Small Business News
In his commencement speech at ESADE, the entrepreneur spoke with the class of 2014 about the future of entrepreneurship and the role new generations play in inciting change.
President Bieto, Dean Sauquet, members of the faculty, distinguished guests, and ladies and gentlemen…Thank you for the kind introduction. I'm honored to be at a university noted for knowledge, and in a city with 2000 years of history--home of Gaudí one of the 20th century's greatest innovators.
I'd like to start with a request.
Everyone, hold your phone up in the air like this.
Now look around. In this sea of phones do you see any Blackberries? How about any Nokia phones?
Okay, you can put your phones down now but let's keep exploring this a bit. Raise your hand if you rented a VHS tape last night? Or if you used a paper map to find your way here?
These questions and your answers lie at the heart of what I'd like to talk about with you today: the changing face of innovation and your role in it.
Let's start with Joseph Schumpeter. I'm sure many of you have heard his name. Schumpeter was an economist who taught at Harvard in the 1930's and 1940's. I like the guy because he's credited with coining the word entrepreneur. But you probably remember him as the one who proposed the theory of creative destruction. According to Schumpeter, capitalism is an evolutionary process where new industries and new companies continually emerge to knock out the old.
Fifty years later another Harvard professor, Clayton Christensen, developed his theory of disruptive innovation, which actually described how creative destruction worked.
Disruptive innovation leads to the creative destruction of businesses that once seemed pre-eminent and secure.
Which brings me back to your mobile phones.
Think about this: seven years ago Nokia owned 50 percent of the handset market. Apple owned zero percent. In fact, it was only seven years ago that Apple shipped its first iPhone and Google introduced its Android operating system.
Fast-forward to today--Apple is the most profitable Smartphone company in the world and in Spain Android commands a market share of more than 90 percent. And Nokia? Its worldwide market share of Smartphones has dwindled to five percent.
You’re witnessing creative destruction and disruptive innovation at work. It's the paradox of progress in a capitalist economy.
So congratulations, graduates--as you move forward in your careers, you'l be face to face with innovation that's relentless.
And that's what I'd like to talk about today--how innovation will shape the business world of the next 50 years and what it means for you.The Perfect Storm
Your time at ESADE has trained you to become a global business leader but the world you lead will be much different from the one your professors knew or your predecessors managed.
Just look at the disruptive challenges that businesses face today--globalization, China as a manufacturer, China as a consumer, the Internet, and a steady stream of new startups. Today's workforce has radically different expectations, brands are losing their power, physical channels are being destroyed by virtual ones, market share is less important than market creation, and software is eating world.
Industries that we all grew up with, industries that enjoyed decades of market dominance--like newspapers, bookstores, video rentals, personal computers--are being swept away.
The convergence of digital trends along with the rise of China and globalization has upended the rules for almost every business in every corner of the globe. It's worth noting that everything from the Internet, to electric cars, genomic sequencing, mobile apps, and social media--were pioneered by startups, not existing companies.
Perhaps that's because where established companies might see risks or threats, startups see opportunity. As the venture capital business has come roaring back in the last five years, startups are awash in available capital. As a consequence, existing companies confront a tidal wave of competitors 100 times what they saw 25 years ago.Efficiency over innovation
Yet in the face of all this change, traditional firms continue to embrace a management ethos that values efficiency over innovation. Companies horde cash and squeeze the most revenue and margin from the money they use. Instead of measuring success in dollars of profit, firms focus on measuring capital efficiency. Metrics like Return on Net Assets, Return on Capital and Internal Rate of Return are the guiding stars of the board and CEO.
Cheered on by finance professors, Wall Street analysts, investors and hedge funds, companies have learned how to make metrics like Internal Rate of Return look great by 1. outsourcing everything, 2. getting assets off their balance sheet, and 3. only investing in things that pay off fast.
As Harvard professor Clayton Christensen noted, these efficiency metrics provided wise guidance for times when capital was scarce and raising money was hard. But they have also stacked the deck against investment in long-term innovation.
Since the financial crisis of 2008, policy makers have kept interest rates at near zero, flooding the market with cheap money in an attempt to restart growth. In spite of this, private equity funds have used the rallying cry of efficiency to hijack corporate strategy and loot the profits that historically would have been reinvested into research and development and new products. We legalized robbing the corporate treasury. Today billions of dollars that companies could have invested in innovation are sitting in the hands of private equity funds.
Unfortunately as we've learned from recent experience, using Return on Net Assets and IRR as proxies for efficiency and execution won't save a company when their industry encounters creative disruption. Ask Sony about Samsung, ask any retailer about Amazon, any car company about Tesla, and any newspaper company about the web.
The stock market clearly values companies that can deliver disruptive innovation. Look at the valuations of companies like Tesla, Illumina, and Twitter.
In fact, I predict that over the next few decades, we will see two classes of public companies. The first will be commodity businesses that are valued for their ability to execute their current business model. Their lifetime as a market leader will be measured in years. The second class will be firms with a demonstrated ability to continually innovate and reinvent their business models. The companies that can show "startup-like" growth rates of 50 percent plus per year will get stratospheric market valuations.
So I hope you are thinking--"hey how can I lead a business with startup growth?" At least I hope you're thinking that, rather than "oops I joined the wrong company." The question for all of you is, what will it take to inspire and manage this kind of innovation?Innovation
Before I answer that question, let's take a minute to establish a common definition of innovation. At its most basic, innovation means to introduce something new. But in a business context, the meaning gets more nuanced. I’d like to describe the four types of innovation you can build inside a corporation:
The first type of corporate innovation is individual initiative. It's exactly as it sounds--you build a corporate culture where anyone can suggest an idea and start a project. Some companies use a suggestion box, others like Google give employees 20 percent of their time to work on their own projects.
The second type of business innovation is called process improvement. This is the kind most of us are familiar with. Car companies introduce new models each year, running shoes grow ever lighter and more flexible, Coca-Cola offers a new version of Coke. Smart companies are always looking to make their current products better--and there are many ways to do this. For example they can reduce component cost, introduce a line extension or create new versions of the existing product. These innovations do not require change in a company's existing business model.
This is what companies typically do to secure and defend their core business.
The third type of business innovation--continuous innovation--is much harder. Continuous innovation builds on a strength of the company's current business model but requires that new elements be created. For example, Coke added snack foods, which could be distributed through its existing distribution channels. The Amazon Kindle played on Amazon's strengths as a distributor of content but required developing expertise in electronics and manufacturing.
Fourth and finally is disruptive innovation. This is the innovation we associate with startups. This type of innovation creates new products or new services that did not exist before. It's the automobile in the 1910's, radio in the 1920's, television in the 1950's, the integrated circuit in the 1960's, the fax machine in the 1970's, personal computers in the 1980's, the Internet in the 1990's, and the Smartphone, human genome sequencing, and even fracking in this decade. These innovations are exactly what Schumpeter and Christensen were talking about. They create new industries and destroy existing ones. And interestingly, in spite of all their resources, large companies are responsible for very, very few disruptive innovations.
The first two types of innovation--individual and process innovation--are what good companies do well. The third type--continuous innovation--is a hallmark of great companies like GE and Procter and Gamble. But the fourth type of innovation--creating disruptive innovation--and doing it on a repeatable basis- is what extraordinary companies do. Apple with the iPod, iPhone and iPad; Amazon with Amazon Web Services and Kindle; Toyota with the Prius… these companies are extraordinary because, like startups, they create entirely new products and services.
ESADE and other great business schools have provided decades of advice and strategy for the first three types of innovation. But leading an existing firm to innovate like a startup is not business as usual.Building Innovation Internally is Hard
Paradoxically, in spite of the seemingly endless resources, innovation inside of an existing company is much harder than inside a startup. That's because existing companies face a conundrum: Every policy and procedure that makes them efficient execution machines stifles innovation.
Think about this. When it comes to innovation, public companies have two strikes against them. First the markets favor capital efficiency over R&D. And secondly, their sole purpose is to focus resources on the execution of their business model.
As a consequence, companies are optimized for execution over innovation. And to keep executing large organizations hire employees with a range of skills and competencies. To manage these employees companies create metrics to control, measure and reward execution. But remember--in public companies financial metrics take precedence. As a result, staff functions and business units develop their own performance indicators and processes to ensure that every part of the organization marches in lock step to the corporate numbers.
These Key Performance Indicators and processes are what make a company efficient, but they are also the root cause of its inability to be agile and innovative. Every time another execution process is added, corporate innovation dies a little more.Act Like a Startup
So how does a company act like a startup in search of new business models while still continuing to successfully execute?
First, management must understand that innovation happens not by exception but is integral to all parts of the firm. If they don't, then the management team has simply become caretakers of the founders' legacy. This never ends well.
Second, and maybe the most difficult, is the recognition that innovation is chaotic, messy and uncertain. Not everything will work out, but failure in innovation is not cause for firing but for learning. Managers need radically different tools to control and measure innovation. A company needs innovation policies, innovation processes and innovation incentives, to match those it already has for execution. These will enable firms to embrace innovation by design not by exception.
Third, smart companies manage an innovation portfolio where they can pursue potential disruption in a variety of ways. To build innovation internally companies can adopt the practices of startups and accelerators. To buy innovation companies can buy intellectual property, acquire great teams, buy-out another company's product line or even buy entire companies. And if they’re particularly challenged in a market they can acquire and integrate disruptive innovation. My favorite example is Exxon’s $35 billion purchase of XTO Energy in large part to get their fracking expertise.
Other smart companies are learning how to use Open Innovation pioneered by Henry Chesbrough who teaches here at ESADE. They can partner with suppliers, co-create with consumers, open-source key technologies, open their application programming interfaces, or run open incubators for customer ideas.
Everything I've been talking about smart companies have already figured out. Many firms are creating the new role of Chief Innovation Officer to lead and manage these innovation activities. Ultimately this is not just another staff function. The Chief Innovation Officer is a c-level executive who runs the company's entire innovation portfolio and oversees the integration of innovation metrics and initiatives across the entire organization.
Looking forward, all of you will play a role in the future of business innovation, whether you help to accelerate it or discourage it. How can you kill innovation? Some companies have so lost the DNA for innovation they become "rent seekers." Rent seekers fight to keep the status quo. Instead of offering better products or superior service, rent seekers hire lawyers and lobbyists to influence politicians to pass laws that block competition. The bad news here is that countries where bribes and corruption are the cost of doing business or that are dominated by organized interest groups, tend to be the economic losers. And as rent-seeking becomes more attractive than innovation, the economy falls into decline.
I know that's not the path most of you want to take. Instead I think you want to be part of the innovation team. And if you do you are in luck. Companies need your help.
They need your help in creating new metrics to manage measure disruptive innovation. They need your help in creating new innovation incentive systems that reward creative innovation.
And they need your help as leaders who can run companies that can both executeand innovate.
Finally, remember Innovation won’t come from plans or people outside your company - it will be found in the people you already have inside who understand your company’s strengths and its vulnerabilities.
So in closing, let me leave you with this final thought:
A pessimist sees danger in every opportunity but an optimist.. an optimist sees opportunity in every danger.
In the last 150 years only a few generations have had the opportunity to reshape the nature of business.
Be an optimist.
Congratulations class of 2014: embrace change and lead the way.
Fresh takes on education aren't just about disrupting an ancient industry or helping people grow their skill set.
Most of the focus on innovations in education--MOOCs, for starters, but also less formal online learning communities like Codecademy or Lynda--tend to focus on two things: the looming disruption of traditional education and the opportunity for just about anybody to sharpen their skills.
A sometimes overlooked element of the industry, however, is the access it affords employers and recruiters to the skills of the broader talent pool.
That's the driving force behind recruiting Aquent's MOOC program, Aquent Gymnasium. The recruiting company launched the program in 2012 with a business model that puts companies at the center of the movement.Looking Through the Recruiter's Lens
Aquent polls its client companies, a roster that includes more than a few of the Fortune 500, about the skills they think are missing in the labor force. They then build their courses to address these deficiencies. Once students complete courses, theory has it, they are best equipped to fill the needs of the companies for whom they recruit.
"(Companies) are probably the best people to identify where the skills gaps are," says Aquent Gymnasium program manager Andrew Miller.
Because it is open to the public, the system also offers Aquent access to passive candidates who are taking courses for their own benefit. While students who complete courses in, say, Java or HTML5 might be happy as a clam in their current job, Aquent can at least see that they might be qualified for a given position and contact them to see if they're interested.
While Aquent Gymnasium could be described as demand-side education technology, supply-side services are finding ways to serve employers.
For example, Piazza--the online community for computer engineering students and professors--launched a paid service for recruiters earlier this year. Companies are now able to create profiles to mingle with techies that represent some of the most sought-after college talent.
In an interview with Inc., Piazza CEO Pooja Sankar says the service isn't just about giving companies the chance to post jobs. It also allows them to interact and field questions with the students in a more informal setting, to sell their mission and their culture.
Asked if students on Piazza were interested in being approached by companies in what had previously been an education-centric network, Sankar said access to brands has always been one of the most in-demand features from Piazza's users.
The cases of Aquent and Piazza don't necessarily have replicability for small business owners. Aquent's courses each cost about $150,000 to set up--which is probably way out of your budget--and Piazza was already an existing community of talent before it decided to welcome recruiters in to the party.
But both instances highlight the idea that edtech doesn't just stand to bolster the credentials of candidates. It also has real value to companies looking to find those candidates, if leveraged the right way.
Studies show consumers prefer a product that they believe has the aura of authenticity. Here's why that is, and what you can learn from it.
He was talking about ketchup. Specifically, Dhar was describing how consumers associate the thickness of Heinz (and the slowness with which it leaves the bottle) with quality, even though Heinz does not reliably win in blind taste tests against thinner ketchups.
In other words, the ketchup's thickness doesn't necessarily make it any better (or worse). In terms of quality, it's a meaningless attribute. But it's an attribute that nonetheless creates a meaningful differentation for the product, because consumers have (speciously) connected it with quality.
As it happens, so-called "meaningless" attributes are not the only way to provide meaningful differentation for your product. You can also differentiate your product by persuading consumers about its perceived attributes. Consider, for a minute, how differently a consumer perceives a $100 bottle of wine versus a $10 bottle of wine. Even if the same wine is inside--even if the labels and brands are exactly the same--there is an immediate perception difference that a consumer feels, based on the tone you set through your pricing.
Through pricing, you can create a perception that your product has more of a vintage--more of an artisan's authenticity--than it actually does. Wine sellers have known this for years.
But why do consumers react so strongly, when they believe that one product has more vintage or artisan aspects than another? Below is a primer on what somemarketing professors have discovered about the topic.The Concept of Contagion
In a recent Journal of Marketing Research paper coauthored by Dhar and his Yale SOM colleague George Newman, the professors demonstrate that consumers prefer products made in a company's original manufacturing location:
It is well established that differences in manufacturing location can impact consumer preferences through lay inferences about production quality. In this paper we take a different approach to this topic by demonstrating how beliefs in contagion (the notion that objects may acquire a special aura or 'essence' from their past) influence perceptions of authenticity for everyday consumer products and brands. Specifically, we find that due to a belief in contagion, products from a company's original manufacturing location are seen as containing the essence of the brand. In turn, this belief in transferred essence leads consumers to view products from the original factory as more authentic and valuable than identical products made elsewhere.
The main takeaway here is that consumers place a higher value on products they believe contain the aura of authenticity. This idea corresponds with another of Newman's studies, which he presented a few weeks ago at Yale SOM's Art, Mind + Markets conference. In the study, Newman showed consumers a new chair with a stated value of $1000. He then asked: If this chair was destroyed, how much would you pay for a replacement?
One group of consumers was told that the $1000 chair was a piece of furniture. A separate group was told that the chair was a work of art.How 2 Identical Chairs Have Different Values
Guess what? Of the consumers who believed that the chair was furniture, 44 percent said that they would still pay $1000 for a replacement chair. The average price they said they'd pay for a replacement was just under $400. Of the consumers who believed that the chair was a work of art, only 21 percent said they'd pay $1000 for a replacement. The average price they said they'd pay for a replacement was just over $200.
When asked why, the furniture consumers explained that the replacement chair was identical--made from the same materials, in the same manner. By contrast, the art consumers explained that only an original work would have the same worth. They also expressed concern that the replacement would not be made by the original artist.
And that's how two identical chairs can come to possess different values, in the eyes of consumers. By telling one set of consumers that one of the chairs is "art," you add value to the chair (as seen in how those consumers measurably devalue the art-chair's replacement).
Now think, again, of Dhar's observation about the "meaningless" attributes of ketchup. Though thickness was a meaningless attribute in terms of quality, it nonetheless led to a meaningful differentiation. Based on Newman's study with the chairs, you could change Dhar's quote from "meaningless attributes often lead to meaningful differentiation" to "perceived attributes often lead to meaningful differentiation." For there is no differentiation, in physical attributes, between the furniture chair and the art chair; the only differentiation is whether the consumer perceives the chair as a piece of art, or a piece of furniture.The Key Takeaway, for Business Leaders
Actual artists have toyed with the ramifications of labeling something as "art" for centuries. Perhaps the most famous example is Marcel Duchamp's In Advance of a Broken Arm, a famous work of art that is, essentially, a snow shovel with a title. The point? Even a snow shovel can be viewed and valued as art, if the right artist (i.e. a legendary creator like Duchamp) spin-doctors it as such.
More recently, the rap group Wu-Tang Clan announced it was attempting a strategy like this with a forthcoming album. Most albums are sold and distributed in mass quantities, for sub-$20 prices. By contrast, Wu-Tang clan announed it would release only one copy of its upcoming opus, selling it for a multi-million dollar price to a high bidder--but only after a promotional museum-gallery tour.
Essentially, the Wu-Tang Clan is doing with an album what Newman's experiment did with the chair (and what Duchamp's experiment did with the snow shovel): Increasing its value, by communicating to people that it's "art," rather than the ordinary consumer product it seems to be.
The key takeaway, then, is to think about pricing as a form of differentiation.
In business settings, the master of this was Charles Revson, the marketing legend who built the Revlon cosmetics empire. (A shout-out here to pricing guru Ron Baker, for sharing this observation.) When other nail polish products sold for 10 cents during the Great Depression, Revson's products were 50 cents. His lipstick sold for one dollar, compared with the 49 cent price of competitors'.
The reason? Revson aimed to differentiate himself from his competitors, all of whom treated makeup like an ordinary consumer product. In Revson's hands, makeup was a vehicle for romantic hope. In positioning his product this way--as something that was more than a strictly functional (and therefore, highly fungible) consumer product--Revson was acting like an artist.
His lipstick was more than mere lipstick. In the same way an artist's chair isn't just a highly replaceable piece of furniture. And in the same way Duchamp's Broken Arm isn't just a shovel.
Four ways to keep your export deal from going belly-up--and a few strategies in case things go south anyway.
Getting a recalcitrant customer to pay up is always tough. But at least when you're located in the same country as your customer, you have some legal recourse. You can hire a collections agency, or, in the worst-case scenario, sue.
Overseas, it's a lot harder. That doesn't mean you can't get paid--just that you have to put a little extra effort into it, and that you've got to be well-prepared for things to go south before you ship. Laurel Delaney, author of the book "Exporting: The Definitive Guide to Selling Abroad Profitably," and founder and president of consulting firm Globetrade.com, has a number of strategies to help make sure you get paid. Here's what she recommends.Paypal
This is where most business owners start, says Delaney, especially if the value of the shipment is less than $5,000. Some even use PayPal for amounts up to $10,000, but bear in mind that Paypal charges 2.9 percent for domestic transactions and 3.9 percent for international ones.
"It's okay, if you don't mind spending through the nose," says Delaney. But as you grow, that 2.9 or 3.9 percent is going to look more and more onerous, and is going to cut into your profit margins. "You don't want to be paying those fees just for collecting money," she says.Cash in Advance
It's very hard to get cash in advance for anything, says Delaney. On the other hand, "You won't get what you don't ask for. There is a remote chance it can happen. The hungrier they are for your product or service, the more likely it is that they're going to do it."
A decent alternative to cash in advance is to ask the customer to pay in installments. One common arrangement is for the customer to pay a third up front, a third while you're doing the manufacturing, and a third when you release the goods and they receive the products.Sight Draft
This is the most common financing tool used by small- and medium-sized businesses that are doing business overseas, says Delaney. You'll need some help from your bank and your shipping company or freight forwarder to set it up.
Essentially, a sight draft allows you to draw a check on your buyer's bank account, although the actual mechanics are a little bit more complicated than that. With a site draft, your international customer won't be able to take possession of the shipment until they sign a document saying the shipment has been made. When they do, their bank will pay you.
By definition, sight drafts are supposed to be paid immediately, but they often take a day or two to be processed (not unlike checks).Letter of Credit
Delaney refers to these as the Maserati of payments. In effect, a letter of credit substitutes the creditworthiness of your customer's bank for that of your customer itself. You'll have to work hand-in-hand with your banker to get a letter of credit, and they're usually not used for shipments of less than $5,000. Your customer has to draft a letter of credit with his or her bank, too.
A letter of credit is paid (or not) based on the conditions in the letter of credit itself, which often include an inspection of the shipment itself. The contents of a sales agreement or any other contract are not necessarily applicable here.
In general, a letter of credit will cost you about 1/8 of one percent of the value of the shipment, says Delaney. "It brings you peace of mind," says Delaney, "It's worth the price, and it's worth your time."If You Didn't Prepare in Advance…
If your customer has possession of your goods, and you've done nothing to make sure you get paid, all is not lost. But you've got a lot of legwork to do. "It's almost as if you're treating the customer as if they're local," says Delaney. In other words, you admit (to yourself, at least) that legal recourse is almost nonexistent, and work to wheedle or shame the money out of your customer anyway.
For a small dollar amount, start with a simple email, says Delaney. Ask: "Is there something we failed to do? Perhaps we do not understand the timeline for payment?" Mention that you'd just love to send someone to their office, in person, to discuss it.
If that doesn't work, send a more insistent email, and say that really, you'd hate to have to ask the U.S. Embassy for help, because you wouldn't want to do anything to tarnish this most valued customer's reputation. If that doesn't work, you absolutely can go to the U.S. Embassy in the customer's country and ask for their help. Often, just the threat of this will get people to pay up.
There are other ways to find government officials who may be able to help. At www.export.gov, pull down the tab for the market your delinquent customer is located in. There, you'll find lists of specialists categorized by industry or product. Find the specialist in your product and country, explain what's going on, and tell them you need help.
"Almost nobody will do this," says Delaney. That makes your odds all the better when you do.
The ceremony highlighted the brands and individuals you should try to emulate on social.
Monday night in New York City's Times Square, the best and the brightest--of a sort--were honored at the Sixth Annual Shorty Awards. Produced by Sawhorse Media (the New York-based technology startup behind journalism network Muck Rack) and hosted by actress Natasha Leggero, the ceremony shined the spotlight on who's who on Twitter, Facebook, Tumblr, YouTube, Foursquare, and the rest of the social media universe. In short, the event showed the people and companies whose presence on social networks you should be watching and emulating.
The ceremony recognized two sets of awards: the Shorties, which honor individuals, and the Shorty Industry Awards, which honor brands and companies. The Real-Time Academy, a panel of entertainment stars and prominent businesspeople, picked the winners from a pool of nominees chosen by the public, based on factors such as originality of content, impact, and engagement.
The Shorty Awards named winners in a variety of categories, from the Best Fake Twitter Account to Vine of the Year to Best GIF Maker. Here are a few of the award winners in business that you should be watching:
- Clothing maker The Brooklyn Circus grabbed the gold in the small business category. The Hay Merchant, a craft beer and food company based in Texas, and She's the First, a sponsor of girls' education in developing nations, were also named finalists in the category.
- Unsurprisingly, Guy Kawasaki won the Business Influencer category. The author and former Apple Evangelist was nominated for "his continual and consistent business guidance" and because his "advice is spot on and un-convoluted."
- In the Charity category, Nature Conservancy beat out charity:water, Random Acts, and Oxfam International.
- The Veronica Mars Movie Project won the Kickstarter of the Year category.
- General Electric was named the Best Brand on Vine for such efforts as its #6SecondScience and #GravityDay campaigns.
- Credit card company American Express was named the Best Fortune 500 Brand on Social Media.
- Engine manufacturer Briggs & Stratton won the Best Facebook Contest for its Motor Mouth contest. The video contest garnered 3.3 million impressions and the company experienced a 43 percent increase in its Facebook fan base.
A surprising new study finds a genetic link between procrastination and impulsivity.
The next time someone gets mad at you for putting things off, blame Mom and Dad. Procrastination is linked to genetics, according to a surprising new study published in the journal Psychological Science, and it may even stem from impulsivity.
Researchers at the University of Colorado Boulder surveyed 181 identical twin pairs and 166 fraternal twin pairs to assess their ability to set and maintain goals, as well as their tendencies toward procrastination and impulsivity.
The study found procrastination actually derives from impulsivity, as ancestors relied on the latter for survival but evolved to have more long-term goals. Unfortunately, we humans still have some impulsive tendencies and haven't figured out how to curb them.
Based on their findings so far, the researchers say they plan to explore the ways humans manage their goals and either delay or make impulsive decisions. But for now, one thing is clear: impulsivity and procrastination share the same roots, and knowing one leads to the other may help you to think more long-term when there's work to be done.
What's quirky and clever to you may be entirely unrecognizable to your potential customers. But that's not the only problem.
"What does your company do?" It should be the most basic of questions for an entrepreneur, next to being asked about your name and how you take your coffee. And yet, it's surprising how many business owners cannot accurately answer the question.
I got to thinking about this question and topic because of an intriguing post by Julian Shapiro on The Next Web about bad startup names.
Shapiro attributes this bad marketing move to three things a company and its founders lack: attention to detail, diligence, and self-awareness. The last one is of particular interest. Shapiro says a company that settled on a poor name "didn't have the self-awareness to thoroughly gather and assess feedback about their naming decision."
That is true, but the problem of naming a startup goes far deeper. Not only does it suggest that the entrepreneurs abdicated an important responsibility, but also that they don't entirely understand what their companies do. If they did, naming the business would have been much easier.
How can you not know what your company does? It's a lot easier than you think. Try describing your own company right now. Write it down. Now read it aloud.
Honestly answer the following questions:
- Does the description focus on the products or services you sell?
- Do you mention how you'll go to market?
- Have you compared the company to your competitors?
- Did include include phrases such as "the leading," "state-of-the-art," or "world-class?"
If you answered yes to any of these questions, then you don't recognize what your company actually does.
To say that a company is about its product, business model, competitive standing, or vapid description is to miss the point. A legitimate company exists only because it has customers. It may aspire to success, growth, and importance, but if the business doesn't thoroughly satisfy the customers, everything else is moot. It won't last long enough to achieve them.
Naming, or managing, a company is difficult if you don't embrace what it does. A good car dealership is about helping people solve their transportation needs, not selling them a car. A green grocer helps customers improve their health and the taste of their meals with fine produce. It isn't a way to push cucumbers and cabbage. A social network connects people in ways that let them stay in touch with old friends and possibly develop new ones. That is much more than serving up ads to a bunch of eyeballs.
When you understand what the business really does, you're closer to developing proper relationships with customers. When you have that relationship set, everything else will begin to fall into order. Until then, you literally don't know what you're doing.
A new study found that female respondents did not apply to job ads that contained specific words. Is your description deterring women from applying?
Women shrink from applying for jobs when the job descriptions "sound" male, a new study suggests.
Researchers from Technische Universität München presented 260 men and women with employment ads for management positions. If the ads contained words like "aggressive," "independent," "assertive," "determined," and "analytical," the women said they found the job unappealing, and that they probably wouldn't apply. (The men were unfazed.) When the ads used descriptors like "responsible," "dedicated," "sociable," and "conscientious," the women sent in their symbolic CVs in droves. (Men: equally enticed.) So perhaps men don't actually read job notices before they submit their resumes. Or perhaps they don't care whether they meet the stated criteria. (In fact, there's evidence to support this hypothesis: While most women only chase positions for which they possess 100 percent of the prerequisites, men often undertake the professional climb with knapsacks 60 percent full.) Perhaps, though, guys just identify with a broader range of human traits than ladies, who apparently inhabit a Divergent-like world in which being conscientious precludes the possibility of being independent too.
Now the question is: What should employers do about it? One answer is that companies who want "assertive" candidates should sing it out! If a woman blanches at the scary job posting, she's a trembling daffodil, i.e., not "assertive," i.e., not the right person. You find confident managers by designing an application process that rewards confidence.
But you don't necessarily find talented managers that way. By framing employment ads in a fashion that invites more women to apply, firms can court more overall genius, skill, creativity, and diligence. They have no ethical imperative to use language that sets daffodils at ease, but doing so may actually benefit them: While you can nurture a sense of authority in someone by placing her in a role that demands it, you can't mainline her IQ points. To take a longer view, a big part of why some women fear they can't perform in leadership positions is that they haven't seen other women do it well. Start filling the upper echelons of businesses with qualified ladies (impostor syndrome and all), and maybe the notion of a "determined" or "aggressive" female manager will begin to inspire less cognitive dissonance.
Also on Slate: "There Is No Such Thing as 'Career Advice for Women.'"
Use the data you have to get the most from your marketing dollar.
Everyone has heard a lot about big data. Whether it has been through articles, blogs or conferences, it's been almost ad nauseam. But there's really no such thing as big data. There's no such thing as small data or medium data either. There's just data. And you're either really good at using it or you're not.
I had an interesting thing happen to me not too long ago. I signed up for a popular deal-of-the-day website and provided all of the personal profile information requested. I was curious to see how it was going to use my info to market to me. I gave my age, gender and location. I also gave my interests--triathlons, running, skiing, and digital marketing. The following day, I received my personalized email offer--a discounted pole dancing class at a women-only studio. I was flattered, but uninterested and subsequently unsubscribed from the service. Here was a company that had mounds of data to leverage, but couldn't get it right.The 5 Question Framework for Smart Data
We now have access to more data than ever before. The good news is that the data provides access to a wealth of insights. The bad news is that the insights are rarely waiting at the surface, so having the quantitative foundation to know how to use the data is key.
Everyone is looking for an edge, looking for a way to outshine their competitors. It comes down to asking the right questions and using data to provide the answers. If you can leverage data to answer those questions more effectively and faster than your competitors, you win. You have to look at what the data is telling you, which actually may lead you to more questions that will need answering.
When I ask people to give me the five most important questions they'd answer to improve their business or a marketing campaign they're working on, I am often surprised at the poor quality of questions I hear. It's not always easy coming up with the right questions.
If you're not sure where to start, use the 5 question framework that I apply when working with clients.
Imagine you asked the above questions and the answers led you to another question, which for the sake of this example is, "What is my cost per new customer?" Initially, this may seem like a straightforward question.
The first step would be taking your marketing dollars invested, which you probably have a clear idea of, and divide it by your total new customers. However, in order to get to your total new customers, you need to first identify whom that includes and excludes: Is it someone who has never made a purchase? Or is it someone who might have previously made a purchase, but hasn’t purchased within the past five years? Who are my existing customers? What are my total transactions both offline and online?
In order to answer these additional questions, you'll need to dive into a myriad of different data sources. And in order to navigate, explore and maintain all of this data, you need to invest in an infrastructure that will provide you the technology and resources to most effectively utilize the data.
It's not until I can answer the additional questions that I can get to my total new customers and filter that back into the denominator of my initial equation, marketing dollars invested divided by total new customers. As the example illustrates, it may not always be as easy as it appears to answer business questions.
Every day you need to be asking yourself what you can do differently relative to your competition. If you can gather smart data, rather than big data, and make it actionable, you will beat your competition. I'm not saying that managing data is easy--it's difficult. But difficult is good. If something is difficult for you, then it’s difficult for your competitors, and there's a big chance they won’t make those investments. Ultimately, if you're able to take advantage of the data, you're going to increase relevancy for your customers and outrun your competition.
When your business is facing disruption by a competitor, your best customers aren't the ones who will provide the most valuable feedback.
If your ship is leaking customers little by little, you better find the crack and plug it. A leak can turn into a flood quickly, especially if the cause of it is a disruptive new technology offered by a competitor.
Maxwell Wessel, vice president of innovation at enterprise software company SAP and an investor with Washington, D.C.'s NextGen Angels, says customers, especially low-profit ones, can hold the answers to your company's problems.
"Most businesses aren't listening to the right customers. Most businesses spend their time listening to their most demanding customers--not only because those customers tend to be the most profitable, but also because our listening techniques direct us towards the customers who speak the loudest," Wessel writes in the Harvard Business Review. "And we end up ignoring--sometimes not even hearing--other customers who may become equally valuable in the future."
Below are the listening practices Wessel suggests you use when a disruptive competitor presents itself.Perform customer exit interviews.
If you aren't doing exit interviews with former customers, you're missing out on a trove of valuable information. Why did they leave? What product or service replaced you? "The customers who opt to buy different products instead of your own are those who can tell you the most about the appeal of those products," Wessel writes in HBR. "Those customers can articulate where you fell short and where others did better. Often, to identify who these customers are, you need to set up different types of listening systems." He suggests putting people in stores to observe purchases, emailing former loyal customers you haven't heard from in a while, and starting an open conversation with people about your company's failure.Engage your less lucrative customers.
You are probably having lots of conversations with customers every day. Most likely, the customers are those that drive your profits, but this group only gives you one side of the story. "When it comes to disruption, you need tools to engage those in other segments of the market. You need to identify who's on the margin of your business and actively open channels for communication with them. Start advisory groups and user communities intentionally populated with people who only engage with your core products peripherally," Wessel writes. "They won't feel as invested as your best customers, so you'll need to make sure you do the work to get them involved and contributing feedback. Unfortunately, if you don't do the work, you may remain stuck in the echo chamber associated with daily business."Assess the scope of the disruption.
Wessel says your company's history can be a powerful tool in measuring your competitors' threat level. "If the customers that are leaving today had left 10 years ago, what would have been the impact on your growth? If they'd left 20 years ago, how much profit would have been lost? Would you even be in business today? This type of listening to economic indicators can both help you understand the speed and scope of your disruption as well as position the significance of the threat to your executives," Wessel writes. "There is no better tool than a rational and realistic description of risk to get large companies to move."
When it comes to pitching investors, a new study finds it's the men -- not the women -- who should be concerned with their appearance.
Finally, some good news for female founders: If you're looking to raise money, it makes no difference how attractive you are. No time to get your hair trimmed, your teeth whitened, or your favorite dress dry-cleaned? No problem! Venture capitalists don't care.
Yes, I'm being a bit over the top here. But a recent report from the Proceedings of the National Academy on Sciences shows that when it comes to women entrepreneurs, their chances of success in making a pitch are not affected by how good-looking they are perceived to be.
Instead, when it comes to fundraising, men are the ones who ought to worry about being objectified. The researchers--Alison Wood Brooks of Harvard Business School, Laura Huang of the University of Pennsylvania's Wharton School, and Sarah Wood Kearney and Fiona E. Murray of MIT's Sloan School of Business--analyzed three pitch competitions, in which about 90 entrepreneurs presented. The researchers asked 60 angel investors, who didn't know which pitches would eventually be successful, to rate the physical attractiveness of the entrepreneurs. It turned out that "attractive" male entrepreneurs were 36 percent more likely to win a prize in the competition than other men."Emotional" Women vs. "Logical" Men
Unfortunately, for women, that's about the only encouraging news (if you can call it that) from the research. Because regardless of how attractive they may or may not be, another study showed just how far women have to go in persuading an audience of the value of their business ideas.
For this study, the researchers asked 194 people to watch a pitch video, which was narrated by either a male or a female voice. The scripts for the videos were exactly the same whether it was a man or a woman doing the pitching.
The pitches narrated by guys were significantly more likely to be funded. Some 68 percent of people said they'd fund the man, but only 32 percent said they'd fund the woman.
Even more galling, the pitches made by men were judged to be more "persuasive," "fact-based," and "logical." Even though the scripts were exactly be same. Think about it: Even when a man and a woman are making the exact same argument, it's judged as more "fact-based" or "logical" coming from a man. In this case, it didn't matter how old the viewer was, or what his or her gender was.
That's something to remember next time you hear that men are more "logical" than women--that even when men and women are objectively being equally "logical," most observers will rate the man as more logical. The problem with women's ability to be "logical" (as opposed to emotional) may originate in the person doing the judging, not the woman doing the pitching. (Or, as our tech team is sometimes moved to comment: PICNIC. As in, "Problem in chair, not in computer").
One possible mitigating factor could be that the people watching the videos weren't professional investors, although they might be representative of those who could invest as friends-and-family or as crowdfunders. One could hope that professional investors would be less biased, although given the fact that 4.2 percent of all venture money goes to women, that doesn't seem terribly likely.
Need a good read? These titles don't deal with startups specifically, but they tackle the kinds of business issues you face every day.
Leadership is a learned skill, not a natural attribute. And, as with any skill, you can always learn more--about how to handle conflicts with investors, deal with employees demanding more pay, or handle a PR nightmare. Here are several new leadership books that offer sage advice from leaders who have lived through the challenges you might face in business.1. The Curmudgeon's Guide to Getting Ahead
Sometimes, it's good to read a book you disagree with--it can challenge your views and make you question if your thought process really makes sense. The Curmudgeon's Guide to Getting Ahead, by political scholar Charles Murray, is a book about how to act in the workplace. It's filled with brazenly opinionated remarks on a number of things, from how to pronounce and use the word data to why you shouldn't share information anymore. It's a good read for leaders to find out what to say--and managers of Millennials to know what they are up against.2. The Hard Thing About Hard Things
If you have not yet cracked open this work by well-known tech investor Ben Horowitz, move it to the top of your reading stack. The Hard Thing About Hard Things recounts how Horowitz worked as the CEO of LoudCloud and Opsware, and how he transitioned into the investment world. The unfiltered writing includes several verbatim discussions about how Horowitz handled conflicts, how he chose his leadership team, and how he secured funding even in the face of bankruptcy. He presents himself not as a genius leader with perfect insight but as someone who learned the hard way.3. Haunted Empire
Though it is not positioned specifically as a book on leadership, this account of the transition between Steve Jobs and Tim Cook at Apple is like a leadership guidebook. Haunted Empire is a fantastic exposé, in which former Wall Street Journal technology reporter Yukari Iwatani Kane uses an in-the-moment writing style to make you feel like you are in the room. The big takeaway: You can learn how Cook uses a questioning approach to leadership and how Jobs ruled mostly by direct frontal attacks. Both had their place to make Apple the tech leader.
Have any other must-reads to add to the list? Let me know in the comments.
How social media, the cloud, and other elements drive successDownload the Technology as a Lever for Growth guide now!
With all the hoopla about social media, you may be wondering what Facebook, LinkedIn, Twitter and the rest really mean to a small business. The answer is simple and powerful -- customer leads and sales. Some 61 percent of small and medium businesses (SMBs) say social media helps find new customers, according to a recent survey called Priming the Economic Engine.1
Social media, collaboration tools, mobile devices, and a strong web presence are no longer a “nice to have” -- they’ve become a fundamental competitive advantage for small businesses. Indeed, SMBs that use the latest technology increase their annual revenues 15 percentage points faster than companies with lower levels of technology adoption, according to The Boston Consulting Group.2
Beyond the statistics,how exactly are SMBs growing through technology? They are empowering workers with new tools, allowing their operations to be more nimble and finding new ways to connect with customers.1. Connect with Customers via Social Media
Social media is a platform that allows you to strut your (business) stuff. For example, savvy landscapers are posting short videos on YouTube with gardening tips. Accountants are addressing questions on “LinkedIn Answers for Business.” All sorts of SMBs are commenting on blogs and posts, lending their advice and guidance. The common theme: The SMBs aren’t straight-ahead selling; they’re giving away a taste of their expertise and offering valuable information, which makes customers eager for more.
Brian Moran, a business consultant in Baltimore, Maryland, says another way successful companies can make greater use of social media is for competitive analysis. Social platforms can tell you what events your competitors are attending, new clients they picked up or recently lost, new product launches and more. Moran says, “One day last year, I sat with a client looking at his Twitter feed. His jaw suddenly dropped when he read that his largest client was looking forward to seeing his biggest competitor at an upcoming industry event. He never let on that he read their tweet, but he was attached to his client’s hip at that event.”2. Access the Latest Technology in the Cloud
Cloud computing is a way for companies to "rent" applications and IT services rather than spend upfront on infrastructure, software, training, and personnel. For example, a small technology firm that helps companies develop mobile marketing strategies turned to the cloud to support its rapid growth -- allowing it to meet fluctuating demand and hold onto its cash for other needs.
The cloud provides easy and inexpensive access to the latest iterations of technology that was once limited to the largest enterprises, such as instant collaboration, file sharing, and online accounting. One consulting company used the cloud for technology that allows clients to easily make changes to documents, which the company says was a distinct competitive advantage.
No wonder a survey of 640 small businesses found huge benefits to the cloud -- 88 percent said it saved them money; 56 said it helped them increase profits; 49 percent said it let them grow their business.33. Bring Your Office on the Road
In a mobile world, the ever-expanding capabilities on tablets and phones are a crucial way to increase business. As the SMB Group notes, more SMBs recognize that having the capability to accept and process a broader range of payment methods can help them attract more customers, gain new business, and even enter new markets.
Credit cards are now accepted by everyone from artists at craft fairs to service people making house calls. Road warriors and freelancers can now easily create expense reports by snapping pictures of receipts and submitting them from the road. Another big benefit of these mobile tools is being able to take your entire office with you wherever go.
“A client of ours that develops fruit packing boxes is able to go to clients and show them 3-D renderings on their laptops,” says Mark Gilmore, president of Wired Integrations in San Jose, California. “In the past, they’d have to email files back and forth. But now the technology has become good enough that they can access data in real time, wherever they are, and have more effective meetings and presentations.” And that leads to more and larger sales.4. Impress with Your Web Presence
While a surprisingly large number of small businesses still don’t have a web site, Aaron Hanson, product marketing lead at Symantec, notes that the leaders are honing their site’s call to actions and design to boost revenues.
For example, nearly one-quarter of U.S. businesses with less than 100 employees are investing more in designing and developing their company website.4 Another 20 percent are optimizing their sites through search engine optimization (SEO), a process that helps them land up higher in listings when people look for products and services on search engines.
The reason is clear for all the activity: in an era when the Internet is the new storefront, a web presence is crucial for success. As people do searches on their mobile phones, they expect instantaneous response -- a one-second delay in loading a web page cuts conversions by 7 percent, one survey found.5 Even if you don't sell through the Internet, a strong web presence still impacts your ability to grow: Nearly half of U.S. consumers have cancelled plans to spend with a small business after discovering the company has a poor quality website.65. Keep It All Secure
All these technology opportunities come with a corresponding need for new safeguards. While cloud-based tools, social media, the web, and mobile devices that access information over the Internet open up the world for small businesses, they also have the potential to open up the small business to data thieves -- indeed, studies show that increasingly SMBs are a bigger target for cybercrime than large companies.
More than ever, small businesses need a sound security foundation and the latest protection against the ever-more-sophisticated threats being levelled against them. SMBs need policies in place to manage how employees conduct themselves online. Companies need to scan their web site, mobile devices, and networks for malware and vulnerabilities. They need to install the latest security controls and let customers and employees know they are in place.
And, ironically, these protections can drive growth as well. For example, Symantec’s Hanson notes that, “research shows having the proper security certificate on your web site can boost sales by double-digits because it makes customers more secure in dealing with you.”
The message is clear: With many SMBs thirsting for more leads and more business, technology, smartly and safely deployed, is becoming the “oil” to propel their growth engine.Find the Right Security Solution for Your Business
While technology offers a path to rapid growth, putting it into play requires a trusted, comprehensive security solution. Symantec Endpoint Protection Small Business Edition offers simple, fast, and effective protection against viruses and malware. Available as a cloud-managed service, it sets up in just minutes with no hardware needed, so securing your business is simple and quick. Interested in taking Symantec Endpoint Protection Small Business Edition for a test run? Sign up for your risk-free trial today!
For business security and antivirus solutions, visit www.symantec.com/small-business.
Landing top talent is never easy, but there are ways to sweeten the deal. Here's the biggest tool in your arsenal and how to put it to use.
In case you weren't aware, it's incredibly difficult to hire software engineers right now. This problem is not relegated to Silicon Valley, New York City, or Washington D.C. It's everywhere. And for a software startup, not having the right talent at your disposal will be a real game-ender.
Here at The Startup Factory in Durham, North Carolina, I'm constantly being asked for connections to talent. In fact, I get asked for talent so much that I created a job fair specifically for tech companies to pitch the audience on why they should work for them.
So what can entrepreneurs do to recruit top talent? Or put another way, how will you compete with others for talent?
The first thing you've got to do is avoid shooting yourself in the foot. This usually happens when you find the right hire, but make a bad offer. As a startup you're obviously low on cash, but you're most definitely rich in equity. Future stock ownership granted through a stock option is the best compensation tool in your arsenal right now.
As a founder, or set of founders, you own all or most of your company. So an option grant has to be the most important part of your compensation offer because it represents the future value of your vision. If you are hiring a new vice president of technology to build out the tech side of your business, for example, then this set of skills may cost $175,000 or more outside the startup world. Allocating that much cash would be crazy, so you need to convince this person to take equity and a smaller amount of cash as part of her total compensation.
Too many times I've seen founders or chief executives present a weak equity offer thinking that giving up part of their ownership will only dilute the massive payday coming to them as visionary founders. The paradox is that the equity is not worth anything if you never get past the development side of your vision. And if you need to hire a VP-level superstar--who has the skills and experience you don’t--that is simply not going to happen.
By definition, your first hire should propel the company forward, and in a big way. So will you recruit her by offering a measly 0.2 percent of the company? If so, that's a big mistake, as one of two things will happen. First, the person who would accept that offer is the wrong person for the job, as she won't understand what this means. Or more likely, she'll walk away because you don't get it.
A terrific hire deserves 10 to 50 of the company's equity, which are big numbers indeed. But that's because it's not about your idea but about the execution of your idea. This person is being hired to help make it happen.
Now that you are over your sticker shock, allow me to offer some comfort. Every stock option plan should have a one-year cliff to vesting the options, so offer your new hire a realistic stock option grant that gets her interested and build from there. If you don’t see momentum from this employee in a year, it's probably best to part ways. And if the new hire moves the company forward, trust me: It will be the best investment you ever made.
It doesn't take much to make an impression. Just vary your content, know your audience, and get them to care.
Most audiences sit back, listen, and are left to find meaning in what the speaker is saying. But fortunately, with careful crafting, you can include three concepts in your presentation to help audiences remember your speech: variation, relevance, and emotion. Here's a look at all three and how they'll make your speech memorable.Variation in Sound, Sight, and Evidence
You must diversify your material to keep people’s attention with variation in your voice, your evidence, and your visuals. Adding variation in your volume and speaking rate will help keep your audience’s attention and motivate them to listen. And by speaking expressively, your passion will shine through.
For many presenters, this type of speaking doesn't come naturally, so I often instruct them to infuse their presentations with emotive words, like "excited." If you are speaking about a big opportunity, then speak in a big way. With practice, you'll feel more comfortable with this type of vocal variety.
Varying the type of evidence you use to support the claims in your presentation is also important. Too often, presenters rely on their favorite type of evidence such as data or on anecdotes. But both qualitative and quantitative academic research have found that triangulating your support provides more compelling-- and memorable--results. So try providing three different types of evidence, such as a data point, a testimonial, and an anecdote. This will neatly reinforce your point and give your audience multiple ways to connect with your idea, and remember it.
What your audience sees is also critical. As a monotonous speaker can cause mental shutdown, while repetitive body movements and slides jammed with words can make them fatigued. To increase the variety of your nonverbal delivery--that is, gestures and movement--record yourself delivering your presentation, then play the recording as you practice your gestures. Since you don't have to think about what you're saying, you can play with adding variation to your body movement without the distraction of speaking.
Likewise, challenge yourself to think visually. What could represent your point in a more meaningful way? Could you create a diagram or flow chart? One tool to get those visual juices flowing is Google Images. Type in the concept you are trying to convey and see what comes up. The images you find might have copyright issues, so I don’t recommend using everything you find, but you’ll get an idea of the visual variety that is possible.Know Your Audience
As a speaker, your job is to serve your audience and make it easy for them to get your message. Too often, presenters deliver numbers devoid of context, which makes it hard for the audience to see their relevance, much less remember them.
For example, I worked with a green technology company doing some wonderful things. During a presentation, one of their executives said their company had saved the United States 1 billion kilowatt hours of electricity. That's a big number, but since I am not an electrical engineer it means nothing to me. But then, the presenter translated this number by saying 1 billion kilowatt hours is the equivalent of the entire U.S. not using power for 15 minutes. Suddenly, the number became much more impactful.
Another way to make things relevant is by connecting your content with information the audience already knows. Analogies are a perfect tool for this. By comparing new information to something your audience already knows, you'll activate the audience’s existing mental constructs, enabling quick understanding.Make Them Care
People remember emotionally-charged messages more easily than fact-based ones. In fact, modern scientists find that our emotional responses have a fast track to our long-term memory. When possible, try to bring some emotion into your presentation, be it in your delivery or the content itself.
In terms of delivery, ask yourself what impact you want to have on your audience. Your delivery style and tone should be congruent with the emotional impact you desire. Yet at the same time, you want to be authentic, not theatrical. This requires some thought, so I recommend practicing in front of focus groups who can give feedback.
Many of my more technical and scientific clients and students challenge me on my assertion that emotion is important. They argue that their presentations are often highly specialized and detailed and that emotion doesn’t play a role in those talks. I disagree. Even the most technical talks can have some emotional aspect, especially if you focus on the benefits or implications of the science or technology. Benefits are inherently emotional--saving time, saving money, saving trees, saving lives--these are the things people care about.
By adding emotion, relevance, and variety to your presentation, you can be sure the audience will remember it. The techniques and approaches I have described will help you be more comfortable and confident in your presenting. And that will only amplify your positive impact on your audience.
This piece was originally published by Stanford Graduate School of Business and has been republished with their permission. Follow them @StanfordBiz
They drove mobile, they drove freemium, and now they are proving that everything is better by the byte.
In today's autocatalytic, technology-driven world, where every change accelerates the speed and frequency of the changes to follow, gamers are the virtual canaries in the coalmine. The disruptive innovations and the market transformations that gamers' behaviors consistently predict ripple across virtually every industry sector. In other words, as gamers go so goes the rest of the world.
It was the gamers’ rapid abandonment of expensive, bulky and static gaming consoles (Playstation and Xbox) in favor of light, portable, and mobile devices that not only built companies like Zynga into almost overnight market leaders, but, much more significantly, presaged the world’s online migration from the desktop to the mobile world. Mobile today is everything and everywhere, and our smartphones are the direct descendants of yesterday's handheld gaming devices.
The actions and choices being made by gamers (of all ages) will continue to change the ways that businesses price their products and services--and the manner in which they interact with prospects and customers. We're looking at the end of fixed pricing for anything and entering a permanent a la carte world. Bulk packaging, bundled products, and even bargain pricing are all breaking down in favor of a single consumer demand driven by a desire for choice and flexibility: They want "everything by the byte" whenever and wherever they want it. And it's gamers who have shown us exactly how these demands are impacting every business.
To understand this phenomenon it's helpful to look at which approaches didn't work in the gaming space, and why.
First and foremost, subscriptions and long-term commitments haven't achieved anywhere near the scale or penetration that was anticipated. The fundamental reasons are fairly clear--commitments of any kind and continuing obligations are out. Any online game company will tell you that the most active participants won't commit to spend a dollar in advance, but will spend ten dollars, a dime at a time, all day long.
Second, fixed pricing, downloadable paid games and pay-per-play models have also failed. The only companies making real money today (more than a million dollars a day in virtual sales) are the companies deploying freemium games, where players are charged for upgrades, increased weaponry, powers/skills, or other virtual goods.
What are the lessons for the rest of us? Three basic propositions underlie the gamers' decision-making process, and these ideas are already on their way to your market and your products and services--if they're not already there.1. Investment
The best and smartest games let the users set the effective price of each session or game each time they play. Some days it's a little bit and some days it's a bundle. The point is that the customer is in control. Your pricing strategy needs to incorporate and demonstrate the same kind of flexibility.2. Commitment
The best and smartest games let the users decide how much or little they want to spend each time they play. Some days it's a lot of time or money (each being a material kind of a commitment) and some days it's just a quick bit of time-killing. If you do things right, you can be all things to all people all of the time. But your products and services need to be accessible across a broad spectrum of pricing and consumer choices, not a simple set of fixed offerings.3. Valuation
The best and smartest games let the users decide on exactly how much the experience is worth to them each time they choose to play or continue to play. All the market research and pricing guidance in the world doesn't compare to letting the customer determine the value of the experience. If your products or services provide real benefit and value, you will discover over time (and over the lifetime of a continued customer relationship) that your best customers will actually pay up for the right experiences rather than try to be bargain-basement buyers.
Focusing on the value of the experience is doubly significant because today no one under the age of 30 really cares about possession or, frankly, about owning anything. Everything is about utility and experience, social and sharing. Ownership (buying "stuff") is a burden today, not simply because so much of the readily disposable technology we see and use every day is outmoded and obsolete in roughly the time it takes us to master it, but also because we would just as soon not assume the obligations and the commitments that come as part of the package.
I know that "one size, one model, one strategy" will never work for everyone, but one thing is true beyond question: Your best buyers will tell you that everything is better by the byte.
A reality show finally gets it right when it comes to finding financing.
On Friday night's episode of Shark Tank, the two founders of Kodiak Cakes company approached the sharks in hopes of landing an investor for $500,000 in exchange for a 10 percent share in their company. Though the sharks were immediately impressed with the initial sales of the whole-wheat flapjack and waffle mix, they voiced some concerns from the start.
Nearly all of the sharks asked the founders why they weren't borrowing against their receivables or rolling over their profits in order to not have to take on an investor. This was the smartest and most honest beginning to an investor pitch I've seen on the show in a long time.The Sharks Get It Right
I'm usually not a fan of Shark Tank, because I would like all business owners to thoroughly explore any and all financing options before giving away valuable equity in their companies. Debt financing is oftentimes a much better solution than equity financing, but many entrepreneurs give in to the allure of having an investor interested in their idea or service and the relatively easy money that comes from having an investor versus taking out a hefty business loan. I encourage all business owners to consider that taking on an investor is permanent, while a loan is temporary.
This is why it was refreshing to me to hear a few of the sharks on Shark Tank advise the Kodiak Cakes founders to seriously consider debt financing over equity financing.
With the $500,000 investment, the founders would spend a large majority of the cash on slotting fees--that is, the upfront fee paid to stores in order to be on the shelves with the major competitors in the space. Though the sharks agreed that the slotting fees are a necessary evil in the food industry, Mr. Wonderful was the first to speak up about the company's valuation and counter with a 50 percent share offer, and Robert Herjavec offered $500,000 at 30 percent equity. Barbara Corcoran came up with a partial offer of $250,000 for 25 percent equity, and Mr. Wonderful joined in at $250,000 for another 25 percent (making their joint ownership 50 percent).
Obviously, the Kodiak Cakes founders were a little stunned with these reduced valuations. They turned down both offers, and Mark Cuban praised the founders for their decision, remarking, "I think you guys are smart," as they exited the tank.
I often disagree with Cuban, and I think that he has, at times, done a disservice to entrepreneurs by opposing small-business loans to start companies, but I found myself happily agreeing with Cuban on Friday night. By agreeing with the Kodiak Cakes founders' decision not to take on an investor, advising them to borrow against their receivables and fund their own growth, Cuban helped to educate entrepreneurs across the country.
Bringing in an investor is, in my opinion, often a misguided step in expanding and financing a small business. Instead of giving away valuable equity to a partner that you'll be stuck with well into the future, consider debt financing as a way to maintain your ownership of the company with a temporary small-business loan. Cuban might finally agree with me on this point, or at least be willing to concede that starting a business with borrowed money isn't always a terrible idea.
When you care about the answer--and you always should--how you ask the question is everything.
I thought I had the answer. Still, I wanted to be sure, so I asked a key employee.
"I'm thinking of moving two crews to a different shift rotation to get a better process flow," I said. "I've run the numbers, and overall productivity should go up by at least 10 percent. What do you think?"
He thought for a minute. "I suppose it could work," he said.
"I think so, too," I said. So I moved them.
My new shift rotation worked on paper. It even worked in practice. But it screwed up the personal lives of a bunch of great employees. (Luckily, I pulled my head out of my ass and shifted everyone back to their old rotations.)
What happened? I asked the wrong question.
We all do it. We ask leading questions. We ask limiting questions. We ask questions that assume a certain answer. (Shoot, sometimes we don't even listen to the answers--we're too busy presuming we're right.)
Here are some ways to ask the wrong questions:You lead the witness.
Asking a question that assumes a particular answer is easy to do when you already think you're right and just want people to say you're right.
- "Don't you think we should go ahead and release that order?"
- "Do you think we should wait any longer than we already have?"
- "Can anyone think of a good reason not to discipline Joe?"
Each question assumes an answer: You clearly think you should release the order, stop waiting, and write Joe up. Though a few people may disagree, most won't--the answer you want to hear is obvious.
A better way:
- "What do you think we should do about that order?"
- "Programming isn't complete yet. What do you think we should do?"
- "What do you think is the best way to deal with Joe's situation?"
Each is objective, direct, and does not include an answer in the question. And each also leaves room for a variety of options, which won't happen when...You stick to either/or questions.
You have a quality problem and have thought of two possible solutions. There are positives and negatives to both. So you seek input from a team member. "Should we just scrap everything and rework the whole job," you ask, "or should we ship everything and hope the customer doesn't notice?"
Most people will pick one answer or the other. But what if there's a better option you haven't considered?
A better way: "There are defects throughout the whole order. What do you think we should do?"
Maybe she'll say scrap it. Maybe she'll say ship and hope.
Or maybe she'll say, "What if we tell the customer up front there is a problem, ship everything to them, and take a crew to their warehouse to sort product. That reduces the impact on the customer. They can use whatever is good and won't have to wait for the entire job to be re-run."
Either/or questions, just like leading questions, assume some answer. Instead of sharing options, just state the problem. Then ask "What do you think?" Or "What would you do?" Or "How should we handle this?"
And then shut up and let people think. Don't rush to fill the silence.You don't try to clarify.
Asking questions can make you feel vulnerable when you're in a leadership role. (You're supposed to have all the answers, right?) That makes it hard to ask questions when you don't understand--especially when you're supposed to understand.
Don't worry: Asking for clarification is easy. Just say:
- "I'm impressed. Now pretend I don't know anything about how that works. How would you explain it to me?"
- "That sounds really good. Let me make sure I don't miss anything, though. Can you walk me through it one more time?"
- Or, best of all: "I have to be honest: I'm not sure I understand what you're saying, but I really want to." (A little humility goes a long way.)
Above all, don't pretend you understand when you don't--all you do is waste the other person's time and make the person wonder later why you didn't try his or her idea.
Now let's flip it around. Here's how to ask great questions:
"But what is happiness? It's a moment before you need more happiness."
Between the adultury, alcoholism, and all-encompassing identity issues, Don Draper has a lot of problems.
Thankfully for his clients, however, coming up with the right message to sell products to the masses isn't one of them.
Draper, played by actor Jon Hamm, is the superstar creative director and brooding mess on AMC's Mad Men. We wouldn't recommend following his example as it pertains to your personal life, but if you're looking for marketing or advertising inspiration, there'd be worse places to look.
With the show set to launch its final season on Sunday (albeit, it's one of those trendy two-part final seasons that will span the next two years), here's a look at some of Draper's most keen marketing insights, courtesy of the folks over at Glow New Media.
The only thing worse than paying taxes after you sell your business is paying too many.
Unfortunately, minimizing the tax burden of your sale isn't as simple as hiring a top-notch tax professional a few weeks before your closing. Some of the tax moves discussed below take time. So get up to speed on these tax strategies now and talk to the experts--a business broker, your accountant, a tax expert--to get your tax minimization plans in place sooner rather than later.Tips for Minimizing Postsale Tax Liability
Regardless of whether you're selling a sole proprietorship or a corporation, it's important to understand the tax implications of the sale long before you pull the trigger on your business exit. There are several tax strategies.
- Conversion to an S corp To avoid double taxation, consider converting your C corp to an S corp prior to sale. Although restrictions may apply, by converting to an S corp, shareholders are taxed for the gain on the sale, but the corporation avoids paying corporate-level tax. This significantly reduces the total tax liability on sale proceeds. But it can't be done overnight--this conversion needs to be made 10 years prior to the sale of your business.
- An installment sale An installment sale is one of the most common tax-deferment strategies for sellers of small businesses. In an installment sale, the buyer purchases either stock or assets using an installment promissory note, committing to pay a portion of sale proceeds over time. Sellers do not permanently avoid tax on sale proceeds, but this strategy delays taxes until payments are received and helps spread out the tax burden.
- An ESOP sale Employee stock ownership plan, or ESOP, sales enable sellers to defer payment of tax on the sale of stock. As long as the ESOP owns at least 30 percent of the company’s stock postsale and the seller invests proceeds in qualified securities, it's possible to create a tax strategy that defers the payment of taxes through a managed account. This creates a permanent tax savings for your estate following your death.
- Qualified small business stock exception There is a provision in tax law that allows for an exclusion of gain from the sale of qualified small business stock, or QSBS. As of January 1, 2014, the QSBS exclusion is set at 50 percent for the sale of C corp stock in a company with total gross assets of $50 million or less. Be aware that other restrictions may apply and an AMT tax preference can further limit your tax savings. Talk with a tax professional to see if this could be an option for you.
The only thing worse than paying tax on the sale of a business is paying too much tax. Given the amount of money that changes hands in a typical business transaction, even small actions can significantly increase the size of your bank account when you exit your company. By working closely with a tax professional in the months or years leading up to the sale, you can improve your tax position and lay the groundwork for more money in the long run.