It’s All About You (and the laws of business)

Summary. Given all the factors used to predict success when starting and growing a business - the personality and talent of the founding solopreneur is the most critical, far more significant than the original business idea. You must know the laws of nature to work in the sciences and the same is true here – what are the universal laws of business demanding accommodation like gravity. Businesses fail to reach their potential not because of the initial idea, but because the founder cannot grow and change to fit the circumstance. The challenge is always bigger than you, it is about how to deploy your talent by emphasizing strengths and mitigating weaknesses.
The laws of nature relevant to understanding business:

• Law of Systems – understanding the uncontrollable and controllable factors effecting the market and then creating a picture (map) of the strategic landscape


• Law of Organizing – methods for aligning and integrating business; structure, control, and processes


• Law of Cycles – the stages of business development and tactics for building systems, process, and infrastructure incrementally

Law of Systems is about processes, inter-relationships, and control. It’s the recognition that the behavior of any part of a system (a collection of processes and sub processes) has some effect on the entire system; and when individual components are performing well, the system as a whole is not necessarily performing equally well. A systems model generally has two parts—variables that can be controlled (Adding Value) and uncontrolled (Resources, Consumption, Environment). That means by understanding the uncontrolled factors influencing suppliers, customers, raw materials, etc., I can design a response in the areas under control (business model, service processes, production processes, etc.) that takes advantage of any gaps between what people want and what is available. A systems perspective in business has many applications but during the early stages, it provides a methodology for analyzing the market and designing strategy.

• Resources: patterns or trends that drive the type and use of raw materials – your fuel


• Adding Value: patterns or trends that drive how you provide value by enhancing raw materials to be worth what you charge – the engine


• Consumption: patterns or trends that drive why customers purchase and how they derive value from what you add – the passengers


• Environment: macro patterns or trends that transcend companies, regions, and continents which influence resources, adding value, and consumption – the network of roads, availability of gas stations, income of the passengers

Law of Organizing represents a method of analyzing and building an aligned and integrated operation, it provides a path for action to sequence which components of the business to build incrementally. The key variables that drive tactics in your operational script:

• Processes: Financial, Customer, Strategy, Production, People
  


• Control: Direct Supervision, Input, Throughput, Output, Mutual Adjustment


• Structure: Apex, Operating Core, Mid-Level, Technology, Support

Law of Cycles are the predictable but not pre-ordained stages of business development. As covered previously, the early stages will occur as the business matures but real success happens much later and without guarantee. Perform well enough and you will progress, do not, and suffer premature death.

I Concept: turning your dream into an initial plan with enough detail to start and is sufficiently right to build upon over time. Creating a comprehensive business plan that serves as a living operational script.

II Startup: Obsession with finding customers to create and stabilize cash flow, spreading or sharing risk throughout the value chain with customers, suppliers, stakeholders, and employees.

III Adjustment: reviewing the initial business plan against reality and updating, building the first level of core processes, hiring the first wave of people, enhancing the current offer and/or creating new products and services to take advantage of uncovered opportunities.

IV Growth: building infrastructure – the next level of core processes – the heart of the house, the professionalization of management, and the second wave of hiring. Growth is at its most extreme and will expose defects in purpose, process, structure, and people.

V Balance: growth is sustainable and real profitability is achieved, executives focus on the future while management focus on the present, 25% of your revenue is from NEW products and services, and the company’s assets and operations are optimized – getting all it can deliver.

The power of this approach is combining the three laws of business into a single model (Business Development Cycle—BDC®) which provides an immediate script to focus energy now and determine what is next. You cannot do everything in the beginning and making the attempt prevents you from focusing scarce time and resources on the most critical. Building a successful business is incremental even when it is an internal startup in a large corporation.

rule of hard corps

Another excerpt from my upcoming book ‘hard corps – the order of entrepreneurship’ and how this Type 1 TRIES to live

I once said that being an entrepreneur was a calling, like perhaps a priest – rabbi – imam. That was not a flip remark; I have great respect the people who answer that call.

Staying with this analogy because of the shared ‘nakedness’ of the roles – your personality, traits, strengths, weaknesses are on public display for all to see. Human nature seems to relish ignoring the 95% good to see the 5% bad: those times when behavior does not match our words. Since perfection is not possible, these high profile roles are performed in a most unfavorable environment of gotcha and the called have the farthest to fall. Integrity is easy to lose and the most difficult personal failing to overcome.

Like a priest or even better a monk, if we are going to self-manage – we need rules to live by. Taking a page from the Order of Saint Benedict and their Benedictine rules, here is my operational version, the rules of hard corps:

1. Embrace objective reality. With so much riding on how we spend our time, what decisions we make, and how we follow through – you must deal from a solid base anchored in reality. The truth is and has always existed separate from the observer and is not relative to the interpretations of you and me, it is not subjet to how we 'feel.' You must seek it out.


2. Understand your talents (and weaknesses). Given the all-encompassing nature of entrepreneurship: your first choice is whether to join the ranks of the self-employed, and the second is what value can you create. You must have the ability and the passion to survive what few can endure.


3. Clarity of purpose (and results). There is a strange dynamic afoot in the universe – people who are clear about what they want create those opportunities. Do not ask me to explain it, I have witnessed it enough to believe there are forces at work I do not understand. If you have accurate information and match that with talent and passion – you will know if this life is for you and over what you will do an all nighter. The nature of this journey is self-absorption and many sleepless nights.


4. Courage to walk your path. Living on purpose is difficult enough in today’s feel good everything is relative culture. But when your path is unique, when it is big, when it requires unfathomable levels of confidence – the sheepeople attack. You make them look (and feel) bad and their role becomes looking for your 5% to use as tools to ridicule and destroy. “How dare you be so sure of yourself!” Also, when the first rule is to embrace truth (objective reality), this involves much discomfort. You not only need courage just walk your path, but the courage to deal with the consequences of your actions. It is the dealmaker or breaker for success.


5. Persist. So many success stories are less about business models or better mousetraps than how the founder, the visionary, the leader stayed the course through all of life’s unsettling events. If it were easy, it would have been achieved already. I have been working on a business idea that has survived three failed startups, a sure contract, an in-the-bag VC funding deal, and a bunch of liars. Now after 8 years – I am months away of realizing my dream.

These are my personal rules, the rule of hard corps. Only you can manage yourself and only through self-management can you succeed in business or in life.

Hard Corps #2

I am in the process of finishing a book on self-management for the startup entrepreneur called ‘hard corps’. The following is a second article I wrote on the subject last year.

Being ‘hard corps’ is about trying to be a Type 1 person and not the bumbler. However, none of us is born to it and if we do not dedicate considerable attention to ‘owning our life’; falling into the Type 3 is inevitable. Then only a catastrophic event seems to move us out of our delusional stupor.

That is the context of hard corps’ second element – “to grant others the same latitude as you demand – we are all in a constant struggle with the human condition.” Much like the life experience required to sing the blues or to understand my very dark business poetry, “Are We Stupid?” it is about the nakedness of entrepreneurship. There is no place to hide, no shield that covers us from the scrutiny of life’s spectators. Our fellow warriors get it and their company brings some solace from the sniping of the sheepeople. The sheepeople don't have the guts for it, do not live it, they have never experienced the working ending end of a double barrel shotgun. If they had they would know no one is coming to the rescue, that you cannot finesse your way out of an impossible situation – this time you will pay the full price for failure.

How much have you lost? How much treasure have you given up to pursue a dream? How many relationships have you blown up in its pursuit? Bumble, Bumble, Bumble. I HAVE BEEN HERE!

I remind myself of this reality every time I see a homeless person standing on the median willing to work for food. Foreclosed with nothing left except a great business plan in need of three hots and a flop – a real virtual company.

Never loose your humanity or your compassion for the turmoil just bubbling below the everyone's surface. Being ‘hard corps’ is not only about being tough in managing yourself, it is also about retaining your humanity while surviving the life when your humanity is all you have left. Now this is tough.

Just keep saying to yourself: “Perhaps this startup is the one.”

Wacko People

The following is a reprint of an article I wrote last year base upon a book by Robert Ringer. I have been in the people business for a long time and there exist many different models for describing human behavior; Myers-Briggs (MBTI), DiSC, and the Harrison InnerView are assessments that I have used in the past. However, I love Ringer’s work because it is easy to follow and practical in its application.

Three Types of People:

Type 1: Personal Gain – direct, straight forward, WIIFM (what is it for me), believe the pie is big enough for everyone, they can win without you losing but that is your responsibility to take care of yourself

Type 2: Bait & Switch – dishonest and not sorry for taking advantage of the deceit, portrays themselves as best buddies, believe that being direct doesn’t lead to success, they can only win if you lose

Type 3: Bumblers – stumble through life and work, don’t really know what they want or how to get there, do not intentionally harm, and are sincerely sorry, as for a worldview about winning and losing – who knows?

Dealing with the Types:

1. They will insist for agreements in writing and do not trust memory, you must assert your claims, they will take what they can but not at your expense except if you allow it by wimping out
2. You must insist on everything in writing and then spend your time enforcing the deal, be especially watchful when they become nice and friendly – something bad is afoot
3. Get it in writing for later use but the key issue here is control, you must control all elements of production essential to success, if you are at their mercy – good luck.

Idiosynchcratic Protoplasm

Success as an entrepreneur requires a Type 1 mindset and behaviors; you need to be ‘hard corps’ about self-management.

It is All About You:

o Life is an Inside Out proposition – it is and always will be about you. If you are not for you, who will be?

o Grant others the same latitude as you demand – we are all in a constant struggle with the human condition

o All relationships are voluntary and based on mutual self-interest – pick well and avoid Type 2’s and 3’s if possible, the worse violation possible are people that waste your time

o Seek positive forces, relationships based on reciprocity and what can we teach each other, not what they can take from you

Life is an Inside Out proposition

You need a SENSE OF SELF THAT IS GREATER THAN YOURSELF AND YET NOT A BY PRODUCT OF SOCIAL REALITY

o Develop a core, a centrality that gives purpose, direction, and boundaries

o Test it in the world but do not make it a function of what others think – remember in the end the dirt will be shoveled in your face – not theirs

o Where is your passion, what would have you jumping out of bed @0400 or working all night

o What are your boundaries – where is the line that no one can cross starting with you, the amount of respect you receive is based upon how you treat yourself

o How will you stay on the path – the law of extremes says that great success and abject failure have the same risk; one feeds hubris and entitlement, the other breeds more failure from all types of dysfunctional behaviors reinforcing your predicament - life becomes a perfect hell because it is by your own hand.

More to come

"Are We Stupid?" or just bad business poetry

Are we stupid? Why not take the path most traveled; get a job, eat dinner at the appointed time, cut the grass on the weekend, and perhaps if good at the chores find a sexual reward once week, a forgettable 10 minute sweat.

Ok, feeling better now having answered my own question - what was I thinking? I would rather have everything bet on the turn of friendly card. I would rather be screaming at some dumbass bureaucrat (how do I know he is a dumbass? He is working there! If he had either brains or stones, he would be on my side of the table screaming at some dumbass).

I would rather have a lobotomy than be norml

I would rather sit here in the dark cold of an Atlantic winter because the power was turned off, than be average.

Got to stop wishing, got to go fishing, down to rock bottom again - thanx for the great line from the Rabbi of Key West.

And he awakes wondering if he was butterfly dreaming of being a man or a man dreaming about being a butterfly.

Sleep well, may coherence visit your dreams of market dominance.

the Invisible Hand

Nothing heats my blood more than the blind indifference I feel from society, government, and large organizations. Although there is an awakening occurring in the country as exemplified by Tom Peter's "Brand You,” Daniel Pink's "Free Agent Nation", and Mary Foley’s “Bodacious Women”, we are the most underappreciated segment of the country, and the world. I do not mean the occasional lip service from the political class - I mean by their actions.

Let me give one example that will serve as the rule - taxes. Have you scratched your head watching the debate on taxes; individual or corporate? If you had an economics class, you know people are supposed to be rationally motivated and act in their self-interest. So in the debate on who should pay and how much, you would expect the conflict to be between the rich and poor and yet that is not the case. The already rich act with indifference to tax policy, tax cuts, etc. Just think of Warren Buffets comments about the low level of federal personal taxes or property taxes in California - how can this be? It is because tax policy in the United States focuses on earnings, not wealth. The poor don't pay much if anything (the lower 50% - under $30k pay only 5% of the total tax) and wealthy do not pay on their assets, not on income derived from sheltered assets such as municipal bonds (which many times is tax free). It is the productive that support the system (the upper 10% - over $150k pay 67%), a tax on adding value! Moreover, if you follow this logic out, taxes have a consequence of adverse impact - the higher the tax, the less of that activity, less of that good produced, etc.

My intention is not to engage in a political dialog - what you believe and who you vote for is your business - my point is it's us - entrepreneurs and business owners who generate a considerable part of the countries GDP, provide the majority of jobs during expansion and job loss during recession. We were the 8.2 percent growth of the first quarter of 2004 and yet have no allies - we pay the bill for their avarice without the return. Why have we been ignored given the obvious significance of our contribution? My belief it is because we are an independent, disparate gaggle that does not join; we really do not want help from Sacramento, Albany, or Washington DC - otherwise we would have real jobs working for somebody else.

It is the same issue with large corporations. Most companies target B2B or B2C in their business plans while the entrepreneur/startup (B2E) is ignored. They think of us as the local mom & pop dry cleaners or sub shop, not people with dreams, aspirations, and the ability to grow into partners or competitors. They understand the numbers, almost 100% of us will go belly-up within 7 years, and ignore the reality we do not give up - we just start repeatedly until it sticks; one good contract or order from them would have made the difference.

Part of me wants to keep the secret - I loved the ability to take our small consulting operation against the big players - McKinsey or Anderson (Accenture) and steal the business. The truth is we are just like entrepreneur and owner. Examine a senior executive of any large and fast growing company and you will find our heart beating in their chests, our intelligence running their CPU’s. We are the heart, soul, and brains behind real growth in any economy. We suffer the brunt of the bear when the economy tanks and loose our fortunes, devastate our credit, and are forced to dodge foreclosure and bankruptcy as a result. There is no one out there with our best interests at heart.

Next time somebody talks about the invisible hand of the market - look in the mirror. It is not invisible – the hand has your face.

We will become visible because this new century is OURS!

Globization of the marketplace not only has companies competing everywhere, the same dynamic is happening to countries. Government is a very blunt instrument and is only effective when a hammer is the right tool, certainly not in circumstances that demand finesse. Globalization means governments really do not control their borders in terms of money and brains. Countries are finding that bad economic policy means flight or scarcity of capital and talent. I witnessed this first hand in Africa where the vicious cycle of bad economic decisions and the inability to entice investment capital (except World Bank loans for ill advised projects that provide little return except to the ruling class and put the country further in debt) leads to tighter currency and immigration controls. You want an example of the logical extension of government with upside down priorities - think Zimbabwe.

The Club of Terror - Part 2

(continuation from Serial Entrepreneur) I recognized these people as my brothers and sisters.” What happened in my thought process to recognize these Ghanaian’s as my spiritual family?

It was the "terror" to quote Joseph Conrad's Heart of Darkness.

Rewind the tape, its 1990 - Accra Ghana. The class was enjoying the sessions but on this third Monday, I sensed restlessness. The unofficial leader of the group, the son of a local king, asked if we could not stop and talk about things important to them. He went on to say this was not commentary on the course - we just had not covered things that kept them awake at night. He then relayed a story of his first startup where he was the principle financier. They had just secured a large deal with a multinational company brokered by the Accra office of the UNDP (my current employer). They set up the deal and negotiated with local suppliers in the immediate area. The contract was signed, money paid and spent, orders placed, and the clock started clicking. Their suppliers were providing pre-assembled materials and the young prince's firm finished the product. An excellent example of his London Business School education. 30 days passed, then 60 and still no partially finished products from their suppliers while they were trying to stave off the multinational and preserve a considerable investment. The story ends with both irony and tragedy; Unilever fired them and when the product was finally received, the supplier was incensed that it was refused and the invoice denied.

This story was followed from a petite woman who had remained silent until now. Women in Africa have a special set of problems because in most countries they cannot own property and in others are considered part of the husbands or fathers property. She was from Senegal and had started a business in her home village. It was a cooperative weaving cloth with her tribal pattern - just like the Scot's and their beloved tartans. She pooled money from her sisters, aunts, and friends, added it to her own in order to purchase old manufacturing equipment and leased space for production. She could not secure any loans because she did not "own" anything including herself. After two years, the business was providing a good living for her employee's and she was actually considered rich in the village. Her bank account was growing, she was respected in the community, and it was all lost in an afternoon. Her husband suffered from the chronic under employment endemic to this part of the world and decided it all belonged to him - legally it did. In a day two years of work was lost and yet here she was sitting in my classroom having left her husband and country behind to pursue her dreams. I cannot even guess what demons she had to face down but a year later she had just started a weaving cooperative making kinte with a micro-loan provided by a local bank (part of our course).

Our future tribal king was now involved in a state-of-the-art chicken processing business. Although the equipment was used and low tech, the business design was not. Both individuals had overcome failure and their private terror from wiped out assets and now were back better than ever. They never lost faith in themselves, never succumbed to their very real fears.

It was then I understood my feelings of family, our connection. I was weeks away from bankruptcy spending the last few dollars on getting to Africa and start this new client relationship which did not pay very well. In fact, the fees were so low that six months earlier I would have been forced to turn it down. Now I was in the middle of nowhere, accessed by half a day trip by Land Rover over unpaved roads, performing my own rope-a-dope 4,000 miles away and trying to keep it together without blatant lying. I remember the fear and my thoughts about foreclosure, no presents at Christmas for my young children, or living in the car. That was replaced with the feeling of an exhilarating narcotic of self-redemption, of being the business Houdini - I understood the root cause of OUR fear; it's being a member of the herd, of being normal, of being average, of living by someone else's leave, of not living and then dying filled with regrets.

How you handle the fear is so important. There is no one to talk to unless they are members of this club; the club of terror. It is like the Harley Davidson bumper sticker..."If I have to explain it, you won't get it.” If you take it home, it will incapacitate your spouse and destroy the relationship. Show it at work and employees will be looking for jobs, the banks will shut done your lines of credit, and customers will only pay after the delivery of products and services.

Welcome to the Club!

Serial Entrepreneur - Part 1

Like some 12 step program, I first must admit, "I'm an addict.” I do not know if it is the adrenaline rush of risking everything or the satisfaction of achieving against significant odds, but I must admit an addiction and then understand its roots. Nothing in my life (I thought) prepared me for the last 18 years. Raised in a gypsy blue-collar family, my father did have a go at his own business for 3 years, but decided he and my mother needed more certainty when it came to paychecks. He had a low threshold for BS and that made for numerous job changes and family moves - but he was not an entrepreneur.

My upbringing was haphazard in terms of where we lived and the schools attended, however my future was certain: college and a job in engineering or science. It was not even discussable, it was assumed, and the only dialog was over which college. This was cemented during my high school years in Florida living through my father's experience in the space program and watching Star Trek; the outcome was ordained. I spent the next 10 years in the sciences; as a marine scientist and my fondest memories are of rolling decks in the North Atlantic with sunrise over the glaciers on Greenland. Yet it was not my true calling, it stirred my brain but not my heart.

Fast-forward 11 years; I am working for the United Nations Economic Development Programmes in West Africa. We are training entrepreneurs (or wanna be's) the skills required for success. After the first two weeks of a three-week program on building processes to improve the odds of success - came my epiphany; my heart was finally engaged. Being an entrepreneur engaged in a startup is tough enough in the developed world like the US or Europe, but in the developing world it is a miracle. These entrepreneurs exist in conditions of no infrastructure (transportation, communication, access to money, etc.) and graft (paying bribes to government officials to do their jobs and adding up to 25% to the cost of doing business). You run a business where to a large degree success is out of your control and yet they were making it work, and sometimes on a grand scale. As they talked from both head and heart, I recognized these were my brothers and sisters. We have more in common with all of the racial, religious, and cultural differences than I did with my own wonderful sisters!

That moment I knew I was called. Entrepreneurship is like the priesthood, social work, teaching - if it is not in your heart - it cannot be explained. 18 years, 6 startups, a life of incredible highs and unfathomable lows - I love it all.