Way to Grow

From Startup to Grownup

Growth is undisputably the biggest challenge for entrepreneurs. There are stages, increments, where the skills and techniques you've used in the past just don't apply anymore. Greg Gianforte, CEO of RightNow, offers insights on how to manage growth.  In this article from SandHill.com, Gianforte expands on these key strategies for growth:

1. Invest incrementally - Avoid the "big bang" approach.
2. Reinvent and expand the business - Move on when your market opportunity becomes saturated.
3. Grasp the strategic transformation - Ah, this is the tough one. Your market entry will almost always be tactical.  How do you bridge the gap to being strategic?
4. Be deliberate about innovation - "When a startup only has $1 million per year in revenue, a $100,000 idea represents a significant opportunity. But when the company hits $100 million in revenue, it needs to come up with a $10 million idea to make it worthwhile. This higher threshold tends to kill new initiatives before they've had time to germinate."  Think about it!
5. Find scalability and incubate it - As you grow and prioritize your initiatives, your new ideas need to breed in a more risk-tolerant environment than your mainstream business.

Greg, I hope I've done you justice in this summary.  Readers, to get the whole picture, read the article in full.

Note:  Greg is author of Bootstrapping Your Business.

Gut Check Questions for Strategy

Still catching up from when I was away. This one has been out there for a few weeks, but it's too good not to post!  Rob at Business Pundit recounts a conversation with an unnamed executive from American Express Open, who uses these gut check questions for the "major moments of truth".

What are the guiding principles which are helping inform or drive your recommendation? If we agree on the principles, we'll probably agree ultimately on the specific recommendation; if we disagree on the principles, the recommendation is likely going nowhere.

What are the success metrics? What's our rollout strategy if we hit them?
What's our exit strategy if we don't?

What are the go/no-go points? sort of like an exit strategy question, it's a
critical one to think through in the case of multi-phase projects

What does "disaster" look like in this situation? How would we handle it?

Beware of the Devil's Advocate

This, from Fast Company via Anthony Cerminaro:

The 10 Faces of Innovation

"The devil's advocate may be the biggest innovation killer in America today. What makes this negative persona so dangerous is that it is such a subtle threat. Every day, thousands of great new ideas, concepts, and plans are nipped in the bud by devil's advocates.

Why is this persona so damning? Because a devil's advocate encourages idea wreckers to assume the most negative possible perspective, one that sees only the downside, the problems, the disasters-in-waiting. Once those floodgates open, they can drown a new initiative in negativity."

So what is a body to do? Adopt one or more of the following Innovation Personas and you'll have a chance to put the devil's advocate in his place:

"1. The Anthropologist...
2. The Experimenter...
3. The Cross-Pollinator...
4. The Hurdler...
5. The Collaborator...
6. The Director...
7. The Experience Architect...
8. The Set Designer...
9. The Caregiver...
10. The Storyteller..."

You Heard Me -- Plan!

David Libby can't say it enough -- plan! 

He says:

You've either been dealt some cards or have a complete hand.  Either way, you're not starting from scratch.  The hand is dealt - and growing.  Lay 'em out.  See what you've got.  Then plan.

He also cautions:

Plan optimistically and realistically and don't abandon your vision.

I say, Amen!

From Passion to Profession

The leader on this BusinessWeek Online article says, "Don't turn your homemade raspberry strudel or hand-carved cat figurines into a business before asking yourself these questions." It quotes Steven Rogers of Northwestern's Kellogg School of Management as saying

People are so doggone convinced that the thing they love is going to be loved by other people that they won't let the research tell them the real story.

My thought: I see this in starry-eyed entrepreneurs in many fields, including tech. It's not just the home crafts folks whose passion can blind them to business realities.

Don't Navigate by Looking Through the Rear-View Mirror

Try this from Jeff Cornwall: He talks about a professor who, "...takes his students to a big open parking lot, where an old car sits with all of its windows blackened out with paper except the rear window. He sets up a simple course to follow with orange cones. The trick is this. His students must navigate the orange cones driving forward by looking only through their rearview mirror. The cars careen all over the lot as the students try to master this almost impossible task."

Clearly, looking back doesn't guide your business into the future. It can tell you what did and didn't work. But in order to look forward, you need to:

• "...identify those specific activities that, when taken together, are critical for building sales and growing.
• Link compensation to these performance measures, placing emphasis on quality rather than just quantity.
• Create a list of numbers you would like to see on your desk each day, each week, each month, and each quarter that will help you see where your business is headed.
• Sit down with your bookkeeper or accountant and see what other suggestions they might have. They can add to your list, but not delete.
• ...[do] not accept gaps in information or unnecessary information in reports you receive."

A No-Exit Strategy?

If you're venture funded, your exit options are generally to go IPO or be acquired.  If you're bootstrapping, you may not be thinking in terms of "exit".  But have you considered planning to remain a private company?  BusinessPundit wonders if public companies are at a disadvantage. "Has the cost of compliance and the incessant focus of Wall Street on quarterly earnings made it attractive to go private? Will that become a competitive advantage for some industries?" Hertz is just the latest of big companies to go that route.

How to Buy a Business

BizzBangBuzz author Anthony Cerminaro shares How to Buy a Business in 10 (not so easy) Steps.  He steps you all the way through from assembling a team and choosing the type of business to buy to arranging financing and closing the transation.

Must You Focus?

There seem to be alot of "portfolio" entrepreneurs, people who run two, three, or more businesses simultaneously. The rationale usually is, "I'll try out all my ideas and see which one takes off."  But Brad Feld says you should Pick a domain and go deep. "Hedging your bets by thinking about and playing around with a variety of different ideas is a huge waste of energy - you need all of your focus on the one thing you are going to do."

Via Ken Dyck.

My footnote: The entrepreneurs I know who have reached a high degree of success are the ones that chose to focus.

Mistakes Start-Ups Mistake

Ken Dyck shares with us a list of "17 Mistakes Start-Ups Make", highlighting Mistake 2: Miscalculating the market opportunity in this post. The list is published in the bowels of the Oregon Health and Science University's website and is attributed to John Osher, whose "lasting contribution to the business world just may be a list of screw-ups he jotted on the back of a piece of paper". Most of these screw-ups represent failures to do a thorough, honest SWOT analysis up front, or to do it and then ignore the results. The rest have to do with lack of clarity and focus.