Showing posts with label entrepreneurship. Show all posts
Showing posts with label entrepreneurship. Show all posts
Monday, June 1, 2015
Thursday, October 23, 2014
When it comes to your business areyou a sprinter or a marathon runner?
Our family business is going through an exciting period of growth. As its new CEO, I am obviously both grateful and energized. After all, assuming the reigns of a company started by someone else, let alone your father, can present interesting challenges in terms of the way things have always been done and how they may need to be done going forward.
I am not suggesting that these kinds of challenges are, in and of themselves, a bad thing. In fact I firmly believe the old saying that if two people in business are always in agreement, then one is redundant.
While my father has incredible faith in me so that my role as company CEO is not just in title, this does not preclude him from offering his opinion. Nor does it prevent me from respectfully disagreeing with him.
However, and rather than looking at differences of opinion in the context of someone being right and someone being wrong, I try to see it from the other person's point of view. In our case, my father's point of view.
What Type of Runner Are You?
In reading Jessica Bruder's Inc. article The Psychological Price of Entrepreneurship, I began to truly understand what it took for my father to not only start a business, but to build it to the point of passing it to me as a thriving enterprise.
Bruder talks about the fact that building a business isn't easy. However, she indicates that there is a far greater price that entrepreneurs pay beyond that which everyone sees. This latter point goes a long way towards explaining the determined certainty in which my father embraces his ideas and voices his beliefs.
Like the laser focus of a sprinter that zeros in on a short distance of yards, there is little opportunity to look beyond the immediate steps towards crossing an imminent finish line. There is no pacing oneself, or trying a different stride or for that matter contemplating a win. There is just the sound of the gun and a few fleeting seconds between victory and defeat. All you can do, is stay within your lane and run as hard as you can for a very short period.
This same kind of myopic urgency is also needed in the early days of a new business. You can't waste hours contemplating what the mid to long-term future will look like when you are in a survive and build mode. You just work as hard as you can on the opportunities and challenges that are immediately in front of you.
It is high stress, and it is tiring, as entrepreneurs deal with what Bruder calls secret demons, which are the inevitable moments of "near-debilitating anxiety and despair--times when it seemed everything might crumble."
Once A Sprinter, Always A Sprinter?
In his Harvard Business Review paper The Founder's Dilemma, Noah Wasserman wrote "At every step in their venture’s life, entrepreneurs face a choice between making money and controlling their businesses. And each choice comes with a trade-off."
He then goes on to write "New research shows that it’s tough to do both," and that if "you don’t figure out which matters more to you, you could end up being neither rich nor king."
I thought Wasserman's words were very insightful, although it isn't necessarily just currency that an entrepreneur wants. Sometimes what matters most is the security of sticking with something that is known and has brought you to this present point. Or to put it another way, we have always done it like this, so why change?
Similar to losing control to acquire funds from outside investors in an effort to make the business better, changing the way things have been done is also a daunting prospect. But often times change, like the infusion of new capital, is what is needed to take the business to the next level.
This is when a new type of runner is needed.
The Long And Winding Marathoner's Road
We have all heard the term fear of failure. For many entrepreneurs who start a new business this is a reality that comes with the territory.
That said, there is also another reality called the fear of success. From my standpoint, the difference between the two is that one requires the courage to begin, while the other requires the courage to change.
When a business finally gains the traction and becomes consistently successful, the intense and narrow focus of surviving in the here and now must be expanded to envision a broader horizon of new possibilities. In other words, the need to survive is replaced by a need to thrive and grow.
This requires a different mindset. One in which there is the willingness to see the future in terms of miles instead of yards. What I am talking about is seeing the business not as a series of short sprints, but as a long marathon in which decisions are not based upon keeping the lights on but adding more lights.
For a founder this is not an easy concept to embrace. Perhaps this is the reason why, as Wasserman points out, keeping founders on board is a challenge once a new CEO has been appointed. The statistics he provides support this.
Choosing power: Founders motivated by control will make decisions that enable them to lead the business at the expense of increasing its value.Regardless of the size of the enterprise, be it a small family business or a Fortune 500 company, all have or will one day have to make the transition from the sprinter's mindset of the founder, to the marathoners expanded view of the future.
The question for both founders and new CEOs alike is simply this . . . how will you facilitate this necessary change?
From my standpoint it starts with recognizing who is the sprinter and who is the marathon runner, and understanding and respecting both for what they bring to the table. From there you will inevitably figure out how to best run the race going forward.
Written by
Julie Lyons-Wolfe
Thursday, July 24, 2014
The Golden Age of Innovation
Despite stereotypes of entrepreneurs as fresh-faced youngsters, new research has found that older workers are more likely to innovate than their under-35 counterparts.
Peach-fuzzed entrepreneurs
like Mark Zuckerberg, 19 when he founded Facebook, and Larry Page and
Sergey Brin, both 23 when they developed Google, have created a
collective image of the successful innovator as youthful, brash, and
brilliant. In turn, we’ve been taught that with middle age come
calcified habits, outdated skills, and an aversion to risk. Sounds bad,
right? Hey, it gets even worse when you consider that, by 2030, the
average age will rise from 37 to 39 in the United States, from 40 to 45
in the European Union, and from 45 to 49 in Japan. The implication is
that such figures, plus the post–baby boomer decline in birthrates,
could leave swaths of the world with a deficit in creative potential.
The question then becomes whether these places can continue to compete,
grow, and create wealth with an aging pool of prospective entrepreneurs
and workers. According to several new studies, the surprising answer is
yes.
It
turns out that many of the most common stereotypes about aging are dead
wrong. Take the cliché of the youthful entrepreneur. As it turns out,
the average founder of a high-tech startup isn’t a whiz-kid graduate,
but a mature 40-year-old engineer or business type with a spouse and
kids who simply got tired of working for others, says Duke University
scholar Vivek Wadhwa, who studied 549 successful technology ventures.
What’s more, older entrepreneurs have higher success rates when they
start companies. That’s because they have accumulated expertise in their
technological fields, have deep knowledge of their customers’ needs,
and have years of developing a network of supporters (often including
financial backers). “Older entrepreneurs are just able to build
companies that are more advanced in their technology and more
sophisticated in the way they deal with customers,” Wadhwa says.
And the age at which entrepreneurs are more innovative and willing to take risks seems to be going up. According to data from the Kauffman Foundation, the highest rate of entrepreneurship in America has shifted to the 55–64 age group, with people over 55 almost twice as likely to found successful companies than those between 20 and 34. And while the entrepreneurship rate has gone up since 1996 in most other age brackets as well, it has actually declined among Americans under 35. That’s good news for one very simple reason: baby boomers are now in their prime, startup-founding years, which will unleash what Kauffman researcher Dane Stangler expects to be an entrepreneurship boom. Since new companies create the vast majority of jobs, the positive impact on a post-recession economy could be great.
Part of the reason that companies started by older workers don’t get much recognition is because they don’t generally produce hot Web apps or other easily understood products. Instead, they tend to involve more complex technologies like biotech, energy, or IT hardware. They also tend to sell products and services to other businesses, which consumers rarely see but which do most of the heavy lifting in powering innovation and economic growth. In fact, America’s fastest-growing tech startup, according to Forbes Magazine’s Fast Tech 500, is First Solar, founded by a 68-year-old serial inventor in 1984. The founders of No. 2 on the Forbes list, Riverbed Technology, were 51 and 33 when they started their networking company. Even the Internet is no longer just the province of young adults. Zynga, the company behind Farmville and other infectiously popular games, will likely pass a billion dollars in revenue next year. Its founder and CEO, Mark Pincus, is a stereotype-defying 44. In sectors such as biotech and energy, Wadhwa estimates the average entrepreneur to be even older.
So if entrepreneurs don’t necessarily fade out with age, what about regular workers? One of Germany’s largest companies had a researcher examine its system for continuous improvement, expecting the findings to back up its policy of pushing workers into early retirement. The numbers, however, showed that older workers not only had great ideas for making procedures and processes more efficient, but their innovations also produced significantly higher returns for the company than those of workers in younger age groups. Birgit Verwonk, a Dresden University of Applied Sciences economist and author of the study, says the findings were so surprising for the company (which wasn’t named in the study) that it is now phasing out its early retirement program.
Given these sorts of results, why is the notion that older people are less productive or innovative so entrenched? Part of it is because there are deep stereotypes and cultural narratives at play. In a series of landmark studies on creativity in the arts and sciences, David Galenson, a University of Chicago economist, identified two types of creativity. One was based on radical new concepts, at which young innovators excel (think Picasso or Einstein, who were both in their 20s when they revolutionized their fields), and the other built on probing experimentation that coalesces later in life (think Cézanne or Darwin). The second type of innovation is more hesitant, probing and often a work in progress, which Galenson argues leads to some of the conventional wisdom regarding older genius. That misconception has some ugly side effects, according to Wadhwa. It becomes the reason why some venture capitalists often don’t return calls from 40-plus entrepreneurs. “The VC people boast that they’re financing all the whiz kids,” says Wadhwa. But given the rates of entrepreneurial success for that group, “they should really be embarrassed.”
The way companies tend to be organized is also to blame. Companies often put new hires fresh out of college on their most innovative projects, while making older workers do routine jobs with existing systems, says Verwonk. Also, too few companies spend enough on continuous training to keep their employees’ expertise up to date. But workers themselves are at fault as well. Many older workers coast into premature obsolescence instead of keeping their skills current. In the European Union, for example, only 30 percent of employees over 55 participate in any kind of job-related training, compared to 50 percent of their younger colleagues.
One thing is clear: a change in the prevailing mindset about older entrepreneurs and workers won’t happen by itself. Mixed-age teams, such as the ones automaker BMW is using, are one possible approach and have the added benefit of minimizing the loss of knowledge that occurs when older workers retire. Siemens, the Munich-based technology conglomerate, has instituted a “cross-mentoring” system under which older employees show younger ones the ropes while getting an update on the latest skills from these new hires. These shifts are a start, but a lot still has to be done, says Verwonk. Demographic and economic pressures will soon force workers, businesses, and entire economies to rethink certain stereotypes; in a post-recession world, assuming that someone can be phased out due to age will be a luxury no one can afford.
And the age at which entrepreneurs are more innovative and willing to take risks seems to be going up. According to data from the Kauffman Foundation, the highest rate of entrepreneurship in America has shifted to the 55–64 age group, with people over 55 almost twice as likely to found successful companies than those between 20 and 34. And while the entrepreneurship rate has gone up since 1996 in most other age brackets as well, it has actually declined among Americans under 35. That’s good news for one very simple reason: baby boomers are now in their prime, startup-founding years, which will unleash what Kauffman researcher Dane Stangler expects to be an entrepreneurship boom. Since new companies create the vast majority of jobs, the positive impact on a post-recession economy could be great.
Part of the reason that companies started by older workers don’t get much recognition is because they don’t generally produce hot Web apps or other easily understood products. Instead, they tend to involve more complex technologies like biotech, energy, or IT hardware. They also tend to sell products and services to other businesses, which consumers rarely see but which do most of the heavy lifting in powering innovation and economic growth. In fact, America’s fastest-growing tech startup, according to Forbes Magazine’s Fast Tech 500, is First Solar, founded by a 68-year-old serial inventor in 1984. The founders of No. 2 on the Forbes list, Riverbed Technology, were 51 and 33 when they started their networking company. Even the Internet is no longer just the province of young adults. Zynga, the company behind Farmville and other infectiously popular games, will likely pass a billion dollars in revenue next year. Its founder and CEO, Mark Pincus, is a stereotype-defying 44. In sectors such as biotech and energy, Wadhwa estimates the average entrepreneur to be even older.
So if entrepreneurs don’t necessarily fade out with age, what about regular workers? One of Germany’s largest companies had a researcher examine its system for continuous improvement, expecting the findings to back up its policy of pushing workers into early retirement. The numbers, however, showed that older workers not only had great ideas for making procedures and processes more efficient, but their innovations also produced significantly higher returns for the company than those of workers in younger age groups. Birgit Verwonk, a Dresden University of Applied Sciences economist and author of the study, says the findings were so surprising for the company (which wasn’t named in the study) that it is now phasing out its early retirement program.
Given these sorts of results, why is the notion that older people are less productive or innovative so entrenched? Part of it is because there are deep stereotypes and cultural narratives at play. In a series of landmark studies on creativity in the arts and sciences, David Galenson, a University of Chicago economist, identified two types of creativity. One was based on radical new concepts, at which young innovators excel (think Picasso or Einstein, who were both in their 20s when they revolutionized their fields), and the other built on probing experimentation that coalesces later in life (think Cézanne or Darwin). The second type of innovation is more hesitant, probing and often a work in progress, which Galenson argues leads to some of the conventional wisdom regarding older genius. That misconception has some ugly side effects, according to Wadhwa. It becomes the reason why some venture capitalists often don’t return calls from 40-plus entrepreneurs. “The VC people boast that they’re financing all the whiz kids,” says Wadhwa. But given the rates of entrepreneurial success for that group, “they should really be embarrassed.”
The way companies tend to be organized is also to blame. Companies often put new hires fresh out of college on their most innovative projects, while making older workers do routine jobs with existing systems, says Verwonk. Also, too few companies spend enough on continuous training to keep their employees’ expertise up to date. But workers themselves are at fault as well. Many older workers coast into premature obsolescence instead of keeping their skills current. In the European Union, for example, only 30 percent of employees over 55 participate in any kind of job-related training, compared to 50 percent of their younger colleagues.
One thing is clear: a change in the prevailing mindset about older entrepreneurs and workers won’t happen by itself. Mixed-age teams, such as the ones automaker BMW is using, are one possible approach and have the added benefit of minimizing the loss of knowledge that occurs when older workers retire. Siemens, the Munich-based technology conglomerate, has instituted a “cross-mentoring” system under which older employees show younger ones the ropes while getting an update on the latest skills from these new hires. These shifts are a start, but a lot still has to be done, says Verwonk. Demographic and economic pressures will soon force workers, businesses, and entire economies to rethink certain stereotypes; in a post-recession world, assuming that someone can be phased out due to age will be a luxury no one can afford.
Saturday, December 21, 2013
Why Every Entrepreneur Should Have a Mentor
Teran is referring to the days before his company's vital pivot point, when he and his team had dedicated their lives to creating a site they loved with features they themselves would want.
"Toplist, before being an app, was a website where people shuffled around cool products curated by their own interests," says Teran. "We worked hard to develop this cool site with great features that showed amazing products. After we launched the site, though, we noticed people didn't use all the great features we had built for them. They weren't engaging with the amazing content we had curated for them. Worst of all, they weren't coming back to use our service."
At that point, his team set out to raise capital for what they had built, hoping to secure enough money for marketing, hires and anything else it might take to help the concept catch on. But, with low user numbers, the Internet odds were stacked against them and time was running out. No one fronted the cash.
"We were just about to let everything go and end the project when we landed a meeting with the CEO of a micro-credit company that had just gone public in Mexico to see if he wanted to be involved as an angel investor in our company," says Teran.
It was the only lead they had, and soon, he would become the first investor. But not in the company's current state. First, there were essential pivots to be made, honest realizations to be had and hard-earned advice to be taken. The Toplist team needed an outside perspective and some guidance to find their way.
"On that day, he made us realize two things," says Teran. "One, the product we had been working so hard on did not work for the users; we thought it would, but it didn't. Two, not everything was a complete failure: We had learned a lot about how to build products that people could be engaged with, we learned about working together as a team. We had learned from our mistakes actually."
What was supposed to be a pitch meeting turned out to be a crucial pivot point for Toplist — one that wouldn't have happened without the right guidance and advice. Teran's team took the feedback seriously, made the necessary changes and their luck started to change. The company's new and influential mentor had saved just saved them from near failure.
"Before we left his office, he said that if we changed our project into something more attractive he would definitely invest," says Teran. "Sometimes you need someone else to honestly point out what is wrong. We were amazed by his good will.
He could have just said, 'No,' and we would have gone on with our failure and him with his success. But he took our side.
He could have just said, 'No,' and we would have gone on with our failure and him with his success. But he took our side."
"Good mentors will be hard to track down, and their time is extremely limited," says Brett Hagler, cofounder of Hucksley, a marketplace for discovering one-of-a-kind brands. "Reach out creatively and always try to take the 'backdoor' approach by getting introduced through a mutual contact. Certain platforms such as LinkedIn allow you to have direct access to your targeted mentors. Always be creative on your specific ask and make it as relevant and direct as possible."
Wednesday, December 18, 2013
The Golden Age of Innovation
Despite stereotypes of entrepreneurs as fresh-faced youngsters, new research has found that older workers are more likely to innovate than their under-35 counterparts.
Peach-fuzzed entrepreneurs
like Mark Zuckerberg, 19 when he founded Facebook, and Larry Page and
Sergey Brin, both 23 when they developed Google, have created a
collective image of the successful innovator as youthful, brash, and
brilliant. In turn, we’ve been taught that with middle age come
calcified habits, outdated skills, and an aversion to risk. Sounds bad,
right? Hey, it gets even worse when you consider that, by 2030, the
average age will rise from 37 to 39 in the United States, from 40 to 45
in the European Union, and from 45 to 49 in Japan. The implication is
that such figures, plus the post–baby boomer decline in birthrates,
could leave swaths of the world with a deficit in creative potential.
The question then becomes whether these places can continue to compete,
grow, and create wealth with an aging pool of prospective entrepreneurs
and workers. According to several new studies, the surprising answer is
yes.
It
turns out that many of the most common stereotypes about aging are dead
wrong. Take the cliché of the youthful entrepreneur. As it turns out,
the average founder of a high-tech startup isn’t a whiz-kid graduate,
but a mature 40-year-old engineer or business type with a spouse and
kids who simply got tired of working for others, says Duke University
scholar Vivek Wadhwa, who studied 549 successful technology ventures.
What’s more, older entrepreneurs have higher success rates when they
start companies. That’s because they have accumulated expertise in their
technological fields, have deep knowledge of their customers’ needs,
and have years of developing a network of supporters (often including
financial backers). “Older entrepreneurs are just able to build
companies that are more advanced in their technology and more
sophisticated in the way they deal with customers,” Wadhwa says.
And the age at which entrepreneurs are more innovative and willing to take risks seems to be going up. According to data from the Kauffman Foundation, the highest rate of entrepreneurship in America has shifted to the 55–64 age group, with people over 55 almost twice as likely to found successful companies than those between 20 and 34. And while the entrepreneurship rate has gone up since 1996 in most other age brackets as well, it has actually declined among Americans under 35. That’s good news for one very simple reason: baby boomers are now in their prime, startup-founding years, which will unleash what Kauffman researcher Dane Stangler expects to be an entrepreneurship boom. Since new companies create the vast majority of jobs, the positive impact on a post-recession economy could be great.
Part of the reason that companies started by older workers don’t get much recognition is because they don’t generally produce hot Web apps or other easily understood products. Instead, they tend to involve more complex technologies like biotech, energy, or IT hardware. They also tend to sell products and services to other businesses, which consumers rarely see but which do most of the heavy lifting in powering innovation and economic growth. In fact, America’s fastest-growing tech startup, according to Forbes Magazine’s Fast Tech 500, is First Solar, founded by a 68-year-old serial inventor in 1984. The founders of No. 2 on the Forbes list, Riverbed Technology, were 51 and 33 when they started their networking company. Even the Internet is no longer just the province of young adults. Zynga, the company behind Farmville and other infectiously popular games, will likely pass a billion dollars in revenue next year. Its founder and CEO, Mark Pincus, is a stereotype-defying 44. In sectors such as biotech and energy, Wadhwa estimates the average entrepreneur to be even older.
So if entrepreneurs don’t necessarily fade out with age, what about regular workers? One of Germany’s largest companies had a researcher examine its system for continuous improvement, expecting the findings to back up its policy of pushing workers into early retirement. The numbers, however, showed that older workers not only had great ideas for making procedures and processes more efficient, but their innovations also produced significantly higher returns for the company than those of workers in younger age groups. Birgit Verwonk, a Dresden University of Applied Sciences economist and author of the study, says the findings were so surprising for the company (which wasn’t named in the study) that it is now phasing out its early retirement program.
Given these sorts of results, why is the notion that older people are less productive or innovative so entrenched? Part of it is because there are deep stereotypes and cultural narratives at play. In a series of landmark studies on creativity in the arts and sciences, David Galenson, a University of Chicago economist, identified two types of creativity. One was based on radical new concepts, at which young innovators excel (think Picasso or Einstein, who were both in their 20s when they revolutionized their fields), and the other built on probing experimentation that coalesces later in life (think Cézanne or Darwin). The second type of innovation is more hesitant, probing and often a work in progress, which Galenson argues leads to some of the conventional wisdom regarding older genius. That misconception has some ugly side effects, according to Wadhwa. It becomes the reason why some venture capitalists often don’t return calls from 40-plus entrepreneurs. “The VC people boast that they’re financing all the whiz kids,” says Wadhwa. But given the rates of entrepreneurial success for that group, “they should really be embarrassed.”
The way companies tend to be organized is also to blame. Companies often put new hires fresh out of college on their most innovative projects, while making older workers do routine jobs with existing systems, says Verwonk. Also, too few companies spend enough on continuous training to keep their employees’ expertise up to date. But workers themselves are at fault as well. Many older workers coast into premature obsolescence instead of keeping their skills current. In the European Union, for example, only 30 percent of employees over 55 participate in any kind of job-related training, compared to 50 percent of their younger colleagues.
One thing is clear: a change in the prevailing mindset about older entrepreneurs and workers won’t happen by itself. Mixed-age teams, such as the ones automaker BMW is using, are one possible approach and have the added benefit of minimizing the loss of knowledge that occurs when older workers retire. Siemens, the Munich-based technology conglomerate, has instituted a “cross-mentoring” system under which older employees show younger ones the ropes while getting an update on the latest skills from these new hires. These shifts are a start, but a lot still has to be done, says Verwonk. Demographic and economic pressures will soon force workers, businesses, and entire economies to rethink certain stereotypes; in a post-recession world, assuming that someone can be phased out due to age will be a luxury no one can afford.
And the age at which entrepreneurs are more innovative and willing to take risks seems to be going up. According to data from the Kauffman Foundation, the highest rate of entrepreneurship in America has shifted to the 55–64 age group, with people over 55 almost twice as likely to found successful companies than those between 20 and 34. And while the entrepreneurship rate has gone up since 1996 in most other age brackets as well, it has actually declined among Americans under 35. That’s good news for one very simple reason: baby boomers are now in their prime, startup-founding years, which will unleash what Kauffman researcher Dane Stangler expects to be an entrepreneurship boom. Since new companies create the vast majority of jobs, the positive impact on a post-recession economy could be great.
Part of the reason that companies started by older workers don’t get much recognition is because they don’t generally produce hot Web apps or other easily understood products. Instead, they tend to involve more complex technologies like biotech, energy, or IT hardware. They also tend to sell products and services to other businesses, which consumers rarely see but which do most of the heavy lifting in powering innovation and economic growth. In fact, America’s fastest-growing tech startup, according to Forbes Magazine’s Fast Tech 500, is First Solar, founded by a 68-year-old serial inventor in 1984. The founders of No. 2 on the Forbes list, Riverbed Technology, were 51 and 33 when they started their networking company. Even the Internet is no longer just the province of young adults. Zynga, the company behind Farmville and other infectiously popular games, will likely pass a billion dollars in revenue next year. Its founder and CEO, Mark Pincus, is a stereotype-defying 44. In sectors such as biotech and energy, Wadhwa estimates the average entrepreneur to be even older.
So if entrepreneurs don’t necessarily fade out with age, what about regular workers? One of Germany’s largest companies had a researcher examine its system for continuous improvement, expecting the findings to back up its policy of pushing workers into early retirement. The numbers, however, showed that older workers not only had great ideas for making procedures and processes more efficient, but their innovations also produced significantly higher returns for the company than those of workers in younger age groups. Birgit Verwonk, a Dresden University of Applied Sciences economist and author of the study, says the findings were so surprising for the company (which wasn’t named in the study) that it is now phasing out its early retirement program.
Given these sorts of results, why is the notion that older people are less productive or innovative so entrenched? Part of it is because there are deep stereotypes and cultural narratives at play. In a series of landmark studies on creativity in the arts and sciences, David Galenson, a University of Chicago economist, identified two types of creativity. One was based on radical new concepts, at which young innovators excel (think Picasso or Einstein, who were both in their 20s when they revolutionized their fields), and the other built on probing experimentation that coalesces later in life (think Cézanne or Darwin). The second type of innovation is more hesitant, probing and often a work in progress, which Galenson argues leads to some of the conventional wisdom regarding older genius. That misconception has some ugly side effects, according to Wadhwa. It becomes the reason why some venture capitalists often don’t return calls from 40-plus entrepreneurs. “The VC people boast that they’re financing all the whiz kids,” says Wadhwa. But given the rates of entrepreneurial success for that group, “they should really be embarrassed.”
The way companies tend to be organized is also to blame. Companies often put new hires fresh out of college on their most innovative projects, while making older workers do routine jobs with existing systems, says Verwonk. Also, too few companies spend enough on continuous training to keep their employees’ expertise up to date. But workers themselves are at fault as well. Many older workers coast into premature obsolescence instead of keeping their skills current. In the European Union, for example, only 30 percent of employees over 55 participate in any kind of job-related training, compared to 50 percent of their younger colleagues.
One thing is clear: a change in the prevailing mindset about older entrepreneurs and workers won’t happen by itself. Mixed-age teams, such as the ones automaker BMW is using, are one possible approach and have the added benefit of minimizing the loss of knowledge that occurs when older workers retire. Siemens, the Munich-based technology conglomerate, has instituted a “cross-mentoring” system under which older employees show younger ones the ropes while getting an update on the latest skills from these new hires. These shifts are a start, but a lot still has to be done, says Verwonk. Demographic and economic pressures will soon force workers, businesses, and entire economies to rethink certain stereotypes; in a post-recession world, assuming that someone can be phased out due to age will be a luxury no one can afford.
Wednesday, September 25, 2013
Are You Staying on Your Side of the Line?
Satisfaction vs. stress.
One of the great freedoms of being an entrepreneur is having the opportunity to focus on your particular talents and wisdom -- and, not coincidentally, this is also how you contribute the most value to your business.
For me, this means coaching workshops, speaking to new groups of people, and developing products based on what I've learned. I find these activities tremendously satisfying and rewarding, whereas execution and implementation are frustrating and stressful for me. Those things are on the other side of the line, so I don't go there anymore.
Where's "the line"?
The first challenge for a lot of entrepreneurs is finding that line. They have no criteria for deciding what they should and shouldn't get involved in. They keep reaching back into things they've given away, and that makes it okay for the team to keep engaging them in their work.
Maybe you feel tempted to help them out, or you don't trust them to produce the result you want. So you keep stepping over the line onto their side, which burns up time you could be spending producing results and interferes with your team's growth.
The solution, of course, is to stay on your side of the line. But in order to do that, you'll need to feel confident about what's happening over on the other side. So here's how to achieve that confident capability:
1. Figure out where the line is. Where do you draw the line? The most workable, enjoyable boundary is around your Unique Ability -- your individual combination of talent, skill, and potential for growth. When you're operating in your Unique Ability, you achieve things with a joy and ease that others simply marvel at.
Even better, no two people's Unique Ability is the same, which means that someone out there -- maybe someone already on your team -- will be elated to take on the tasks that you're incompetent at and hate doing. Give them the opportunity to use and develop their talent, and you also eliminate the number-one cause of "messes" in a business: avoidance of obligations you dislike or aren't really committed to. (An accountant is one of the first hires many entrepreneurs in my workshops make; a personal assistant is a close second.)
2. Communicate your thinking. Be really clear about the result you want. This isn't a "drive-by delegation," but an opportunity to fully explain the purpose of this task and what it will look like when it's done -- and done well.
I have project managers for all my projects, and I meet with them at the start of every new job to share my vision, my intentions, and the criteria I'll be measuring the project's success by. Then, I listen to make sure they get it. When I feel confident that they do, I step back and let them assemble the plan, people, and resources to get it done.
How much communication do you need or want during the project? That's good to establish at the outset too. For some projects, I want to see work in progress to make sure it fits with what I had in mind. Yet, if we've done something similar before, I'm happy to let my team run with it, and we can make refinements when they come up with a first draft.
You can help if it means contributing part of your Unique Ability. But if you feel your team should be able to do the job by themselves, communicate that too.
3. Show them how, then get out of the way. My goal is to help my clients develop a fully Self-Managing Company. To achieve this, you need a team you trust -- people who are exceptionally good at what they do and can respond creatively and decisively to any situation. Your team members can only become those people if you give them the permission and authority to deal with things, and if you treat mistakes as opportunities to learn and refine the process.
At a certain point, for your team members to grow, you simply have to not be there. This, incidentally, also gives you back time to be productive on your side of the line and to enjoy a balanced, rewarding personal life.
A win for both sides.
It takes time to figure out where the line is, how to stay on your side of it, and how to communicate this idea to the people you work with. When you do, though, you gain an enormous sense of satisfaction and relief -- knowing you have the freedom to use your Unique Ability in your business to invent and capture new opportunities and that your team will follow through to maximize the value of what you're creating.
As you expand your ability to create the positive changes you want to see, you grow, your team members grow, your business grows, and your clientele grows. It's a win for everyone.
Monday, May 27, 2013
The Golden Age of Innovation
Despite stereotypes of entrepreneurs as fresh-faced youngsters, new research has found that older workers are more likely to innovate than their under-35 counterparts.
Peach-fuzzed entrepreneurs
like Mark Zuckerberg, 19 when he founded Facebook, and Larry Page and
Sergey Brin, both 23 when they developed Google, have created a
collective image of the successful innovator as youthful, brash, and
brilliant. In turn, we’ve been taught that with middle age come
calcified habits, outdated skills, and an aversion to risk. Sounds bad,
right? Hey, it gets even worse when you consider that, by 2030, the
average age will rise from 37 to 39 in the United States, from 40 to 45
in the European Union, and from 45 to 49 in Japan. The implication is
that such figures, plus the post–baby boomer decline in birthrates,
could leave swaths of the world with a deficit in creative potential.
The question then becomes whether these places can continue to compete,
grow, and create wealth with an aging pool of prospective entrepreneurs
and workers. According to several new studies, the surprising answer is
yes.
It
turns out that many of the most common stereotypes about aging are dead
wrong. Take the cliché of the youthful entrepreneur. As it turns out,
the average founder of a high-tech startup isn’t a whiz-kid graduate,
but a mature 40-year-old engineer or business type with a spouse and
kids who simply got tired of working for others, says Duke University
scholar Vivek Wadhwa, who studied 549 successful technology ventures.
What’s more, older entrepreneurs have higher success rates when they
start companies. That’s because they have accumulated expertise in their
technological fields, have deep knowledge of their customers’ needs,
and have years of developing a network of supporters (often including
financial backers). “Older entrepreneurs are just able to build
companies that are more advanced in their technology and more
sophisticated in the way they deal with customers,” Wadhwa says.
And the age at which entrepreneurs are more innovative and willing to take risks seems to be going up. According to data from the Kauffman Foundation, the highest rate of entrepreneurship in America has shifted to the 55–64 age group, with people over 55 almost twice as likely to found successful companies than those between 20 and 34. And while the entrepreneurship rate has gone up since 1996 in most other age brackets as well, it has actually declined among Americans under 35. That’s good news for one very simple reason: baby boomers are now in their prime, startup-founding years, which will unleash what Kauffman researcher Dane Stangler expects to be an entrepreneurship boom. Since new companies create the vast majority of jobs, the positive impact on a post-recession economy could be great.
Part of the reason that companies started by older workers don’t get much recognition is because they don’t generally produce hot Web apps or other easily understood products. Instead, they tend to involve more complex technologies like biotech, energy, or IT hardware. They also tend to sell products and services to other businesses, which consumers rarely see but which do most of the heavy lifting in powering innovation and economic growth. In fact, America’s fastest-growing tech startup, according to Forbes Magazine’s Fast Tech 500, is First Solar, founded by a 68-year-old serial inventor in 1984. The founders of No. 2 on the Forbes list, Riverbed Technology, were 51 and 33 when they started their networking company. Even the Internet is no longer just the province of young adults. Zynga, the company behind Farmville and other infectiously popular games, will likely pass a billion dollars in revenue next year. Its founder and CEO, Mark Pincus, is a stereotype-defying 44. In sectors such as biotech and energy, Wadhwa estimates the average entrepreneur to be even older.
So if entrepreneurs don’t necessarily fade out with age, what about regular workers? One of Germany’s largest companies had a researcher examine its system for continuous improvement, expecting the findings to back up its policy of pushing workers into early retirement. The numbers, however, showed that older workers not only had great ideas for making procedures and processes more efficient, but their innovations also produced significantly higher returns for the company than those of workers in younger age groups. Birgit Verwonk, a Dresden University of Applied Sciences economist and author of the study, says the findings were so surprising for the company (which wasn’t named in the study) that it is now phasing out its early retirement program.
Given these sorts of results, why is the notion that older people are less productive or innovative so entrenched? Part of it is because there are deep stereotypes and cultural narratives at play. In a series of landmark studies on creativity in the arts and sciences, David Galenson, a University of Chicago economist, identified two types of creativity. One was based on radical new concepts, at which young innovators excel (think Picasso or Einstein, who were both in their 20s when they revolutionized their fields), and the other built on probing experimentation that coalesces later in life (think Cézanne or Darwin). The second type of innovation is more hesitant, probing and often a work in progress, which Galenson argues leads to some of the conventional wisdom regarding older genius. That misconception has some ugly side effects, according to Wadhwa. It becomes the reason why some venture capitalists often don’t return calls from 40-plus entrepreneurs. “The VC people boast that they’re financing all the whiz kids,” says Wadhwa. But given the rates of entrepreneurial success for that group, “they should really be embarrassed.”
The way companies tend to be organized is also to blame. Companies often put new hires fresh out of college on their most innovative projects, while making older workers do routine jobs with existing systems, says Verwonk. Also, too few companies spend enough on continuous training to keep their employees’ expertise up to date. But workers themselves are at fault as well. Many older workers coast into premature obsolescence instead of keeping their skills current. In the European Union, for example, only 30 percent of employees over 55 participate in any kind of job-related training, compared to 50 percent of their younger colleagues.
One thing is clear: a change in the prevailing mindset about older entrepreneurs and workers won’t happen by itself. Mixed-age teams, such as the ones automaker BMW is using, are one possible approach and have the added benefit of minimizing the loss of knowledge that occurs when older workers retire. Siemens, the Munich-based technology conglomerate, has instituted a “cross-mentoring” system under which older employees show younger ones the ropes while getting an update on the latest skills from these new hires. These shifts are a start, but a lot still has to be done, says Verwonk. Demographic and economic pressures will soon force workers, businesses, and entire economies to rethink certain stereotypes; in a post-recession world, assuming that someone can be phased out due to age will be a luxury no one can afford.
And the age at which entrepreneurs are more innovative and willing to take risks seems to be going up. According to data from the Kauffman Foundation, the highest rate of entrepreneurship in America has shifted to the 55–64 age group, with people over 55 almost twice as likely to found successful companies than those between 20 and 34. And while the entrepreneurship rate has gone up since 1996 in most other age brackets as well, it has actually declined among Americans under 35. That’s good news for one very simple reason: baby boomers are now in their prime, startup-founding years, which will unleash what Kauffman researcher Dane Stangler expects to be an entrepreneurship boom. Since new companies create the vast majority of jobs, the positive impact on a post-recession economy could be great.
Part of the reason that companies started by older workers don’t get much recognition is because they don’t generally produce hot Web apps or other easily understood products. Instead, they tend to involve more complex technologies like biotech, energy, or IT hardware. They also tend to sell products and services to other businesses, which consumers rarely see but which do most of the heavy lifting in powering innovation and economic growth. In fact, America’s fastest-growing tech startup, according to Forbes Magazine’s Fast Tech 500, is First Solar, founded by a 68-year-old serial inventor in 1984. The founders of No. 2 on the Forbes list, Riverbed Technology, were 51 and 33 when they started their networking company. Even the Internet is no longer just the province of young adults. Zynga, the company behind Farmville and other infectiously popular games, will likely pass a billion dollars in revenue next year. Its founder and CEO, Mark Pincus, is a stereotype-defying 44. In sectors such as biotech and energy, Wadhwa estimates the average entrepreneur to be even older.
So if entrepreneurs don’t necessarily fade out with age, what about regular workers? One of Germany’s largest companies had a researcher examine its system for continuous improvement, expecting the findings to back up its policy of pushing workers into early retirement. The numbers, however, showed that older workers not only had great ideas for making procedures and processes more efficient, but their innovations also produced significantly higher returns for the company than those of workers in younger age groups. Birgit Verwonk, a Dresden University of Applied Sciences economist and author of the study, says the findings were so surprising for the company (which wasn’t named in the study) that it is now phasing out its early retirement program.
Given these sorts of results, why is the notion that older people are less productive or innovative so entrenched? Part of it is because there are deep stereotypes and cultural narratives at play. In a series of landmark studies on creativity in the arts and sciences, David Galenson, a University of Chicago economist, identified two types of creativity. One was based on radical new concepts, at which young innovators excel (think Picasso or Einstein, who were both in their 20s when they revolutionized their fields), and the other built on probing experimentation that coalesces later in life (think Cézanne or Darwin). The second type of innovation is more hesitant, probing and often a work in progress, which Galenson argues leads to some of the conventional wisdom regarding older genius. That misconception has some ugly side effects, according to Wadhwa. It becomes the reason why some venture capitalists often don’t return calls from 40-plus entrepreneurs. “The VC people boast that they’re financing all the whiz kids,” says Wadhwa. But given the rates of entrepreneurial success for that group, “they should really be embarrassed.”
The way companies tend to be organized is also to blame. Companies often put new hires fresh out of college on their most innovative projects, while making older workers do routine jobs with existing systems, says Verwonk. Also, too few companies spend enough on continuous training to keep their employees’ expertise up to date. But workers themselves are at fault as well. Many older workers coast into premature obsolescence instead of keeping their skills current. In the European Union, for example, only 30 percent of employees over 55 participate in any kind of job-related training, compared to 50 percent of their younger colleagues.
One thing is clear: a change in the prevailing mindset about older entrepreneurs and workers won’t happen by itself. Mixed-age teams, such as the ones automaker BMW is using, are one possible approach and have the added benefit of minimizing the loss of knowledge that occurs when older workers retire. Siemens, the Munich-based technology conglomerate, has instituted a “cross-mentoring” system under which older employees show younger ones the ropes while getting an update on the latest skills from these new hires. These shifts are a start, but a lot still has to be done, says Verwonk. Demographic and economic pressures will soon force workers, businesses, and entire economies to rethink certain stereotypes; in a post-recession world, assuming that someone can be phased out due to age will be a luxury no one can afford.
Saturday, May 25, 2013
The New Dynamics of Competition
by Michael D. Ryall
Photography: Courtesy of Pace Gallery
Artwork:Tara Donovan, Untitled (Mylar), 2011, Mylar and hot glue, Tara Donovan: Drawings (Pins), Pace Gallery, New York
The problem, Drucker argues, is that knowledge-driven innovations are “almost never based on one factor but on the convergence of several different kinds of knowledge.” The initial breakthrough generates a spate of activity, but meaningful progress occurs only after all the pieces are in place.
I cannot attest to the scientific merit of Drucker’s claim, but I consider it to be a remarkably accurate description of the field of strategy. In its early days strategy was a loose affair. Content originated either from commonsense approaches such as SWOT analysis or from frameworks like the Boston Consulting Group’s growth-share matrix. In 1979, however, Michael Porter’s five forces model changed the field forever. It masterfully synthesized the practical implications of economic research on industrial organizations from the 1960s and 1970s. Knowledge-based innovation put strategy on the map as a field of study, virtually overnight. Competitive Strategy, Porter’s practitioner-oriented book, became an enormous success.
Porter’s ideas generated immediate excitement. They prompted interest from researchers in other fields and the establishment of the Strategic Management Society and the peer-reviewed Strategic Management Journal. A flurry of papers made informally reasoned claims about the causes of persistent performance differences across firms. Theories such as the resource-based view, dynamic capabilities, and transaction-cost economics appeared, and an avalanche of empirical work quickly followed. Another seminal concept, though not as popular with practitioners as Porter’s proved to be, came in 1996, when Harvard Business School’s Adam Brandenburger and Harborne Stuart Jr. proposed “value-based business strategy.” That work has bred an extensive body of literature on strategy by mathematical economists.
From that backdrop, a general model of competitive strategy, which I call the value capture model (VCM), has emerged. It uniquely applies the mathematical concept of cooperative game theory to research on business strategy. (“Cooperative” is a misnomer, as the math focuses on competitive dynamics.) As such, the VCM has an explanatory, predictive potential that no other theory of competitive strategy, including Porter’s, can claim. The model is a work in progress, but scholars are starting to use it to explain the dynamics of competition and to identify practical implications for strategic decision making. At the VCM’s core is this axiom: “The value that any party can capture from engaging in transactions with a given set of parties is bounded by the value each of them can add to parties outside the set.”
In this article I will explain the axiom and its implications for how we need to think about strategy.
Redefining Competition: From Five Forces to One
In most industries, a firm, its suppliers, and its customers all have choices about how and with whom they create value. To produce more value, they may change how they engage in transactions with existing suppliers and customers or may switch to other suppliers and customers. Those agents, in turn, have similar alternatives in how they transact with the original firm and with their own suppliers and customers.
That reality suggests a formal definition of competitiveness that applies equally to all the firms, suppliers, and customers in an industry: a tension between the value generated from transactions that a firm undertakes with a given set of agents and the forgone value it could have generated from transactions with other agents. That definition enables you to assign formal identities to the agents involved; to place them in a mathematical game-theory model; and, with given measures of competitive tension, to examine the payoffs from their investments in resources and capabilities. You can also bring big data—from enormous databases that track consumer behavior and spending, stock prices, company accounts, and so on—to bear on this work. No other current theory of strategy offers the ability to model the effect of strategic decisions so precisely or to use data to test hypotheses about what kinds of management processes or investments improve a given firm’s ability to capture value in its industry.
Wednesday, May 1, 2013
5 Incredible Entrepreneurs and What We Can Learn From Them
Entrepreneurship is growing at a breakneck pace. And with our technological revolution, businesses are scaling and impacting the world more than ever before. For the United States to remain competitive, innovation and entrepreneurship must remain center stage. After all, entrepreneurship has been the primary engine of job creation in our economy over the last several decades – from 1980 to 2005, new companies (less than 5 years old) were responsible for nearly all net job growth in America.
But
it is not only jobs and wealth which entrepreneurs create. Oftentimes,
business creators bring forth solutions that solve society’s most
difficult problems, provide inspiration and brighten our future. To
celebrate entrepreneurship and its contributions, here is a list of five
truly incredible entrepreneurs and lessons we can learn from them:
- Bill Drayton, Ashoka
Lesson Learned: Incorporate empathy into your business
Widely considered the “father of social enterprise,” Bill
Drayton has extended the idea of entrepreneurship into the spheres of
education, health, environment and human rights. He regards empathy as
the most powerful factor in forming an organization. The ability to see,
understand and feel from the perspective of others, he says, is
absolutely key in the process of creating a business that will be
helpful and desirable.
Empathy played a role in Drayton’s founding of Ashoka, a
global enterprise that identifies and invests in social entrepreneurs
across the globe. Ashoka currently operates in over 70 countries and
supports the work of over 2,000 social entrepreneurs making important
contributions.
- Oleg Firer, Unified Payments
Lesson Learned: Start young
As the founder of the number one fastest growing business
on the Inc. 500 list in 2012, Oleg Firer’s career is a testament to the
power of starting young as an entrepreneur. Firer started his first
business at 17 and worked hard through successes and failures for the
next twelve years, when he founded credit card processing company
Unified Payments in 2007.
By 2012, Unified Payments was processing $10 billion worth
of transactions for 100,000 merchants a year – with a mind-boggling
three-year growth rate of 23,646.3 percent.
Firer undoubtedly achieved his success in large part due to the hard lessons learned from being in business at such a young age.
- Halle Tecco, Rock Health
Lesson Learned: Pick a specific niche
It seems that accelerators, incubators and other
startup-boosting programs are popping up everywhere. So when Halle Tecco
graduated from Harvard Business
School in 2011 and set out to create an accelerator program, she picked
a specific niche to tackle: healthcare technology.
Today, Tecco’s accelerator — known as Rock Health – has provided dozens of health tech startups with millions in collective funding.
Today, Tecco’s accelerator — known as Rock Health – has provided dozens of health tech startups with millions in collective funding.
Rock Health tripled its revenue last year and has
solidified itself as the first accelerator exclusively focused on health
startups.
Tecco’s success proves the importance of picking a specific
niche and sticking to it. In the words of marketing genius Seth Godin:
don’t be a generalist that is pretty good at lots of things, rather be a
specialist that is great at one thing.
- Aaron and Karine Hirschhorn, DogVacay
Lesson Learned: Use personal pain points to inspire your business idea
When husband and wife Aaron and Karine Hirschhorn couldn’t
find the right overnight kennel for their dogs, they decided to take
matters into their own hands and created a marketplace that pairs
traveling pet owners with local pet-sitters. Since being founded last
year, LA-based DogVacay has raised over $6 million in venture capital
and is increasing revenue 60 percent monthly.
The online service, dubbed “the Airbnb for pets,” has
already booked 50,000 nights for pets and has paid over $1 million to
pet-sitters signed up with the site.
The Hirschhorns identified a simple pain point in their own lives and created a business that solved the problem. Entrepreneurs should remember that great businesses are often born from observations of and attempts to solve personal pain points.
- Jake Nickell, Threadless
Lesson Learned: Build a community around your business
Jake Nickell founded Threadless over a decade ago on the
premise that a community of individuals would contribute and determine
the T-shirt designs his company would print and sell.
More than two million artists have submitted their designs
to Threadless and collectively vote on which designs will go to print.
The company, which is rumored to be at $30 million or more in annual
revenue, sells millions of shirts each year and gives previously unknown
artists a spotlight.
Nickell says his goal is to “give the creative minds of the
world more opportunities to make and sell great art.” His constant
focus on community building and collaboration has been at the heart of
Threadless’ success.
Friday, March 29, 2013
8 Common Bad Habits That Ruin Client Relationships
By Vivian Giang
When you’re running a small business—especially in the early stages—it’s easy to simply focus on how to stay afloat. The problem is, that mindset will keep your company mediocre at best and fighting for survival at worst.
In the first months of launching their real estate company Those Callaways, Joseph and JoAnn Callaway learned just how much real growth starts with client relationships. In that situation, they decided to forfeit a deal because it was the best choice for their client. Since then, their business brings in around $100 million in sales annually and reached $1 billion worth of resale in the first 10 years of business.
In their book Clients First: The Two Word Miracle, the Callaways discuss where most business owners go wrong when developing relationships—and how to fix the problems. Most employers are guilty of these bad habits without even being aware of it, and these habits can not only ruin relationships, but they can negatively affect business too.
1. Being too sure of yourself.
The Callaways say that when you have a healthy perspective of who you are, it will help you stand apart from your competitors, but when you’re too focused on recognition, you may veer off “onto a destructive path.”
“No client likes working with someone who has a patronizing attitude or constantly sings his own praises,” Joseph says. “Your job is not to be the most important person in the room or to put others down. Believe me, when you take care of your clients first and foremost, they will take care of you through their loyalty and appreciation.”
Instead, Joseph advises that you should always focus on your client. Don’t try to find a common interest just so you can bring the conversation back to yourself.
2. Thinking it’s just a job.
The only way you can honestly put a client first—time after time—is if you actually really do care about your job and what it means to society. If you have to, try to make a connection between what you do and how that affects the bigger picture.
“Whether you are a CEO or installing brake pads, you can learn to love what you do in that you feel pride in your work and strive to be better,” Joseph says. “Having any other attitude will only make you miserable and drive clients away.”
To fix a negative pattern of thinking, the Callaways say you should think of specific things you can do to ensure you’re always growing professionally. For example, look into seminars related to your field and continually network so you can meet and learn from people in your industry.
3. Telling “white lies,” which includes exaggerating.
If you’ve ever told your client you’re sick just so you can have a few more days to work on a project, then you’re guilty of not being entirely honest with someone who is paying you to be honest.
“When you cultivate a reputation for rock-solid honesty—for laying out all your cards even when it doesn’t benefit you, for telling the whole truth, for never holding back or sugarcoating—you’ll gain customer loyalty that money can’t buy,” Joseph says. “Clients will trust, respect and refer you, and your own life will become easier."
4. Being too professional.
Do you see your clients as business opportunities and sources of income, or do you see them as actual human beings with likes, preferences, quirks and stories? If you want to truly put your clients first, you need to think of them as more than sources of income. You should treat clients—and potential clients—as if they’re different from any other.
5. Thinking you’re always right.
The Callaways say that it’s easy to think you’re always right, especially if you’re the expert and the most qualified to make decisions. Although this may be true, it doesn’t mean that other opinions don’t matter.
“No matter what industry you’re in, you need to turn your viewpoint around and make a sincere effort to see yourself and your business as your client does,” Joseph says.
You can always ask the client what they think about your business, especially if the deal fell apart and they no longer conduct business with you. If you’re willing to accept this feedback and change your business model based on it, you can stop yourself from making the same mistake with the next client.
6. Being stingy with time and money.
Yes, your time is valuable, but the first sign that you’re trying to wrap up with a client quickly so you can get to the next one will probably be the last time you get that client’s business.
“I remember being very apprehensive about donating a large sum of money to build a Habitat for Humanity house as a Christmas gift for our clients,” Joseph says. “I thought I’d never see that money again. But in the years since, I’ve learned that new clients chose us—and even that a bank gave us all of their foreclosures to sell—because they had learned of that donation.”
That might not be the scenario for every case, but Joseph says it shows the time and money you use for something will eventually “come back to you with interest.”
7. Failing to express genuine gratitude.
If people don’t feel valued, they’ll likely take their business elsewhere, so it’s risky to take people for granted.
“JoAnn and I have realized that there are many ways to say ‘thank you’ to clients, and not all of them are verbal … you can show clients just how much you appreciate them by getting to know them personally, forgiving occasional bad behavior, and staying up-to-date in your field so you can give them the highest level of service,” Joseph says.
8. Doing everything yourself.
When you truly care about the success of your business—and about the well-being of your clients—it can be hard to let go of any aspect of your work. The thought of allowing someone else to take over any area of responsibility is extremely difficult, but necessary. In actuality, one of the most important aspects of running a successful business is understanding how to delegate responsibilities to others. Otherwise, what ends up happening is that “you become stretched too thin, feel overwhelmed and actually become less effective,” Joseph says.
Although it may be common to think about your business on a short-term basis, such as making enough money this month to pay the bills, the Callaways say that building the long-term relationship with clients is what will keep you in business and set you apart from your competitors.
“Most business owners are so concerned with paying the bills that we instinctively put ourselves first,” he explains. “It’s a behavior fueled by fear. But when you really put the customer first, and put your own needs second, a whole lot of other things naturally fall into place. Decisions will become easier, your business will flourish, and your relationships will be based on true transparency.”
When you’re running a small business—especially in the early stages—it’s easy to simply focus on how to stay afloat. The problem is, that mindset will keep your company mediocre at best and fighting for survival at worst.
In the first months of launching their real estate company Those Callaways, Joseph and JoAnn Callaway learned just how much real growth starts with client relationships. In that situation, they decided to forfeit a deal because it was the best choice for their client. Since then, their business brings in around $100 million in sales annually and reached $1 billion worth of resale in the first 10 years of business.
In their book Clients First: The Two Word Miracle, the Callaways discuss where most business owners go wrong when developing relationships—and how to fix the problems. Most employers are guilty of these bad habits without even being aware of it, and these habits can not only ruin relationships, but they can negatively affect business too.
1. Being too sure of yourself.
The Callaways say that when you have a healthy perspective of who you are, it will help you stand apart from your competitors, but when you’re too focused on recognition, you may veer off “onto a destructive path.”
“No client likes working with someone who has a patronizing attitude or constantly sings his own praises,” Joseph says. “Your job is not to be the most important person in the room or to put others down. Believe me, when you take care of your clients first and foremost, they will take care of you through their loyalty and appreciation.”
Instead, Joseph advises that you should always focus on your client. Don’t try to find a common interest just so you can bring the conversation back to yourself.
2. Thinking it’s just a job.
The only way you can honestly put a client first—time after time—is if you actually really do care about your job and what it means to society. If you have to, try to make a connection between what you do and how that affects the bigger picture.
“Whether you are a CEO or installing brake pads, you can learn to love what you do in that you feel pride in your work and strive to be better,” Joseph says. “Having any other attitude will only make you miserable and drive clients away.”
To fix a negative pattern of thinking, the Callaways say you should think of specific things you can do to ensure you’re always growing professionally. For example, look into seminars related to your field and continually network so you can meet and learn from people in your industry.
3. Telling “white lies,” which includes exaggerating.
If you’ve ever told your client you’re sick just so you can have a few more days to work on a project, then you’re guilty of not being entirely honest with someone who is paying you to be honest.
“When you cultivate a reputation for rock-solid honesty—for laying out all your cards even when it doesn’t benefit you, for telling the whole truth, for never holding back or sugarcoating—you’ll gain customer loyalty that money can’t buy,” Joseph says. “Clients will trust, respect and refer you, and your own life will become easier."
4. Being too professional.
Do you see your clients as business opportunities and sources of income, or do you see them as actual human beings with likes, preferences, quirks and stories? If you want to truly put your clients first, you need to think of them as more than sources of income. You should treat clients—and potential clients—as if they’re different from any other.
5. Thinking you’re always right.
The Callaways say that it’s easy to think you’re always right, especially if you’re the expert and the most qualified to make decisions. Although this may be true, it doesn’t mean that other opinions don’t matter.
“No matter what industry you’re in, you need to turn your viewpoint around and make a sincere effort to see yourself and your business as your client does,” Joseph says.
You can always ask the client what they think about your business, especially if the deal fell apart and they no longer conduct business with you. If you’re willing to accept this feedback and change your business model based on it, you can stop yourself from making the same mistake with the next client.
6. Being stingy with time and money.
Yes, your time is valuable, but the first sign that you’re trying to wrap up with a client quickly so you can get to the next one will probably be the last time you get that client’s business.
“I remember being very apprehensive about donating a large sum of money to build a Habitat for Humanity house as a Christmas gift for our clients,” Joseph says. “I thought I’d never see that money again. But in the years since, I’ve learned that new clients chose us—and even that a bank gave us all of their foreclosures to sell—because they had learned of that donation.”
That might not be the scenario for every case, but Joseph says it shows the time and money you use for something will eventually “come back to you with interest.”
7. Failing to express genuine gratitude.
If people don’t feel valued, they’ll likely take their business elsewhere, so it’s risky to take people for granted.
“JoAnn and I have realized that there are many ways to say ‘thank you’ to clients, and not all of them are verbal … you can show clients just how much you appreciate them by getting to know them personally, forgiving occasional bad behavior, and staying up-to-date in your field so you can give them the highest level of service,” Joseph says.
8. Doing everything yourself.
When you truly care about the success of your business—and about the well-being of your clients—it can be hard to let go of any aspect of your work. The thought of allowing someone else to take over any area of responsibility is extremely difficult, but necessary. In actuality, one of the most important aspects of running a successful business is understanding how to delegate responsibilities to others. Otherwise, what ends up happening is that “you become stretched too thin, feel overwhelmed and actually become less effective,” Joseph says.
Although it may be common to think about your business on a short-term basis, such as making enough money this month to pay the bills, the Callaways say that building the long-term relationship with clients is what will keep you in business and set you apart from your competitors.
“Most business owners are so concerned with paying the bills that we instinctively put ourselves first,” he explains. “It’s a behavior fueled by fear. But when you really put the customer first, and put your own needs second, a whole lot of other things naturally fall into place. Decisions will become easier, your business will flourish, and your relationships will be based on true transparency.”
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