Image by Venn Diagram via Flickr
Here they are:
10. Inadequate Focus
When everything is a blank piece of paper, there is an unlimited set of possibilities. The great dual-edged sword of the start up experience is freedom. The freedom exists to pursue anything or everything. Success, however, is a function of focus. Start ups that don't focus in early and completely upon a target customer/solution/market/etc. will fail. Sure, you can build a technology or a product that is useful to many individuals or companies or industries. But to succeed, you have to pick a specific set of individuals, companies or industries that your technology or product helps and focus intently on them. With an industry focus, for example, the second customer sale is easier than the first, and the third sale easier than the second, etc. If Marriott is a customer, for example, then Hilton or Gaylord knows immediately that a respected competitor has "validated" your product. Another customer from another industry just wouldn't provide Marriott with that same validation.
9. Substandard Product
In the 80's, the statement was "perception is reality". This reflects the power marketing once had to influence prospects about a product. Today, reality is reality thanks to the availability of user reviews of everything. Previously, you could achieve the perception that your offering was superior with a less than stellar product via creative marketing or sales muscle. Some companies grew well with vaporware. Those days are over. Now, the product has to be great. Not kind of great, or great in certain lights, but great in the opinion of knowledgeable users. Oh, that's the other thing, the world is now full of knowledgeable users - who want great products. Not products with great marketing, sales or positioning.
The commitment to create a great product is central to a successful start up's DNA. It permeates all thoughts, actions, plans and attitudes. If it doesn't, the product isn't going to be great. If the product isn't great in today's market, the start up is ill equipped to compete and is unlikely to survive.
8. The Value Proposition isn't Understood or Valued
The solution the start up offers must solve a problem that is acutely felt by whoever has it and the solution the start up offers must be recognized as the appropriate answer. In life science investing, for example, the target market question is in two parts. First, how many people have the condition or disease that this treatment addresses. Second, how many with the condition seek treatment. The market is the subset that desire a solution.
If the target market doesn't understand what it is or what it does or why they might want it, the start up will not make it to its happy place. Yes, something can be a great shampoo, floor wax and dessert topping but what it can do or how it can be used is the seller's perspective. But it will never sell on the basis of being good at any of those things, it will only sell for what it is great at doing from the customer's persepective. The buyer's perspective is not all it can possibly do, but the one or two things it will do for them and do for them better than anything else.
7. Salespeople determine Target Markets
It is unfair to ask salespeople to define target markets. The job of truly understanding the market segmentation and customer profiles is a broad responsibility across a start up. Many start ups task their limited sales force with solving this question on a "trial and error" market segmentation, where they call lots of people and report back on what they hear. The result is unscientific to the point of being completely unreliable. The right people have to be asked the right questions to determine the best prospects with the greatest need and perceived value for the solution. Only when the target profile is developed can salespeople deliver real value.
You need to position salespeople to win by defining the prospect clearly. Salespeople are often talented hunters but, for maximum efficiency, they need the prey to be carefully defined for them. If you say, "Go shoot rabbits", without further definition of rabbits, salespeople will shoot at everything that moves, declare them all to be rabbits, and argue that whatever they hit is proven as a "rabbit". It wastes time and won't secure customers that can be profitably sold and serviced on a scaleable basis.
Even given an infinite amount of time, most salespeople won't hone in on the best target customers. It isn't their skill set. Salespeople are great at determining fit of a solution to a customer's needs. Do them a favor by eliminating as many suspects as possible. Then, they can focus on fit, budget and compelling action. More will be sold as a result.
6. Wrong Timing
Being early to a market is a slower death than being late to a market. Either way, if the timing of the offering is well off of the market opportunity, failure is highly probable. It is easy to get timing wrong. Most Venture Capitalists have stories of great ideas that suffered from nothing more than abysmal timing.
If you have ever surfed, you know that once you see a big wave, you have probably missed it. Timing the great wave is about properly anticipating it within the context of many waves. By the time the success of a Groupon or LivingSocial is widely recognized, the opportunity to ride that wave is long gone.
You can also be too early. Even with a great product and a well defined market, timing is critical. I led the creation of a product called MyRoom.com in 1997 as an online private space for teenagers where they could create their web space, invite friends, have an email address, and enjoy a customized radio station. It was well executed, and way too early. If the company's market timing is way off, the start up won't often live to see its day in the sun.
5. Not Enough Experimentation
You cannot understand too much about anything related to a start up's progression. The rapid assimilation of the truth is a competitive advantage for a start up. All things being equal, in a competition the faster start up to get to the truth wins the race. At the end of the day, everything will be known by pretty much everybody. Before that point, a better understanding of key customer insights is a competitive advantage. A management team that prides itself in being "smarter" about customers without being data driven for its "intelligence" gets beaten by a team with better data -- nine times out of ten.If the product and key processes aren't continually perfected with feedback and testing, the start up doesn't have a chance. If you don't get into a mode of test and refine cycles, you won't arrive at the processes, product, support and understanding necessary for growth. The start up that relies on its own wisdom consistently over the results of dispassionate customer dialogue and testing is screwed or soon will be.
4. Low Urgency
Consistent with the previous point, every start up is in a race against time and insolvency. Show me a start up management team that isn't moving like its hair is on fire and I will show you failure in the making. When the team doesn't keep a fast pace, they fall behind in everything. When they fall behind in everything, there is no amount of money or cleverness that will close the gap between them and their faster moving competitors. There is no functional equivalent to a time machine, time lost is time gone.
There are legitimate reasons and times to move slowly and carefully. And it is difficult to know when patience should outdo urgency. To stay appropriately urgent, start up management teams must assess the rationale for going slowly. If critical data points are imminent, it is usually worth waiting. If the desire is to perfect something prior to launch, it is usually not worth waiting. Your team must accept that the perfect is not the enemy of the good. Many times, good will be good enough because failing to act is failure. There just isn't time for inaction. A management team that tends toward slower response to opportunity and challenge will create cumulative damage to the company's standing.
3. Total Random External Events
Stuff happens and sometimes that stuff is both random and devastating to a start up company. Many start ups fail for reasons beyond their control. Any start up making reasonable head way in the summer of 2008 with a product for the larger financial firms, including Wall Street, Large Banks or Mortgage Companies, knows this well. Sometimes things are "overcome by events" and fail as a result.
A start up can do almost everything right and still fail because of external events. So can large companies for that matter.
2. Poorly raised or managed Capital
This isn't just about the health or receptiveness of the capital markets, the company must either make do on the capital it has OR get more capital. Success requires more capital than failure requires. It isn't necessarily about the underlying growth or lack thereof, but moreover, the management of the capital available to the business. If enough money isn't raised or care is not exercised over what resources are available, then the money needed to survive isn't there. And the game is over.
Picture a growth market where companies are trying to gain marketshare while attempting to re-define a market of five players down to the two "winners". The availability of capital and access to it will have a disproportionate influence on the outcome. Or imagine alternatively, a down market where the stewardship of capital will determine the survivors.
Start ups need a capital strategy for well-being and growth. Many start ups fail due to lack of a sound capital strategy.
1. Unwilling or Unable Management
Start ups most commonly fail because their management isn't willing or able to make them succeed.
Getting start up successfully launched can be hard. Sometimes they can be nearly impossible to make succeed. In practice, it is far more likely that management is unwilling than unable to make a go of something. Many a management team backs off when they realize how long and difficult the road to success is going to be for their company. They will simply say, "This is too much". Which is true for them. It is entirely fair for them to admit.
Is too much for anyone? Maybe. Sometimes it is too much effort and time for little prospect of return. Sometimes, it is just too much for a given management team. Other times, the start up fails because it is beyond the abilities of the assembled team. This is less frequent in my experience. A management team that is willing but lacks ability will renew itself with deletions and additions. By comparison, a management team lacking in determination isn't situated to fix that or even motivated to fix it.
This post was originally published by BusinessInsider.com on September 3rd, 2010. Here is the link
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In my career I have laid off or
fired hundreds of people. It was never a matter of pride by any means; I
lost a lot sleep prior to taking people out of jobs that they didn't deserve to
lose. It was never easy and I didn't enjoy a minute of it.
If I could have ever avoided the job of being the person to let people go, I would have, but it was ultimately my job responsibility. On occasion, I had some satisfaction dealing with people who weren't exerting appropriate effort or behaved badly toward co-workers. It was something that had to be done and unfortunately, for me, I was often the guy tasked to do it.There were plenty of tears, angry words and often, and completely stunned silence. Questions, accusations, allegations and refutations were all commonplace in these discussions. I found that the most deserving of separation employees were frequently the most shocked and upset. The least deserving were more rationale and accepting. Maybe they had better prospects for another job and knew it. But, those run-of-the-mill separations aren't the ones that I really remember. The separations I remember are the ones where people's responses weren't entirely what I expected.
Here are few that stand out:"Not Again?!?"
I let a man go once who responded in a completely exasperated manner. He started with "Not again, I am so sick and tired of being fired. This is the third job in a row." I asked him about his opinions and insights into why this was the case. He had none. He had a good resume and he interviewed very well. He went to work for Microsoft and rumor had it that he was one the first people ever fired from Microsoft. So, I lost track of him at 4 in a row.
"You guys haven't been clear
I had to let go an employee who just didn't do anything well. He was "too heavy for light work, and too light for heavy work". On one hand, all tasks were in a "Goldilocks" fashion not right for his skill set. And on the other hand, there was no amount of instruction adequate to inform him to his satisfaction of his duties. In the 18 months I worked with him, I tried him in 7 different jobs. No matter what, it wasn't the right fit for him, he failed completely at each of them. He attributed it to my failure to explain in excruciating detail all the tasks expected within the position. He was completely indignant at being let go and wanted a shot at an 8th position.
"But my other credit cards didn't have enough room to pay for the wedding"
I had to fire an employee who put her entire wedding on her Corporate American Express. By the looks of the billings and my conversation with the employee, it really sounded like a nice wedding. And paying for things, isn't that what credit cards are for? Her point of view was that we had given her the credit card to use and she had used it. And besides, her other cards were maxed out.
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"I had to smoke the pot in the parking deck, I rode the bus that day"
I had to fire an employee who chose
to smoke pot under a closed circuit camera at client site garage. I
asked, during the firing process, "Why smoke pot at work in front of a
camera?" His answer was that he had taken the bus to work that day
and couldn't smoke in his car on the way to work. " Yes, of course,"
I said, "but the whole camera thing?" He response was that he was in
kind of a hurry.
"I wanted to dress appropriately, so I look like an 18th century widow"In one spate of layoffs, I had to travel to 6 cities to layoff 20% of the staff in each city. By the time I had completed three cities, the employees in cities 4 through 6 were pretty aware of the meaning of my trip. Added to this was that the employees who were to be laid off were scheduled for a "meeting" with me. In Seattle, the employees to be laid off responded with flair by showing up in costume. My favorite was a young lady in dressed completely in a black, multi-layered taffeta dress complete with a veil a la' colonial Mexico. Black long sleeve gloves completed the ensemble. It was really impressive. We chatted about how she had put it together and where the various pieces -- dress, veil, gloves, shoes -- had been found. I told her I hoped she could use it again for Halloween or something. Then, as nicely as I could, I fired her.
It is never easy regardless of supporting circumstance to let someone go. Even when they might really deserve it. But the process of laying someone off or firing them is always memorable for both parties.
This article was originally published on BusinessInsider.com on 8/30/10. Here's the Link.
Image by Daniel Waisberg via Flickr
(This post was originally published on Business Insider int the War Room section)
A great deal has been written about the so-called 1-9-90 Rule and user behavior in Social Media.
The conventional experience is that 1% contribute a lot of content and participate frequently, 9% contribute from time to time and 90% don't contribute or comment.
This is all true at any moment in time. It fails, however, to account for changed user behaviors over time.
As such, the 1-9-90 rule provides to be of little real guidance about how to make money in Social Media. If it tells us anything at all, it is that people should make whatever money they can by simultaneously driving the 1% of heavy duty contributors to create while monetizing the other, mostly passive, 99% by whatever means available -- predominately low cost per impression advertising.
This doesn't work very well for most people running websites. It sub-optimizes revenue in a fundamental way.
The key to making money in Social Media is to monetize the right segment of the audience. First, though, one needs to view the segments by something other than their 1-9-90 participation.
The highest value audience segment has participation that changes over the passage of time.
Here's an alternative view, one that is key to realizing profit from social media. I break the audience into four segments, that don't correlate perfectly with the content contribution break out of 1-9-90. They are Catalogers, Discoverers, Influencers and Lifetime Lurkers.
Catalogers seek an online home for their information and knowledge.
In the view of the 1-9-90 model, they start in the 1 percent of heavy
contributors and migrate over time into 9 percent and maybe into 90
percent. They are the highest value audience, but more on that in a
minute. They are doubly valuable because they build the web site
initially with content contribution AND return to it loyally even after
they have completed the cataloging process. They are also the user with
the most personal sense of ownership, deepest relationship with the web
site and willingness to buy premium services, subscriptions, etc.
Catalogers are commonly mistaken for a formerly valuable audience member
(i.e. they used to contribute and now do not) under 1-9-90 instead of
the most currently valuable member.
Discoverers want knowledge and insight. They arrive in large numbers and leave in large numbers. They are the locust swarm that has been moving from web site to web site since the early days of the Internet and its' wooden CPU's. They may derive the greatest value from the information and are the least inclined to pay for it. They are a tempting audience. But it is folly to pursue them. They don't want to pay, they have never paid and they are not going to start paying now. And they are leaving soon and are unlikely to return, there may be other locusts but not the same ones. It is tough to monetize any audience that perpetually refreshes itself. Restaurants and web sites need their loyal, paying customers. The Discoverers are not inclined to be either loyal or paying ever.
Influencers want to demonstrate knowledge and influence others. They correlate well with the 1% in terms of activity but generate little meaningful content. They derive psychic reward from expounding and demonstrating expertise. Yes, they comment a lot but like the discoverers, they tend to take more from the site than they provide to it. They do provide animation and an organic liveliness to a web site operation but don't much impact the catalogers or discovers who will dismiss them by and large. But one must distinguish between contributing to the web site's knowledge and information and commenting on it. Value for the site owner is derived infinitely more from thoughtful and well crafted contribution than comments.
The Lifetime Lurkers have begun and will end their relationship with a website as lurkers, having never been a Cataloger, Discoverer or Influencer. And, yes, there are a lot of them. And, yes, lower cost impression advertising is probably the best way to monetize this group. But if you follow 1-9-90 Rule, you will lump the high value Catalogers into the Lifetime Lurkers category and never realize your revenue potential. I wouldn't disparage Lifetime Lurkers in any way. They pay the bills after all. But they aren't the key to making money in Social Media regardless of conventional wisdom to the contrary. Though that wisdom is in itself flawed by defining the group to be much larger than it really is.
Many people perform different roles with websites over time based upon subject and individual passion. We are complex beings after all. If you want to succeed at monetizing an audience in Social Media or User Generated Content, viewing the roles people play and the changing nature of those roles is a starting point.
Find your Catalogers and find ways to create more Catalogers; they are the key to making money in Social Media.
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(This post was originally published on BusinessInsider.com. Become a Thought Leader )
Five hundred or five thousand twitter followers will not buy you a cup of coffee in America. Followers at work, by comparison, will propel your career and assist your rise up the corporate ladder.
When top executives look within their company to identify the people they wish to promote or hand additional responsibility, they look for people who others will follow. Executives want people who are already followed within the organization. But leadership qualities alone won’t get you ahead.
There are many kinds of leaders. But the leaders who get promoted are the acknowledged thought leaders within a company -- they're the informal leaders people are already following.
Sure, strong managerial skills and/or superior competence within your scope of responsibility is helpful. As is being a hard worker. But those attributes are ultimately table stakes, as everybody in the game has them. To rise above the fray, you need to demonstrate the type of leadership that generates respect and recognition from upper management. The same type of leadership that creates followers within the organization.
So how do you create followers? How do you become a recognized leader? One key is careful development and measured demonstration of thought leadership.
Here are some ways to develop such leadership, as well as a few tactics for demonstrating the skill.
Become a subject matter expert
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Go beyond competence in your job: develop subject matter expertise of interest to a broad swath of your organization.
Examples would include your own company’s products and their primary uses, the competitor landscape, key operating metrics, or industry trends. Take the time to read and analyze the posted reports of public companies, listen to free podcasts of industry experts, watch posted videos of key executives' speeches, read whatever whitepapers you can get your hands. All the information necessary to transform you into subject matter expert is available to you. The bulk of it is free.
To avoid prompting defensiveness, make sure that your interest is characterized as professional interest in a subject that will make you a better corporate contributor; and second, offer your insights first to anyone who may be threatened by your knowledge.
Demonstrating deeper and more current knowledge is the nature of subject matter expertise
Everybody dislikes a faux expert. Make sure you really know what you are talking about.
Having achieved your expertise, you will be progressively and regularly surprised by the people who seek you out. At the end of the day, there may be others who are tasked to know some of this stuff. But, if someone’s neck is on the line for a decision, they'll find the people who really know. And that will be you.
Increase your relevance
Make sure others know about your expertise. Offer information freely
and widely to anyone you think may benefit from it. They will react,
respond and follow you if the information is valuable to them.
Enable others to trade and leverage the information you have developed with concentrated diligence. Don’t worry about attribution. Either way, consumers of your information and expertise are following your lead and that is far more significant. If the organization comes to rely on your expertise with regularity, well, you have established yourself across departments and among peers.
Recruit your followers
Whenever someone expresses interest or respect for your subject matter expertise, ask them to “opt in” to occasional updates from you. Offer to share your material in email briefs or short presentation briefings. Seek exposure for the material, (and yourself), and always offer to provide updates to everyone you expose to the information. Warning: characterize the updates as a “from time to time” communication as “significant or important developments occur” so no one confuses you with a subscription service.
Find and follow other thought leaders
Other thought leaders in your organization will end up being promoted over time. Which means that they are the most likely to be in a position to help you now or later. Bonus: thought leaders are flat out more interesting than the average knucklehead in your workplace They have material and insights you can leverage in your job. Smart people make you smarter. Thought leaders are also easy to find by asking around. You can also find them near the company's most well thought of initiatives.
You need to find and follow fellow thought leaders so they are in position to vouch for you to top management. Remember, when it comes time to evaluate you for promotion, the people who provide input will be the leaders you know and who know you. You should proactively build this pool.
If other thought leaders respect you, they can multiply and amplify your influence
Volunteer to go wherever and whenever you can while customizing the information to the degree possible to the audience. Example: Brief the salespeople on the weak points of your competitor’s latest offerings in a way that enables them to win deals and you will have a vocal following. Take the same information with a product positioning spin to various departments in marketing and you will have new recruits. Understand that the nature of followers in the modern world is that hierarchies get jumped and circuits close in unpredictable ways.
Picture the salesperson who utilizes your insights on a high level sales call with your CEO. After the sales call, the CEO might reasonably say, “I didn’t know that about our competitor’s latest offering. Where did you get that information?” Cue: Nice comment about you. If it happens once, it is nice. It happens twice, and that’s good. The third time someone quotes you or your information to the CEO, well, you’ve added another follower. An important follower whose success is dependent upon finding and promoting thought leaders. Thought leaders like you.
Don’t waste an important insight by sending it at the wrong time or sacrifice the value of your insight by not spending adequate time packaging your product.
For most people, you will only share information from time to time and you need to make the most of each communication. Do everything you can to enable and encourage sharing of the information. You can even make helpful declarative statements like “I did a ‘deep dive’ …(you can add that it was over the weekend if this works in your environment)… into this applicable subject matter (competitor product/industry review) and noticed three material things we at OUR COMPANY should be aware of. Would you pass this along to anyone who could benefit from it? I am happy to answers any questions about my analysis....” Package your insights and package yourself. This is thought leadership in an email. The desired cycle is that the email is read, valued and forwarded on.
Becoming a thought leader requires hard, thoughtful work
The application of the developed leadership must be conscious and
deliberate. The return is outsized, however, as one gains a credibility
and respect from this type of recognition that is much harder to
develop than from superior execution of one’s job responsibilities.
If you’re willing to do the work to have greater knowledge and you package and present it willingly, you will generate a following worth “tweeting” about.