The United Kingdom has voted to leave the EU. (Sorry I used the B word in a previous column but I can’t bring myself to type it again.) As I write this on the afternoon of Friday 24 June I find the future looks more unknown to me than at any time in my adult life. I really don’t know what this will mean.
I have been clear all along that I supported the Remain option. I am disappointed with the result but there are two things I know for certain. First, I repeat what I said in my article Why Startups Should Ignore the EU Debate. Regardless of what happens next we have innovation, passion and the human spirit on our side. A far more powerful set of levers than any Government action or political decision. The main focus for any and every business is to keep building. Stick to your strategy. Grow your market. Develop your teams. It will not be easy. In the immediate aftermath I have heard remain supporters talking about tragedy or disaster. One large company JP Morgan is also talking already about moving staff away from the UK. Another IAG has issued a coded profit warning. This is all wrong. It shows people as bad losers and it misses the point. Everything that happens in future is a choice as well. Only leaving has been decided. Nothing else. A democratic decision has been made. We now need to work to make the best outcome from this result for the whole country. And beyond. Any startup, any SaaS company, any business in fact needs to keep a calm head. Words like turmoil, chaos and confusion will be bandied around. Don’t get sucked into the negative. Even if the doom mongers are right it will not help. So a few things to bear in mind. Expect the unexpected
So many things may change. The mechanics, legal ramifications and logistics of leaving the EU have not been explored. Both campaigns have simplified the issues, ignored major questions and misled the electorate.
Some of the more obvious impacts of this are already starting. David Cameron has signalled his resignation. Jeremy Corbyn’s leadership is under challenge. Nicola Sturgeon talks of another referendum on Scottish independence. Sinn Fein are also calling for a vote on the unification of Ireland. The ripples are also spreading. Debate about leaving will be intensified in other parts of the EU. The UK referendum is already on the agenda for the upcoming election in Spain. Get your head around the possibility of change. In almost any area of Government, politics or economics. New leaders will emerge and some major public figures will fade from view. Different values and ideas will be discussed. Some good, some bad. Expect the unexpected. Its not just about trade
Most of the economic ‘debate’ has been about trade agreements. Note not trade. Trade is driven by businesses. For thousands of years human beings have been finding ways to trade. And overcoming barriers unimaginable today. International trade agreements only affect this at the margins. With the advent of the WTO there are also global limits to this impact.
So reaching trade agreements is not the economic priority in the new world. I suspect this question will fade rather quickly. Some sort of interim arrangement will be made to fudge over the immediate period after the UK leaves the EU. The rest will be left to the sort of trade talks that only geeks like me even know are happening. That does not mean economics are not important. The debate will centre on big areas like welfare, health and education. For businesses there may also be change in other critical areas. Corporate and international tax policies. Public funding for business through bodies such as Scottish Enterprise and Innovate UK. Finance and co-operation in science and research. All may be subject to radical change. Anger, disappointment and the blame game
I have just listened to Alastair Campbell on TV. Looking tired and drawn he mused about the bizarre situation we now find. Donald Trump is the voice of the dispossessed in the US. Boris Johnson may emerge as the spokesman for the disaffected in the UK.
The tone and texture of life in the UK will also be affected by the discontent that runs deep in many parts of the world. Since 2008 so called populist movements and causes have adumbrated this change. Signs range from the Arab Spring. To the election of right wing Governments in Poland and Hungary. And the emergence of left wing parties in Italy, Spain and Greece. Many of those who voted Leave on 23 June did so in a mood of anger. Protest against our established leaders and institutions of Government. Those hopes for change will be disappointed. For example, there will be no change in the management or control of immigration in the next couple of years. We could even see a rush of people trying to get into the UK before things change. The remainers who are grumbling now will soon fall silent. There will be anger and blame. Most of it will come from the same constituencies. The unemployed. The white male working class. Those in areas blighted by industrial decline. Poor pensioners. All the people who feel the country has abandoned them. A battle is lost but the fight goes on
I fear I the above seems negative. That is not my intention. I just want to set the scene. Negative facts, emotions and choices will dominate for a long time to come. Please don’t let this drag you down.
Voting to leave does not mean that the leave campaigners are now running the country. Both campaigns were in any case motley and ill matched groupings. Who agreed on little else other than remaining in or leaving the EU. And the winners are right in one important fundamental. The people of the UK are in charge of their own destiny. This is not changed by leaving the EU. We can all can vote, campaign and work for the vision of the country we want to see. So no matter how passionate you were about remain, you now have the opportunity to shape the UK in your image. Help build a better society. And really stick it to the nasty elements that lurked close to the surface of the leave campaign. For me the best way to respond to the Leave vote is not to wail and moan about a terrible decision. It is to work to build a better future. Put the UK at the forefront of human rights. Stand up for liberty, democracy and the rule of law everywhere. Lead the international effort to resolve crises and civil wars. Help our economy harness new technologies as a force for good. Build a more sustainable future for our young people to inherit. This is a bit of a random collection of thoughts and reactions. In the long road to a better world, a battle has been lost. Prepare yourself for the fight to go on.
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After my previous post I had a great exchange with Brad Feld. To cut a long story short, he pointed out that I had left out a couple of crucial points. His book on Startup Communities stresses:
I can’t argue with either of these things. And taken together they remind me of another important challenge. The young founders and entrepreneurs in Scotland today are our best and brightest. The leaders for the next generation. I suspect the same is true for most startup ecosystems. How do we help them grow to realise their potential over a lifetime? The lifetime of a leader that is. Not just of a business or a technology. I was lucky enough to enjoy a long and somewhat successful career in professional services. Start and up had not then been joined into the same word. Yet in my time (1984-2013) the industry and my firm experienced rapid growth and change. Throughout learning and personal development were at the core. Central to what was expected and valued in the organisation. As a result I became a different a better person. Better at serving clients. More of a leader. Better balanced and more thoughtful. Personal development objectives were part of every appraisal. More senior members of the team were always happy to make time to help with achieving these goals. As I progressed into leadership roles I found out why. The objectives of leaders also embraced growing talented people and teams. This applied at every level. All sorts of behaviour flowed from this culture. Responsibility was given early to allow individuals to learn. But with a supportive mentor to ensure they succeeded. Promotions were denied on occasion. Because hitting the numbers was only part of the story. We also looked at how close each candidate was to realising their potential. It could lead to unexpected moments of genius. I remember a media campaign we launched about a year before I left. At its core were a series of brilliant cartoons. They were produced by a teenager working in the post room in one of our offices. The marketing team found him. Because he had expressed a desire to develop his artistic talents in his annual review. At length I realised that this culture arose from 3 mantras. They apply to leaders and leadership at all levels. Any time, any place, anywhere: 1. The only job of a leader is to grow more leaders
You do this by generating more work for others. So that you create space in the business for additional leaders.And by mentoring, coaching and supporting others to do more challenging work. Helping them achieve their leadership potential.
2. Grow leaders better than you could ever be
Be generous by bringing all your learning to the next generation. They will learn faster and achieve more as a result. Your goal is for your successors capability and talent to go beyond your own. And so take the business to new heights.
3. Look to future value not present gain
Make sure the business you leave behind has more potential than the one you inherited. Act for the long term growth of the business. Not just to maximise the value today. Or the exit value for current stakeholders. This is essential to build a great, sustainable business. It is also the foundation of fair dealing with employees, customers, investors and the wider world.
My ambition is to lead and mentor with these ideas in mind. We all owe it to the people who are taking the risk. The entrepreneurs of today and tomorrow. Those who will grow into the leaders of our communities for years to come. This is the best investment in the future anyone can make. Succeed and you will find it is also the best fun you ever have.
The digital age offers new hope in communities across the world. A recent speech by Paul Graham and a well thought out book by Brad Feld describe some of the ways cities can build on this opportunity. These ideas are a great start. But more innovation is needed. Every community can find its own way to meet its own goals. This should be an ongoing and passion filled debate. This article shares my ideas and questions. What do you think?
Paul Graham gave a talk recently in his home town of Pittsburgh. His theme was how rust belt industrial city with a great heritage could nurture a startup ecosystem to rival Silicon Valley. I live in Glasgow. A city with a comparable past from its days as the second city of the empire. And the shipbuilding capital of the world. So Paul’s analysis got me thinking. The focus was on demographic and cultural factors. This is in contrast to Brad Feld’s excellent book Startup Communities. A book allows for more depth of course. But the approach is different as well. Brad looks into the proactive things various stakeholders can do to make startups happen. These are two smart guys who I admire. I must admit that Paul’s thinking sits a little more comfortably for me. That is a just a personal thing though. Both sets of ideas have merit. I suspect neither covers the whole story. The Scottish startup example
Scotland is the example I know best. We are by definition small, peripheral, cold and Northern. Comparisons to Pittsburgh only go so far. Yet we are experiencing some success. We have two unicorns (Skyscanner and Fanduel). Not bad when the whole country only has 5 million people.
We also have a good number of strong businesses. Led by great entrepreneurs with fantastic teams. Many of these are somewhere between Product/ Market fit and the ability to scale. Supported by a diverse and well organised Angel community. Larger VC investors are also starting to take a growing interest. Proactive Government (at EU, UK and Scottish levels) and Universities are also a feature of our scene. In a way which is not at all like either Paul or Brad’s models. And there are signs of successful startup communities from Trondheim to Nairobi. With an almost infinite range of circumstances and heritage. Startups offer hope for all our futures
But this is not a review of startup Scotland. Or any other ecosystem.
At the same time, we live in a world where economic progress is fragile at best. Many, many millions live in abject poverty. And/ or in war zones and despotic failed states where the situation is desperate. The “better off” working and middle classes in the developed world are disaffected. And disillusioned with their rulers and their lives. Mobile and digital technology are a beacon of hope in this landscape. Not the whole answer but a big part to play. Tech provides a potential outlet for restless, energetic and frustrated youth. Products and solutions that can the world for the better in many ways. And an accessible and available economic route to build or rebuild communities. Maybe even whole countries. Paul identifies some inherent attributes that Pittsburgh enjoys. And I wish them every success in leveraging those factors to build a great startup ecosystem. I attended the celebration dinner for Scotland’s Digital Technology Awards this week. the event shows how this kind of heritage can work. Held in a refurbished Victorian Fruit Market but with cutting edge video and a fun atmosphere. Well done to everyone involved.
But it can’t just be about places like Pittsburgh and Glasgow. Nor is everyone striving to emulate Silicon Valley a realistic or desirable goal. I don’t have answer, only questions. Yet I believe that everyone should be able to grasp the opportunity. Otherwise why are we using mobile to spread across the globe? Communities need the chance to do things their own way. Build their own futures. And make a real difference to their own lives.
Some ideas and questions to get started
I think this should be a running debate. With far smarter people than me contributing and developing ideas for years to come. Let me kick off with some ideas and questions that I have been kicking around. Some of these might even work!
For Scotland, the first priority is to remember what is great here. We have wonderful people and a great social and cultural environment. Our country stretches from historic and vibrant cities. To some of the most beautiful true wilderness in Europe. The legal and financial systems are stable, clean and supportive. And our Universities have global academic standing and nurture a big pool of talent. These are global advantages. Not all are unique but much is world leading. Our success depends on leveraging what we have. Not on dwelling on the things we lack. How do we maximise this opportunity? What works for other, diverse communities around the world? They are endowed with their own talents and qualities. We can learn from leaders like Paul Graham and Brad Feld who are generous enough to share. But we also need to innovate on for success. This should be a passionate and energising debate. I would love to hear what you think.
One of the challenges with metrics is that they tend to represent the business point of view. SaaS is a great industry for measuring everything and anything. Yet the standard set of SaaS numbers looks at the business only from one angle. The interests and priorities of the investors and leaders of the company.
Understanding the performance of the business is vital of course. But the two most important factors that determine SaaS (or any business) performance are your customers and your people. Learning from your people is a subject for another article. This one is about listening to the voice of your customer. Don't drown it out
Customer interaction in SaaS and startups is focused on sales and marketing. Even customer support and customer success are often seen as tools for the SaaS sales process. Part of the onboarding experience. Or a defence against churn.
This is natural. But sales situations are not a good setting for customer voices. Whether online or face to face the balance is tilted toward the company message. Yet your sales and support teams are also the primary touch point with your customers. The benefit you can accrue if you allow your people to engage in depth with customers is incalculable. I loved this recent post on Intercom’s excellent blog on the same general topic. The Value of Salespeople Who Don’t Just Sell. So don’t allow your sales much to drown the voice of your customer. Make it a rule for everyone in your team to spend twice as long listening to customers as they do talking to them. And make sure they capture all those conversations. The fundamentals - Experience and Value
Think about what you want to learn from your customers. When you are validating your business idea this is simple. What pain do they suffer? Will they pay to solve that problem?
Once you have real paying customers and a whole market of potential new customers… It is also simple: Customer Experience and Customer Value. These are the two fundamentals. Did your customer enjoy the experience? Did your team and produce exceed expectations? Were they reactive? Or proactive, providing what the customer needed right when they needed it? The list of questions to probe customer experience is long. They are all worth asking. Value is more concrete. And equally important. What value did your customer derive from the experience? Did this exceed the pain of adopting/ using your SaaS? Whenever you hear the voice of your customer try to relate it to the two fundamentals. Resist the temptation to impose more structure. Avoid the measurement mindset
Too often we equate metrics with measurement. The words just seem like natural companions. But you are not trying to measure your customers. They will measure you (back to customer value) not the other way round.
Plus measurement in early stage SaaS can be dangerous. Freud talked about the narcissism of small numbers. This is the delusion of small numbers. With 100 customers, can you draw genuine conclusions from the 2 customers who churn in a month? Compared to 1 a month before? Your approach to the voice of your customer needs to be qualitative not quantitative. What do they do? What do they say? How do they feel? These are the questions you are trying to answer. You are recording and analysing the voice of your customer. Not measuring against some expectation, benchmark or target. Expand your horizons
Imagine your two critical business metrics were the voice of your customer and the voice of your team. Think about the power and insight of strategy, plans and incentive based on those two numbers. So much more real than MRR or LTV or Churn.
This dream may be impossible to achieve. It is well within your grasp to capture the voice of your customer. Through their actions and conversations. Spend time diving into those voices. Learn the lessons. Allocate resources and make decisions with the voice of your customer front of mind.
I am a big fan of sharing. I worked in an incredible collaborative environment most of my career. And when I see great things happening in startups an open attitude to knowledge is always a part of it. I also know that no-one person has a monopoly on the best ideas. And luckily a whole lot of smart people love to share their best thinking.
One of the themes of this website is sharing the best ideas I find. You can see this in action in my SaaS Pricing section. The focus is SaaS and startups. But from time to time I will wander into other areas. I pick up ideas all the time from blogs and newsletters. I also share ideas generated in discussions I have with great founders and startup teams. For example the SaaS Scotland Group. You can see these in real time by following my twitter feed. One theme at this early stage in 2016 has been guidance on some basic and early stage stuff. As a startup founder or leader you will be asked to cover a bizarre range of skills and disciplines. Technical and sales of course. Strong marketing is obvious. But also finance, HR, procurement, strategy and planning, operations and many more. At the same time you must be an inspiring leader and a great manager. Make tough decisions. Take the right risks. Find and persuade investors. Contribute to the ecosystem. I could go on but it gets scary. No-one has all these skills. So in this post I am sharing the articles and guides I have found to a whole range of basic skills. If you are just starting out on the startup journey you should find some help here. I also read and reread some of these posts. When I was young (a long time ago) I played chess a bit. And I was always struck by the attitude of the Latvian former world champion Mikhail Tal. He told an interviewer once that he always watched the chess lessons for beginners broadcast on Soviet TV. (Proving the USSR was a real fun place.) As far as he was concerned it always helped to be reminded of fundamentals. I think the same applies to business. Things can get complex. But it is easy to forget the basics. Keep your eye on the simple things. And keep doing them right. You will go a long way to succeeding. First Steps
For many entrepreneurs the move from idea to a real business is the hardest step. You meet lots of people in everyday life who have a great idea for a business. They may be unwilling to take the risk. Yet the biggest obstacle is often just not knowing how to start.
Regular readers of this blog or my newsletter will know that I am a huge fan of the Crew blog. The writing is excellent and the content is consistently thought provoking. So I love this collection that forms a complete guide to building an online business. It is great for first steps and goes quite a bit further as well. If you prefer a more dynamic, rock’n’roll approach then this quick and dirty guide is also excellent. As in many walks of life, the best way is often to learn from others. In this blog post the founder of a classic B2B SaaS business tells his story. ToMo is an employee onboarding tool and this is how they got from idea to tangible product fast. A big challenge for many founders is tech skills. It can feel as if only programming geeks know how to create a software company. Or people who have lived on their X-Box for 10 years. This is far from accurate. Many great tech companies have been built by non-tech founders. HelloCompass tells the story of building a tech startup without tech founders. Accelerators have become a popular option for startups worldwide. The original and many would say the best is Y Combinator. This series of lectures put together by Y Combinator founder Sam Altman. He has pulled in many of his friends and Stanford University. You need a bit of time. But How to Start a Startup takes you through the whole accelerator journey with some of the most inspiring speakers you can find. Making the leap
The mechanics and methods are fine but you still need to take the risk. Most businesses fail. Wherever you look. In every country. All types of business. Any strategy or none. The chances are your business will fail. Yet so many people believe there has never been a better time to try. I agree with them. Perhaps one of these articles will help you make the decision…but remember no-one else can choose for you.
Let’s start with Ash Maurya. Ash is one of the gurus of the startup scene. And his book Running Lean is one of the best practical guides you will find. He also supplements the book with regular videos and posts to encourage real action. He gathered some of this philosophy into the Bootstart Manifesto. Nonetheless you will probably fail and this article explains why. SaaScribe by the way is a great regular collection of interviews and articles. With a specific SaaS focus. The team are also involved in SaaS meet ups and conferences in Europe. Full disclosure - I also write for them on occasion. Continuing the SaaS theme. In this article another SaaS guru, Jason Lemkin, explains that it takes 24 months to succeed. The time is not a fixed point. But he is dead right that perseverance is one of the qualities need to build a business. If there is one practical step you can take before jumping, it would be validating your idea. You need to feel confident that here is a viable, paying business for what you are trying to do. This is no guarantee. You still need, talent, execution and a bit of luck. Will anyone pay you money?
This is the first of 3 sections with money in the title. The order is customers, profit and loss, investment. This is deliberate. Tackle the money in this order. Too many founders jump straight to fundraising. Too many seed investors fall for this and give them cash. Bootstrap your way to early customers. And have a clear idea of a viable business model. Then raise funds if you need them. Always in that order.
My first selection is about what not to do. This just such a fundamental point. I see lots of business plans that talk about great markets. Yet have no mention of real customers. Aiming for the sky is awesome. Finding the first users and customers is indispensable. Your market plan must build from the bottom up as well as the top down. You can read the theory of this in detail in Steve Blank’s book Four Steps to the Epiphany. In many ways this is a terrible book. The prose is clunky and jargon laden (pot calling the kettle black I know). The author describes a business far removed from a typical 2 or 3 person startup. Yet the ideas are essential and universal. Who do you sell to first? Friends and family are a start. But you need to get out into the wide world at some point. In B2B this can seem daunting. Try this guide to finding your first leads. The founder of the company also contributed this piece to SaaScribe. How to find your first 20 customers. In the early days you are not trying to make sales. Your first job is to figure out if your product is right for your market. If not you need to change the product. Or choose a different market. Or a bit of both. In this post the Lean Startup team looks at this process. Known in startup speak as product/ market fit. For a simpler guide try this from yet another SaaS guru, Tom Tunguz. Finding the right answers is often about asking the right questions. The 8 in this post are relevant to anyone. At some point you will feel as if you are reaching a good fit. Then it is time for another giant leap. Paying for some marketing. Dropping money into the wide blue ocean to see if anyone bites. This is a bit more technical. But a good guide to spending those first advertising dollars - the first $10k to be precise. Just buying advertising is a crazy strategy in today’s world. You need to drive demand in other ways to. Here Drifft offers a 7 step process covering the whole product launch process. And don’t be afraid of something new. I found this site recently. It offers practical tools for every step of the process. From defining a market and prices to checking out the competition. It is a paid SaaS product with a 30 day free trial called Edison Plan. Would love to know if it works. Can you make money doing this?
First you find a market i.e. some real people prepared to pay real money for your product/ thing/ stuff. Next, will this make a viable business? This can be tough for founders without a financial background. Or even sometimes for startups with good finance knowledge. Building a financial model which reflects your business model is essential. You need to understand how your business will make money. If it makes money at all.
Begin with a plan. You will need accounting soon. But step 1 is to make a plan. Model some numbers and see if there is at least a chance of making money. That is the subject of this post. It also has links to some handy free resources like example spreadsheets. On the other hand you could try building your own. This is nice guide to the basics of making assumptions and assembling them into a financial model. I also think this is an excellent example. Written by top European SaaS investor Christoph Janz. It includes another free model and lots of good ideas about planning. In similar vein check out this post. It is in effect an interview with someone who spent 20 years building this type of model. Peter Reinhardt is a recent discovery of mine. Almost anything he writes is useful and in this post he covers the accounting basics you need to know. It is also worth understanding some accounting concepts. Focus on those that are most relevant to your business model. For SaaS and many others this boils down to many different ways of measuring revenue. If you think cash being paid into your bank account is revenue its time to think again! Profitwell explains what this means for SaaS here. Let me close with a link to the next section. When you start a company your biggest concern is going to be running out of money. Once you start fundraising this mutates into asking how much money do you need. The amount you spend every month is known as the cash burn. If you know this, you can figure out how many months your cash will last. Back to Tom Tunguz for some ideas on figuring out how much cash you should burn. Where can you find the money to build your business?
I cannot say often enough that raising money is not the objective of a startup. Building a great business is. However, chances are you will need outside investment at some point in the journey. So here are three posts to help you on the way.
Back to Y Combinator. They run an excellent blog called the Macro. In this item they have included a podcast covering all the basics of legal and finance. Some of the legal stuff is US specific. But there will be an equivalent in every country. Essential basics to avoid being trapped by more experienced or unscrupulous investors. Philipp Moering has written a good post on the fundraising process from an investor point of view. What do investors focus on? How does the early stage process work? What should you do to get ready? Includes a key message. Get to know investors before you start asking for money. If you live in Scotland there is a proven source of some free(ish) money for your startup. The Scottish Edge awards round 8 has just opened up. Final post is a collection within a collection. Another blogger I follow is Alex Iskold. He has put together this article with 25 of the best posts about fundraising. Some great choices. Some help with other things
There is no complete answer to all the things you need to cover when you are running a business. To round things out a couple of links to places you can find help. Addresses a wide selection of other business and management questions.
You are not alone. These are the top 15 areas where startups most often ask for advice. If you are not asking these questions, maybe you should be! Or maybe you just need a place to go and look for help. Founder Centric is startup focused and has some nice free tools on some key topics. Management Help is much more traditional business. On the other hand it has a more comprehensive collection of useful guides. Conclusion
Nothing is a complete answer. I will keep sharing ideas. And writing blogs or developing tools which share my own experience. You can download a couple of free things on this page. I also share a small selection of the best ideas every week via my newsletter. No matter what you read or what you do, we all make mistakes. If you sign up below, I will share the best posts I know about on founder mistakes in next week’s newsletter.
People are the heart of any business. In a startup there is often little else. A few lines of code and some sketched designs. Doesn’t amount to much. The ideas, the passion, the execution all rest in the people. This means people skills are not an option for a founder or CEO. Without the ability to build relationships, learn from other people and get the best from your team you will fail.
Any startup leader will be practicing these skills every day. It is part oft he dynamic in all their activity. In my experience most of them have a natural talent for this sort of thing. As well as being an integral part of the job, that talent is needed in two key situations. Growing people and hiring people.
This is not going to be a post about the hows of leading people. I wanted to set the scene. And then focus on one key point. The basis of success in any aspect of leading people…. Its about strengths not weaknesses
Most people have a kind of intuitive model for managing others. Every individual is good at some things - strengths. And not so good at others - weaknesses. Human nature then triggers a simple thought process. If we want someone to improve we need to fix those weaknesses. Seems obvious right?
Conscious or not this approach is endemic in all kinds of business. And it undersells your people and your organisation. We all succeed by honing and building the things we are good at. Becoming great at the stuff we know how to do. And excelling at what we love. In a surprising number of cases people become the best in the world at what they do Think about it. You didn’t leave school and focus on the subjects you were no good at. You forgot all that stuff and became the best you could. I always remember a friend of mine from high school. We were in the same class for English but nothing else. I was good at numbers so maths and science were my real strengths. I ignored the language stuff. (This should be obvious to anyone who reads this stuff regularly). But my friend found English was his best subject. He made a career as a journalist and became the editor of a national newspaper. He took his strength and made the best he could of it. Which turned out to be outstanding. Why change this thinking when we leave school? Great companies are built on this principle. Support great people to do what they do best. As a leader your first task is to identify the strengths of your people. When you are hiring you have little time with the candidates. Invest it in figuring out their strengths. Get to know what people can do. Not just technical skills. Are they potential leaders? Great team members? Social catalysts and influencers? Deep thinkers about the world? These are the qualities that will add value to your business. Making strengths count
You can do this every day. Great leaders do it every minute. You can also take a different approach to 4 other situations:
A focus on strengths means a different thought process for weak areas as well. We all have them and beyond a certain stage of life they are tough to eliminate. Instead of obsessing about perfection look for other solutions. Find a way to cover weaknesses by defining roles that allow others to fill in the gaps. Structure projects and teams to offer a good variety of talents. Try to keep things in balance rather than attempt the impossible. When you are hiring look for honesty and self awareness. Bring in people who understand their own strengths and weaknesses. You need to take account of those weaknesses. And place them in jobs that fit their talents. Why would you hire someone for a job they don’t suit anyway? But the purpose of the hiring process is not to catch people out. Try to understand the whole person. You will get great value out of people when you can see their talents and put those to work for your business. The strengths revolution
If you want to see the benefits of this thinking, check out the Genius, Power, Dreams programme run by my former colleague Andy Woodfield.
The difference may appear quite subtle. But the impact is profound. You need everyone to do awesome things and grow with your business. It is the hidden agenda for startup success. And I promise the most rewarding thing you will ever do as a leader.
Business is about people. How do competitors think? What will they do next? How do customers decide? Pressure to succeed and an uncertain world tempt us all to think others are stupid or malicious. Teams and leaders believe decisions are made because of stupidity. Or that the competition is out to get them. Thinking this way leads to bad decisions. And a stressful life. It is almost always wrong. Put yourself in others shoes. And do the right thing for your business. I spotted this recent article by Y Combinator partner Aaron Harris . He raises part of an important mindset that is needed to succeed in business. His article points out that it is naive and dangerous to assume that the competition is stupid. I would go much further. People love to attribute motives and rationale to third parties. Whether it is bosses, colleagues, customer or suppliers. It is one of the biggest mistakes in business. No matter how someone’s behaviour looks, you don’t know why they act in the way they do. Repeat that. You. Don’t. Know. Why. Don't Fall For Conspiracy TheoriesSo many discussions centre around stupidity. Even more often I heard people explaining badness. How and why customers or competitors were acting with deliberate malice. I am a big believer that the best approach to the market is to put yourself in your customer’s shoes. Believing others are stupid or bad fails to achieve that. Identifying malicious or stupid motives works against you in three main ways:
Stress Is The Only OutcomeNumber 3 is important. It arises because this kind of behaviour always ends up focusing on the negative. It is a symptom of paranoia. “Why are they out to get us?” is the basic mentality. It is human nature to fear that others will do us harm. In a group situation jealousy and malice add fuel to this fire. I saw most stress and distress caused by this downward spiral in my time in the corporate world. Teams have a special vulnerability. Another human instinct is to defend the tribe. It is so easy for members of team to become convinced that management are working against them. Failing to reward success. Giving more money to other people. Stress in the workplace is a major problem for society. Negative spirals based on mythical animosity are a major cause. Startup founders and teams are vulnerable to these challenges at least as much as anyone else. Your Fear Is WrongThe flip side is that these motives are almost always wrong. Grand conspiracies and complex schemes don't exist in the real world. Your competition don't think only about damaging you. Even isolated or individual acts of malice tend to be carelessness or misunderstanding. People are not bad. They are different from you. They have different goals and pressures. But true nasty, evil people? I can think of at most two in the last 32 years. And I may be wrong about those. One area where this does extra harm is when working across cultures. Normal behaviours and just common courtesies are different across cultures, countries and continents. Small areas can contain many different cultures. We recognise this in Europe but forget that it is also true in the Middle East, Africa or Asia. Experiencing different cultures is the real joy of working across international borders. Software and startups give us a historic opportunity to enjoy this experience. Don’t spoil it by not taking the time to understand. Next StepsThe summary is simple. Listen to what people say and watch what they do. This is all the information you have. Be honest, smart and professional in your responses. Base your actions and communications on the best information you have. If you are dealing with another culture, do some research and find out what is normal.
Don’t speculate. Don’t assume. People want to be nice and to be liked. They are striving to achieve their own goals. Sometimes these will conflict with yours. That’s business life. Finding a way for everyone to win is much more rewarding than stressing about non existent attacks. Avoid this kind of thinking. Start from the basis that others are just like you. Except maybe smarter and nicer. It will be better for your business, your peace of mind and your health. For the best ideas to help you build and grow your SaaS business, sign up to our newsletter. There is a famous quote from Dwight D Eisenhower in his role as a General. “In preparing for battle I have always found that plans are useless, but planning is indispensable.” I agree with this as do many others. Dave Kellogg, CEO of Host Analytics put it top of his list in this recent selection of quotes. The sentiment sort of chimes with my practical experience. It is one of those wise sayings. But quite hard to pin down why it fits so well with the real world. The Joys Of PlanningStart with planning. I have spent a disturbing part of my life preparing, discussion and reviewing plans. Business plans, actions plans, personal plans, whatever. The process works well for:
Of course planning is also the best possible way to create a plan. But don’t let the disappointment of the end result put you off! Don't Make A Plan For Your StartupSo why are plans useless?
Next StepsFind time for planning. Invest in space and freedom to debate and discuss. Write down the results. Then enjoy a laugh about it when you look back. Don’t try to live by it. Use the process not the plan.
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Feedback informal and improves all business relationships. Process and evaluation can interfere with feedback signals. So it is better to keep them separate. Using informal channels and frequent, two way discussion are key to effectiveness. Feedback is a skill which should be part of your lifelong learning approach. Improving will help you make better decisions and build better business relationships. It so important maybe we should call it feedforward.
Feedback - A Key Business Skill For A Startup
Giving and receiving feedback is one of the most important parts of business. It takes high level communication and learning skills in both directions. Large enterprises often use the word “feedback” to describe a set of internal processes. Staff reviews, Peer feedback. Team evaluation. And so on.
But feedback is a part of every business relationship. A startup is receiving feedback from customers, community and investors every day. Every minute in fact. In these terms, quality feedback makes a huge contribution to making good business decisions. It provides the best evidence you have for the needs, attitudes and goals of customers. Or investors and other stakeholders. The problem is that feedback is often wrapped up with judgement and assessment. You need to separate the process and listening associated with feedback. Keep the management decisions and actions apart or you will pollute both. When you ask for feedback from someone who knows what you will do with it, their bias changes their response. It can work both ways. Over generous and positive feedback is more common than the negative and nasty kind. Both are of little value as input to your future plans. Leaders often say “We need honest feedback to help us make the right decisions”. Even saying this tilts the playing field. Natural human behaviour is to give feedback which influences those decisions. Recognising this kind of behaviour is the thinking behind The Mom Test. Rob Fitzpatrick’s excellent book is all about persuading potential customers to tell you the truth. To share their real views of your product or idea.
Why Feedback Matters
It is worth learning this lesson. The benefits of feedback go well beyond improved decisions:
Small Business Consulting - How Great Feedback Works
Feedback is a core skill for anyone in the commercial world. Both giving and receiving. It can be learned and developed like other important capabilities. After 30 years of receiving, giving and observing feedback, here are my tips:
Next Steps
Startups begin with a feedback process. Customer discovery is the foundation of every success. Finding real world problems and designing solutions which offer real customer benefits. You will know that this is not easy. The techniques are hard. When it is done well the information can be full of contradictions and inconsistency. Getting information from customers and acting on it are two different things.
All feedback is like this. Hard to get the truth but worth it in the end. It is the only way to align your business with customers. And the best approach to developing your team. In a startup your first experience is receiving feedback. You will soon be giving it as well. The cycle never ends. Innovation, response to demand and business improvement are all built on this base. Feedback is integral to building a team, building relationships and growing your customer base. On reflection maybe we should call it feedforward! For more small business consulting tools that will help drive your startup, subscribe to our newsletter below.
Great teams are a feature of the startup scene. Founding groups made up of committed, talented people. On the surface leading this kind of group should be easy. But it does not work that way in the real world. Simple, short term incentives don’t work. Providing the right challenge and setting an overall direction are necessary. Then have the courage to allow everyone to express their own intelligence and ambition. In their own way. The results will be amazing.
Success in a startup depends on the team. New ideas, great product, efficient business model, innovative marketing all count. But is the people who deliver the prize. The best startups have great teams. Full of talent and potential. High motivation coupled with passion and commitment. In theory leadership should be easy in this environment.
Not As Easy As It Looks
The real world is different. A startup is like a group of high performing professionals. The leadership challenge is similar to a surgical team or a big law firm or a global consulting project. Herding cats is the most common metaphor for these types of team. Traditional leadership approaches don't work so well. Natural routes like setting clear goals are not suitable. Aligning incentives and establishing defined roles is not enough.
Here are three reasons why leadership of high performing teams is different:
Ask Don't Tell And Other Startup Leadership Rules
Allow Your Team To Find Their Own Way
To some extent no motivation is needed when you have a team like this. Yet you still want to maximise the potential. The first rule is work. Great professionals needs good work and plenty of it. In my career in professional services, boring tasks were the second biggest problem. Lack of work was the largest by far. Good people hate being idle. Overwork was never an issue. At least in the short term. In the medium and long term persuading people to take breaks was a challenge.
Work also needs to be new and challenging. Even a routine, tedious task which is OK one time. If it is new to the worker it will be tolerated. Doing the same thing over and over is the reverse. No matter how exciting and engaging, the best people lose interest fast. Ask for a repeat might work. By the third or fourth attempt, all motivation disappears. Once a professional has proven his technique and banked the experience, he or she wants to move on. One other simple rule about work. Ask don’t tell. Command and control never works with talented self motivated people. For any task no matter how important or urgent you ask the person to do it. My old firm employed over 150,000 people. Even in an organisation of this size the global leader would ask the lowest intern about the simplest task. For example to make a photocopy or fetch a coffee. it was never a written rule. But everyone understood the basic respect involved.
So far a startup is in a great position to motivate the team. There is never any shortage of work. And the pace of change makes sure that new challenges are not in short supply. Does this complete the incentive picture?
Not quite. The risk is that a group of individual talents will pull in random directions. Brilliant flashes will abound but nothing will connect. How can the energy and intelligence focus on a collective goal? Set a clear simple strategy and allow the team to find their own way of achieving it. Leaders need to allow each individual freedom and responsibility. Communication is the critical skill. Each member of the team needs to understand the same end goal. This is not as straightforward as it sounds. When a group of smart committed people listens to the same message at the same time, they each find a different meaning. Set the scene with the group but then take the time to engage each individual. The leader needs to know how each team member thinks and behaves. Adapt the conversation to find the right focus one by one. If you lead a great startup team you are lucky. Working with great talent is a joy and a privilege. Achieving the impossible with a passionate group is the most fun you can have. Recognise and nurture each individual. Make the whole even better than the sum of the parts. World Class Small Business Consulting A Startup Can Afford |
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AuthorKenny Fraser is the Director of Sunstone Communication and a personal investor in startups. Archives
September 2020
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