summer of 2001 the company was back on track, even though the economy hadn’t revived. On September 10 I was at a golf outing, and I distinctly remember feeling grateful that I was in a good place both personally and professionally. The next morning the terrorist attacks plunged us into another difficult period. By November, any customers that had been marginally shaky started going bankrupt. Bankruptcies exploded. All the money we had made back, we lost again. As a result of September 11 we lost money for the year. Yet, we are more grateful for what we do have. We have survived those bankruptcies and are doing all right again today. I like our position within the steel industry, because we can control our risks. We are able to focus on our goals, even though the steel industry is in a constant state of turmoil. I’ve always been a risk-taker, and when it came to business, risk taking was an extension of what I’d done all my life. When I started out as a pro golfer, I was constantly assessing risk and reward, whether it was going for it on a par five over water, or hitting over the corner of a dogleg. I like to say that if you let me spend an hour with a person at a blackjack table, I’ll be able to tell you whether he or she would make a good entrepreneur. At a blackjack table, you find out the extent of a person’s aversion to risk, along with their ability to avoid emotion and stick to a plan. I’m pretty non-averse to risk, which is important in this business. I’ve gone out and bought millions of dollars’ worth of steel at one time with the hope of selling it for more than I paid for it.

Inside The Minds

Another risk in my business is extending credit to people. Part of me knows if risks go wrong, I still have to keep the business in operation. What helped us through 2001 was maintaining the processing, or service, end of our business. These operations have become a bigger part of the business as a result of the constantly fluctuating economy, and they help us control when to take risks. Lessons Learned I have learned that to survive through tough economic times, you have to stay lean at the administrative level. I’ve also learned you have to be able to change your inventory strategy. For example, if I get stuck with different types of inventory, I may lose money just to get rid of steel. If I stay in a similar product mix, I can find multiple uses and customers for the steel and turn over the material more easily and with better profitability. This is what you have to do in our industry. You also have to accept the fact of change. You have to bite the bullet and react right away, instead of hoping things will go back to the way they were. I have learned a lot about managing people over the past six years. When I started, I made some terrible mistakes. I wanted to be everyone’s friend. I knew where everyone lived and what their wives’ and kids’ names were. I took it personally when people were upset about something and told them to come to me with their problems. Finally, I read a book called The EMythRevisited, which greatly influenced my management style. In the book, the author, Michael E. Gerber, argues that the boss has to build a system and work people around the system, instead of vice versa. As the boss, you can’t get too involved in the lives of the people you work with, because you have to remain the boss. Today I still care about my employees, but I do not maintain personal relationships with them outside of work. This is for their benefit, as well as mine. They come to work to make

The Entrepreneurial Problem Solver

money. My job is to help them develop the right goals and to work them through the system toward the achievement of those goals. I have a solid program for hiring a good team. Number one, I look for someone who has commitments, such as a mortgage or a spouse and children. This partially ensures that he or she will be responsible. I also look for someone from a blue-collar background – someone whose mother and father both had jobs. This is the type of person who is not afraid to work. They might not be the prettiest people with the highest degrees, but they will give you their best effort. I used to be a micromanager, but I have learned a lot about sharing power. Most businesses start with a person who has technological knowledge. In my case the knowledge concerned how to sell steel. This doesn’t mean that I am a business genius. The reason we lost money in 2001 is that I was a bad manager at the beginning of the year. You have to reach the point where you realize you made the decision to put your middle managers in place, so you need to tell them what to do and let them do it. I’m wise enough to know they are smarter than I am in much of what they do, so I try to stay out of their way. You have to give your employees a chance if you want to see them deliver results. Just make sure they are focused on the proper outcome. To make sure that everyone stays on track, I’ve built a chain of command and an incentive system. I measure the profit on every job and reward my managers with a percentage when we make money. They are aware of the finances and are motivated to make the right decisions by the prospect of making more money. I also try to hold a management meeting every week, during which we review financial statements, walk through the projects, and assess problems. Most of the time the challenge is how to get all the work cut, because we have oversold the capacity of the plant. It is essential to keep track of the flow of information.

Inside The Minds

Stick to Your Plans Based on my own experiences, I would give the following advice to people who are just starting a business: Write your own personal financial plan, and use your business to fulfill that plan. The opportunities you see when running a business will make your eyes widen in wonder. Emotion can get the best of your intelligence, and it is easy for greed to overcome logic, but don’t let anything change your plan. If your goal is to save a certain amount of money per month, make sure the decisions you make still allow you to save that money. Whether your objectives involve free time, financial independence, a creative outlet, or not having to work for someone else, use your business as a tool to achieve them. If you remember your own goals first, you will save yourself a lot of personal and financial unhappiness in the long run. The same philosophy applies to your business plan. Build a system and work the system toward your goals. Every time I’ve strayed from the original plan I wrote on those napkins in 1994, I’ve had nothing but problems. If you stick to your plan and use your business to achieve your personal goals, you should succeed. This kind of discipline will also make you a better leader. At this point in my life I believe leadership is really about helping others maintain focus. Build a plan, set a goal, develop a system to get you to that goal, and work the system. That is the golden rule. If the dot-com companies that went bankrupt had done just that, they might have survived. They were selling several focal points, and they didn’t have an overarching plan. The idea that you can build market penetration without profit wasn’t going to work. You have to make money.

The Entrepreneurial Problem Solver

Dave Hegan, chief executive officer of MAJAC Steel, was born in northern Indiana and schooled in Chicago. While attending Indiana University and majoring in accounting, he played some college golf. After college he worked for five years as an accountant, but quit in 1986 to become a golf pro, playing in tournaments and teaching. Three years later he was broke. At that time Mr. Hegan made the decision that if he could become as good at sales as he was at golf, he could make a good living. He returned to his former accounting firm as an inside sales rep, becoming an outside sales rep two years later. After four years he came up with the idea for MAJAC Steel and persuaded a friend to pursue it, joining MAJAC himself a year later. He bought his friendâ&#x20AC;&#x2122;s interest in the company in 1998.

The Entrepreneurial Problem Solver

ENTREPRENEURIAL SPIRIT AND PASSION FOR PASTA – A WINNING COMBO

AARON KENNEDY Noodles & Company Co-Chief Executive Officer

Inside The Minds

Starting From Scratch My experience as an entrepreneur began in Greenwich Village, New York, in August 1993, when I was hit with the global noodle shop concept. The entire concept just fell into my lap. It began flowing out of my brain onto a napkin as I was commuting to Boulder, Colorado, to see my wife. Almost immediately, I began typing up the concept and creating the business plan. Now, Noodles & Company is a restaurant chain featuring freshly sautéed noodle dishes that bring together culinary influences from around the world. We offer a big bowl of noodles for around five bucks, from Japanese Pan Noodles to Mushroom Stroganoff to Pesto Cavatappi to Wisconsin Mac & Cheese. We have a very warm and comfortable dining environment, with natural wood tabletops and a décor of warm colors, such as sage green, okra, and spice red. It is a wonderful place to have a meal, and we make it convenient to carry out, as well. To get the word out about Noodles & Company, we used a very grassroots marketing approach. I chose a time of day when I knew business would be slow, and I’d grab three employees and a box of menus and head out into the neighborhood to distribute the menus to potential consumers. Literally, we just wanted to get to the people on the street to introduce ourselves, give out a free noodle bowl, shake hands, and reach out to every single household. Another way we marketed ourselves was to begin at the top floor of an office building, introducing ourselves to each receptionist and offering an incentive to come in and try our product – usually a free noodle bowl – and then leaving several menus behind. This proved the most effective way to drive our business in the early days. Noodles & Company took some creative financing to get off the ground, as well. We actually used both the capital we raised and the ability to pay for some services with stock. We made our cash go further by paying our executive chef, graphic designer,

The Entrepreneurial Problem Solver

architect, operations consultant, and accountant with stock in the first year. The lawyer required cash. Had all of these consultants required cash, we probably would not have survived. I personally had to take out a second mortgage, and I charged about $50,000 in credit to pay the bills. Fortunately, we made it over that bump. The ingenuity required to conserve capital was taxing in the first two years. We got to know the tolerances of our creditors very well during this time, and we figured out when payments absolutely had to be made. Conserving capital was timeconsuming and frustrating, considering it’s an activity that doesn’t strengthen the business or the team, but just helps to keep it alive. From my experiences I have learned it is critical to have a wellarticulated business plan and financial model to demonstrate the business can make money. I also learned how important it is to have a lot of great relationships – people you can send your business plan to, knowing they think highly of you and will read your business plan, thinking, “This sounds interesting.” It was certainly a flyer for anyone who invested, as there was no other global noodle shop concept anywhere to prove it might work. They basically had to believe in me and believe I could make this wild idea happen. Having a lot of those strong relationships allowed me get the funding to start the business. We have completed four rounds of financing since then. These were a little different, because we had some operating results. We’ve been able to sell more stock at higher prices in each successive offering. At this point we’ve sold shares for 100 times the price our original shareholders paid. The beautiful thing is that all of our shareholders have had the opportunity to sell shares and take gains, even though this is still a privately held company. We achieved this liquidity buy turning excess demand

Inside The Minds

for our stock back to our existing shareholders. This has produced a large, but very satisfied, shareholder group. Success as an Entrepreneur The common question that rings through the minds of aspiring entrepreneurs is, “Will I be successful if I start my own company?” If you knew the answer to that simple question, you would know whether to get started or get it out of your mind. To be successful as an entrepreneur, it is helpful to be very good at a lot of things. It is essential to have excellent intuition about virtually every discipline that affects your business. This means you have good instincts in accounting, operations, marketing, engineering, architectural design, law, finance, and human resources. It is helpful to have the ability to be creative and decisive in all of those areas. I think this is a foundation a person needs to have. If you don’t, you must quickly surround yourself with people who have these skills. In addition, an entrepreneur will greatly benefit from having the following innate traits. In nearly 10 years of cutting my own path, I have found these to be the most essential elements of my success: Innate Traits or Talents ❏ ❏ ❏ ❏ ❏ ❏ ❏ ❏ ❏ ❏

Insatiable passion for your concept Self-drive and self-motivation to get started Courage to make the leap from your safe haven Ingenuity to overcome the barriers before tripping over them Determination and tenacity to claw up the growth curve Physical and emotional endurance Patience to allow the concept to breathe and come to life A vision for how it will all come together Finesse to infuse others with the vision Ability to set aside your ego and pick up a broom

The Entrepreneurial Problem Solver

In addition to these internal traits, several learned skills and external components are important elements of successful entrepreneurship. You must have strong relationships and contacts with people in financing and consulting services, along with designers, engineers, and anyone else who might help you get your business off the ground. You should also capture as much broad experience as you can possibly obtain from someone else’s business – working at other companies and immersing yourself in every project you can get your hands on. Attack every challenge available to learning and preparing yourself for the future. External or Learned Components ❏ ❏ ❏ ❏ ❏ ❏

A distinctly appealing business concept or system Compelling business economics (risk/return ratio) Connections for money, people, and services Organization and time management skills Leadership and management skills Good experience and instincts in multiple disciplines

Many people started businesses in the e-commerce world who were not qualified entrepreneurs and who had neither the internal nor the external attributes required. Many were not capable of running a business, but they were able to launch a company because they had the technical expertise that allowed them to get financed as a start-up. I think one of the most prevalent reasons for business failure is that people with specific expertise in developing the product try to start or run a company (chefs try to run restaurants, software developers launch tech companies, etc.). You cannot expect to be successful at starting and running a business if you are good at only one thing. Despite the e-commerce boom-splat, it appears to me that strong interest remains in starting new enterprises. However, much more caution is being exerted now by the founders and the

Inside The Minds

financiers. Those who have a broad skill set and experience to run a business are still getting funded. There is actually far more money available and wanting to be placed today than there are sound business ventures available to fund. Getting Started When I had accumulated a broad base of experience from working first as a marketing research manager in new-product development at Oscar Mayer (Lunchables) and then as a brand manager at Pepsico (Pepsi), I was awarded a great concept in the form of an epiphany. The concept for Noodles & Company, a global noodle shop with modest pricing and a warm, comfortable dining room environment, hit me with such clarity that it never occurred to me that I should even consider not proceeding. It was obviously what I was supposed to do. When I was risking my own financial future and reputation, I did not really consider or weigh those risks. I was utterly committed. I knew this was my path, and I simply had to figure out how to drive down it. It was not logical. If I had relied on logic, I would not have started a restaurant business or continued to fund losses beyond my means. I took far more risk than was appropriate â&#x20AC;&#x201C; way more than a rational person would have driven through. I would not advise anyone to take an irrational risk. If, however, you have a very clear vision about the company you are creating, and you have deep confidence that it will work, then my advice would be to not let anything stop you. I am a noodle zealot. I live and project my vision every moment of every day. It is in every word I say, every email I send, and every glance I throw. I live our culture and our values, and I convey my own commitment and confidence in our mission. Anyone who has this clarity of vision should find a way to bring it to life. I did some crazy things to make my vision happen, and today I am very thankful I did.

The Entrepreneurial Problem Solver

Making the Transition From the moment the lightning bolt hit me on Hudson Street in Manhattan, I was so utterly captivated by the Noodles & Company concept that I could think of nothing else. I was miserable, going to work every morning, knowing I was wasting time on something other than my new business concept. My lack of enthusiasm for my job became evident to others, and that made it difficult for me to be effective. Within a couple of months I realized I simply must pursue this dream. In fairly decisive fashion, I arranged to spend a couple of extra days in Boulder on one of my weekend trips. I coordinated an interview with the owners of a graphic design firm in Denver, where a friend of the family worked. I conveyed my interest in becoming the firm’s marketing director and developing my business plan on the side. They agreed, and in the next six weeks, I obtained the blessing from my wife to initiate the plan, found a house, quit my job in New York, and started my life as an entrepreneur in Colorado. From a financial perspective, newly minted entrepreneurs will find it helpful to have another stream of income, perhaps from a spouse or a parent, while you are getting your company off the ground. You really cannot expect to take home pay from the company for at least a year or two. Once you’ve proved the business can generate returns, investors and manpower will become more available, and you’ll be able to begin making an income. Unfortunately, most new entrepreneurs underestimate their capital needs and overestimate the early potential of our businesses. This was true for me, as well. So I drew upon four financial resources. I went back to the “friends and family” investor group and requested 25 percent in incremental funding, took out a second mortgage on our new home, applied for every credit card I could get my hands on, and pushed all of our vendors to the limit of their terms. By tapping every one of these

Inside The Minds

completely, we just made it through the tight spot and emerged on the other side to become a very successful company. Motivating Employees The success of our company thus far has been generated by hiring competent and committed people and successfully integrating them into our culture and vision. We believe employees gain a sense of ownership when they feel they are actually doing meaningful work and that they are working for people who appreciate their contribution. When a person comes to work feeling inspired because they are doing something that contributes to the creation of a great company, and they feel the appreciation for that, that feeling weighs in heavier than any number of stock options could. That is how people become emotionally invested in the company. Stock options invest you financially, but they do not get your heart and your enthusiasm into your work every day. When Noodles & Company began, we did not have middle managers. Now that we do, we have to address the question of how to make certain we keep these people passionate. We try to maintain a strong level of communication with each of them, so they do not feel they are getting lost in a growing organization, and so they know their contribution is valued at all levels of the company. It really goes back to employees having meaningful work and realizing their contribution is critical to the success of the company. As we grow larger, it becomes more difficult for me personally to connect with each person. So it is imperative that others in the organization become capable of conveying this message and meaning to each person. We have begun to develop some human systems that will help keep our team well-informed and aligned. Objectives are set for each person at the beginning of every year with specific bonus

The Entrepreneurial Problem Solver

dollars attached to each objective. Quarterly, we go back and analyze how we, as a company and individually, are performing. Throughout the year we continue to touch base, and at the end of the year we go through a performance planning worksheet for each person and discuss how the person contributed to the company this year and how he or she can contribute next year. For each person we will conduct five to seven interviews with peers, subordinates, and senior-level people to gather input. When the manager sits down to share this feedback, the employee also presents written thoughts on his or her own performance. They clarify the feedback and begin the process of setting objectives for the upcoming year. In addition to setting objectives for the employee, the staff member gets an opportunity to explain what they need from the company to be more successful in the coming year. It’s a very useful dialogue. Innovation in a Corporate Environment We have a mantra at Noodles & Company: “Either you are moving forward, or you are moving back. There is no status quo.” If we remain static, other companies will pass us by. We engrave it into our culture that we are constantly innovating to find better solutions to our customers’ problems, to our business challenges, to our financing. We constantly push for a better way. When we select people to join our company, we look for that forward lean, that high-performance mentality that will push for better solutions. Then we make them passionate about our mission and purpose. We ask them to be self-directed. I don’t provide much day-to-day direction on things outside of the brand, culture, and culinary arenas. If they aren’t able to thrive on their own, we’ll help them move on to a new environment that is better suited to their style. The entrepreneurial spirit is not limited to people who start their own businesses or work in a start-up. Some large companies

Inside The Minds

encourage their employees to think entrepreneurially. In a corporation, innovation by itself might bring some success, but if you are an innovative person who wants to create a new way of thinking within a large corporation, you must bring a disciplined, structured approach to it. You must integrate and gain acceptance broadly across the organization. That requires patience, political savvy, and a sound methodology. I believe discipline and innovation can coexist. In fact, in any organization that wishes to grow and thrive over the long term, it is essential. As companies grow larger, innovative, entrepreneurial approaches must be supported by disciplined systems. If they are not, both the innovator and the broader organization will become frustrated and lose productivity. Most large companies do not like wild ideas coming from a pioneer spirit. Recognizing this and tailoring your approach will yield better results. Once a company reaches a size where the founder can’t reach out and inspire every manager, you’ve essentially become a “big” company. At that point you must put the systems in place to replicate the results that were generated by a finesse-driven approach inherent in most small, entrepreneurial organizations. Adjusting my approach to suit the larger company I now run is my primary challenge. As my father once told me, “If you decide to eat an elephant, don’t gag when you get back near the tail.” The timeless adage, “Be careful what you wish for, because you just might get it,” would also apply to those aspiring entrepreneurs. Aaron Kennedy is founder, chairman, and co-chief executive officer of Noodles & Company, a global noodle restaurant with locations throughout Colorado, Wisconsin, Illinois, and Minnesota. A passionate brand builder, product developer, and global marketer by trade, Mr. Kennedy developed Noodles & Company based on more than 10 years of professional

The Entrepreneurial Problem Solver

experience and a burning desire to enter the world of the entrepreneur. Mr. Kennedy has worked with some of the world’s largest and most recognized brands. As brand manager for Pepsi Cola, he directed national advertising and promotional campaigns for more than four years. He also worked for Oscar Mayer Foods, where he conducted consumer research to develop the Lunchables brand, one of the most successful products in the Oscar Mayer portfolio. In addition, Mr. Kennedy’s history includes several years at top design firms, where he directed marketing and design efforts for international companies, including Coca-Cola, Sears, Burger King, Swiss Army Products, Warner Lambert, and The Limited family of stores. In 1993 Mr. Kennedy came up with the global noodle shop concept after eating at a neighborhood Asian noodle restaurant in New York’s Greenwich Village. In 1995, at the age of 32, he founded The Noodle Shop Co., parent company of Noodles & Company. Since then the company has opened a total of 39 locations throughout the United States. Noodles & Company’s rapid growth and success recently warranted its inclusion in the Inc. 500 list at number 45. Mr. Kennedy was recently named Entrepreneur of the Year by Ernst & Young and a “Top 40 Under 40” by The Denver Business Journal. In addition, Noodles & Company has been named a “Hot Concept!” in 2001 by Nation’s Restaurant News, an “Emerging Growth Chain” by Restaurants & Institutions magazine, a “Concept of Tomorrow” by Restaurant Hospitality magazine, one of the “Top 10 Companies To Watch in 2000” by Boulder Daily Camera, and an “Esprit Entrepreneur Hot Company to Watch” by Boulder County Business Journal in both 2000 and 2001. The Denver Post also named the company one of the “21 Companies to Watch” in 2001 and 2002, and Rocky Mountain News selected the company as one of “18

Inside The Minds

Colorado Companies to Watch” in 2001 and 2002. Other awards include Boulder County’s 2001 IQ Award for innovation in business. Propelled by the company mission statement, “To always nourish and inspire the individuals within the communities in which we serve,” Mr. Kennedy is committed to improving each community through good works and charitable contributions. Because of the company’s leadership role in the non-profit community, it was just selected a multiunit “Neighbor of The Year” by the National Restaurant Association. Mr. Kennedy serves as a guest professor at the University of Colorado, the College of William & Mary, and the University of Wisconsin. He also guest lectures at the Boulder-based Cooking School of the Rockies executive culinary program. He is an advisor to the Boulder Family Learning Center, is an active member of the Colorado chapter of Young Presidents Organization, and is listed in the National Register’s 2000-2001 edition of “Who’s Who in Executives and Professionals.” He earned his bachelor’s degree in journalism and English at Augustana College in his home state of Illinois and his MBA in marketing management from the University of Wisconsin in Madison.

The Entrepreneurial Problem Solver

ESSENTIAL NUTRIENTS FOR GROWING A WATER GARDENING ENTERPRISE

GREG WITTSTOCK Aquascape Designs

President and Chief Executive Officer

Inside The Minds

A Home for Sampson I started my business without start-up bank loans, capital investment, and all the things that most people normally think they need to go into business for themselves. To be honest, I didn’t start by thinking “business” at all. I started out as a hobbyist, and I built my first pond in my parents’ backyard when I was 12 years old. My motivation for building it was to give my pet turtle, Sampson, a place to call home. I got caught up in the pond and all its critters. They included not only my pet turtle, but also the fish I added, the frogs and toads that came on their own, and the wildlife that showed up to bathe and drink from this little pond I’d built with my own two hands. It was really cool, and my interest continued through high school. I saw an opportunity when the postman, the UPS delivery guy, and neighbors all reacted with a resounding “WOW” when they saw my pond. The UPS guy even asked if I could build him a pond like mine in his backyard. I said sure. Then I thought, “There’s a business opportunity here.” By then I was attending Ohio State University. But after my sophomore year, when I returned home for the summer, I needed a job. I’d researched the possibility of building ponds the summer before, and I knew that local landscapers were installing traditional (concrete) ponds in the Chicago area. I also knew how much more beautiful my rubber-lined, natural looking ponds were than their concrete counterparts, for which installers were charging approximately $5,000.00. I knew my cost of goods, and that the profit potential was high. So I figured, why work for somebody else when I can work for myself? I calculated that if I built only three ponds the entire summer, I’d make more money than I made the previous summer, working

The Entrepreneurial Problem Solver

for an hourly wage and answering to somebody else. That first summer, financed by sweat equity, along with the help of some part-time guys from my high school football team, I built five ponds, and I thought I was rich! Great Timing, Little Competition, Much Luck One thing that helped was that this company took root in the early 1990s, during a rise in the popularity of non-traditional landscapes. The tried-and-true green grass, a few perimeter bushes planted around the house’s foundation – that was all being replaced by perennial plants, wildlife gardens, and yes, even water gardens. Our timing couldn’t have been much better. The other factor was that there was no formally organized water gardening industry when we started. There were hobbyists like me, but there was nobody out there really promoting professional pond installations. So we got in on the ground floor of the industry, and we had an unprecedented opportunity to help shape and define a market niche now recognized as professional water gardening. This also meant that we had minimal competition, which allowed our start-up company to maintain its prices and its profit margin. In the summer of 1992, my second full season, we’d built a total of 17 ponds, and I was in water garden heaven! Late in that season we had another stroke of luck when the Chicago Tribune picked up on a little press release I’d sent out the previous summer. The writer who called was intrigued. She wrote a cover story on my unique little pond business, and we suddenly had so many calls that I was working 18 hours a day just to keep up. (By the way, that article still hangs front and center on my office wall.) We had a wonderful problem that, till that point, I’d never

Inside The Minds

dreamed of having. I also hired my first full-time employee that year. In 1995 I launched the mail order side of the business and found that it worked well locally, where installers had actually seen my crew build a pond. With hands-on experience, the connections were made. But without that component, the connection failed. It was then that I began the training and education side of the business, where we traveled the country, directly showing installers how to build beautiful, naturally balanced, lowmaintenance ponds. In 1997 we had another stoke of luck when I met a directmarketing guru by the name of Peter Henry. He suggested we reduce our catalog from 36 to 16 pages and increase our circulation from 65,000 to 800,000. I trusted his judgment. We rented lots of names, mailed lots of catalogs, and entered our current level of catalog distribution. It was at that point that our business took off like a house afire, and to be perfectly honest, we’ve never looked back. We’re now one of Inc. magazine’s top 500 fastest-growing privately-held companies in the country. You Do What It Takes Since I started as a one-man band, I should say a few things about my personality and my outlook on life. I believe confidence plays a large role in any entrepreneur’s success. If you know the odds of a business succeeding in this country, and you lack confidence in yourself, you’ll never step out onto that limb and take the risk. But if you opt for the salary, the financial shelter, and the so-called predictability of working for somebody else, it may be less risky, but lots harder to get ahead. And I like being ahead!

The Entrepreneurial Problem Solver

I would find it impossible to work for somebody else. I combined my inherent optimism, my confidence, and selfesteem, with the knowledge of my own personal limitations (I can’t work for somebody else), and decided to take a swing at starting my own business – on a shoestring. I once read that Herb Elliott, the great Australian track and field star and world-record holder in the mile said, “In order to go for a world record in the mile, you have to be arrogant enough to think you can do it, and yet humble enough to subject yourself to the discipline required to achieve it.” I think the start-up mentality in business has to be very similar. You must be confident (arrogant) enough to think you can beat the odds, yet willing to pay the price. Starting a business on a shoestring is truly a humbling experience that requires you to be able to choke down a little crow, and risk everything in the process. In real estate they say the three most important factors are location, location, and location. But when it comes to building a business, I say the three most important factors are motivation, motivation, and motivation. Some people claim it’s all a matter of hard work, and I did my share of this. Others claim it’s all a matter of smart work, and I’ve always tried to do this. But I say, if you’re a beast and a glutton for punishment, then hard work alone may do the trick. And if you’re a genius, smart work may suffice. I’m smart enough to know I’m neither. I need to work hard and work smart to win. In my case, doing the all things it takes to win in business and in life boils down to motivation – what makes me tick. That goes not only for me, but for every member of Team Aquascape, as well. My primary job in this company is to lead the way, to motivate, to light the fire in our team, and see to it that it stays lit.

Inside The Minds

My favorite motivational speaker in the world is a gentleman by the name of Francis X. Maguire. Frank is fond of saying, “Leading is not getting somebody to do what you want ’em to do. It’s getting somebody to want to do what you want ’em to do.” The difference between these two levels of motivation (extrinsic vs. intrinsic motivation) in a company is the difference between night and day, the difference between a company that’s going places in a hurry and a company that is treading water, just struggling to maintain its market share. (Worst of all, their employees are bored stiff, going through the motions, and living for the weekend. I confess I’ve never spent a boring day at Aquascape Designs, and that’s the way I want to keep it!) Filling Your Ranks With Entrepreneurs In my view, there’s really no such thing as an entrepreneurial person. There’s only an entrepreneurial environment, or system, that encourages and inspires each individual team member to meet the challenges, to respond creatively, to confidently step up to the plate and take advantage of their skills and talents to benefit the company, the team, and themselves. I guess that makes me a strong believer in people because, given the right environment – the right system within which to maximize their talents – I’ve met very few people who fail. But you have to find the personalities who can handle your unique culture. The difference between a conventional gossip-laden, ideasuppressing, glass-ceilinged, back-stabbing corporate culture and a true, keep-it-simple, get-the-job-done entrepreneurial culture is huge. My job is to make sure the people who work for us are working in an environment that encourages them to think for themselves, to act creatively, and to take full responsibility and ownership for a job well done. And when that job is well done, I make every effort to make sure the rest of Team Aquascape knows about it.

The Entrepreneurial Problem Solver

Frank Maguire calls this part of the formula “validation.” He also says it’s the job of a leader to deflect the spotlight away from himself and put it on others. That’s all part of validation, and it’s virtually impossible to overemphasize this critical concept. On the other hand, when the job is not well done, I’m not shy about recognizing that either. There is more than just the environment and the system, though. For instance, an individual can find himself or herself in an entrepreneurial environment and still fail to respond creatively, fail to meet the challenge. And if that happens, the responsibility falls on the shoulders of that individual. The individual’s response to the opportunities in the environment dictates success and failure. We do occasionally run into people who, for lack of confidence or some other reason, just fail to live up to their full potential. So we look for individuals who are optimistic and who have strong self-esteem and enough confidence in themselves to step up to the plate and take a swing. It takes a little confidence to get the bat up off your shoulder and to swing at the pitch. But if you refuse to swing, there’s very little anybody else can do for you. Sometimes those qualities take a little time to develop. Sometimes we end up pumping up someone’s confidence level so they can fulfill the potential we see hiding inside them. But if we see potential, we’re not afraid to prime the pump and help our people grow and believe in themselves. In Maguire-talk, that’s “validation.” By the same token, I love the old Field of Dreams thinking that says, “If you build it, they will come.” We work hard at building an entrepreneurial environment that will motivate, motivate, and motivate our team members. And our success at building that sort of environment, more than anything else, explains the success of Aquascape Designs over the past decade.

Inside The Minds

Now Aquascape Designs is lean and mean. We have a little more than 80 employees – fine for a relatively small, but explosive company. But what happens if Aquascape grows to 800 or 1,000 employees? Will we evolve into a bureaucracy? For my money, the basic principals are exactly the same. But the bigger the organization gets, the more the responsibilities have to be spread out, and the more the decision-making process has to be pushed down through the ranks. Everybody has to “buy in” and take ownership of the company, its mission, and their own job for us to be running on all cylinders. That “buy in” is either systematically built in, or it’s systematically excluded. In the global economy of the 21st century, I wouldn’t want to be part of a company that fails to pull every member of its team onboard and make every employee a critical member of the team, all pulling in the same direction, together. Without it, your ship is destined to sink in the waters of worldwide competition. All this is not to say I endorse a workaholic mentality. It’s not all about working, producing, making money, increasing company stock. It’s in the culture. We have no benchwarmers, no spectators in this company. And we don’t want any. Spectators are dead weight and counterproductive. By the same token, you have to know your end goal. In the NFL it’s winning the Super Bowl. In Major League Baseball it’s winning the World Series. In track and field it’s Olympic Gold. For Aquascape Designs, our big-picture goal is to participate in the market in such a way that all members of Team Aquascape – not just upper management – are compensated in such a way that they can live balanced and meaningful lives with their families and friends. And with that as a core goal, we’ll reach our company goal of “changing the way the world builds ponds.”

The Entrepreneurial Problem Solver

Money Can’t Buy You Love I feel sorry for those people who think “more money” is the real end goal, that “more money” can buy them “more happiness.” What is money, anyway, other than a means to an end, and a measurement of freedom? I expect to work for a living. But work is only part of a balanced recipe in life. Work and the income it produces should give you enough leisure time to spend on all those other things that make life meaningful, fulfilling, and worth living. Using myself as an example, if I can’t do my job in a 50-hour work week, I won’t do it. Tomorrow is guaranteed to no one. Figure out what you value most in your life, and don’t let work – or anything else – keep you from it. For some people it’s reading and growing intellectually. For others it’s participating in church-related activities. For those with families, there can be no higher priority. When work detracts from – instead of contributes to – a person’s ability to participate in those kinds of liberating activities, then something’s wrong with the job, and something’s out of balance in the life of the employee. We aim to avoid that occupational trap at Aquascape Designs. If I’m not happy, or if my family is unhappy, as a result of the things I do for a living, what’s the purpose of work? I’d sum this up by saying happiness is priceless; for everything else, there’s MasterCard. Along the same lines, although we challenge our people to challenge themselves and to grow, we also need team members to recognize if they’re operating on overload. We discourage workaholics, and we encourage everyone to lead a balanced life, including work, play, leisure, rest, good food, good times, good families. Burning employees out is not only dumb, but it’s also costly and does nobody any good in the long run.

Inside The Minds

Overload and burnout are symptoms of lives that are out of balance. In the water gardening market we preach the virtues of naturally balanced ecosystems. In the workplace we preach the virtues of naturally balanced lives. As management at Aquascape, we do lots of things to counter the problem of overload and burnout. For starters I’m really big on physical fitness myself, so we have a first-class in-house workout facility and a personal trainer whom we encourage all our employees to take advantage of on a regular basis. I try to set the right example myself. We have fitness contests and fitness seminars, complete with healthy meals. I’m completely and totally convinced that a physically fit Greg Wittstock is a more productive Greg Wittstock. The same goes for all our team members. So a significant percentage of our employees actively participate in our fitness program. That helps them keep work in its proper perspective and counteracts burnout, big-time! We’re also a young company with an average employee age in the early 30s, so we have lots of employees who have, or are about to have, young kids in the nest. We go out of our way to make sure we’re a family-friendly company. I know an employee with family problems is an employee who will be unable to live up to his or her fullest potential. So we have parties; we encourage spouses and kids to come to the office and visit; we have a get-away weekend every summer where everyone – all family members are welcomed – gets together, lets their hair down, and just plays. All these things are essential to inspiring the spirit that’s so central to our company. I genuinely care about all our employees, and it’s vital that I not only tell them, but I show them, in tangible ways, that we really do care. I figure if I go out of my way to treat my team members

The Entrepreneurial Problem Solver

right, they’ll go out of their way to treat our customers right. And as long as our customers are being treated right, their inclination to pitch a new tent with my competition is minimal. So we just continue to deal all our cards right off the top the deck – nothing under the table, for employees or customers. Customer Care Is Critical Our competition credits our success to “good marketing,” by which they really mean good advertising. But my definition of marketing is broader than our competition’s. When it comes to the customer, we’re in business for one reason, and one reason only, and that is to make sure our customer succeeds and prospers in the water gardening business. We attack that end goal in a number of ways. For example, we work very hard at giving our customers the most bang for their buck in the pond products we sell. We sell only items we’ve tested thoroughly, we use ourselves, and we actually believe in. That means there are plenty of items in the water gardening market you can’t buy from us. We also go to great lengths to educate our customers about water gardens, so they understand why some things are worth their time and effort, and others waste it. We turn orders around faster than anyone else in the industry. And with our new dealer program, we’ll have local access all around the country, so an installer can drive up and get what they need any time. Service in any industry is critical, so we support our installers with an incredibly knowledgeable tech staff who are on call, toll-free, 10 hours a day, five days a week for an installer to call whenever he has a problem. Another way we support our customers is through our nationwide educational tours. For starters, each year we travel to

Inside The Minds

more than 60 cites and put on “Build a Pond Day” seminars, where we teach up to 50 installers about our systematic pond building methods. It’s a real hands-on experience, and customers walk away from it feeling they have the confidence to do the job correctly in their own local markets. There’s no substitute for actually being there and doing the job with your own two hands. We also host our biannual “Growing Your Water Garden Business” seminar tour in cities around the country. This program is more theoretical, more business oriented. You can have the best product on the market, but if you fail to get enough customers, or fail to correctly interpret the numbers your company generates, you won’t be in business for long. It’s our job to make sure our customers succeed. We take this job seriously, and our customers all know it. I’m proud of saying that we not only talk the talk, but we also walk the talk, and that wins customers every day of the year. If all these things are involved in “good marketing,” our competition is right about us. Strength in Communication I was a communications major at Ohio State, and although I’ve always felt I learned more outside of class than in class, my appreciation of the importance of communications is my strongest suit. That appreciation probably comes from both the major I chose to pursue in college, and that my mother was an English teacher. She was a big influence on my thinking in this regard. In any case, since day one, I’ve been a stickler for good communications, and at Aquascape we go to great lengths to communicate clearly and regularly on two levels. First, we communicate internally with our teammates. And second, we communicate externally with our customers, whether they’re

100

The Entrepreneurial Problem Solver

contractors who use our kits to install ponds, or consumers who are the end-users of our products. Our customer relations department produces a quarterly newsletter for all our dealers. Our publishing department produces two quarterly magazines, one aimed at the trade and one aimed at the consumer. I personally write articles in various trade magazines on a regular basis. Our marketing department produces all sorts of marketing materials designed to help our installers communicate with customers and attract more customers. The tech department produces video tapes and helps produce books and various other communication materials. We even have a weekly internal, employee-produced newsletter called The Froggie Chronicles, which keeps everyone involved, up-to-date, and informed about all kinds of things going on in the company. Take a look at any failing company, and I’ll show you a company that does not communicate effectively with its various markets. As along as I am at the helm of Aquascape Designs, we will be strong proponents of clear and regular communication. More than any one thing, that’s what I bring to the table. Moving Aquascape Into the Future We are revamping our business model based on a book we’ve discovered recently. It’s called The Great Game of Business, and its author is Jack Stack. Stack is a proponent of a strategy he calls Open Book Management, in which all employees are given access to, and are taught to understand, all the books – the antidote to future Enrons. Furthermore, employees are strongly encouraged to study their jobs closely and to make suggestions they think will

101

Inside The Minds

streamline the process and make the company more efficient, more competitive, and more profitable. When they do so, the employee shares financially in the savings that are generated from their suggestion. The whole thing ends up in an ESOPS (employee stock ownership plan), effectively throwing everyone in the company on the same side of the bunker, working together for the common good of the whole team. Talk about systematically building a fire-in-the-belly level of motivation! This strategy is being implemented by a few businesses around the country, so we’re by no means leading the pack on this thing. It’s very hands-on and practical, as opposed to theoretical pie-inthe-sky. It’s been tried and tested in numerous business settings. But as far as I know, we’re the only company in the water gardening industry that is planning to implement Jack Stack’s open-book management strategy. Done correctly, this will put turbo jets on our operation, and I can hardly wait to see how it works out for us. Some people say to me, “Greg, you already have a company that’s eating your competition for lunch. Why fix something that isn’t broken?” But my feeling is different. I am personally always looking for ways to improve myself physically, mentally, and spiritually. I see no difference when it comes to my business. If we sit back and rest on yesterday’s headlines, it won’t be long before we’re no longer leading the pack. And I don’t care for the view in second place, so I constantly look for ways we can improve, streamline, become a more efficient and effective team. The Great Game of Business offers concepts I know we can all take to the bank. So why not implement and improve? That’s my question. Isn’t this all just common sense? I’ve said “team” about a thousand times; obviously, teamwork is important to me. I was a member of the 1986 Illinois state high school football championship team my junior year at Wheaton

102

The Entrepreneurial Problem Solver

North High School. To this day, I can’t remember an experience that was more exhilarating. Our coach (Jim Rexilius, still the greatest single influence in my life) preached teamwork, teamwork, teamwork, and motivated, motivated, motivated his team members. In a sense, I suppose I’m still just chasing down another championship ring. I love sports and thrive on competition and good times, and Aquascape Designs is a reflection of that orientation. And I won’t rest until I see my dream of “changing the way the world builds ponds” become a reality! Greg Wittstock is the president and chief executive officer of Aquascape Designs, Inc., of Batavia, Illinois, a company ranked in Inc. magazine’s top 500 fastest-growing privately-held companies in the U.S. for the past three years. In 1991 Mr. Wittstock began his business with four assets – a shovel, a wheelbarrow, a strong back, and the foresight (some would say audacity) to think he could build a profitable business around backyard ponds and water gardens. With his fierce entrepreneurial spirit, Mr. Wittstock turned these four decidedly unbankable assets into a $30,000,000 runaway train that currently controls a full 70 percent of an exploding market.

103

The Entrepreneurial Problem Solver

TOOLS, TRICKS, AND TACTICS THAT WORK

KURT THOMET Quest Solutions President

105

Inside The Minds

Identifying Marketplace Opportunities In high tech, the game is in spotting the trends that will be longlasting and sustainable. As the products and services that are most profitable become adopted, they create momentum. It makes the most sense to look first at install base, profit margins, and gaps. Once known, they are further evaluated by determining whether a second and third market opportunity is available with minor modifications or as a fallback market. It is kind of like being a futurist and a historian, with a sales and marketing bent. A current day example is pen-based computing. It was mired down in 10 years of small niche marketing to early adopters of â&#x20AC;&#x153;gee whizâ&#x20AC;? technology. When the idea of wrapping a day planner, address book, and to-do list into one device collided with an affordable portable, the technology took off. Now the makers of these devices are using a second and third market opportunity to capitalize on the wave of widespread adoption of cell phones and PDAs to design the next device that will take advantage of a large install base and a possible convergence of these two markets into a new one. Other opportunity areas are easy to spot by looking at other industries and adopting some of their marketing, products, or tactics, then recombining those ideas around your products and services in easier to use or lower cost ways. An example of this is Intel selling a more expensive product (chips) by changing the sale to a total cost of ownership presentation. New cars are being sold at a much more brisk pace when leasing is used as the tool to create affordability. You cannot leave an appliance store or office products store without being offered an extended service agreement at the time of your major purchase. Taking these three ideas together to the mobile computing industry has yielded great results and has created a successful competitive differentiator. The game was changed to keep the competition guessing and out of the game.

106

The Entrepreneurial Problem Solver

My entrepreneurial management style could be described as a trusting, hands-off, tough, nearsighted, mistake-making submariner named Johnny Appleseed. I plant seeds everywhere, creating many small experiments in many different markets, not putting all of the effort on only one initiative. Once a tree begins to bear fruit, we pour more resources at the new â&#x20AC;&#x153;money tree.â&#x20AC;? We hire the right people and empower them with the ability to self-manage and perform to their potential using good people skills and the cumulative wisdom of their team. We push so hard that we make mistakes, but the mistakes we make build us and build our relationships with our customers. When we review successes we have had with our customers, they are most often filled with mistakes. When we look at those customer relationships, we know our painful mistake recoveries are what strengthened our hold on that customer. With employees there is no handholding, only a requirement to perform. Great professional sales reps are attracted by tight control of pay plans that lean toward commission-only plans without guarantees and without caps. Management prioritization of problems and opportunities is most often based on nearsighted, short-term benefits. Long-term planning is a year out, not five years. We change who we are very quickly, based on what the market tells us. Key managers make phone calls once in the morning and once in the afternoon, recapping successes and failures, and then changing the company based on that input. We call it torpedo tactics â&#x20AC;&#x201C; continuously keeping the torpedo on course by making many small adjustments along the way. Employees as Entrepreneurs On the sales side, getting the salespeople to think a bit differently is what makes deals happen. Working on a deal together, looking at various ways of combining different elements is what actually

107

Inside The Minds

closes business. Using strong business logic, return on investment analysis, and creative â&#x20AC;&#x153;what ifâ&#x20AC;? analysis, our sales team learns to create deals in a style that is our norm. On the operations side we encourage the entrepreneurial style through positive strokes, regular recognition, and storytelling. We conduct company-wide training that focuses on our core values and a review of the mistakes we have made, along with the unique entrepreneurial style that was used to cure the problems we faced in the past. How does this change at a big versus a small company? As long as the teams are kept small enough, the divisions have their own goals, and people are empowered, quick change can occur. This is the unique characteristic of entrepreneurs that excites me. There is no boredom because we are always changing, always improving. Looking at the best large companies will show you they operate as mini-companies within companies. Many times they are actually part of a rollup that allowed autonomy after acquisition. Failures occur when too much change is required by the acquiring company dictating widespread cultural changes. People are the most important assets of an entrepreneurial company, not policies and procedures. Balance is required to avoid the chaos created by too many entrepreneurs in one company. When creative people are forced to live with rules and too much structure, their business soul is destroyed, and they whither. This is one of the reasons a company cannot be entirely full of entrepreneurs. Entrepreneurs must lead, working with a team that can support the vision, to implement the plans and to develop the policies and procedures required to survive in some sort of predictable business model. Finding people who are entrepreneurial is a search for openminded, flexible employees who are intelligent, responsible, and moral. It is a company norm that can be taught to good people, a way we do business. We do not want all employees to be

108

The Entrepreneurial Problem Solver

entrepreneurial because we would train them and then lose them to their own ventures. How entrepreneurial do you want them? It is a trait you like to see come out in employees sometimes, but not all the time. I would say management can have it, but that it creates too much chaos among the ranks. If someone exhibits these characteristics, they demand to be considered for management through their innovative ideas. What do entrepreneurs do that is special? How is the way they think special? High growth and rapid change are the most special traits found in entrepreneurs. The other biggest gift found in this group is the ability to overcome the odds. They are the eternal optimists who look at mistakes and setbacks as successes in disguise. When the company is bigger, better funded, and better staffed, the entrepreneur magically finds a way to win. Jumping over industry norms, around tougher competition, and under barriers set up by unfriendly foes, the ever agile entrepreneur always seems to find a way to be involved in taking business away from the expected sure winner, through his or her ability to take a blank slate and create a living and vibrant business that changes lives and markets. To allow a team of individuals to form out of very separate lives is both special and difficult. It is all about creating the culture, the business plan, the norms, and the repeatable successes. Maintaining a changing vision that evolves over the life of the business is the burden that comes with the job. It is one of the most challenging and exciting parts of being an entrepreneur. Sharing that vision is what excites and motivates the people who join this cause. Special differences are built into the belief system. A bit of rebel, out-of-the-norm thinking is common, as is believing in the vision of the business without interference from what others say and what has been done before. This trait is a gift and a curse. If the leader cannot get enough customers to help support the vision,

109

Inside The Minds

the business fails. What must occur in the process is a feedback loop from customers that is constant and everlasting. The other problem is dealing with change. As the business grows from one stage to the next, the skill sets required change. It is my belief that the very best entrepreneurs gain the wisdom to bring in different professionals along the way to fill new slots as the business matures. Staying true to the passions of building, creating, and growing means putting others in place to farm what has been created to date. The notion of hunters and gatherers seems to fit the evolution of an entrepreneurial organization. The organization needs both types of employees â&#x20AC;&#x201C; those who seek out opportunity and start relationships and those who maintain those relationships. These are two different types of employees, with very different skill sets. Being an entrepreneurial thinker gives an individual a sense of loyalty to and ownership of the business. It is part of the democratic company â&#x20AC;&#x201C; a shared sense of ownership that comes from the ability to make a difference. Momentum Marketing, Planning, and Execution Change is what we look for. It is the indicator of momentum marketing and creates all of the large sales and opportunity for the company. In the product adoption lifecycle, the bell curve is split into early adopters, early majority, widespread adoption, and, going down the other side of the curve, the late majority and the laggards. Spotting the services and products that are about to enter the majority is how we make our money. We also look at the most popular products and draft behind them, creating support products and services for the very largest trends. The planning in our entrepreneurial organization is part of the founderâ&#x20AC;&#x2122;s continuous, everyday activities. After the revenue and

110

The Entrepreneurial Problem Solver

sales model are self-sustaining, after the methods and techniques for creating profitable income are completed and passed on, a larger percentage of time is spent creating strategic alliances that do not cost the company as much money as if we hired or created the expertise for which we look to alliances. It is part of the Johnny Appleseed job of trying a bunch of different ideas to find one that works. We can share in the risk with another company, another alliance, and then either learn the skills we did not have or develop the partnership more fully. We make sure our company executes through information systems that are stable and metrics that are known, measured, and adhered to. Focusing our sales team on weekly goals, as opposed to monthly or yearly, works better for us. Focusing on the most realistic sales opportunities is the most difficult task the sales representative has to do. As a sales mentor, it is our job to continuously help them to stay on task and to effectively prioritize opportunity. The model of a balanced investment portfolio with high growth, large cap, and secure, reliable payoff is the same one we follow for opportunity management. Empowering other executives or middle managers is the only way to get enough done in a high-growth business. Allowing managers and their employees to make mistakes and empowering them to take corrective actions pushes them harder and teaches them self-reliance. Power for employees to effect change has no limits and is encouraged. We prevent the abuse of power by splitting final large decision making to a team of two or more. Vision of Success: A Balanced Life My vision of success is a balanced life, full of family and friends who enjoy very frequent gatherings away from work. Playing, laughing, sharing, and caring are the cornerstones of this

111

Inside The Minds

lifestyle. Realistic pleasure comes from a happy heart that is honest and full. Our work, our employees, our families, and our fun should all be blended in a healthy and exciting life. Dealing with the stress that comes with rapid growth and change is the biggest single problem I have encountered. Because of the speed, the volume, and the frequency of change, it is difficult to kick back and relax. Squeezing in a midday workout helps relieve some of the stress. Taking long weekends and quarterly family vacations helps lower the average work hours per week below a scary number. Keeping weekends and school nights free of work is the best way to schedule and force down time. Because there is so much to do, I find myself using time after my family is in bed and before they are up in the morning to get more done. Weekends are usually spent with only family and friends, seldom with work. Charging Up and Taking Risks Selling yourself, your product, your vision to prospective clients, your own team, and others is an ongoing process. Belief in your own abilities has to come first. Confidence, competence, and wisdom must be full-blast and contagious. Our people are charged up daily with interaction from our most gifted people manager. Our prospective clients come to our Web site for a consistent story delivery. Our vendors get to know us through working together, through a concerted effort to educate, and through feedback from our customers. Jumping off the cliff is always hard. Each of our life-changing events is looked at that way. You get to the edge, where the decision to do something has to take place. You have arrived at the cliff for a reason. Camping at the edge is dangerous because the reason you are going off the cliff is to get to something unknown at the bottom. Knowing as much as you can about the

112

The Entrepreneurial Problem Solver

unknown is the best way to make the decision to jump, so research, understanding, and due diligence are well worth the time before even getting to the cliff. Knowing the person at the bottom of that cliff increases the odds for success tremendously. All of the cliff diving we have done has brought good results. Even the dives that were wrong taught us something of value. We did not do enough research, did not know that person well enough, or learned what will not work. We then knew how to change it to something different that did work. We like to make quick decisions; we like to get on to the next level. Evaluating the size of the risk in that decision is what makes the decision a good one. Hedging the risk is the best way to allow you to make more decisions faster. Trying it just a little is like bungee jumping. You get to go off the edge of the cliff and look at the bottom a little, but you donâ&#x20AC;&#x2122;t incur all of the pain if the decision is wrong. Most of our wrong decisions led us to the right decision. When we hedged, we were able to adjust faster. Selecting a new accounting package is an example of a wrong decision that was painful and hard. We did not hedge it enough; it is a product that is hard to try before buying; however, we did not talk to enough companies that were very similar to us to determine the fit. Cliff Diving and Guerrilla Marketing The best piece of entrepreneurial advice that I have received is that the business is a game. The game is about plateaus and continual cliff diving. It is like being at the top of a series of pools with increasingly higher waterfalls or cliffs to dive off to get to the next one. The scale gets bigger, and you have more people cliff diving with you along the way. You have to be sure you know your risks before jumping, looking at your downside and your upside. Being careful about where you are going allows

113

Inside The Minds

you to safely complete the next stage of growth and change. Taking on more than your cumulative experience can handle causes crashes that can be fatal or felt for a very long time. The best advice I can give others about being an entrepreneurial problem solver is a collection of ideas based around “guerrilla marketing”: low-budget, against the norm, non-defensible, change-the-game strategies. Don’t allow others to know where you are coming from. Repackage and recombine, taking some ideas that work and putting them together in new, creative ways that win. Discover the best proven ideas in other industries and use them in your industry before anyone else allows you to quickly differentiate, to be remembered easily. Make swift changes that are the norm, moving the market instead of making the market (too expensive). Perseverance against the odds, creativity, original thought, and use of recombination are the traits that I respect most about leaders. A good mind, combined with the wisdom to learn, teach, and push, makes a leader who is most often found in the companies and organizations that are the most respected in their field. Leadership and Passion To build a leader, you start out with three common cores: experience, a positive attitude, and most of all, passion. Passion is so often missing in our much too busy lives. We get spread too thin and do not have enough energy left over to start the “passion-mobile.” A very high level of energy is required to keep the passion at its best and burning brightly. I like to lead through storytelling, through value examples. I learned that I like to follow a passion of another if that person can communicate the vision brought out through belief in shared values. If a story is very like me or very unlike me, I relate to it and learn to adopt the story line into my beliefs and goals. When

114

The Entrepreneurial Problem Solver

a vision of future change is believed in enough and can be visualized through storytelling or goal setting, the good leader ensures that enough subconscious minds are working on making the vision a reality. We shape our children with storytelling, religious reading, and fairytales that teach values and actions we would like to see them emulate. We teach our coworkers the same way. Reinforcement of the actions and values through reviewing â&#x20AC;&#x153;storiesâ&#x20AC;? of combat, competition, or of what went wrong is the way we have most successfully led our employees. Once a leader has experience, attitude, and passion, they graduate to the top of their fields through their effectiveness, ability to spot trends, communicate them, and then monetize them. The worst part of being a leader is being involved in the failure to exceed customer expectations. The very worst part is living through the disappointment of losing a sale because of something we did wrong. Being so passionate about work that patience is short results in actions that may be taken too quickly. Not achieving a goal quickly enough to satisfy a customer or our employees is the one that hurts the most and lasts the longest. To overcome the failure, the disappointment, and the setbacks that are part of leadership, family, friends, and physical activity all seem to work well when enjoyed in volume and without the memory or discussion of work. Being noticed happens when the passion for a full life is so strong that it vibrates. It is exactly like being a good parent. When you listen well, act with your heart, and spend the right amount of dedicated time, your child (like your business) grows. You are loved or appreciated more; you get more business or more attention; and the circle of passion just keeps rolling along. Good things happen; good luck occurs; and repeat business just keeps piling up. Your child grows up to be better than you were; your business becomes bigger and better than you ever imagined

115

Inside The Minds

it could be. Being a truly grounded and well-balanced person in life allows you to perform better at work. Performing better gets you noticed; getting noticed gets you promotions and opportunities; and it just keeps getting better all the time. When you are imbalanced, the whole person is missing something and almost always compensates with overindulgence that leads to a spiraling downfall. Staying on Top To stay on top of knowledge and maintain a lead, I read. Reading periodicals and business books that are outside your field seems to help keep the mind active and creates an opportunity to apply successful ideas from other industries in new combinations. Grabbing an article and doing the â&#x20AC;&#x153;grip and ripâ&#x20AC;? allows you to share the information with a coworker, a customer, or a vendor. Sending that information or a Web link keeps you in front of that person and helps show you care about them and their professional progress. Grooming vendors to keep you in their thoughts and in their plans by sending them ideas you found reading allows them to find reasons to work with you more often. Taking advantage of education from vendors and from competitors puts you in a position of strength, where knowledge truly is power. Watching and analyzing what competition is doing and strategizing how we can copy it, change it, or improve it gives us an edge over those who do not invest in learning, changing, and adapting. Encouraging employees to take the opportunity to use equipment or services you sell creates honest, believable relationships with customers and employees that make it even more difficult for competition to penetrate your stronghold.

116

The Entrepreneurial Problem Solver

Goals and planning are the roadmaps for success. Without them there is no way you can arrive at your intended destination. An important lesson we have learned in the process of planning is that prioritization is the very most important part of it. Writing down goals without the steps and tactics to reach them is like viewing the name of a city you want to drive to without a map to assist you in the journey. Our sales reps all want to make a lot of money, but often were bogged down by not prioritizing all of the many choices of prospects and customers. After reviewing projections, we discovered that our job as management was one of prioritization and measurement. If we did not have small pilot projects or tests going on with our customers, the big number we expected them to do with us would never happen. After realizing this, we formalized pilot projects and tests as part of the selling culture. This was like many great discoveries – simple revelation with extraordinary results. An Entrepreneur’s Golden Rules ❏ Business is a game. You need to practice, fail, and laugh. ❏ Coopetition (cooperating with your competition) works. Use it. ❏ Enemies usually cause you the worst harm. Don’t make them. ❏ Be easy to do business with. The alternative takes too long and is not as much fun. ❏ Recognize the lifetime value of a customer. Making less on the first sale is OK. ❏ Problems are the manifestation of an improvement to be made. ❏ Perpetually asking why allows you to truly understand and gets to the answer. ❏ Prune bad customers and bad employees.

117

Inside The Minds

❏ Do not waste time. ❏ It is better to do it wrong than not at all. You learn from wrong; you rarely learn from not doing anything. ❏ Appreciate your customers, your employees, and your opportunity. Fight for them all. Future Advantage to Entrepreneurs The advantage individuals “thinking entrepreneurially” in a company have over the next five to 10 years is job security. Change is occurring at a more rapid pace than in any other time in history. When left without government interference or company politics, our markets are pretty pure. They establish the prices; they weed out the weak; and they allow the best to rise. Greed has created some forces in the market that are vibrating hard enough to shake up our abnormal norms. Layoffs, downsizing, and rightsizing are forcing some of the non-leaders either to find different passions or companies, or to leave and learn entrepreneurialism on their own. Within companies, those traits generally get you promoted, not fired. The more agile, easy to change, adaptive companies that survive into the future will be those that have cultivated and created in-house teams of entrepreneurs. Those employees who create growth and change through entrepreneurial actions are the movers and shakers who get noticed. They take calculated risks, winning more often than not, and losing gracefully. A person who has these traits will be tapped to become a leader or manager within a company because of the results they achieve, the respect they earn, and the passion they exhibit. Companies will have an advantage in “thinking entrepreneurially,” regardless of size, over the next five to 10 years. With customers realizing they have power and choice and

118

The Entrepreneurial Problem Solver

that they are enabled more fully with the Internet, personal relationship selling and customer relationship management will become much more important. Those companies that use the tools of the entrepreneur will be able to capitalize on winning the battle for the customer. Quick and highly adaptive changes, differentiation, and personal touch-the-customer actions will be the winning formulas the best companies employ. Industry-leading organizations maintain their leadership positions through success with their customer base that is sustainable and long-lasting. Staying close to the customer, having them become true partners in your business, and growing it together is the way of the entrepreneurial company. Creating partnerships is the strategy that a smaller company often uses to grow faster or fill voids in skill sets. Viewing all relationships with customers, employees, vendors, and competitors as partnering possibilities is a way of life that creates relationships that are hard to defeat.

Kurt Thomet is president of Quest Solutions. He entered the business on the edge of the technology explosion, when the PC was first taking off in the 1980s, driving to become the largest Commodore education dealer west of the Mississippi. Mr. Thomet was one of the first of the Zebra bar code print integrators and was also a channel manager for PI Systems, a pen-based computer company, in the early 1990s. He served as regional sales representative for Telxon Corporation, selling wireless mobile computing, beginning in the days of narrow band. Mr. Thomet attended Arizona State University, majoring in marketing, but dropped out to jump on the PC explosion one term short of graduation, and later becoming a student

119

Inside The Minds

of Geoffrey A. Moore (Crossing the Chasm, The Gorilla Game).

120

The Entrepreneurial Problem Solver

SHOOTING FOR THE MOON

DAVID LAW Speck Product Design Co-Founder

121

Inside The Minds

Take the Pull Over the Push Most start-up companies are founded by people who have had an opportunity to identify problems in the marketplace. Entrepreneurs can transform these problems into business opportunities. For example, weâ&#x20AC;&#x2122;ve done a lot in the notebook arena, in which heat dissipation is a major issue. If you have ever tried to use a laptop on your lap for any length of time, you have experienced the uncomfortable heat given off. A laptop will never be as fast as a desktop, currently because the main CPU gives off too much heat. If you could develop a way to circumvent or solve this problem, you would have a viable product. Finding these nuggets of information is vital to potential product development. In this sense, it has been helpful for us to consult in the industry â&#x20AC;&#x201C; not to see what people are developing, but to ascertain the major problems that exist. We definitely spend our time looking for major industry challenges rather than, for example, attempting to figure out whether blue Palm Pilot cases will sell better than yellow. Thatâ&#x20AC;&#x2122;s more of a guessing game; whereas, with the thermal problem with laptops, for example, you know there is a need for a solution. It is hugely advantageous to discover the key issues in the area you are trying to enter. Developing a new product should be based around a market pull. Developing a product that does not address a need is pushing something onto the market. It will be much harder to achieve success by pushing a product on the market than by addressing a market pull. Good entrepreneurs should be lured by the potential to solve a problem rather than simply to take advantage of a huge market. We do not define market pull as asking consumers for their opinions. Incremental changes and improvements to existing products can benefit greatly from user studies and market

122

The Entrepreneurial Problem Solver

research. But a breakthrough product will never be developed by asking consumers what they want and then developing a product based around that feedback. A great example is the development of the first graphical user interface for computers. At the time, if you had asked consumers how their experience of DOS or similar systems could be improved, you would have received a lot of feedback that would have suggested tiny incremental changes, e.g. font size, color, different scrolling methods, etc. The leap to using a mouse and clicking on a graphical representation of your desktop came from rethinking the entire situation and from addressing the underlying problem of accessing and interacting with information stored on the computer. Taking risks is everything in business. If you don’t take risks, then the company is dead – or, to put it less dramatically, no risk means no future. You have to take risks to benefit from all of your hard work; however, there is no way to be certain of the outcome. You have to take a stab at the option with the most potential. Obviously, it is better to have as much information as you can possibly get, but it is still impossible to predict how things will turn out. Basically, you take the same steps you would take if you were trying to predict the future: Look to the past; avoid repeating your mistakes; lick your finger; hold it up in the wind; and take a big leap. I think in this environment, people understand that with risk taking comes the possibility of both reward and loss. It is natural for people to concentrate on the positive side of the equation and not regard the negative outcome as a distinct possibility. But it is healthiest to regard both potential outcomes as equally likely to occur. The most practical way to approach risk taking is to ensure that the risk isn’t so great that it will threaten the survival of the company. As long as the risks won’t put you under, then you can

123

Inside The Minds

take them all the time. You can have setbacks and not make as much profit as you might have wanted, but as long as the company will survive, you’ll be okay. Just don’t bet the farm. Getting Real I think it’s important to shoot for the moon in terms of business goals, but it’s equally important to keep your feet on the ground. Make sure your business plan is conservative and sustainable. Some people imagine the only way to be successful is going for the gold. The wild success stories you read are only a very small percentage of the successful businesses that exist, and they are on the extreme end of the success scale. I find it important to enjoy yourself along the way. I try to aim high while maintaining a realistic perspective, so I can survive and enjoy myself day to day. Any business requires perseverance, and I most frequently find myself telling newcomers to stick with it. That’s why it’s important to enjoy what you are doing. If you are just working toward the goal, do something else. As long as you enjoy what you do, getting to the goal is simply frosting on the cake. People who have an idea they want to patent and take to market often approach us. My advice to them is to get a provisional patent application and then share their idea with as many people as possible. They should also consider whether the idea they have is something they want to spend the next five years of their life working on.

124

The Entrepreneurial Problem Solver

Sticking With It The golden rules of entrepreneurialism are as follows: Be optimistic. Never give up. Believe in yourself. Get lots of feedback. Surround yourself with great people. If I have learned anything, it is that success doesn’t arrive overnight. Essentially, you have to be in it for the long term, and you can’t expect to cash out a year from now. A few years ago it was tough to be in a hardware-based area when everyone in the software and Internet business was apparently being wildly successful. It was difficult to not look over the fence and believe the grass wasn’t greener on the other side. Many people were overwhelmed by the excesses of overnight money and success, without having experienced the reality of entrepreneurialism: the day-to-day grind and the sense of striking out on a long path. Many were hooked by the pot-of-gold-at-the-end-of-the-rainbow idea. So it has been interesting and in some ways gratifying that people have come back around to hardware and to hard work. Entrepreneurialism is about perseverance and keeping at what you are doing. The importance of sticking with it is an essential part of what I communicate to my employees. To motivate employees during slow economic times, you sincerely have to believe in what you are doing, and you have to strike a balance between exciting people and instilling in them a sense of realistic timelines and success rates. As a leader, I attempt to articulate the freshness of my vision, as well as help my employees understand that success won’t happen overnight. Employees should know as much as possible about what’s going on in the business. If they are aware of how difficult the process actually is, they won’t be surprised and disappointed when things don’t move as rapidly as you (or they) would like. We were shooting for the moon when we first started, back when the dot-

125

Inside The Minds

coms were roaring. There was an impression that everything was going to be great, and we definitely lost a few employees early on, when our goals didnâ&#x20AC;&#x2122;t materialize as promised. Now, we recognize the value of making employees part of our own learning curve. We continually ask our employees to identify how we can do this or that better, how a product can make us money, where the opportunities exist, and so on. You can never do this enough. People want to learn, and part of that learning involves evaluating concepts and identifying good business opportunities. Asking employees to think in an entrepreneurial way helps them stay motivated and innovative. Motivating employees through compensation plans is also important. They will be more committed if their own financial future is closely tied to that of the company. As much as you foster entrepreneurialism, however, you canâ&#x20AC;&#x2122;t create an entrepreneur. You can encourage entrepreneurial thinking, but I believe that true entrepreneurs are born, not made. Entrepreneurial thinking helps employees identify with the company to a larger degree. They are more motivated to make the company successful, which is a great boon for the business. An entrepreneur will be harder to keep without providing opportunity for growth and ways to share in the success of the business. You have to remember that an organization can only sustain a limited number of entrepreneurs. Along with the plotters and dreamers, you have to include employees who simply want to make good money and work hard. We generally can identify good employees through the interview process. In our company prospective employees meet with at least six or seven people before being hired. Given that we are a small business, they will have met a significant percentage of the company before coming onboard. Another human resource strategy is to hire people as

126

The Entrepreneurial Problem Solver

contractors. This gives us an opportunity to work with someone before extending an offer. We attempt to use our hiring strategies to protect the prospective employee, as well as the company. Because of the long hours we spend together, employees really have to enjoy what they are doing and thrive in the environment. In a small company such as ours, the importance of a match in personality is more important than it is in a larger company. Another reason you really have to like the people you work with is that it is so difficult to balance work and home life in this business. The worst mistake you can make is to fail to fully commit to your personal life at the appropriate time. It is not good to be with your family but still be semiconcentrating on work. When you are in your personal life, commit to it wholly. The same is true at the office. If you don’t, no one gets your full attention, and everyone is disappointed, whether it’s your business partner or your domestic partner. I attempt to draw a line: When I’m away from work, I’m away. If you can’t find an appropriate balance, it’s hard to keep going. If anything defines the entrepreneur, it’s the ability to continue in the face of a lack of success over an indefinite period of time. Having a personal life helps keep things in perspective. A Delicate Balance I hope the people I hire have as much drive and enthusiasm as I have, so I try not to spend a lot of time managing them. The flip side to a hands-off approach is that I don’t have a lot of control. I rely heavily on my employees to get their work done. My personal style is that people can approach me anytime. We work in a large, shared space that lends itself to this approach. As a manager, there’s a balance between having time to work on your own projects and making sure other people’s work meets your standards. This has forced me to become less hands-off over

127

Inside The Minds

time. I’ve realized I have to guide people more than I might like to, because I’ll always have a vision they don’t necessarily share. While I would love to be more involved in the day-to-day project management, there simply isn’t enough time. We are a small company, and there is always too much to do. Realistically, my management style is determined by the limitations of having only 24 hours in day. The amount of effort I’m able to put into shepherding my employees is ultimately driven by external factors, and I would similarly qualify my personal timemanagement style as “interruption-driven.” I have found the best way to ensure the company executes and follows through is to hire someone whose sole responsibility is profit and loss. This person looks at what the company or project expects to achieve and comes up with a plan to get there. The company provides a sense of the big picture in terms of what has been done before and what resources are available, and this person determines what the company has to do to be successful. We have benefited from this strategy, not only going forward, but also in providing closure on the past. In an entrepreneurial environment, it is easy to become overly attached to certain projects. For example, it can be really difficult to let go of a patent, even if it is not a good return on investment. The ongoing patent fees can become a major financial drain when international filing and maintenance fees start to occur. In these situations, it’s helpful to have an independent third party step in and evaluate the project with a measure of detachment – someone who can ask questions that would never occur to someone closer to the project. At some point you have to cut your old projects so as not to burden the business. This is a really hard lesson to learn. There is a lot of emotional attachment to projects that people have worked hard on, and I think it is nearly impossible for someone close to the project to be impartial about it. This is a direct result

128

The Entrepreneurial Problem Solver

of the entrepreneurial spirit. People naturally get emotionally attached to the projects they work on. Ultimately, the way we measure our employees’ success is somewhat subjective. We get direct feedback from clients we work for on the consulting side, and we definitely measure against tangible goals and performance measures. In the entrepreneurial environment of a small company, however, part of an employee’s success is determined by his or her contributions to the overall atmosphere. We look at how supportive they are, how they help people survive through both the good times and bad times. Peer performance review is important. We assess how they contribute to their projects, whether they make their deadlines, whether they come up with good ideas. In many ways it boils down to how much they care about the company. Did they take on new responsibilities, or did they sit back and do only what they had to do? Did they perform well, or did they go to the next level and not only perform well but also come up with new ideas? If you are looking for motivation and self-direction from your employees, then assessing those qualities is a good measure of overall performance. I try to lead by example, through working hard and sharing my excitement. If you are in a long-term relationship with your employees, which is the goal, leadership ultimately boils down to your employees’ belief in who you are and what you hope to do. Good leadership is all about how honest you are and how well you communicate. If you don’t believe in yourself, you’ll have a hard time persuading other people to believe in you and the future of the company. Sharing your vision is also critical in winning new clients. The best way for us to sell ourselves is to get in front of customers. You can have reams of sales literature and a fantastic Web site, but they will never replace sitting in a room with people.

129

Inside The Minds

Potential customers can really understand who you are when they are sitting across from you and hearing you answer their questions and concerns. The Internet and video conferencing will never replace face-to-face conversation. There are many ways to demonstrate our work, whether through printed materials, the Web site, or phone conversations, but face-to-face contact is the real deal-clincher. Business is about relationships with other people. I think that is one of the things people forget to concentrate on. When you are trying to make a deal with someone, the financials will have to make sense; however, given the same financial results from two competing businesses, the deal that will ultimately move forward is the one in which the two parties have the greatest level of comfort on intangible aspects such as confidence and respect. Instruments of Change There’s a lot of change in any business, but we are in a somewhat unique position to thrive, in that our whole business is about change. On the consulting side, every couple of months we are working in a different industry, trying to think up the next great innovation. On the development side, we ask people to continuously think about solutions to problems in our current area of focus. For example, if we are looking at handheld solutions, we try to figure out how we can make them better by figuring out the major problems and overcoming them. We have to be open to change – and even ahead of change – because we are the instruments of change. A normal business often has to worry about stagnation and lack of innovation. We have the opposite problem: staying focused on one thing long enough to make sure we follow through on it. I struggle every day with how to get resources for the projects we want to do. We are self-funded and have never taken on any outside investment. We’ve gone back and forth on the topic. We

130

The Entrepreneurial Problem Solver

are not an easy entity to fund because we are a blend of a service company and a product company. It is difficult to articulate how the capital would be allocated. Financially larger businesses definitely have an advantage. If you are entrepreneurial in a large corporation, and your idea and vision are strong enough, chances are youâ&#x20AC;&#x2122;ll be able to get funding for it more easily than you would if you had to convince an external capital source. Our major stumbling block is finding someone to give us money so we can make money. I imagine this is less frustrating in a large company. The advantage of limited resources is that you work out ways to do things that produce great results for less outlay. I am continually amazed by how much internal budget a larger corporation can spend for development without realizing anything tangible. As a result of our limited resources, weâ&#x20AC;&#x2122;ve learned how to use capital in an efficient way. We try to maintain a good relationship with our bank, so they can be as flexible as possible. We also work hard to foster good relationships with our manufacturers. Manufacturers can be a source of funding by working with you on the terms of payment and amortizing the up-front costs into the part cost of the product. When people think of capital, they typically think of funding resources. However, not being billed for three months can make a huge difference. We try to explore options whereby our bills for advertising, tooling, part prices, and so on, are delayed, reducing a significant amount of up-front capital expenditure. Entities you donâ&#x20AC;&#x2122;t necessarily consider to be sources of capital can work with you to help finance a project. Change is the natural state for companies. If there is one universal law that can apply to any business, it is that four months from now everything will be different. It is important to remember this and take time to step back every couple of months and ask yourself important questions about what you are doing

131

Inside The Minds

and why you are doing it. It is very easy to get caught up in the day-to-day execution of an initial plan and not realize the external drivers for the project have changed. This will necessitate shifts in direction on the projects and of the company as a whole. Being an entrepreneur is like a high wire act: Keep focused on the long-term goals, and let yourself be flexible enough to retain balance, regardless of the external forces you experience. And hope for the same feeling of exhilaration and joy. David Law is one of the three founders of Speck Product Design, where he has been involved as a designer and manager on several projects ranging from notebook computers for Apple computer to toys for OddzOn Products. Born and raised in Scotland, Mr. Law pursued a degree in naval architecture and ocean engineering at the University of London. He turned to Glasgow University to complete an honors degree in product design engineering. In early 1993 Mr. Law moved to the U.S. and joined IDEO Product Development. He played a lead role on projects ranging from portable computers to furniture and office equipment. He has several utility patents, including one of the first major commercial uses of Memory Metal (shape-memory alloy). Mr. Law teaches Experiences in Visual Thinking, a required creativity course for engineering students at Stanford, and regularly helps run volunteer projects to introduce schoolchildren to engineering and product design.

132

The Entrepreneurial Problem Solver

SUCCESS MAKES YOU JUST LIKE EVERYONE ELSE

PATRICK SMITH Natural Data

Founder and President

133

Inside The Minds

Making the Leap You are truly an entrepreneur for only a short time. It’s when you jump over that edge – the cliff – where you go from working as an employee, to one day saying, “No more! I’m going to go do something on my own!” Entrepreneurs are the people who for 15 to 20 seconds decide they have an idea and they’re going to run with it. It is only during that brief moment of inspiration and initiation that you are truly an entrepreneur. After that, as time passes, you are back to being a normal person again. It may be a combination of two things that brings someone to jump over the cliff. Many times, right before they get to that point, they’ve seen some type of inefficiency or situation with their current company, something they felt they could improve upon. There has to be that one situation that makes you think, “Hey, I can do this better.” The realization and challenge, combined with drive, urge you to take the risk and go it alone. Drive is definitely a major factor. Some people may have ideas of ways to do things better, but lack the gumption to follow through with their vision. One without the other won’t work. They go hand in hand. To a certain extent – let’s not kid ourselves – there’s also a certain amount of selfishness that causes you to become an entrepreneur. Your ego creates a desire for a better life – a desire to create your own time plan, be your own boss, and reap your own profits. There is definitely a passion in there to further your own personal situation. That, along with the thought and determination that you can do it better – those are the things that get it done. To be successful as an entrepreneur, you have to have great people skills because you deal with so many people on a daily basis. Intelligence, whether you call it upper-level brainpower or just street smarts, is quite important. Either will suffice, but you

134

The Entrepreneurial Problem Solver

must posses at least one of the two. Honesty is also essential, for people to look at you as someone they would want to associate with. People can sense dishonesty quickly. If you’re trying to attract the appropriate people, you must to be honest; otherwise, if you’re a dishonest person, you will attract the same – and that normally does not work out too well. Also, people want to join with someone who keeps others’ interests in mind and not just their own. I think if you can convey to people that a certain decision is going to benefit everyone involved, that’s really what people are looking for. Energy also helps quite a bit – people with energetic qualities, or who are just very enthusiastic day to day, are positive people to be around. We recruit great people with high energy. Not only do these qualities serve as drive to help them accomplish the task at hand, but they also rub off on others, raising company morale and productivity as a whole. Management Day by Day My management style has evolved quite a bit. I was 25 when I started the firm, and in six years I have definitely grown up a lot. In the beginning you want to build a friendship with your employees and clients first and foremost. While it is a natural inclination, it can sometimes be very difficult emotionally, and at other times devastating. Then you begin to build a kind of separation, or barrier. You still work on building relationships – don’t get me wrong – but with a different goal in mind. Business and friendship are two separate entities that should remain distinct and not overly entwined. As we (the company and I) have matured, we’ve reduced some of the knee-jerk reactions and become more thoughtful, more patient. In the few short years we have been operating, we have had the misfortune and benefit of experiencing such catastrophes as September 11 and the recession that followed. They forced us to quickly reflect on and refocus our company goals and

135

Inside The Minds

strategies. We made it through the turmoil, and those of us who did not jump ship are much stronger now and share an even more powerful commitment to the success of our company. Our management team is literally made up of superstars, and you tend to want to treat everyone that way. But not everyone has the heart or understanding to do what it takes to succeed. You must fully apply yourself and be willing to put in long hours to reap the greatest rewards. Some people need more time to grow before they realize and achieve their full potential. To find the people for our team, we call in PLUs – “people like us” – little by little, one by one. I believe if you’re in charge of assembling an awesome team, most of the time you have to do it one by one. Each successive member has to buy in to the others; they have to mesh. Each individual fills a specific role and influences the rest of the team in a unique way. I think that’s why building a team through networking is so helpful. It’s “Who do you know?” and “Who do you know?” and “Can you bring someone you know will be a perfect match, as well?” Word of mouth and referrals mean a lot. We challenge our employees to think in a more entrepreneurial way through our leadership style and compensation structure. Our compensation structure is based on growth, whether it’s the whole company through profit sharing, or divisional bonuses based on how large, for example, our engineering services group grows – compensation is big! Stock options also help foster that ownership feeling. We also try to keep our employees updated about major opportunities and obstacles the company faces. We want them to understand why we make the decisions we make. Being informed helps everyone see the bigger picture and feel more involved in the status of the company. By informing and involving our employees, we are teaching them to think in a more entrepreneurial fashion, which should lead to greater ambition and stronger dedication to the company.

136

The Entrepreneurial Problem Solver

Sometimes, however, it’s dangerous to drive people to believe they are entrepreneurial. This word should not be used lightly. I think if you have people totally buy in to the vision, they stop acting like employees, and that can be scary. They can become too self-righteous and unruly without realizing the major consequences true entrepreneurs face. When you’re not only an entrepreneur, but also an owner of a company, you have the fiscal responsibility and other burdens that come along with it. But when you simply try to think and act like an owner, and share in the freedom, but you don’t have the headaches that comes with it, you tend to be more reckless. That can be dangerous. But we do preach vision and ownership; we teach determination and accountability. It’s an education thing. With regard to finance, we have an open book. If you continue to drive home two things – responsibility and accountability for profit – and educate people about cash flows, then employees do become more entrepreneurial. I believe having employees think entrepreneurially goes both ways. In general, it works if you can convey to people how important it is to think like someone who has the financial responsibilities, and tie that to financial rewards that simulate being an entrepreneur or an owner. On top of that, you have operational excellence to strive toward. This ensures that even though people are thinking out of the box, they stay within the set value guidelines, such as not going outside the accounting rules and so forth. Creating and maintaining some sort of structure and accountability that works for your company and fits within the specified parameters is very hard for many companies to accomplish. There must be a good balance. My role, or the role of the leader of any organization, in creating that balance is education and definition. You have to try to educate people about the financial side, as well as the visionary side. Then be sure to create the checks and balances – sometimes

137

Inside The Minds

people call it “trust but verify.” Putting the correct processes in place and then putting the managers in place to lead and ensure accuracy is my job. It’s all-encompassing, with education being the major part of it. Putting in additional time to lay out operational manuals, to lay out periodic performance reviews so people know where they stand, to set the accountability lines – I guess that’s where a manager’s role can help – balancing the visionary’s role. I won’t say building the vision is the easy part, but once you get it going, it’s a little easier than putting in the checks and balances. To create an empowerment situation, not only do you need to reward successes, but you also need to let mistakes happen so people actually feel responsible for and learn from their actions. Some managers or businesspeople keep things too structured and keep a reporting system or hierarchy that doesn’t allow for mistakes. I think that destroys empowerment. When our people make a mistake I think they realize it, and we don’t hold their hand. We say, “Hey, this was your deal and this is what happens; these are the consequences. You were empowered to make a mistake, and you did.” It also encourages the employee to say, “Hey, they let me make that mistake, and I learned from it; that’s pretty wild.” So let mistakes happen, but remember the compensation, which plays a big part. Our promotion system also plays a big part. People can tell who will rise through the ranks at our firm just by the actions (which are empowered) they take. It’s almost like a challenge. People look at those who take the biggest steps with the most risk and say, “Wow, look what he’s doing. That’s crazy!” But when they win, the rewards are huge. It’s a competition situation to go out and do the next cool thing. The original vision set this up from day one. It’s a large vision, a risky one, and a highly rewarding vision if it works, but it’s also diversified. At the beginning we outlined certain potential

138

The Entrepreneurial Problem Solver

diversifications and told people, “If you’re the one who runs with this partial thing, you’ll win. You can control 20, 30, 40 million dollars of revenue on your own. Your potential with this company is limited only by your efforts and achievements. If you take risks and they work, you will swiftly rise to the top.” Taking risks and selecting the right risks to take are integral to creating a company that can withstand fluctuation. I severely criticize people who criticize others for taking big risks because usually the critics don’t take risks at all. Risk management is extremely important – I’ve just begun to realize how important. You have to ride the right wave and be prepared for that wave to crash. I think, as far as entrepreneurs go, they need to hand off that risk management to somebody else. From what I know of entrepreneurs, risk management is not their favorite thing to do, so I think it is wise to put someone else in place to handle it. It helps give them an outside perspective – for example, “Pat, if you do this, here are your risks. Let’s weigh them. You might want to wait until this point to do that.” Or, “We need this kind of finance situation to do that.” Seizing Opportunity To help identify opportunities in the marketplace, we read everything we can get our hands on, even though it’s filtered. We read entrepreneurial-type magazines such as Inc. and Fast Company, and the Wall Street Journal – everything. We get involved with community situations through the Chamber of Commerce, whether that’s attending their tax and fiscal policy committees or just networking events in general. We target specific business leaders and ask for their insight and advice. We also survey our employees and clients, to incorporate their feedback, about every six months.

139

Inside The Minds

To decide whether we should jump on an opportunity, we match it up with our current core competencies and our vision. Then we do a quick financial analysis to decide whether to take the next step. If you are a young company, you won’t do a lot of that because you’re really focused on making your current business work. When you do take a look at diversifying a bit, it is important to weigh all the pros and cons and make sure you do not stray too far from your original vision. I consider us a youthful company; we’re still just six years old, and the majority of our management team is fairly young, as well. In six years there hasn’t been a lot of opportunity to create a mess. The energy is still extremely high. A younger organization also still has the key people driving the entire business, which is an added advantage. The people from the beginning have their hearts in the business and feel a stronger tie to the company. We act on the opportunities in the marketplace. Since we haven’t been able to create much of a mess at this point, we’re very, very clean – so I guess I’m willing to take a high amount of risk to advance the company fast. Some organizations will look at 3, 4, 5 percent growth. Through our vision, we’re looking at 20, 30, 40 percent growth. We still work long hours and are very aggressive in our pursuit of success. Our goal is to be the best in business and admired as experts and innovators in our industry. Thriving on Change To position our company to thrive on change in the marketplace, we think speed; we have to be speedy. That helps with our clients; it helps with our decision making; and it keeps our company flat. It also forces our managers to delegate tasks and authority. If you create that speed, then you can change relatively fast. Again, though, there’s that other consideration – the

140

The Entrepreneurial Problem Solver

educational things you do – quarterly, daily, whenever – to keep an eye on things and to keep people fresh. We educate people, and we reward them when they build a growth situation. We’ve drilled into everyone’s heads that if they’re the one to locate this new opportunity or change in this way, they will get recognized. Opportunities and obstacles will always cross our paths; it is how we respond to them that truly measures our skill. The more we experience, the better and quicker we should become. So keeping things speedy will create empowerment, delegation, and decision making. We keep it fast. If you want to keep up that pace, you have to take a look at change. That forces you to plan often and to do strategic decision making instead of strategic planning. If you just take out “planning” and substitute “decision making,” you create a very different idea about how people plan and strategize. We’re here to make decisions, not to sit around and plan. Decisions need to be made to execute and fulfill your plans. And if our goal is to keep things speedy, we’ll need to do our planning much more frequently than just once a year. We’re not going to run a 10hour strategic planning session once a year; we must have planning sessions periodically throughout the year to capture and respond to change. At times when the industry or economy is more chaotic and volatile, we must plan more frequently and more carefully. The biggest issue, once the strategy is set, is making sure the company executes efficiently. We hire either a senior executive or a consulting organization to help us run our planning sessions, or as I prefer to call them, our decision-making sessions. It makes a greater impact when someone from outside the company is involved, instead of me just telling the same people over and over again to make sure they perform. When we bring in an outside person our group respects, and we create our decision-making process with our goals and plans for a certain time throughout the year, that person also handles the

141

Inside The Minds

accountability for it. I definitely feel having an outside person create the accountability helps a lot. He’ll actually come into the group, as an outsider, and say, “You didn’t get your part done,” and that creates a greater sense of urgency and responsibility. Since we’re still a very youthful company, normally we go after people who have a lot of experience. When we go outside, we go to people who have learned valuable lessons and want to share their insights and solutions with others. They can bring introductions; they can bring certain processes that have worked for other organizations in the past; they can do a lot. But the biggest thing is they bring is newness, freshness. They catch our interest with stories of their experiences and open our eyes to the possibilities we face. They almost act as mentors from whom we can seek advice and inspiration. The newness creates fun and energy and interest; it also brings a refocus. Often when you bring in someone from the outside, you may feel they didn’t cover anything you didn’t already know. But they did: They revived your attitude. They reminded you of things you were taught, but didn’t learn how to apply until they gave you examples from their experience. Lonely at the Top When you’re an entrepreneur, you often feel very, very lonely. It’s paradoxical that you become an entrepreneur to do it alone, but when you get there, it is scary to look around and realize that you are indeed alone. You are the greatest motivator and final determining factor of the success of the company you created. Sometimes you get the feeling you’re the only person on earth, and everything is on your shoulders. But when you hear from another entrepreneur talking about situations they’ve been through, you realize the sun doesn’t revolve around you. It’s happened to other people, too. It gives you a sense of comfort, or

142

The Entrepreneurial Problem Solver

the reassurance that you’re not so alone. And that’s a big relief. I think that’s why a lot of young CEOs and entrepreneurs join the Young Presidents Organization or the Young Entrepreneurs Organization. Not only does joining create a network of support, but even more than that, it allows them to say, “Well, I’m not all alone. I’m not the only one this has happened to. Maybe I can learn from them how to deal with this better.” The best piece of entrepreneurial advice I ever received was “Do not take a partner.” Unfortunately, I did not listen. It was the best advice I ever received and the hardest for me to follow. Entrepreneurs, although they may not always be right, do need to be able to make decisions. And having a partner, especially one who is not entrepreneurial, creates stagnation and conflict. On top of that, entrepreneurs tend to be very powerful people who do not like to be handcuffed; an entrepreneur who is handcuffed can be explosive and uneasy. Speaking personally, I gave essentially 50 percent of my company to my best friend, so I would have someone to share in its success. The thinking behind it was, “I’ve been doing this for a year and a half now. I’m going to be wealthy. I might as well do it with my best friend and share my good fortune.” Big mistake! I’m not a negative person, but it’s good to know the worst. Entrepreneurs need to be hard-nosed, stick-to-it people. Quitting is not an option. One of the hardest things is conveying your plan over and over and over, while creating and maintaining a passion, and just not giving up on it, no matter how difficult the times get. Another difficulty of being an entrepreneur or leader is that you always have to be thinking about how and what to communicate. Staying positive is very difficult at times. Always, always being an example for the people you lead can be exhausting, and always being in the spotlight can keep you pretty uptight. The biggest and nastiest problem is doing things on a micro-level that you don’t want to do, but for the sake of the organization you have to. Doing those very difficult things, such

143

Inside The Minds

as firing someone for the good of the organization, can be emotionally very difficult. Once you reach the realization that you must do things like that, you begin to learn how to communicate in thorny situations. You find ways to explain that a certain action is probably better for everyone involved in the long run. You begin to learn that if you look at something in the right way, it may not be as bad as you think. And you begin to realize you are doing something for everyone’s good, and you latch onto that and learn to be unemotional about it. It also helps you make better decisions from the beginning because you don’t ever want to have to go back and correct something, especially if it will be painful. Time and experience should make you a better leader. The Golden Rules ❏ Take that step. ❏ Be honest. ❏ Be humble. (You’ll probably have humility forced on you; it’s something that just happens to you.) ❏ Treat others as you would like to be treated by them. ❏ Be very smart. And never stop learning. ❏ Go after those things you are passionate about. ❏ Bring people along with you – but chose your team wisely. Patrick Smith is the founder and president of Natural Data, Inc., a multimillion-dollar national staffing firm headquartered in Phoenix, Arizona. Natural Data’s rapid success has recently been recognized and ranked by such accredited publications as Inc. magazine in its Inc. 500 list, Purple Squirrel magazine in its PS100 list, and The Phoenix Business Journal in its FASTECH 50 list, to name a few. Founded by Mr. Smith only six years ago,

144

The Entrepreneurial Problem Solver

Natural Data is now considered one of the largest and fastestgrowing privately-held staffing firms in the nation. Mr. Smith is very active in his community, the business arena, and positive international causes, especially those concerning children, providing personal and corporate financial support and personal time. His employees are constantly made aware of opportunities to get involved in volunteer activities, and employee fundraising is often matched by corporate contributions.

145

The Entrepreneurial Problem Solver

LEADING A VIRTUAL ORGANIZATION FOR PLEASURE AND PROFIT

DANIEL A. TURNER Turner Consulting Group President and Founder

147

Inside The Minds

Entrepreneurialism and Vision Imposition I believe there are two kinds of entrepreneurs. First, there are “serial entrepreneurs” – the ones you’ve always heard about, who start companies, reach a certain point, get bored (or depressed or tired or greedy or anxious), and start another company. They often sell the company or change it into something else. Second, there are people like me. We’re “lifestyle entrepreneurs” – people who truly enjoy the lifestyle. We are building a company for the long term, and we don’t intend to sell out or change the business radically. A serial entrepreneur often comes up with her own way of doing things, but generally leaves the administrative work to someone who enjoys it. A lifestyle entrepreneur also has his own way of doing things, but can tolerate more of the day-to-day drudgery associated with owning a company. I really enjoy all the administrative activities. I do my own bookkeeping, and I also like the legal aspects of running a small business. All of the policies I’ve created make sense to me; part of my job is to explain them to my employees and get them to buy in to that vision. The biggest part of my vision is of a company that can thrive even as its employees, scattered around the country, are making their families stronger and more resilient. We don’t allow people to work more than 40 hours per week, and we pay overtime for hours completed over that. We have only rare inperson meetings, though we are always meeting via conference call. Our employees are scattered all over the U.S., from Florida to Maine to Oregon. This is my vision. Vision is an important concept in any size company. If you have a codified list of core values, those values can be transmitted to your staff. If the values are clearly articulated, your staff will more closely reflect those ideals. We’ve tried several different core values, and they have evolved. Our basic core value is that everyone is working here because it’s fun. If it’s not fun, there’s

148

The Entrepreneurial Problem Solver

no point. I know, and my staff knows, having fun isn’t always possible, but we try to average everything out so we’re generally having more fun than not. Part of having fun is building a team that believes they can make a difference in the management and running of the company. Team building and other things described by buzzwords are important. For example, recently one of my managers said they thought .NET would overtake J2EE because Microsoft has a much better marketing engine. In one of our daily meetings we had a big argument about whether that was accurate, but the upshot was that the person who made the observation is putting together a team to evaluate Microsoft’s offering – setting up training for some of the technical folks – to see if we want to get into .NET. People put together their own teams and budgets and figure out the ROI and how we can pay for it. In my experience, the easiest way to make people more entrepreneurial is to be as lazy as possible and make them do all the work! Anyone in the company can come up with an idea and run with it. Recently I discovered that laziness is recognized as an important quality even outside my company. Larry Wall, the inventor of Perl (a computer language), says a truly great computer programmer is lazy, impatient, and full of hubris. This is absolutely true. Laziness, properly applied, makes one work really hard up front so future work is avoided. A good programmer hates getting calls about broken programs – they are only interested in their current project, and having to go back and fix stuff from two projects ago annoys them to no end. Impatience has the same outcome. A good programmer wants to get on to the next project, and so does not want to deal with old work. Hubris is important when you’re out to change the world – if you don’t think you can do it, you won’t do it. Once I’ve trained my employees on my worldview, I try to give them as much leeway and information as possible. I am in a

149

Inside The Minds

group of young entrepreneurs who meet regularly and who aren’t allowed to solicit each other (the Young Entrepreneurs’ Organization). It’s a great organization because we can talk honestly to each other. The group does a class with MIT and Inc. magazine, where participants go up to Boston for one week a year and leave with the equivalent of an entrepreneurial MBA. We learn how to get our workers to think a certain way, how to evaluate our opportunities, and how to make small companies into bigger ones. It works very well; what I have learned has been valuable and has allowed me to come back and teach my employees how to think in new ways. For instance, I learned that companies that have more meetings to make sure everyone is on the same page do better. Companies that have weekly meetings do better than those that have monthly meetings. Companies that have daily meetings do better than those that have weekly meetings. There’s a limit, of course – if you meet too often you don’t have time to actually do any work – but we have daily and weekly meetings by conference call, since everyone is all over the country. We have calls every morning for about thirty minutes, with all the managers in the company. We have a strict order and a standard agenda. Information about what is going on is presented quickly, and any problems are identified, so they can be solved. When I’m not there, the calls are held the same way. There is a codified process, and all of the managers know how to run the meeting with or without me. This proved so valuable that the project managers started having daily and weekly meetings with their project teams. Programmers now have weekly meetings to discuss problems they’ve come across and solutions they’ve found. This knowledge transfer is fantastic. The biggest barrier to knowledge transfer is oppressive management. My middle managers generally tell me what to do and what I am spending too much time on. I listen to them – they know what’s really going on. I don’t tend to just make

150

The Entrepreneurial Problem Solver

pronouncements; instead we generally argue things through until everyone agrees on a solution. That’s empowering, because it means people are taking their own hands in running the company. When I do make a decision without allowing argument, it’s because I want to get past a problem and don’t feel it’s worthy of discussion, or because it’s part of the vision that I’m trying to impose. During our weekly meeting we review what each person tracks – each person has his or her own metric. Some people track the number of employees who were productive in the past week; some people track how many opportunities we have, how many are in the pipeline, and what the costs are. My metric is how much money we have, how much we owe the bank, and how much our customers owe us. These metrics give my employees a sense of ownership, even though I own 100 percent of the company. When my employees know the numbers and our business situation, they can start thinking in ways that will improve those numbers. The great thing about this kind of management is that it makes it easy to grow as a company. Because of the telecommuting basis of the company, we have never lacked for people, even in the hardest of times – for instance, in 2000, when it was impossible to find technical people. We were still getting 10 résumés or more a day – and good ones, at that. Today we’re getting more than 15 per day, and we often hit 30 or 40 per day. We put those people in a database and contact them individually when they look promising. The nice thing about working from home is that you have to have a certain amount of entrepreneurialism built in. If you can’t force yourself to get out of bed and do the work every day, then you won’t succeed as a homeworker. So the people we hire are innately entrepreneurial. It’s a bit odd to work with people you never see. I have employees I still haven’t met (unusual in a

151

Inside The Minds

small company) and probably will never meet. I know them very well and have talked to them on the phone a lot but have never seen them. There is no need, as long as they understand what they need to be doing and are doing it. Our relationship is as good as any other employer/employee relationship. The difference between this and other employer/employee relationships is that I can’t judge the success of the company or of a particular project by walking around, seeing who is working late and who isn’t. Instead we manage by results. We tell the project manager (PM) there is a project to be done. The PM is given a technical leader out of the programming group, and the PM sits down with the tech lead and figures out how to break the project into tasks. The tech lead generates an estimate of the amount of time each task will take to complete. The tech lead then takes the tasks to the programmers who will be assigned to the project and asks them how long they think their task will take. The programmers set their own time frame to do their tasks, provided they’re not wildly out of line with the tech lead’s estimate. We have a fairly sophisticated task tracking system, where each hour’s work is recorded carefully on a time sheet, based on the project the employee is working on and a description of what she did. The tech lead can evaluate all this to make sure people are on task. The PM does the same thing for the task leader, and I examine the work of the PM, so there are checks and balances. Everybody has incentives to make sure his or her estimates are correct. We don’t stifle innovation by doing this, because innovation doesn’t mean not having a schedule or not knowing what you are going to do that day. It means having enough time to do what you need to do and coming with better ways to do things. To help people come up with better ways of doing things, we promote continued learning. That leads to “eureka moments,” which are important. When someone has one, we press him or her to investigate the idea as thoroughly as possible within the

152

The Entrepreneurial Problem Solver

confines of what needs to be done for our client. Sometimes we will set up R&D projects, so the idea can be investigated without having to rely on client funding. For example, a long time ago someone said it would be nice to have an online time sheet. So we put some money into it, and six years later we have a full Web-based intranet with a calendar, timesheet, survey module, expense reporting module, purchasing module, bug/requirement tracker, archives of our mailing lists, and a document repository. The original idea included less than 5 percent of the current functionality, but in 1995, when the person came up with the idea, no one was using this kind of technology. Ours is better than anyone else’s because it builds in everything our company needs. (If you’d like it, we’re happy to give it away – we’re a services company, not a product company.) Holidays are another example of how we give people the time and flexibility they need to be innovative. For us, there is no point in shutting down the office on a holiday because people don’t work on site. People will work on that holiday if they want to. For example, if someone wants to work on Labor Day, he can. He can take Labor Day on any day within the month in which it appears. That person could use the holiday on September 23 instead, to spend the day at his kid’s school. People use the time when they need it and don’t take time when they don’t need it. It just makes more sense for a company that doesn’t have a physical presence – or even if they do – because it makes people happier. That kind of leeway gives people the idea that they can do a lot more with us than they can do with other companies. I’m a big advocate of telecommuting because it’s what my company is based on. What we found by doing studies and examining the research is that the average person working at a desk job at an office gets about three hours of productivity out of the day – three out of eight hours. Let’s say you’re a regular

153

Inside The Minds

office worker. You arrive in the morning, and after sitting in traffic you are exhausted, so you go out and get coffee and talk to other people. By then, it’s 10:30 or 11:00. You get about an hour of work done. Then it’s time to talk about lunch for a while. Then you go out to lunch. When you come back, it’s about 1:00. You are full and kind of droopy from the carbohydrates, so you play Solitaire for a while. Then it’s about 2:00, and you start getting phone calls because other people have digested their lunch. You work for a while; then people stop and visit, and lo and behold it’s 5:00 – three hours of good work in that eighthour day. You have to stay late to finish your work, and your work product is bad because you’re feeling guilty that you’re staying at work late again instead of going home to your family. This is no way to live! We find that our employees, working from home, find themselves much more exhausted after a day of work. It’s much more tiring to work from home because you actually get about six or seven hours of productivity out of an eight-hour day. When you do the laundry or run an errand with your child or call a friend, you don’t charge that time because you have a certain amount of things to get done in the time you have, and you don’t have time for loafing. You are not working from nine to five; you are working when you are working. We track time in 15minute intervals, so we know exactly what people are doing. If someone says she is working eight hours straight every day, we get suspicious because it’s not possible for someone to sit and do something for eight hours without breaks. Our eight-hour days tend to last 10 hours. However, without the commuting, people still have more time to spend with their families and more freedom. It’s true that there are some downsides to telecommuting. It is very difficult to have any kind of celebration. We were in the Inc. 500 this past October and were very proud of it and decided to have a party. It’s not so easy. I bought a webcam for everyone

154

The Entrepreneurial Problem Solver

who didn’t have one. For those in the Washington area, I had them come to the office where our office manager and I work (and where we have a nice conference room for meetings like this), and ordered pizza and beer. For the remote workers, I told them they could order pizza with one topping of their choice, and the company would pay for it. We all got together using a service called iVisit that allowed us to see everybody at the same time from the office. We had two cameras at the party at the office; everyone else was at home. We got to have a party at the same time, but we didn’t party in the same place. Since we were on a conference call together, we could hear and see each other. The advantage of this was that nobody got drunk and smashed their car on the way home. The disadvantage, of course, was that nobody got to hook up after the party. There’s another downside to telecommuting: Not everyone can handle it. The reality is that there are some people who simply need more human contact than we can provide on a day-to-day basis. There’s nothing we can do about that, except to offer opportunities within the company where people can work on-site at a client’s office. We’ve done that in a number of cases, and that works very well for people who simply cannot stand to work without daily face-to-face interaction with their coworkers. Telecommuting will both stifle us and help us as our company grows. The advantages are that we can get people whenever we need them. If we need someone who does VMS and CORBA, then we can look through our pile of resumes (6,000 in the past year) and pull up whomever we need on the spot. The problem is that a lot of clients aren’t comfortable with that. They don’t understand that in reality most people never see each other anyway, and when they do it is often to the detriment of the project. We have lost projects because of that. So what we have started doing for our larger projects is to put one person on-site, so that the client can at least see him or her and see that there is someone around they can talk to face-to-face, if necessary.

155

Inside The Minds

Everyone else on the project works at home, and we rotate those people around if possible. This works very well with our larger clients, who manage by walking around and don’t trust people who say they’re working and produce well, but aren’t there. Staying in Touch We are better at keeping in touch with our employees than any employer we’ve encountered. We use every form of communication available. I received 364 emails yesterday. I sent out 142. That’s a big day, but my average is 177 in and 100 out. We don’t just use email. We use a conferencing system for which all we pay is a flat fee and long-distance charges. We have about 12,000 minutes of conference calls a month, which runs us about $1,200. Each employee also has his or her own 800 number, so they can call each other from wherever they are. They all have one of the Instant Messenger clients – preferably Trillian, because it incorporates all the different instant messenger systems – up at all times. The Internet is so important to us – as it is to every company now. Using all of these things I can get information out to my employees as well as or better than anybody else. On September 11 we had a floating conference call starting at 10:00 a.m. and continuing until 6:00 p.m., just so the employees could talk to one another. We also had a chat room open, and we kept the cameras on. We were able to get feelings of comfort, even though things were so bizarre on that day. Everyone saw the plane go into the Pentagon, and they knew how close that is to our office, and they were all worried for us and for their livelihoods. But we didn’t have to send anyone home, and we got work done that day anyway.

156

The Entrepreneurial Problem Solver

Dealing With Change and Risk Ideally, I talk to prospective clients to sell my vision. The reality, however, is that this is a commodity business. The only vision we need to sell them is that we are capable and able to do the job. To do that, all we can do is show them what we’ve done for our former clients. We have lost contracts to kids in high school. We had one opportunity for which we bid $70,000 (it wasn’t a huge contract). A company that later folded then bid $35,000. The client felt they had to go with them because they were half our price. A year later the client called us and said the other company got halfway through and stopped. They spent $10,000 getting us to consult with them to finish the work. The other people had run way over budget and had no interest in putting more money in. So eventually we were hired to fix the situation for another $40,000. The whole thing ended up costing the client more and taking far longer than it should have. We use that example when we pitch our new clients – we tell them even though our prices may look higher, we are actually trying to tell the truth and not lowball. We have a reputation for giving actual estimates and not lowballing, and that helps. Even with that, kids and out-of-work Silicon Valley types, who need the money to eat, regularly undercut our prices. That’s part of life in a commodity business. When I started my company I firmly believed it was wrong to charge too much money for my employees’ work. I told my parents I would never charge more than $10 per hour more than what I paid somebody. I figured that when the work is for the government, it’s taxpayer money, and it doesn’t seem right to make more than that. My parents laughed at me. The reality is that it costs me more than just the hourly rate of the person. There is overhead time, training, training time, marketing, computers, connectivity, benefits, and a thousand other costs. All of those things aren’t free, so we have to charge for them. The

157

Inside The Minds

best advice I ever got was to charge more than what it cost me to do the work. Getting work from the federal government is very interesting. The government requires you to report exactly what your costs are, to the penny. You have to know your overhead costs per individual and per hour of work. I need to know exactly what it costs me to employ any particular person, including myself. Once I have that, I can then add profit. The government is happy to allow me to make a profit, though the profit is allowed to be only in the 3 percent to 6 percent range. That’s not a lot – on commercial work we can make 25 percent to 50 percent profit, if I can sell it to our clients. That’s the downside of working for the government: You can’t make a lot of profit. However, they will pay all of your expenses, so growing is pretty simple. It’s basically all about information. Once you know what your business is, it’s easy to make money off it. In my business we don’t really have any supplies or inventory or capital expenditures like big computer systems or HVAC units. The only thing we have is people. That knowledge allows us to move along very easily. We can grow instantly to a thousand people or shrink down to two people, according to market conditions. The reality, though, is that the marketplace actually doesn’t change that fast. What happens is that people don’t pay attention for a while, and then the marketplace changes from under them, and they get surprised and frightened. There has never been a killer application that came up in two weeks and changed the world. It just doesn’t happen. If you think of email, for example, it took 30 years to get it to work very well. I was using email in 1986, when I was 13. That’s a long time. I’ve been using it forever. It’s a killer app, but not a surprise. Fax machines took 40 years to become ubiquitous. Automobiles took at least 25 years. In contrast, the World Wide Web took four years to become usable by business. But it shouldn’t have come as a surprise to anyone when it did become popular. There was plenty

158

The Entrepreneurial Problem Solver

of time to grow accustomed to it – in 1991, when the WWW protocol was invented, it was hard to even register for a domain name. That said, the browser did become part of daily life faster than any invention before it. I started my company based on the concept that the world was changing every three months, because every three months a different browser came out that worked very differently. We started with Mozilla 0.9 and NCSA Mosaic. When Netscape 1.0 came out, that was another change, and so on with 1.1, 1.2, etc. The attitude of having the platform we were working on change every three months came to be the way we thought. However, that slowed down and proved to be a short-term phenomenon. If someone wasn’t paying attention for a full year, they’d be fine; they would just have to work a bit to update to the newest platform when it came time to update their system. The technological risks of migrating to the Net or to some Internet application are gone. Those who got in early are enormously wealthy or gone forever. It’s hard to know when to take risks. A lot of people call me a risk-taker. There are risks that seem like obvious ones. We have had bids out where we came up with a bid of $350,000, but we realized the client would never go for a project that cost that much money and tried to see where we could cut back. After doing that, we got down to no profit and just barely squeaking by, at cost, for $270,000. But the client didn’t use us. Some other company came in at $350,000 and the client used them. Why did the client use them? They felt like they had more leeway in the bid – the other company could expand the work to use up all the money because it would already have been allocated. We have had other projects where we thought the client was trying to lowball us. We bid $250,000 and the clients would try to get us down to $200,000. When we didn’t go there, we lost anyway, to a company that bid $400,000. None of it makes sense. Sometimes we win, and sometimes we lose.

159

Inside The Minds

In that sense, every day we have to gamble. I have gambled with the whole company. Four years ago I fired our biggest client. I realized that the company wasn’t doing the quality of work I wanted us to be doing. So I fired the employees and then fired the client. It was important to do, and the client understood. We had changed, and the client knew they weren’t working well with us anymore. Since we let them directly hire the people they liked and took away the people they didn’t, it was an amicable breakup. And it was absolutely vital for my company’s health. I’m convinced that if I hadn’t taken that gamble, we would have failed entirely in the subsequent six months. Balancing Personal Life With Work For a long time I didn’t have a personal life. When I was 24 I was living with my parents, since I started my company at my parents’ place and didn’t have any money. I put all my money into the company. I would go to singles events and meet somebody and tell them what I did. They would get interested when I told them about myself, and more interested when I told them about my company. Then they would ask me where I lived, and I would tell them. That would be it. Who wants to date someone who lives with his parents and claims to be an entrepreneur? Once I moved out, it was a lot easier. Still, the reality is that I have to spend a lot of time at work. Of course, after running a company for a long time, you get really good at what you are doing. You can get by with doing less than the standard entrepreneur workload of 70 or 80 hours a week because you are doing it well. I can now do my job in less than 50 hours a week, which gives me time to do other things. That said, having a business and a personal life is a terrible idea! You really can’t put the required amount of time into either, and that’s not acceptable.

160

The Entrepreneurial Problem Solver

Now that I’ve found someone and am getting married soon, I can state with conviction that it is very good to get married because it increases your productivity and drive to succeed. Suddenly I have a reason to do well. When I was single, I was doing well for fun. When I get married, I will suddenly have people depending on me, besides my clients and employees (whom I care about in a different way). In terms of a personal life for employees, telecommuting is a major plus. We had 13 babies last year, in a company of 28 employees. That’s a lot of babies. It’s partly due to a nice parental leave policy. However, the reality is that when you work at home, you have more time for other things. Also, a lot of my staff is female – about 70 percent – and women are more likely to take leave than men (since women can create babies without men, but men are kind of stuck). Leadership – and Coping With It Becoming a leader is more than just running a company. A leader is formed by crisis. To create leadership, you have to be intimate with crisis. The best entrepreneurs create crisis because leadership is the only way for a company to succeed, grow, and move forward. Leadership shows only when crisis is involved. The flip side of any crisis is the opportunity that created or that is created by that crisis. Opportunities are themselves potential crises. A good entrepreneur will find opportunities and create crises to exhibit their leadership and move their company forward. Without crisis and leadership, you are left with managers, who only run things and who benefit from maintaining the status quo. A company run by managers cannot grow. Good examples of leaders are people I’ve worked with who have excellent rapport with everyone they meet. They know

161

Inside The Minds

everyone’s name, and they can judge people and draw people out. I’d love to be able to do that. When I was in college, one of my bosses, now a friend of mine, worked at the National Institutes of Health. He had toys all over his office. When you walked into his office, he would throw a toy at you or shoot you with a Nerf gun. This is what computer guys do. They work hard, so they enjoy themselves a lot. Now my office is filled with toys. I have a six-foot tall Dilbert standup doll. We use humor in our job ads, and the people who respond to the ads respond enthusiastically to the humor. I am on the board of my Young Entrepreneurs’ Organization (YEO) chapter. The only criterion for participation in YEO is that you have to be under 40 and have a business grossing a million dollars or more. The average age is 33; the average number of employees is 60; and the average gross is around 9 million. In addition to monthly learning events, the organization puts on events called “universities,” where you go off for four days and are taught how to make your business better. Hundreds of people attend each one. You learn how to deal with unusual situations. More important, you get to meet interesting people. I learn more from the people I talk to than from the conferences themselves. You take a group of entrepreneurs and put them in a strange place, such as Cuba or Hong Kong, and you learn an enormous number of things. You are exposed to ideas you would never have come up with on your own – different ways of hiring people, dealing with problems, sales techniques. The take-home is endless, and it’s a great opportunity. There is a strict nonsolicitation policy: If you solicit, you are kicked out. As a result, there is no worry about being hit up for work. This isn’t a networking organization; it’s an organization that lets entrepreneurs develop a peer group. My YEO friends are always calling me when their businesses are going well, or badly, and they want to brag or complain. A company owner needs that kind of release – nobody else in the owner’s life wants to hear

162

The Entrepreneurial Problem Solver

about it, because they can’t relate to the problems or opportunities they have. Another opportunity YEO provides me is the opportunity to be a member of a small group – a “forum,” where eight to 12 people get together and talk in a completely confidential environment about problems they have had and solutions they have come up with. Participants are forbidden to discuss afterward what is talked about there. It works really well. The stories I have heard in my forum have been enormously interesting and helpful to my business. The people in my forum are wonderful – we have an interior designer, the owner of a chain of bakeries, a man who owns three businesses, a woman who is building a spa and a research and development company, a systems integrator, a promotional materials integrator, and the owner of a large government contracting computer agency. It has given me an opportunity to learn things and talk to people I didn’t know. Suggestions for Large Companies One of the main problems I find in big companies is that “the book” binds them. That has a certain amount of value in some situations, but not always. You need a book to rein in salespeople who will say whatever they want to make the sale. For managers, you need a book that will give them the basic tools they need to do their jobs. Beyond those basic rules, employees and managers should be able to make modifications. We don’t live and die by our lawyers. I tell our lawyers what I want. They may tell me what I want to do is risky and not the best thing to do. They outline the potential risks, and based on that I decide what I want to do. A lot of companies do whatever their lawyers say, which is not the best way to do things. Lawyers, accountants, and so on, are programmed to avoid risk, and avoiding risk isn’t necessarily the right way to do things.

163

Inside The Minds

Several things can help. One is a certain amount of open-book management. Tell all of your employees what exactly is going on financially with the company. That’s scary to do, but the reality is that it makes people think of how they can help the company do better. The other thing they can do is to be open to alternative ways of working. People who telecommute are already thinking differently. They will be more productive, more creative, and more valuable to the company in the long run because they can work from home. Last, you can teach all your employees to use all their resources. By this I mean that when an employee has a problem, teach them the first answer isn’t to ask you for help. It’s to ask their neighbors, ask their friends, check the dictionary or online, and if they still can’t find an answer, ask you for help. If everyone in every company were self-sufficient, it wouldn’t work – it’s the asking that’s more important than the self-sufficiency. Asking generates knowledge transfer, and we all know how important that is. And most of all: Have fun! Daniel A. Turner, president of Turner Consulting Group, Inc., started the company in 1994 after a 14-year career as a programmer for various clients and his own pleasure. He brought his background in government computing services and state networking agencies to the creation of a virtual organization. Using technology he pioneered for clients, he manages two dozen employees in seven states on his own secure intranet. TCG has developed secure custom Web sites for several divisions of the National Institutes of Health and for private industry. Those clients, for whom confidentiality is an important concern, include an international telecommunications company, the world’s biggest computer manufacturer, and one of the

164

The Entrepreneurial Problem Solver

countryâ&#x20AC;&#x2122;s best-known financial and consulting firms, as well as associations, educational institutions, and small businesses. Mr. Turner is president and a founder of the World Wide Web Data Base Developers Group; a member of the Washington Breakfast Club, a group of technology business leaders; a member of the Information Industry Association; and of the Netscape Developers Group.

165

The Entrepreneurial Problem Solver

BACK TO BASICS: SUCCESS THROUGH ETHICAL AND SOUND FUNDAMENTALS

RUSS W. INTRAVARTOLO StarNet

Chief Executive Officer

167

Inside The Minds

Long-Term Value Throughout my prior career at Motorola, Inc., I was lucky enough to be assigned to “culture changing” roles in several business units. My tasks included implementing radically different technologies into the business processes, which at times was difficult to undertake. New business processes can be implemented in many ways into an existing culture. We chose to “pull the rug out from under” the existing culture, which was sometimes a painful process to spearhead. I had to learn to guide the people in the process with an understanding of the way things were traditionally done, and how to apply that thinking and the changes necessary to do the same tasks in new and different ways. This experience and “thinking out of the box” landed me in a special entrepreneurial think-tank organization in the company called New Enterprises. As a member of the New Enterprises group at Motorola, I was as close as you can come to being an entrepreneur without having to take all the risk. It was great to have someone else’s money behind our team of entrepreneurs. As one of the founders of Motorola Lighting, I held virtually every job you can imagine within the new business. When I left Motorola to begin StarNet, three of the Motorola Lighting founders agreed to be my advisors. They don’t have a large financial investment in StarNet, but they’ve played a key role in guiding the company. Perhaps my advisors’ most pivotal role was to keep me from jumping into the dot-com frenzy. It’s interesting to see their perspective on basic business processes and the keys to success. They are true business fundamentalists, and they have been unaffected by the market’s ebb and flow, always advising me from a strategic perspective. They predicted the bubble in the market would deflate, and they warned me that if the company couldn’t stand its own two feet financially, then it would go under, just as the others did. So we kept our nose to the

168

The Entrepreneurial Problem Solver

grindstone and built a company that was a self-supporting, longterm value proposition. Our belief has always been that if the company could not offer its equity to the public, with real value, then why would anyone want to invest in it or buy stock? As we look forward to an IPO in our near future, I am grateful for my advisors’ charge to “build a company with value.” Selling real value to the public is a far cry from staging an IPO from an untried and unproved business plan. We will go forward with our IPO plans with the assurance that we are selling equity in a company that has a proven track record, profitability, and real value. Many people fell for the dot-com ideas before they had been proved. There’s no replacement for proving your ideas through hard work. Furthermore, if you build the company using your own money, you’ll have an easier time persuading others to invest theirs. The time to look for outside investment is when all of the principals have tapped their own resources. I couldn’t have gotten an outside dime if I hadn’t used all my own resources first, and I think this makes sense. How can you expect someone else to put their money into your business if you aren’t willing to risk your own funds? I talk to people who are trying to get money to fund their ideas, and my first question is whether they own a house and, if so, if they have mortgaged it a few times for their idea. If you aren’t willing to put your own money into your idea, then it must mean you don’t really believe in it. Honesty and Integrity To ensure the company’s longevity, we are always planning two or three years ahead. It’s a given that the technology we sell today will not sustain us forever. We recognize, however, that our current business enables our future product development. As plans for our future products and services are solidified, we

169

Inside The Minds

compare them to our current business, and we try very hard not to place a higher premium on either technology. We recognize they are in different phases of the life cycle. It’s easy for the people in the company to look at the new technology we are working on and wish they were all involved in that process instead of the technologies we mastered years ago. If the people in the business all wanted to work on the new technologies, the old ones would falter and not produce the necessary revenues to fund the ongoing development of the new ones. It’s important for us to make sure all employees know how their efforts help the whole organization move forward, either working on new technology or supporting older technology – they all have an integral place in the process. Being highly attuned to technology is important, but it won’t help you identify customers. If you can match your technology expertise with customer needs – or, ideally, anticipate their needs – you can create opportunities. The equilibrium we have been able to achieve through matching our natural strengths with our customers’ needs is a very important attribute to our ongoing success. Strengths in a business are not as technically based as many people may believe. Our strategic strength lies in our people and the culture we portray to our clients. Our clients see that people can relate to StarNet; they relate to us as ordinary folks, working hard and trying to do the right thing. Customers relate to us not because we are a polished-glass-and-brass telecom supplier, but because we are good folks who work hard and do a great job. We sell the “what you see is what you get” philosophy. If you walked into our facility, you wouldn’t necessarily be impressed, but you would be convinced that we will do what we say we will do. Customers see our honesty and integrity.

170

The Entrepreneurial Problem Solver

Honesty and integrity are critical to every aspect of the company, and they are the primary characteristics I look for in new employees. In the first four years of our company’s existence, we had only one employee with a bachelor’s degree; we were primarily composed of high school graduates. I hired people who had military backgrounds and who, above all, were loyal and trustworthy. Someone with the right attitude can learn anything, and technology can definitely be taught. You can’t teach honesty and integrity. My general manager had been a manager in a bar; my human resources manager was the sound guy in a bar; and my network deployment manager was a supervisor at Blockbuster Video. They would go to bat for me and risk anything for the company’s success. These people may not have impressive résumés, but their work for the past few years has been something this industry has never seen before. It makes me wonder if the aspects of a typical résumé we traditionally look for should be changed. Hard work, desire, and dedication are difficult to ascertain from a résumé. There was a period when it was hard to hire people with experience because they all demanded a high salary and equity. Interestingly, there was a time when a 21-year-old technology person expected a salary over six figures just because they knew about networking. Technologies come and go; they change; it’s a continuum. Knowing a specific technology is valuable for only a short time, and then it fades. We tried to tell the young members of our team to become experts in dealing with change, fast decision making, and deploying technology for the sake of the business, not for technology’s sake. These skills make an employee valuable. Now the applicant pool has changed, and people with experience and realistic salary expectations are begging to be part of the company. Two years ago I never got a résumé in the mail. Now I get two or three a day from good candidates.

171

Inside The Minds

Loyalty and honesty will take you a long way. As one of my advisors reminded me, your gravestone won’t say, “He was a great CEO.” You want to be remembered for being an honest person, a good parent, a loyal worker. Managing the Culture No one here doubts we will succeed and that everyone will share in the company’s successes, as well as its failures. I sell my vision for the company with conviction, and I think the employees like to see the executive isn’t out golfing every day, but working alongside everyone else. If we have a direct mailing to get out, we all sit around together and stuff envelopes. People want respect; they want to feel they are part of a winning team; and they want be able to relate to their leadership. You can give employees good salaries and equity, but that doesn’t keep them around for the long haul. People want to feel respected, no matter what their job is, and they want to feel proud of the company. I continually ask myself what motivates me and what makes me tick. I think a lot of CEOs and other business leaders forget the people they lead are the same as they are. We all have similar needs and wants from our careers and lives. The people in this business view their jobs as only a part of their lives. Their jobs are now a separate aspect of their lives, but an integral part of it. We need to feel satisfied financially, no doubt, but it isn’t just money that motivates us for the long term. Success, respect, loyalty, genuine concern for their well-being – all these things play a role in satisfying an employee, and it’s all part of my job. As a manager I’ve become a lot less dictatorial over the years. Continual interaction helps me to keep a finger on the pulse without constantly telling my employees what to do. When people ask me what my job is, I tell them it’s managing the culture. I’ll sit in the visitor’s chair in someone’s office and ask

172

The Entrepreneurial Problem Solver

them what they’re up to. In a mix of personal and business talk, I might interject a few of my ideas in a casual manner. I try to do a lot of pulse-taking without making it look official. This approach is far less stressful and more effective. I like to think there is a healthy level of mutual personal respect among people in the company. We also have short weekly sessions with department leaders, during which we discuss what’s behind some of the decisions that are made. I’ll guide the process so the departments see they are part of a whole, interdependent organization, and that their decisions affect others. My job is to keep everyone moving in one direction. I try to empower others by forcing them to make decisions. I’m opinionated and tend to take over meetings, so I purposely sit back and allow my employees to argue their positions. I encourage healthy confrontation, and people who may not have fought for their ideas a year ago are becoming more confident. They may not think so, but their willingness to argue their position with conviction tells me they are more confident in themselves. I encourage my employees to make decisions and then live by them, even if I think they may be making a mistake. In preparation for the IPO, my “tactical” focus has shifted from technological to financial strategy. But, without fail, I will always be responsible for leading the culture. It’s my most important strategic responsibility. I spend a lot of time talking to other companies’ CEOs, and I do more now to understand the market from Wall Street’s perspective. I have learned more about the financial aspects of the technology world and have allowed other people to take over the technological strategic view. I’m spreading around a job that used to be all mine.

173

Inside The Minds

Motion for Motion’s Sake I was fortunate to be at Motorola during a time when the company leaders were like patriarchs. It was like having your grandfather as your boss. The person to whom the New Enterprises group reported gave us a lot of his time. He is the former CEO of Motorola, and one of the most influential men in American business through the 1980s and early 1990s. His motto was “Motion for motion’s sake.” He told us to keep moving forward because even making mistakes was better than standing still. He said, “Even if you are faced with a fork in the road, and absolutely no idea which direction to take, take one, any one. As you are walking down this unknown path, something may catch your pant leg and give you a clue. It may even tell you that you chose the wrong path, but either way, you are now smarter than when you were faced with the fork. Your motion provided you with the means to learn something new.” This philosophy is far more fun than overly analyzing a decision. Sure, we make a lot more mistakes than most organizations, but we learn faster, and eventually we get where we want to go. Michael Jordan said he wasn’t necessarily a better shooter than anyone else, but he was just not afraid to keep taking the shot, even if he missed. His confidence was not hindered by missing; rather, he kept shooting. He scored more points because he wasn’t afraid to take the shot. In terms of keeping my company fresh and innovative, I, too, believe in motion for motion’s sake. Trial and error is infinitely better than stagnation. You can keep things moving with good people because they will learn quickly. It’s better to quickly learn the wrong way to do something than to waste time sitting around and analyzing. Creating motion simply for motion’s sake is healthy in some situations. As the company gets bigger, it is becoming harder for

174

The Entrepreneurial Problem Solver

people to accept change, and I’m worried that we will become set in our ways. One way we keep fresh is to shuffle responsibilities for employees who have been doing the same thing for a long time. We are also planning to move our offices shortly. I try to keep pulling the rug out from under everyone to keep them moving. Sometimes, forced motion is better than no motion. While change is good, I also believe in Alvin Toffler’s philosophy that a business should be a healthy mix of the radical businessperson and the incrementalist. Businesses need people who will rattle the cages and create turmoil, as well as people who want to continue to do things the same way. There is a need for consistency and predictability in business processes, so incrementalists do have a place. New processes are defined by radical thinkers and maintained by incrementalists. Radical thinkers become bored with the seemingly mundane task of operating a process in a consistent manner. An incrementalist is less apt to create change or new processes, so matching the right task and responsibility with the right type of individual is critical. Managing people seems easy when you give them responsibilities that match their skill sets. They are happier when they have the confidence they can do their job well, and there is a perfect fit between their accountabilities and their skills. Many leaders promote their employees into positions that don’t match their skill sets, and then blame the employee for their failure to succeed. What a shame – to change the rules on someone who was a success, and then blame them for their failure. It’s my job to see that people’s jobs are matched with their skills. If a person has a weakness, then we stay clear of it. We exploit their strengths instead.

175

Inside The Minds

Conviction and Determination It takes conviction and determination to be a leader. Basically, it boils down to whether you can take a hit and get back up. We’ve had some serious hits here at StarNet. In 1997 a wholesale customer who accounted for more than 60 percent of our revenue quit with one day’s notice. All of a sudden, over half our revenue walked out the door. With integrity and ethics as core strengths, you don’t take it out on your people; you try to get yourself out of the situation. I had to give back equipment, get out of leases, and scale down operations to make ends meet. We learned a lot about our people and our business partners. Some of the suppliers we approached with our dilemma were unresponsive to our situation. Others were willing to step up to the plate and help us work through the problem, with the long-term relationship in mind. Many of those suppliers are still with us today. Similarly, in 2000 one customer who owed us $2 million went bankrupt. This killed us from a cash-flow perspective. We run our business through our own cash flow, without outside money. We’ve never sold equity to gain venture money. The leader has to be willing and able to take a step backward to keep the business healthy and moving forward. True conviction and determination surface when people are ready to do what it takes in the bad times. It’s easy to say you are dedicated to the business when times are good, but what will happen when there is a serious problem? Those are the times when the people in the business show their true colors. One survival strategy we have always employed is to oversell our capacity before it’s even built. In other words, I know that if we can push our network to a certain percentage of utilization, we can make a profit within a month. But we need to have the equipment asset to generate revenue. If we sell the capacity first and get vendors to give us longer payment terms, we’ll have

176

The Entrepreneurial Problem Solver

enough time to get the equipment installed, generate revenue, bill revenue, and pay them back. For example, having sold a certain capacity, I’ll buy $100,000 worth of modems from our modem supplier with $5,000 in the bank. With a 90-day term of payment, we’ll have just enough time to get the modems into use, collect the money for usage, and turn around and pay the supplier. The trick is to sell first; if you don’t sell anything, then you don’t need to buy anything. This approach assumes a high level of trust among the departments in the company. Many times the sales team would tell the network deployment team, “You better deliver this capacity, because we’re selling it as though it exists.” The network deployment people tell the procurement people, “You better get this equipment in here because we’re making travel and installation arrangements assuming you’ll deliver.” Everyone trusts the other processes will deliver, and they assume they will succeed. This “work in parallel” saves so much time in the delivery cycle from the customer sale to actual delivery of service. If all the processes waited for the previous process to complete its assignment to begin theirs, then the delivery cycle would be as long as everyone’s tasks added together. Our approach delivers the service in the length of time it takes to accomplish only the longest single process in the delivery cycle. As companies grow larger, small working groups are critical. It is essential to keep the delivery process small, so working groups can maintain a sense of ownership and can make decisions quickly. Keep the power of guiding a business within a small team. As technologies and marketplaces continue to evolve more rapidly, the traditional corporate methodologies can’t sustain themselves. Smaller, specialized companies will use available technology to deliver big services with big revenue. Our

177

Inside The Minds

company is a good example: We are competing successfully against WorldCom and Qwest. While the same premonition of demise may have existed 15 years ago, the waning of big companies may be more imminent today than ever, and in 10 years it will be even more so. As technology evolves, small companies like StarNet will have a greater chance of succeeding against bigger competitors. While technologies make us look big, our small size gives us the advantage of rapid mobility and adaptation. Russ W. Intravartolo is chief executive officer of StarNet, Inc. He attended Washburn University of Topeka, Kansas, the Illinois Institute of Technology, and DePaul University before going to work as a mechanical engineer at Motorola. When CAD technology came out in the mid-1980s, he taught himself the system with a sample system from General Electric. Within a few months he was using CAD during his daily engineering job and eventually ended up managing the CAD department at Motorola’s Automotive Division. After working throughout the world for Motorola, Mr. Intravartolo was chosen to be part of a group called “New Enterprises,” an entrepreneurial think tank tasked with creating new business processes and researching new market potential. In 1990 the New Enterprises group started a highly successful business called Motorola Lighting. In mid-1994 Mr. Intravartolo created a mock business plan in a course called “Challenging Perceived Monopolies.” This assignment taught him how to found a business from the idea stage, and he went on to create a plan for what would become StarNet. He resigned from Motorola in 1994.

178

The Entrepreneurial Problem Solver

SEIZING THE GOLDEN MARKET OPPORTUNITY

MARK ESIRI Fulcrum Analytics Chief Executive Officer

179

Inside The Minds

Identifying and Seizing Opportunity in the Marketplace If you don’t look for something, you won’t find the one thing you’ll be good at. One of the things my chairman and mentor said to me when I was first thinking about Fulcrum was, “Until you’ve really identified, crystal clear, what the business idea is and how it makes money, do nothing.” You must understand your value proposition, your target market, the skills required by your team, your evolution, and the steps required to move your company to achieve your dream, or you won’t be good at running the business. Otherwise there won’t be a sustainable business. That was the best advice I ever received. I was working – basically interning – for a venture capitalist, who said, “You sit here; you’ll see lots of different businesses, and one day, what will happen is that you’ll see this thing that will come past your nose, and the key is whether or not you recognize it as the thing you want to be doing.” And with Fulcrum, that’s basically what happened. I was looking at businesses all around the marketing space, just doing strategic analyses and helping them do their business, and I saw this idea. It was just the idea of direct interactions – one-toone with consumers – and data mined to drive it. There was no epiphany, just a clear idea of how you could actually turn that into a practical business need and make marketing budgets run much more efficiently. That’s when we started working on a business plan, but it took about two years before I saw the result of that idea. I think you just have to immerse yourself in the market, and almost through synthesis you will identify a clear, well-defined gap in the marketplace from the customer’s perspective. Then you have to work out whether you can fill that gap through technology or service or whatever your solution might be. I think

180

The Entrepreneurial Problem Solver

many times people identify a gap, but find it impossible to identify the solution. Most of us are consumers of something, so whether you recognize it or not, you are buried in a big consumer marketplace. An example – in my case, at least – would be when I’m at home, and I get direct mail that spells my name wrong. Or you discover a very poor marketing method when you read the letter or look at the letter and you think, “That has nothing to do with me. Why are they wasting their money?” These are actually all business opportunities. The same goes for things like fashion. You see someone wearing something and you think, “That is something I want to be wearing.” Maybe the person made it herself, or only very few people have it, and you work out that it is something that could be rolled out as a retail concept. I think we’re all immersed in markets, wherever we are, around the world, all the time. The difference is whether you recognize the things that persistently pop up, and you know someone should do something about the problem. Another way people recognize opportunity is within their jobs. They’ll be working on whatever it is they do, very often at big companies, and they’ll think, “There’s a better way to do this. Why doesn’t management understand or recognize that?” But management is so busy keeping the billion-dollar traditional business going that they’ll never put their best resources on the emerging business idea, and consequently, that creates the opportunity for someone else to do it. Take Microsoft: If IBM hadn’t focused on its core business (mainframes), then there would be no Microsoft, because IBM would have written the PC code. But they said, “We don’t actually have the resources to risk our core business by focusing our best people on this new area, so we’re not going to do it; we’ll outsource it.” And, of course, Bill Gates and his crew are what they are because of that. The rest is history.

181

Inside The Minds

I think opportunities pop up all the time – literally daily. Whether you recognize it is one thing, and the second thing is whether you care about it passionately enough to think about the solution. The third thing is whether you have the capability to deliver against that problem. Management and Entrepreneurial Style My management style is collaborative, in that I’d rather a team make decisions. Many hands make light work. You just have to balance that with not having too many cooks in the kitchen. So divide your management teams’ roles, and trust them to do the best they can, to run with their area of responsibility, and to have good judgment as to when or when not to bring in other people to help them do that job. I favor delegation of most decisions at the functional level of a business. On the entrepreneurial side, that kind of attitude basically forces others to think about ownership of the business, and about making decisions as owners, rather than as employees. Inevitably, if you make a decision as an owner, it is always different from the decision you would make as an employee. During the growth period of a business – the really accelerated growth at the beginning – you need employees thinking entrepreneurially because they need to be as passionate as you are about the success of the company. They need to be happy to work weekends and happy to come up with solutions on their own and to innovate, because you’ll never manage to do all the things that need to get done, particularly as you go through the phase of getting your first big client or launching your first product. You need everyone pulling in the same direction and not worrying about their jobs and their domains or building their own kingdoms.

182

The Entrepreneurial Problem Solver

The original employees at the company are also the primary builders of the brand. I think when you reach about 150 people and a good amount of revenue (say, $15 million to $20 million), you’re approaching a size where what you ask of your management team is much more to manage than to come up with ideas and solutions. You’re saying, “We have the business down to the model that we now need to scale. That means focusing on our core business and less on ideas around the edge. We have to expand the model we’ve already created.” That’s a different case, in which it is normal to bring in more experienced managers from a similar field. This is the time when the entrepreneur needs to decide whether he’s the best person to manage the operations. In my case we are looking for a very heavy-hitting chief executive for Fulcrum, because I think my shares will be more valuable if I bring in someone else to do the job I’ve been doing to this point. And I don’t want that person to be an entrepreneur. I want that person to be a professional manager with skills I lack; he or she needs to be able to play the chief executive role, but the chief executive is not necessarily an entrepreneur. Experience, Priorities, and Risk taking Experience is your business accelerator. Experience is knowing which client to bet your company on, because you’ve been through it before. Experience is knowing that if certain things happen – if you oversell, for example – you will end up with cash-flow problems. Until you have been through a situation where you’ve overtraded, you will never understand the link between increasing sales and decreasing cash balances. Cash flow and making payroll are the most important bits of experience you could possibly have. Experience lets you hire people who are better than those you would hire if you just followed a formula. The more experienced hirer will often spot

183

Inside The Minds

the person who is very good at interviewing, but who is not actually someone who can deliver. Experience also lets you win arguments with your management team! Experience is many little things you pick up through stubbing your toe along the way. At each stage of the development of a business, a different thing becomes the priority. When you start out, it’s probably getting the product right; then it’s positioning the product in the market; then it’s actually selling your product; and then it’s hiring people. Can you actually hire a salesman right at the beginning who’s really good? That can be the difference between three years of negative cash flow and immediately going profitable. Before Fulcrum I was involved in a business with a friend, currently the chief financial officer at Fulcrum; we had a cleaning company. It was maid services, plumbing, and that kind of thing, and we learned some very simple lessons. We learned we wanted to work with technology, and we wanted to work with very bright, goal-oriented people who had real career ambition. We did not want to work in a business that involved trying to drive lots of vans and trucks around a town. Those are some very practical things we learned first of all, and then we recognized probably the best learning experience there was: what you can do with good managers. If you have good managers, you can make a lot more money than if you have bad managers. Very simple. That was one obvious thing. Second was making payroll. That’s the most important thing you can do when you’re a growing company. Make sure you pay people. It sounds stupid, but when a company goes into cash crisis, it can be all over. I’ve never seen a company that missed payroll survive, because you lose all credibility. Yet every small business stays right at the edge. Always. You scramble around on Friday trying to get in the last check so that you know you can pay everybody.

184

The Entrepreneurial Problem Solver

You learn those important lessons. You then identify what to do next time around. We wanted to tackle a harder problem that involved technology – that would give us investment advantages and offer us higher margins – and we also wanted to make sure we have a cash cushion, which means getting outside capital, unless you’re willing to risk it all yourself. Those were the differences between the first business we ran and the second. We’ve raised $30 million in Fulcrum. I think understanding risk is incredibly important. If you understand risk – and you ask any people taking risks, and they’ll agree – you’re not actually taking risks. I don’t remember who it is attributed to, but an entrepreneur once said, “The definition of an entrepreneur is basically that we go to work and have three ways of operating: One, you go to work; you get in in the morning; you start work; you work all day; and then you go home. Two, you go to work; you put your feet up; and you daydream all day about what you could be doing. Or three, if you’re an entrepreneur, you go to work; you daydream for an hour; and then you do what you daydreamed about for the rest of the day.” He said that third category is far less competitive and therefore far less risky than either of the other two. I know if I want to be the best financial services marketer in the world, I could work at First USA or Citibank or wherever there are 2,000 other people I’d have to compete with if I want to get to the top. That’s pretty tricky unless I’m a brilliant politician and fairly brutal, with lots of traits and skills I don’t have. Whereas if I define a slightly more narrow goal – and go off and do it, even though it doesn’t seem to be as big, but no one else is trying to do it – I could be the person who succeeds at being number one in a group of one, but I may actually make money. So I think being able to evaluate risk and manage it is very important. I think that is where experience comes in, and that is ultimately where you can help small businesses develop – in

185

Inside The Minds

managing risk. Experience is hindsight; and hindsight reduces risk. Vital Tools I’m a big believer in getting all the training you can, so when I was in the United Kingdom starting the first business, I went to every government small-business course available. I also did my MBA at night school. Doing it part-time meant I got a chance to experiment during the day and then went to business school at night and learned something else. That was hugely helpful. Constant learning, getting the practical skills, and having great mentors are all vital tools. I have had a fantastic mentor for the past nine years; he was a senior executive at Marsh McLennan, the world’s biggest insurance company; he’s now head of the venture capital firm Wand Partners. Having access to experience like that, and a sounding board and advice, is something everyone should have. Whether he or she is a board member or someone you have breakfast with once a year, a mentor is a vital tool. The other organization that I’ve been getting involved with recently is YPO, Young Presidents Organization. Through this organization I receive the chance to meet a lot of other people running businesses more successful than mine. Meeting other people who run businesses and finding ways to network with them are extremely valuable. To be a good mentor, you have to give back to the art. A lot of patience and enthusiasm are required, and you have to suffer fools. You have people asking terribly basic questions – I ask Bruce, my mentor, questions he probably addressed 30 years ago, and he has the answer in his pocket, so that must be quite boring to him. But he has a desire to help people, and he’s enormously helpful to me. That’s a prerequisite: Mentors have to

186

The Entrepreneurial Problem Solver

want to mentor, and they have to get a lot of satisfaction through your success, normally without getting anything in return for it. Think of your best teacher while you were at school or in college. It’s that kind of person who just has a gift for mentoring. Measurements of Success I attribute the success of Fulcrum to the great respect everybody in the company has for individual cultural differences and to the full access to all our finances. It is true openness – to the extent that the managers very much control the majority of outcomes, including closing down their own business units. I have had people at the company who have literally come to me and said, “My department – given the plan for the business – has succeeded in doing what it needed to do, and we now need to close it.” That could mean their jobs. Or they say, “I need to hire someone who is better than I am at this job because we have reached the stage where I don’t have the bandwidth or the technological capacity to handle it. I would like a mentor to be hired above me.” So, there are three things: One is a culture free of prejudice; the second is open books – and I’m saying what it is, but also what the objectives of the businesses are and being able to link the two. The third is people having ownership in the company, so everyone in the company owns shares of stock options. This really helps them think like owners, so we keep pulling in the same direction even to the extent that some people put themselves out of their jobs. But they still own shares of the company, so they still want the company to do well. The culture is really where people feel ownership, not just equity. Are people really able to contribute? To change the company? Tangible evidence of individuals’ impact on progress, and encouraging the mistakes and successes that result are critical.

187

Inside The Minds

Fulcrum started as a company that used to do focus groups for AOL in 1994, back when AOL had 100,000 members. We were the only ones doing this interactive research over the Internet, which meant the group of seven of us were the world’s experts on focus-group research online. Since then, the stake we’ve had in the ground is to pick the niche and be the best in the world at it, both from a personal perspective and a company perspective. From a personal perspective, it might take all our lives to get to be the best at whatever field we choose. From the company perspective, it is in many ways easier to measure because you’re very exposed to the marketplace, day in and day out, and a company either picks you to run its database, or it picks someone else. So where we focus – as experts at analytical custom database management – we are arguably the best in the world. Even though we’re a small company, ours is a new area, and there are certain companies that will be the first to adopt this kind of technology. We want them as our clients because that will show us we have succeeded. They are typically companies that are six-figure consumer businesses with big customer databases. They have very competitive marketplaces and a lot of customer information. We’ve set out to win business in the retail arena and also in telecommunications and utilities in the United Kingdom. We have a lot of the top clients now – Ford, Tommy Hilfiger, Lowe’s, and Circuit City. Many of the top businesses in their fields, when it comes to analyzing and managing their customer databases, come to us. We don’t do a lot of marketing, so we’re close to achieving what we want to achieve in terms of position, and from there we want to roll it out and create a lot of value and very big companies. Metrics for our performance, in terms of revenue and competitor position, are easily measured. So that’s the goal, and assuming we price right, we’ll make a lot of money, too. The money will come with it if we get the model

188

The Entrepreneurial Problem Solver

right, but the first thing is to be the leader in the field, to create immense value for your customers, and as a result create value for the shareholders of the companies. I personally think I want to be very good at helping small businesses develop – helping them achieve those kinds of goals – and being one of the best people in the world at doing that. At the same time I want to help them have a balanced lifestyle, which is difficult to do when you end up doing lots of entrepreneurial types of things, because the business is always 24/7. I’m not quite sure what the metrics for success will be, but I think, to use the cliché, it’s more about the journey than the destination. I hope along the road there are a few events that make you stop and smell the roses (a very important thing for small businesses and their employees to do!). The Golden Rules of an Entrepreneur ❏ Have a very clear focus on the value proposition, what the market needs, and how you’re going to satisfy it. ❏ Have a great deal of self-confidence. This is necessary to overcome the frightening knowledge that you’re probably trying to do something no one has done before, and you need to keep trying to do it and be creative. ❏ Demonstrate real discipline about building a good team and delegating. ❏ Find mentors. ❏ Remember you can’t be successful without understanding cash flow and making payroll every week. ❏ Recognize when you’re lucky.

Mark Esiri has served as chief executive officer and president of Fulcrum Analytics since 1996. He also serves as an operating principal at Wand Partners, which holds a controlling interest in

189

Inside The Minds

several of the nationâ&#x20AC;&#x2122;s leading marketing and research companies. Previously, Mr. Esiri was a vice president of Wand Partners, where he focused on investments in marketing and information services businesses, playing an active role in the management of Yankelovich Partners, a market research business, and KnowledgeBase Marketing, Inc., a database marketing business. Before joining Wand Partners, Mr. Esiri was director of CASEwise Systems Limited, a United Kingdom business process reengineering software firm, and cofounder of a lucrative London-based high-end household services business. Mr. Esiri has a law degree from University College London and an MBA from the University of Greenwich, also in London.

190

The Entrepreneurial Problem Solver

LEARNING TO FLY IN BUSINESS COMBAT

JAMES D. MURPHY Afterburner Seminars

President and Chief Executive Officer

191

Inside The Minds

Turning and Burning Afterburner Seminars (ABS) teaches flawless execution and methodology in rapidly changing, challenging, and sometimes hostile environments. The seminars are presented by a group of 60 men and women fighter pilots, using the tools we were taught as frontline fighter pilots in the Air Force, Navy, and Marines. The same tools and techniques used to fly high-performance jets in combat are the tools and techniques Afterburner Seminars teaches Fortune 500 companies and entrepreneurs. These tools and techniques help companies survive in today’s rapidly changing, challenging, and even hostile business environments. The idea for Afterburner Seminars began when I was in F-15 fighter pilot training. I realized the Air Force had taken me from a farm in central Kentucky and trained me to fly one of the most sophisticated jets in the world. I loved my career, and my teammates were extremely sharp and empowered. I recognized that if the CEO of a company could do what the U.S. government had done – by teaching intense levels of leadership, camaraderie, focus, attention to detail, planning, and execution skills in a short time frame – he or she could create a great business environment. After graduating from college I sold Toshiba copiers door-todoor for my father’s business. This taught me about cold calling, rejection, and communicating effectively. I learned the sales process, especially how to close a sale, and the idiosyncrasies of building situational awareness. Situational awareness (SA) means understanding exactly where you are, based on where you’ve been and where you want to be in the rapidly changing environment – a term the Air Force would later instill in me and all of its other fighter pilots. As a salesperson, you use SA to pull in all the clues and cues you need to close the deal. When you use SA, you realize how much

192

The Entrepreneurial Problem Solver

preparation and visualization goes into a sales call â&#x20AC;&#x201C; you visualize the pitch before you pitch it, and you understand how to close the sale. SA allows you to anticipate the pitfalls before they happen. I think anyone who wants to build wealth and success as the leader of a corporation or as an entrepreneur should be very effective in selling or marketing, and use SA to create maximum effect with limited time. Later, I decided to test my theory. I secured a job as vice president of sales and training for Smiland Paint Company in California. I helped Smiland launch a new line of paint the company was selling exclusively through The Home Depot. When I started, Smiland was bringing in $5 million in revenue. When I left two-and-a-half years later, the brand of paint I had started selling was making the company $52 million. This experience gave me confidence that the tools and techniques I wanted to teach to the business world would work in any situation, with any product, and in any environment. I launched Afterburner Seminars in 1996. We have grown at a thousand-percent rate since inception, and we made the Inc. 500 list of fastest-growing companies in America last fall. We work with more than 80 Fortune 500 clients, teaching them flawless execution and methodologies through our half-day seminars and one-hour keynotes. We also coach executives on these methodologies through our corporate wingman program for midlevel and top-level executives. At Afterburner Seminars, we draw on our experience as fighter pilots to help create team spirit within organizations. As an individual fighter pilot in a single-seat jet, you either fly a good mission or you donâ&#x20AC;&#x2122;t come back from your mission. You have to look out for yourself, but you also have to fly perfect formation with your wingmen and work effectively as a team. Many of todayâ&#x20AC;&#x2122;s business people see themselves as fighter pilots because they are out turning and burning, but they have to realize they

193

Inside The Minds

have wingmen – teammates – to support, and they have to understand how their actions and decisions on the front lines affect the entire organization. Thinking about the surrounding environment will help them win. Flawless Execution We run Afterburner Seminars the way we hope our clients run their businesses. We have a plan; we brief the plan; we execute the plan; then we debrief the plan. We teach our clients this flawless execution model to win: plan, brief, execute, debrief. Briefing the plan (daily or weekly, depending on the cycle of the mission) is crucial. For example, if the mission is a seminar, we send the plan ahead of time to our facilitators at the seminar and fly in a day ahead to brief every detail of the plan, so everyone understands it. Most businesses operate from a general vision, but a business will never execute flawlessly on general vision and direction. With our six steps to combat-mission planning, we take the company’s general vision and run it through six steps, resulting in an exact roadmap for the company’s mission. This roadmap is what we brief before we execute our mission. Our briefings are not meetings; they are briefings. There is a big difference, and we teach companies that difference so the briefs are effective. Briefs are short and concise. They are the tools for understanding how to execute the business mission this week, this month, this quarter. We then execute the plan, based on the brief. After the seminar, we debrief in a nameless, rankless environment, admitting mistakes and pointing out others’ mistakes made during the execution phase. We do this because as fighter pilots we learned if we repeat mistakes, we do not return from our missions.

194

The Entrepreneurial Problem Solver

Our debriefing follows the STEALTH format. This opens communication in a corporation and creates an environment where people can admit their errors in front of their peers, superiors, and subordinates. They can then walk away with lessons learned, both positive and negative, and expose those lessons learned to the entire organization, through a device such as a company intranet. To accomplish the STEALTH format: ❏ S: Set a time, place, and end time for the debrief. ❏ T: Set a nameless and rankless Tone. The debrief begins with the person at the top of the organization admitting his or her mistakes to the group first. ❏ E: Compare the Execution against the objectives. Do people understand the mission objective, now that the mission is over? If they still have questions, it means the mission objective was not clear, and a company cannot hold people accountable unless they understood the objective. ❏ A: Analyze the execution. Look at the outcomes: Missing our monthly target, the cause, and the root cause of that mistake (or high point). For example, the cause is that we lost two key legacy clients. The root cause was not focusing on new business, and we did not communicate with existing clients. ❏ L: Lessons learned should focus on the biggest root causes: What did the company do to fix the communication problem? ❏ T: Transfer lessons learned through a methodology that will ensure the whole team sees them. This will accelerate the experience for the entire organization.

195

Inside The Minds

❏ H: Always end on a High note or happy note. Some debriefs get bloody, but it’s important to say, “We’ve learned a lot today. We’re going to turn this around, and by turning it around, we’ll gain 25 percent more market share. Great job. Let’s do it.” Task Saturation A company can have the best plan in the world and can brief the plan, but if task saturation is not identified and eliminated, it is impossible to execute well during the execution phase. Task saturation (TS) is having too much to do and not enough time or resources to accomplish the goal. At Afterburner Seminars, we know business executives everywhere are suffering from task saturation. We know it kills pilots and businesses every month because as TS increases, business decreases. As TS increases, the number of mistakes increases. Humans deal with task saturation in any of three ways: They quit. They compartmentalize. Or they channelize. Quitters simply shut down. Compartmentalizers organize everything into a neat linear format so they can complete each item one by one by one. Channelizers focus on the most important item and shut everything else out. All three of these processes are dangerous ways to deal with task saturation. At Afterburner Seminars we provide the tools and techniques to effectively eliminate task saturation. Some of the tools we use to eliminate TS in the cockpit are checklists, cross checks (how we monitor the 350 gauges in the F-15), and mutual support and teamwork. We teach these three tools to businesses, teams, and executives. Then we teach the STEALTH format on how to have a nameless, rankless debrief and share lessons learned from that debrief with the entire business group. This accelerates the whole team’s experience.

196

The Entrepreneurial Problem Solver

Six-Step Model To run a company through our six-step model, I begin by looking at the company to see if it is operating under specific guidelines that everybody understands. If these are absent, we work on those approaches to build a good foundation of procedures, policies, and standards. Then we look at how the upper-level management articulates the weekly, monthly, and yearly plans: Are they laser-guided mission objectives, or are they very broad? If they’re too broad, we then begin the six-step process. 1. Determine a mission objective, “not mission a statement,” that must be clear, measurable, and achievable (i.e., believable), and that supports the overall vision of the organization. A poor mission objective, for example, would be to increase sales or be the dominant player in the IT industry in the Southeast. A good mission objective in this case would be to increase sales 15 percent by December 31, 2002. The mission objective is clear, and it must be measurable, so the company can see how well it has executed the mission based on the plan. But it must also be achievable (believable). This is where most CEOs and businesses fall down. For fighter pilots, when you are sending men and women into missions where they may lose their lives, you’d better make sure your idea is achievable (believable). In a business, make sure that quota is realistic. Finally, ask yourself if the mission objective supports the overall vision of the organization. 2. Define the threat, based on today’s mission objective. Many companies focus on the external threat of competition, but they shouldn’t neglect the internal threat of complacency, indifference, or apathy. Other internal threats are task saturation and poor communication. When the economy grew robustly a short time ago, there were an unprecedented

197

Inside The Minds

number of mergers and acquisitions. Two of the main killers of these companies were poor communication and poor infrastructure, which made it impossible to bring two or three teams together to understand today’s mission objective. 3. Identify your support assets. Find out who or what is on your team to help you win today. It sounds straightforward, but most companies do not do this in the planning stage. They wait until they are executing, and then they scramble to find out what vendor, what customer, what person or department, can help them out of the situation. Afterburner Seminars trains companies to find out and identify those support assets ahead of time, in the planning process. 4. Compare strengths against the internal and external threats and weaknesses. After steps 1 through 4, the company should have a rough plan for execution. 5. Prioritize or set timing. We always set our timing as if the mission will go perfectly down to the last second. How many times have I seen a mission go perfectly down to the last second? Zero. But we do it because it gives everyone a timeline for where every player will be at the exact time and exact altitude. If the mission does not go as planned, we can flex much more easily, based on our expectations of where everyone is supposed to be. The timing is also based on the threat’s weaknesses, your strengths, and the environment. For fighter pilots, the environment is the true environment. In the business world the environment might be sociopolitical – for example, rolling out a new product in Europe is very different from rolling one out in Southern California. 6. Plan for contingencies: Ask, what if? What happens if production is not ready for the product launch, and we’re

198

The Entrepreneurial Problem Solver

already out there selling this new product? What if the economy in the U.S. continues to go downhill? Will we be able to launch this new product on time? The saying in the fighter pilot world is, “Flexibility is the key to air power.” At Afterburner Seminars we believe preparation is the key to flexibility. Measuring Success Our success is measured on how well we hit our budget and our marketing and sales plans. We track these plans on a quantitative basis and identify whether we are repeating past mistakes that have been identified and debriefed. If so, we look at our communication process. Since our company is truly a virtual business – only four people work in the Atlanta office, but we have more than 60 people in our organization – it is imperative that we communicate. We debrief our clients to see whether we are executing our primary objectives or are getting task saturated and pulled off our primary objective of providing world-class management training and seminars. We hire fighter pilots from the Navy, Air Force, and Marines because they have been trained in the skills we teach and set a high standard of excellence. For our internal training, we have a standards guide that lays down every standard in the company – from how to dress on the airplane before a seminar to how to conduct a pre-seminar briefing and debriefing, to what to wear on your flight suit when speaking at the seminar. For our operational people, the guide outlines how to go through the daily operations, so every person in the company can keep our product consistent across the board. This ensures that the customers see the same brand, the same front, and the same intellectual property, and receive the same learning. It makes our business very turnkey.

199

Inside The Minds

We also have a phone bridge the entire team uses for daily, weekly, monthly, and quarterly meetings. It allows us to get our entire company on one phone line and have a virtual meeting with virtual briefs and debriefs. Every Monday at 1 p.m., our operations team, our Hunter team, and our California and Kansas City teams get on the phone and do a 55-minute brief and debrief. During that time we brief the week’s mission objective and debrief last week’s mission objective. Afterward, we post the lessons learned on our company’s intranet, so the entire company can access it and read it throughout the week. Another tool is bringing people to Atlanta for a “Reblue.” An example is bringing in our 18 corporate coaches for retraining, to ensure our standards and high level of coaching are being executed. In short, our communication is a combination of bringing people to Atlanta, phone bridging, and using the standards guide and the company intranet. Air combat – because of its speed, team approach, individual approach, and hostile environment – requires a very sharp edge, and we think the business world greatly needs this same edge. We understand that as technology evolves, our tactics need to evolve. We articulate the latest tools and techniques so that the business world can benefit from and use that information. James D. Murphy (“Murph”), president and chief executive officer of Afterburner Seminars, has logged more than 1,200 hours as an instructor pilot in the F-15. He has accumulated more than 3,200 hours of flight time in other high-performance jet aircraft. He was selected a combat flight lead and has flown missions in Panama, Singapore, Turkey, and Israel. He was selected the 116th Fighter Wing’s Chief of Training; his job was to keep 42 combat-trained fighter pilots ready to deploy worldwide within 72 hours.

200

The Entrepreneurial Problem Solver

Mr. Murphy has added to his combat training over a decade of top-level business management positions in prominent companies in the imaging and manufacturing areas. He started Afterburner Seminars in 1996 to bring his business and fighter pilot skills together, training more than 40 Fortune 500 companies through his daylong seminars and keynote addresses. His business has enjoyed triple-digit growth since its inception. Afterburner Seminars and its 40-person staff will train more than 30,000 business fighter pilots this year alone. Mr. Murphyâ&#x20AC;&#x2122;s book, Business Is Combat: A Fighter Pilotâ&#x20AC;&#x2122;s Guide to Winning in Modern Business Warfare, is in its second printing. Mr. Murphy resides in Atlanta, flies internationally for a major commercial airline, and is a member of the Young Entrepreneurs Organization and the Air Force Reserves.

201