Fire yourself. Then see if you are eligible to be re-hired.

The bane of some enterprises – startups included – has been their inability to challenge the incumbent management / founding team’s method of working – or sometimes its vision altogether. They had toyed with a great idea and did go quite a distance with it. Somewhere along the way, they had realized they were going down the wrong road. They stop and look around for sign posts. They saw none, no passer-by to enquire. So what do they do?

A normal traveler would just retrace his steps until he locates a sign post or finds some local guy to guide him. But in enterprise adventures, there’s this big difference – of sunk costs. Covering each mile comes with substantial cash burn and losing your way can be costly too. It gets complicated if the team had some early skeptics whose words went unheeded.

That’s exactly when the team needs fresh, unbiased perspective. If the mistake needs to be owned up, it had better be. Have it reviewed by an outsider and get his opinion. Naturally, it’s easier to take a fresh perspective when you really are new and when the assumptions you are questioning are not your own. We’re all more comfortable challenging someone else’s thinking than stepping back and critically assessing our own ideas and behaviors. That’s what Ed Whitacre did when he needed to shake up GM’s management team post crisis — because the incumbents couldn’t get enough distance to challenge the way things had previously been done.

But why wait for your company to get in trouble and for the board of directors to shake up the management team? The turning of the calendar year is a good time for every manager to take stock and think about what you would do if you were starting fresh. So here’s a thought-exercise you can do: First, take a deep breath and fire yourself. That’s right — take yourself out of your job so that you’ll get some distance from it.

And who knows? Maybe you’ll end up re-hiring you.

To stay put or to fade away

Conventional wisdom often tells upstart investors in the stock markets to invest thro mutual funds if they are not sure of their own stock picking talent. The logic – mutual funds engage expert fund managers to do the investment on behalf of investors in return for a fund management fee. The fund managers are specialists that watch every day market movements closely, track the businesses of companies they invest in, market momentum, liquidity situation in the economy etc., on the basis of which they pick up early trends. Yet, seasoned investors have often observed that markets surprise everyone on the upside as well as the downside. No one is spared from its vagaries. The question then crops up in the mind of every investor – if the fund manager who is an expert is also equally vulnerable as I, why would I trust him with my savings and why would I pay him to make mistakes? Had I taken a direct exposure and made money, both the fortune and accompanying thrill is mine. And if I had lost, I am richer by experience (of the bitter lesson) which I would never repeat.

I take a parallel and am thinking about professional investors like Angels, VCs and Private Equity veterans. I am much used to the refrain from these folks over the lack of fundable ideas, extreme valuation expectations of entrepreneurs / managements. Why wouldn’t these moneybags stop bemoaning and start an enterprise of their choice and invest in it? Why expect others to dream up an idea that has all the elements of (what they think as) a good investment in it?

The fact of the matter is, some investors do turn entrepreneurs. But turning an entrepreneur is a different ballgame because founding a business is not as easy as much simpler capital allocation that investors are wont to do. When you are an investor, you need to study an existing business, analyze its history, evaluate its management, compare its market standing with its peers and track its growth momentum. But if you were to found a business, then you have to start from the scratch – dream up an idea, find the right team with the right talent, assess the market potential, do the paperwork for compliances, lay down systems and processes, develop the prototype, have it tested by potential customers, fine tune it before you get it going. Then is the big question of how much to invest in or whom to partner with.

Of both the above choices, the former is relatively easier, only relatively because you are investing in an existing, well founded going concern. In the latter, you spray and pray. But the returns from investing early in a (seemingly) successful startup is huge in comparison with investing in a going concern. You get to buy a slice of a startup business at dirt cheap prices because startup founders need the money badly (not many would like to take seed stage risks) and they can’t haggle on valuations beyond a point. Existing businesses, will have many suitors and so you have to pay the top dollar to win the bidding war and own a stake. This is a critical difference why we still find venture investors amongst us despite the significantly greater risk involved in a seed stage enterprise.

Yet the most important temptation to invest in a startup is because besides the financial fortune, you get a lot of personal satisfaction of being involved in the venture (probably a domain of your choice, in which you have some knowledge) right from the word go, guiding the founders along the right path and learning from them as well. Bright young upstart entrepreneurs brimming with new ideas do not hesitate to tread the unbeaten track, adopt the most unconventional ways to meet an end blissfully unconcerned about the cost of numerous trials involved. They are fired by the endless energy of their dreams, of achieving the feature they imagined, to unleash the power of their idea. They put their most creative, often disruptive imagination to work, and work from effect to cause to deliver solutions that erect very high entry barriers for the also ran. That earth shaking disruption, could drive fears in the minds of existing players that could tempt them to adapt fast and review their own businesses. Those that are able to adapt quickly will survive, others will be in a hurry to buy the startup out, in case if they are willing. The name of the game is survival, at any cost. That’s the startup founders’ biggest dilemma as well – to build it to last or to flip !

Don’t be your own enemy

I’ve read somewhere – “The difference between perseverance and obstinacy is that one comes from a strong will, and the other from a strong won’t”. Indeed, the greatest oak was once a little nut that held its ground.

And then courtesy of Ben Casnocha, I read this Boston Globe piece on persistence. An excerpt –

“I’d bet that there isn’t a single highly successful person who hasn’t depended on grit,” says Angela Duckworth, a psychologist at the University of Pennsylvania who helped pioneer the study of grit. “Nobody is talented enough to not have to work hard, and that’s what grit allows you to do.”

So, that’s it. The race is not always to the swift, but to those who keep on running. Intelligence is clearly secondary if you stack it up against persistence. No quantum of intelligence will help you “get there” unless you’re willing to persevere. Think of the postage stamp; its usefulness consists in the ability to stick to one thing till it gets there. The drops of rain make a hole in the stone not by violence but by falling often.

Like Jonah Lehrer says in that article “Everybody knows that things fall – it took Newton to explain why”.

If we are facing in the right direction, all we have to do is keep on walking. Stalwart investors that dabbled in the stock markets will vouch for it. There could be as many dissuaders that stress upon the perils of stock market investing to deflect every genuine investor. They pound you with instances of past crashes and bust stories, why stock markets are unsafe and why one should keep away. But what if someone is left with not many alternative fields of expertise? What if he finds it the most exciting place to be?

I would just say this. Stick around and be dogged about it! Don’t be your own enemy !

How (Why) to unseat the incumbent vendor

A clear message for the last ten years is that selling is all about relationship. Relationships built and strengthened over time, makes it easier to pursue new business with existing customers. You know how to hit their “hot buttons” than that of a net new customer (especially if their gatekeepers are doing a damn good job). This often accounts for the bulk of new business. Cold-call prospects are likely to be entrenched already, and you have to unseat the incumbent — your competition. In addition, enterprise is hiring more and more gatekeepers to keep up with the recessionary trend. It is increasingly difficult to reach out to the executive level and make inroads.

Then why does broad marketing attempts try to replicate the relationship approach to the prospects where you have no relationship, instead of approaching them in other ways?

Here is a compelling need to unseat the incumbent vendor that’s often not easy.

But there are always customers that don’t have a regular incumbent. So make the channel partners focus on the long tail. Not just the top visible ten percent that are on top of every competitor’s mind. The ones that advertise loudly on every media and so targeted by all. It’s better to lose that ten percent because they will likely get the most competitive of offers that will shrink the enterprise margin wafer thin. Start from the back, Begin with the marginal customer that slinks under the vendor radar. You will likely hit the hot button faster.

Get them to dive deeper with the customer and know their needs. Ensure flow back of customer intelligence from the savviest of channel sales force. Share the findings with the rest of the force and poke their ego by crediting the partner that came up with the nuance. A sense of deficiency (in letting the peer channel partner get up close with the corner office) and underperformance should invigorate the rest into brisk activity.

Shall we call it the immersive approach..? Is that transformational enough…? What do you think…?
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In crisis, spot your default future and tweak it

Steve Zaffron, CEO of the Vanto Group, a global consulting firm and Dave Logan, who teaches at the University of Southern California’s Marshall School of Business, offer a set of simple rules to show how leaders and their companies can prosper, even when the odds are stacked against them in their best selling book The Three Laws of Performance: Rewriting the Future of Your Organization and Your Life.

Recognize that people normally have an unconscious, gut-level idea of where they — and their company — are at, and where they’re likely to go. Zaffron and Logan call this “the default future” and show how it is deeply rooted in people’s assumptions, hopes, fears, and past experiences. The first task of leadership, they argue, is to identify the default future, discuss it, and analyze it, and then go about reimagining — and, in effect, rewriting — the future. The book examines a series of management cases at companies around the world where rewriting the future has led to real business transformation. And the lessons are just as applicable to individuals. it’s extra-critical for the CEO who has to steer the ship, to get people in communication about the future that they see coming at them. This is what they call the “default future,” and it’s constituted by a lot of complexity that all comes together in a certain way. This default future consists of our expectations, our fears, our hopes, and our predictions, all of which are ultimately based on our prior experience.

But most CEOs worry about telling the people about the firm’s default future as they see it. They try to paint a happy picture in a relative sense pointing to the competition that had gone belly up. They try to benchmark their performance against a broader industry index and say, “hey, we’re better off.” But the people know the level of emptiness behind those statements and don’t buy a word of it. So why not say it as it looks?

That calls for intuitive grit. The CEO will have to begin by believing in his ability to face up to the responsibility and keep the ship afloat. He should be quick to capture what others see and then gauge the standard deviation from what he thinks about it. He has to communicate the long term goals he has outlined for the company. Say every morning that our business is fragile, and that it can break very easily. So you’d better look at all the risks and make sure that they’re mitigated as much as possible. You see something you don’t like, tell that to the people and ask them do something else. Dare to be naïve.

Believe in getting into hot water. It keeps you clean.
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Inside the bore zone

For quite some time now, I haven’t had much to post on. There was nothing worth its while to contemplate, to have deep thoughts on. It was just the mundane stuff coming back up, week after week. It’s not the first time I’d hit this morose zone, a hiatus, pretty much a forced pause. There had been times in the past when deals dry up and my creativity sagged. Not a thing that I could do to get over it than to quietly let it pass.

May be it’s got to do with the global gloomy sentiment. The weather isn’t helping much either. We’ve had some showers in Mumbai and it’s all wet all around. The laziness is, like a gift of the monsoon – at least for me. I walk and sleep a lot more and read and write a lot less. Stock Markets – that has lately been my mainstay in the absence of meaningful resource raising deal flow that is otherwise my true calling, have been quite range-bound after a brisk run over the last three months.

I knew I had to do something to get rid of this boredom. Boredom is a serious enough problem, since at least half the sins of mankind are caused by the fear of it. The fun was that I wasn’t even feeling insecure. So, is this listlessness a symptom of security? I had to deal with this internal commotion. The war between being and nothingness is the underlying illness of the post-crisis times. Coming to reckon that, boredom slays more of existence than war. Some take to mad shopping, others gamble and most others drink. But I knew I had to stimulate myself somehow and I’d rather do something else. And that’s going to be the only way to get out of this unsavory morass.

But I’ve noticed something. I am regular to pick up my daughter from her coaching classes now more than ever. Guess punctuality is the virtue of the bored! And there is one other reason. I like to drive down early and get a great parking spot, then sit in my car and count how many people ask me if I’m leaving.

To them, I’d rather ask – Could they teach me how to sit still in one room ?
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Try hiring an entrepreneur

Much as founding teams would like to hire future leaders, they would in fact be looking for true blue entrepreneurs to lead their enterprise into the next phase of growth.  Having been in the founding mode for quite a while, they know how it’s like to be in the trenches and what takes an entrepreneur come of age.  Having been thro all that grind and having survived it, why would any one leave that joy of enjoying one’s own fruits of labor and the freedom that comes with it to move on to manage someone else’s enterprise?

 Actually speaking, there is no reason why one should forsake enterprise liberties to go and work in another firm.  But sometimes it’s a necessity for many a fledgling ventures and other tried-it-but-didn’t-quite-fly types.  Not necessarily that these guys are losers, it may just be that they found the risks too much to bear.  Nothing wrong with it.  In fact, if you have that realization early on and are quick to make amends and retrace your steps, you must be a real warrior in another firm where the risks are shared. 

 I know quite a few mediocre guys making it big in the job scene and quite a few brilliant entrepreneurs that are struggling.  I am seriously in talks with a few such guys for a new venture that I intend to float in the coming weeks.  That’s why the topic.  I don’t need employees, I need founding partners.  Employees come to work to earn a paycheck, whereas entrepreneurs try to prove a point.  They go to any lengths to achieve their goals and it’s such guys that I need to work with me.

 So, how do I headhunt entrepreneurs?  Most recruiting firms I talked to boast of head hunters in their database, but none came forward.  The recruiters cannot keep using the same bait of “better prospects” to an entrepreneur, because he isn’t exactly after a paycheck.  He had figured out something in his head and is on a lookout for a play field where he could exercise his theories and make a living.  Meanwhile I’ll keep searching.

Creative conundrum

I concede.  Having known some, it’s way too difficult to explain why creative individuals are the way they are.  Not that they are weird or something. On occasions when they don’t conform to conventions and follow their hearts, it seems they are kind of warped.  Scratch deeper and we get at some stark rationale – in that quite little quirks and twists go into the making of an individual.  To suppress them all and follow the clock and calendar and creed until the individual is lost in the neutral gray of the host is to be less than true to their inheritance.  Life never compels one to follow another man’s rules.  It’s true that we have the same hunger and same thirsts, but that is for different things in different ways at different seasons. Lay down your own day, follow it to its noon, your own noon or you’ll sit in an outer hall listening to the chimes but never reaching high enough to strike your own.  

Their appetite for novelty is inexhaustible.  For them, life is one long process of trying risk laden new things, getting tired before starting all over again.  The levels of creative energy sets them apart from other mortals.  They’ve long since realized opportunity is often difficult to recognize;  something we usually expect to beckon us with beepers and billboards.  Like the CNBC analyst that cautions investors to wait till markets stabilize for investing in a relatively inexpensive stock, by when the stock is in every one’s radar, the arbitrage vanishes and valuations shoot through the roof.

So if you are a lesser mortal but raring to set your own rules and go,  remember.  Before you dunk in the creative seas,  always use the rule #1 in the old life guard rule book – Seize the opportunity by the beard,  for it is bald behind !!!

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Who will buy my salad shooters now?

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Who will stand in for the American consumer?

 

So we know it’s not so easy to swap the all-gorging American consumer with somebody else. Nobody has that kinda’ appetite!  Tom Friedman in his NYT Op-Ed column puts it beautifully –

 

“Let’s today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: “No more.”

 

We have created a system for growth that depended on our building more and more stores to sell more and more stuff made in more and more factories in China, powered by more and more coal that would cause more and more climate change but earn China more and more dollars to buy more and more U.S. T-bills so America would have more and more money to build more and more stores and sell more and more stuff that would employ more and more Chinese …

 

We can’t do this anymore.“

 

But then enterprise has to produce and serve to consumers.  How will the new bunch be?  Who could guzzle stuff like an American consumer?  To whom will you sell your salad shooters anyway?

 

Funeral’s better than life support

I’ve often wondered why don’t they funnel stimulus funds to Greenfield projects than resuscitating the dying gorillas.  My argument – it’s lot more productive because it saves time (no wounds to heal) and money (no clean-up cost, no claims from the past). It saves jobs as well because trained workers can be re-hired at lower wages because of their huge supply.

But I needed an ally before I could air my views. Today I found one in Tom Friedman.  Excerpts -

“Bailing out the losers is not how we got rich as a country, and it is not how we’ll get out of this crisis…When it comes to helping companies, precious public money should focus on start-ups, not bailouts…If we are going to be spending billions of taxpayer dollars, it can’t only be on office-decorating bankers, over-leveraged home speculators and auto executives who year after year spent more energy resisting changes and lobbying Washington than leading change and beating Toyota…Our motto should be, “Start-ups, not bailouts: nurture the next Google, don’t nurse the old G.M.’s.”

Our country is still bursting with innovators looking for capital. So, let’s make sure all the losers clamoring for help don’t drown out the potential winners who could lift us out of this. Some of our best companies, such as Intel, were started in recessions, when necessity makes innovators even more inventive and risk-takers even more daring.…they will drive innovation in all these areas — and move wind and solar technology down the cost-volume learning curve so they can compete against fossil fuels and become export industries at the “ChinIndia price,” that is the price at which they can scale in China and India.

That is how taxpayer money should be used to stimulate: limited financing, for a limited time, targeted on an industry bristling with new technology start-ups that, with a little push from Uncle Sam, won’t just survive this crisis but help us thrive when it is over. We need, and the world needs, an America that is thriving not just surviving.

Thank you Mr.Friedman. You nailed it – well, almost !

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