The Reason Why Corporate Innovation Is So Hard

Gijs van Wulfen

Innovation is a paradox for all of us. On the one hand you are well aware that you have to take new roads before you reach the end of the present dead end street. On the other hand it is incredibly risky. It takes a lot of time. And it takes a lot of resources. Research shows that only one out of seven innovation projects gets launched and is successful. So saying yes to innovation is a step into the unknown. It creates fear of failure, which causes fear to innovate, especially in big organisations where a conservative corporate culture prevails.

On average it takes 18 - 36 months to develop a new concept, which often will only be profitable 2-3 years after introduction. Stimulated by short-term targets managers in big corporates focus on 'the business of today'. As innovator you want them to shift money and resources to the business of tomorrow, which is really hard.

Now be honest now: "Do you want to invest your personal savings in a project with a 1 out of 7 chance that it will be successful?" Probably you won't, unless you have to. And that is the real reason why a lot of managers wait until not innovating is not an option anymore. We all are humans.

I like to quote the CEO of BMW AG, the German luxury car producer, Dr.-Ing. Norbert Reithofer. When asked why BMW started the risky E-car project with the BMWi-3 and i-8 he responded very honest: "Because doing nothing was even a bigger risk" [Autoweek 41-2013].

Big corporations have often a very clear mission statement with an emphasis on innovation, a very well organised innovation process and professional innovation departments. Shareholders, board and bosses will however only stick out their necks for innovation if doing nothing is a bigger risk. This is the main reason why corporate innovation is so hard in practice.

So you how can you break the status quo and create momentum for innovation? Make them nervous that doing nothing is indeed a big risk. How? Identify the key persons in your company and confront them personally with concrete reasons for change that will move them out of their comfort zone.

So how can you make your managers nervous?

• Take them to visit start-ups challenging your position.
• Invite a trend watcher to confront them how quick the world is changing.
• Visit ex-customers who just changed to a very innovative competitor.
• Take them to Tech Universities to see experiments with new technologies.
• Spam them with articles of new successful business models;
• Visit young customers and ask what they think of your brand and - products.

Your conservative managers will say yes to innovation as soon as they get the insight themselves that doing nothing is an even bigger risk.

Go for it! Good luck.

How The Most Successful People Think Differently To Solve Their Biggest Challenges

Paul B. Brown, Contributor

Invariably, when presenting a new approach to solving problems, authors, pundits and commentators go to great lengths to “prove” why everything that existed before they presented their argument has been a waste of time.

That’s just silly. 

You know why people attack everything that has come before. We live in a hyper-competitive environment when it comes to getting someone’s attention and so if you have something new, you may feel compelled to come up with a gimmick such as “everything you know is wrong” in order to get people’s attention.

We understand why they do this, because it would have been extremely tempting to go down this road ourselves.

We have developed a proven approach to dealing with uncertainty in all forms, i.e. what you should do when you don’t know what to do. 

We know it works because it is the same approach that the people who are masters at dealing with uncertainty—successful serial entrepreneurs—use. (There is nothing more uncertain than starting a business, and serial entrepreneurs are masters at it.)

The clichéd image of entrepreneurs coming up with an idea, laboring feverishly to perfect it, and delivering their creation to the market fully-formed is not what usually happens. The much more typical path is that they come up with an idea. They take a small step toward implementation to see if anyone is interested, and if it looks like some people are, they take another step forward. If they don’t get the reaction they want, they regroup and then take another step in a different direction.

In other words, they:

• Act.
• Learn (from that action)
• Build (off that learning)
• Repeat, i.e. they act again.

That cycle continues repeats until the entrepreneur succeeds, knows she is not going to, or decides there is another, more appealing opportunity to pursue. As we said, the approach serial entrepreneurs use when faced with the unknown (starting a business) will work for you when you face the unknown of any kind.

So, does this mean you should scrap your traditional ways of problem solving?
 
Absolutely not.

You shouldn’t use this approach exclusively. The way we all were taught to solve problems that are predictable—how do we introduce our existing product into an adjacent market; how many refrigerators will we sell during a recession—works just fine. You have historical precedents and data to draw on.

When you do, predict away.

When you don’t, try what we are advocating. It gives you an additional tool. It does not replace the ones you have.

We concede presenting a new idea this way is far less dramatic then screaming “EVERYTHING YOU KNOW IS WRONG.”

But it is honest, the process has been proven, and it should be helpful.

Paul B. Brown is the co-author (along with Leonard A. Schlesinger and Charles F. Kiefer) of Just Start: Take Action; Embrace Uncertainty and Create the Future recently published by Harvard Business Review Press.

How The Most Successful People Think Differently To Solve Their Biggest Challenges

Paul B. Brown, Contributor

Invariably, when presenting a new approach to solving problems, authors, pundits and commentators go to great lengths to “prove” why everything that existed before they presented their argument has been a waste of time.

That’s just silly. 

You know why people attack everything that has come before. We live in a hyper-competitive environment when it comes to getting someone’s attention and so if you have something new, you may feel compelled to come up with a gimmick such as “everything you know is wrong” in order to get people’s attention.

We understand why they do this, because it would have been extremely tempting to go down this road ourselves.

We have developed a proven approach to dealing with uncertainty in all forms, i.e. what you should do when you don’t know what to do. 

We know it works because it is the same approach that the people who are masters at dealing with uncertainty—successful serial entrepreneurs—use. (There is nothing more uncertain than starting a business, and serial entrepreneurs are masters at it.) 


The clichéd image of entrepreneurs coming up with an idea, laboring feverishly to perfect it, and delivering their creation to the market fully-formed is not what usually happens. The much more typical path is that they come up with an idea. They take a small step toward implementation to see if anyone is interested, and if it looks like some people are, they take another step forward. If they don’t get the reaction they want, they regroup and then take another step in a different direction.

In other words, they:

• Act.
• Learn (from that action)
• Build (off that learning)
• Repeat, i.e. they act again.

That cycle continues repeats until the entrepreneur succeeds, knows she is not going to, or decides there is another, more appealing opportunity to pursue. As we said, the approach serial entrepreneurs use when faced with the unknown (starting a business) will work for you when you face the unknown of any kind.

So, does this mean you should scrap your traditional ways of problem solving?
 
Absolutely not.

You shouldn’t use this approach exclusively. The way we all were taught to solve problems that are predictable—how do we introduce our existing product into an adjacent market; how many refrigerators will we sell during a recession—works just fine. You have historical precedents and data to draw on.

When you do, predict away.

When you don’t, try what we are advocating. It gives you an additional tool. It does not replace the ones you have.

We concede presenting a new idea this way is far less dramatic then screaming “EVERYTHING YOU KNOW IS WRONG.”

But it is honest, the process has been proven, and it should be helpful.

Paul B. Brown is the co-author (along with Leonard A. Schlesinger and Charles F. Kiefer) of Just Start: Take Action; Embrace Uncertainty and Create the Future recently published by Harvard Business Review Press.

Negotiating Successful Business Deals

Few issues have more impact on the long-term success of your business than your ability to cut successful deals with customers, vendors, bankers and other key constituencies

 Yet, most CEOs leave too much money on the table during their most important business deals. Why? Because they usually take the wrong approach to the negotiating process.

Rather than approaching negotiations as a mutual issue-solving process, they see it as a kind of mental and verbal sparring session, where the side with the sharpest minds, toughest resolve and most aggressive tactics emerges as the victor. Such an approach invariably leads to win-lose or, worse, lose-lose outcomes, and their companies suffer in the long run. 

Adopting a more productive negotiating mindset requires getting rid of some outdated notions about how to negotiate effectively. In particular, four common negotiating myths make it difficult, if not impossible, to create successful deals:

Negotiating myth - 1: Negotiating involves competition.
Reality: Negotiations involve exchanging information and resources in order to satisfy the different and sometimes conflicting needs of two or more parties.

Negotiating myth - 2: Negotiating involves bargaining.
Reality: Bargaining is competitive; negotiating is co-operative. Bargaining focuses on whom is right; negotiating focuses on what is right. Negotiating creates long-term deals and relationships. Bargaining agreements never last because the losing party always insists on the chance to come back and get even.

Negotiating myth - 3: Negotiating always involves compromise.
Reality: Nobody wins in compromise because both sides end up getting less than they want or need.

Negotiating myth - 4: Effective negotiations involve the use of tactics, trickery and manipulation.
Reality: Honest, ethical negotiators never try to manipulate or deceive the other side. Tactics should only be used in self-defence.

The bottom line is that negotiating business deals has nothing to do with bargaining, compromise and competition. To create win-win outcomes, both sides must:

• Strive to understand the other person's wants and needs

• Attempt to solve the other person's problems/issues as well as their own

• Adopt a mindset of flexibility rather than rigidity

• Focus on "enlarging the pie" rather than dividing it up

Always aim for win-win outcomes.
This approach may sound "soft" to those who enjoy going toe-to-toe with the other side during a negotiation. However, I emphatically agree that following these principles will dramatically increase your chances of creating deals that benefit both sides and lead to positive long-term relationships. 

Six Steps to a Successful Deal

• Understand the other side. To solve the other person's issue, you need to gather as much information as possible about their situation. Specifically, you need to know:

• Any existing time, industry and/or financial pressures

• Their corporate goals and objectives

• Their specific goals for the negotiation

• Their options if they don't make the deal with you

• The personal goals of the negotiator

Who makes the final decision on the deal?
Smart negotiators spend far more time on research and discovery than they do on the actual negotiations. The more information you have the greater your ability to solve the other person's problem to your advantage.

I also recommend finding out who you're negotiating with. One of the first things in any business negotiation is to establish the honesty and ethics of the person sitting across from you. A lot of people say they want a win-win outcome, but their negotiating style and strategy often prove otherwise.


Plan your approach. A planned approach starts with having a crystal-clear understanding of your own position. To clarify your position, I recommend identifying three different deal scenarios:

• Best possible outcome

• Worst acceptable outcome

• Expected outcome

These outcomes establish the ballpark you will play in. Without them, you have no realistic starting point. In addition, the best successful dealmakers always prepare two other key elements:

• Walk-away point. This sets an absolute limit on the least favourable outcome you will accept. Anything less and you walk away from the deal.

• BATNA. Your "best alternative to a negotiated agreement" identifies what will you do if you can't reach agreement on this deal.

As long as you have these two elements in place, you cannot cut a bad deal.


I also recommend the use of role-play as an additional planning element. The more you know about how the other side might respond during the negotiation, the greater your chances of creating the outcome you want.

Build the relationship. If you want to cut a good deal, take the time to build the relationship before getting into the specifics of the deal. Most CEOs focus on price, terms and conditions because that's what they know best. Plus, those areas are easy to quantify. But the key to most negotiations is building communication, relationship and trust because those elements most often determine the outcome.

How do you build communication, relationship and trust? By exchanging information, active listening, and acknowledging the other person's needs.

People have a pressure and a need to tell you what they want. If you do not hear them out, you will not get past their perception that your company cannot meet their needs. If they do not feel that your company can meet their needs, they'll give the business to someone who will.

People make decisions for their reasons, not yours or anybody else's. Unless you address their reasons and needs, you're wasting you're time and theirs. You discover those needs by asking questions and building trust so that they feel comfortable disclosing information to you.

Solve their issue. To create a true successful deal, solve the other person's issue as well as your own. Doing so, requires learning three things during the discovery phase, what the other side values, what they are looking for in the deal, and their "never agains.
In order to solve the other person's issue; identify their items of value by asking open-ended questions. To determine their desired outcome, ask, "What exactly are you looking for in this deal?"

"Never-agains" are negative situations that have happened to the other person in the past and guide all their future negotiations. For example: Never again will we pay cash up front. Never again will we have partners in the deal. Never again will we reveal confidential information. It pays to get these out in the open early on because some people base their entire decision on them.

Enlarge the pie. There are two kinds of negotiations -- "fixed-resource" and "expanded-resource." Fixed-resource negotiations (i.e., buying a car or a house) involve win-lose propositions because one side gets more and the other gets less. Expanded-resource negotiations involve finding ways to exchange things of varying value so that each side walks away with a positive outcome.

"Bargainers and compromisers ask, 'How do we divide up the pie fairly and equitably?'" "Skilled deal-makers ask, 'How do we create a bigger pie so that we both get what we need?' Fixed-resource negotiations create win-lose outcomes, which lead to short-term relationships. Expanded-resource negotiations create win-win outcomes, which lead to long-term relationships.

To enlarge the pie:

• Gather as much information as possible about both sides before starting the negotiations.

• Identify items of value for both sides and list them in order of priority.

During the negotiations, avoid giving in to the temptation to bargain and compromise. Instead, get creative about ways to introduce and exchange items of value so that both sides get their needs met.

Stay focused on the desired outcome for the deal.

Make the numbers work. Most CEOs love to quantify things and reduce them to numbers because they are easy to work with. They also love to have precise formulas for the numbers. But the rationale behind the numbers always counts more than the actual numbers. The more you know about the method the other side uses to reach their conclusions, the better your chances of reaching a successful deal.

When trying to arrive at the final numbers:

• Clarify the rules for how the deal will be structured.

• Strive for as much communication as possible.

• Question all assumptions.

• Show how you are different.

Focus on the risks as well as the benefits of doing business with you. 

If you do the first five steps properly, working out the numbers becomes almost a formality. The key to any successful negotiation is to enlarge the pie by changing a fixed-resource negotiation into an expanded-resource negotiation. When you gather information, identify items of value for each side and look for creative ways to exchange them, you will cut deals that work for both sides.

Playing the Negotiating Game
When negotiating deals with your customers and vendors, it helps to know how the game is played. The negotiating playing field consists of four key elements: time, information, power and passion. The party that holds the advantage in these areas will usually prevail.

I believe that the person who controls the tone, tempo and format of the negotiations has a decided advantage. I recommend five principles for tipping the control factor in your favour:

• The person who speaks first sets the tone for the negotiation.

• The person who asks the most questions determines the content and direction of a negotiation.

• Never argue with the other side.

• People do things for their reasons, not yours.

• The party that listens the most will have the greatest effect on the outcome of the negotiations.

Ultimately, reaching an agreement that works for both sides comes down to making sure the other person feels like they got what they needed from the deal. To increase the odds of reaching this outcome, I recommend the following:

• Identify common issues.

• Go hard on the terms and easy on the people.

• Translate the value of the deal to the other side.

• Make it easy for them to win.

The secret to great deals is to let the other person walk away with a win. Don't make it so obvious that they feel like you gave in. But letting them win is essential for keeping the deal in place.

The Art of Making Concessions
Great dealmakers have a knack for making the right concession at just the right time. To improve your ability to make concessions, I recommend the following:

• Do the research. Make a list of "items of value" and use them when the other side asks for concessions. Also make a list of things you want in return.

• Never respond immediately to a request for a concession. Instead, use time to add uncertainty, thereby adding value to the concession when you make it.

• Never make a concession without asking for one in return. If you give without getting anything back, you reinforce the behaviour of asking for the concession.

• Do not make huge concessions, especially on the first go-round. Making a large initial concession undermines your credibility and sends the message that you still have plenty of room to come down.

• Make concessions in decreasing increments. This establishes more credibility for your opening position and signals that you have little room left in which to move
•  
• Beware of "insignificant" concessions. Great negotiators can take you to the cleaners by constantly asking for small concessions. Always wait until you have the whole story before agreeing to a small concession.

• Be prepared to justify every concession. Never make a concession unless you can demonstrate how the acquisition of new information has allowed you to change your position.

• Never try to exploit a concession. When you try to take advantage of a concession, you lose credibility.

• Know your `bottom line`. Never give something away if it doesn't make sense for your business.

In terms of concessions, the biggest mistake people make is going right to their final number, thinking they're getting a compromise. However, great negotiators don't get deals by compromising or focusing on concessions. They create great deals by exchanging items of equal or greater value so that both sides win. 

Avoiding the Deal-Killers
One key to successful business deals is avoiding the major deal-killers while minimising the minor gaffes that don't necessarily prevent an agreement but lead to less than ideal outcomes. These include:

• Going too fast

• Failure to establish your walk-away position

• Assuming the other side looks at the deal the same way you do

• Taking a short-term view

• Proving the other person wrong

• Failure to conduct your internal negotiations

• Negotiating against yourself

• Improper use of concessions

• Not knowing when to stop

• Dealing with Hardball Negotiators

From time to time you will run across negotiators who like to play by their own rules. These people, I refer to as "hardball negotiators," tend to have rigid thinking patterns, are unwilling to compromise and have an overwhelming need to be right. Worse, they tend to pursue win-lose outcomes. Negotiating with these people requires a careful assessment of the situation and a slower, more deliberate approach to the deal.

When faced with a hardball negotiator, I recommend the following:

• Take a hard look at all the implications of the deal and what you stand to gain from it.

• Hold fast to your walk-away point.

• Do not get caught up in an auction mentality.

• Watch out for individuals who just want to win.

Successfully negotiating with hardballers requires a three-pronged approach:

• Step aside. Never go head-to-head with a hardball negotiator because you will always lose. Instead, strive to defuse the conflict they're looking for by acknowledging their concerns and focusing on building communication and trust.

• Attract their interest. Give the hardballer plenty of airtime to talk about what they value, what they are looking for, and any "hot" items the company has to have. To keep them talking about their interests, ask plenty of open-ended questions.

• Close the deal. Find a way to make the hardballer look good to their boss so they will champion your position within their company. In order to cut a deal, they have to feel like they got a better outcome than they would have received from your competitors.

If these steps do not work, you may have to walk away from the deal. However, in today's environment the business that you do not take will affect your bottom line more than any business that you do take. Knowing when to say 'no' so that you can maintain margins is the sign of a good negotiator.

Improving Your Negotiating Skills
To advance your skills as a negotiator, I offer the following techniques:

• Make it a habit to critique your performance after every business deal, identifying areas that went well and those that could stand improvement.

• Role-play before every negotiation. Especially include reverse role-play, where you try to determine how the other side will approach the negotiation.

• Understand the real meaning of "win-win." "win-win" does not mean equal win. One party may gain more than the other, but as long as you both gain more by negotiating, you come away with a win-win deal.

• Avoid using tactics. Never introduce anything into the negotiating process that smacks of underhandedness, manipulation or deceit. Tactics should only be used to defend yourself from unscrupulous negotiators.

• Focus on turning fixed-resource into expanded-resource negotiations. Great negotiators focus on bringing more into the deal and adding more value to each side.

• Listen twice as much as you speak. To remember this important rule of thumb, simply look at the person across the table. They have two ears and one mouth.

• Practice, practice, practice. Provide training and practice to your staff, especially your sales team. In addition, practice your own negotiating skills where it doesn't count -- at hotel check-ins, rental car counters and other places where the stakes are small.

• Never want anything so badly that you won't accept something else. Never go into a negotiation feeling like you have to make the deal.

Think, research and plan to be successful. 

Now go on your journey for success.

Written by

Colin Thompson

The Difference Between Successful and Very Successful People

I recently met with a capable and driven executive and asked him, “How are you?” He gave me a rapid-fire answer of all of the things he was doing: travelling, business updates, career changes and his children’s innumerable activities. It sounded like an intense but satisfying life.

Then I asked him again, “How are you really?” And the moment I did, he became emotional and the reality of his life just flooded out of him: his stress, his frustration of trying to juggle it all, his sense that he had no time to really think, or play with his children or enjoy any of it. The (cute) summary is this: his schedule was always filled but his life wasn’t fulfilled. What is less cute is the idea that he, and many of us, have been sold a bill of goods.

We’ve been sold on a heroic ideal of the uber-man and super-women who kill themselves saying yes to everyone, sleeping four hours a night and straining to fit everything in. How often have you heard people say, “I am so busy right now!” But it almost seemed like a back-door brag.

But it’s a bogus badge of honor. It suffocates our ability to think and create. It holds otherwise hard working, capable people back from our highest contribution. Below are a few of the myths of success that hold us back from becoming very successful.

Myth 1: Successful people say, "If I can fit it in, I should fit it in."
Truth: Very successful people are absurdly selective.
As Warren Buffet is credited with having said, “The difference between successful people and very successful people is that very successful people say no to almost everything.”

As I wrote in a piece for Harvard Business Review, this means, "Not just haphazardly saying no, but purposefully, deliberately, and strategically eliminating the nonessentials. Not just once a year as part of a planning meeting, but constantly reducing, focusing and simplifying. Not just getting rid of the obvious time wasters, but being willing to cut out really terrific opportunities as well. Few appear to have the courage to live this principle, which may be why it differentiates successful people and organizations from the very successful ones."

Myth 2: Successful people sleep four hours a night.
Truth: Very successful people rest well so they can be at peak performance.
In K. Anders Ericsson's famous study of violinists, popularized by Malcolm Gladwell as the "10,000 hour rule," Anders found that the best violinists spent more time practicing than the merely good students. What is less well known is that the second most important factor differentiating the best violinists from the good ones was actually sleep. The best violinists averaged 8.6 hours of sleep in every 24 hour period.

Myth 3: Successful people think play is a waste of time.
Truth: Very successful people see play as essential for creativity.
Just think of Sir Ken Robinson, who has made the study of creativity in school's his life's work. He has observed that instead of fueling creativity through play, schools actually kill it: "We have sold ourselves into a fast-food model of education, and it's impoverishing our spirit and our energies as much as fast food is depleting our physical bodies. Imagination is the source of every form of human achievement."

Myth 4: Successful people are the first ones to jump in with an answer.
Truth: Very successful people are powerful listeners.
As the saying goes, the people who talk the most don't always have the most to say. Powerful listeners get to the real story. They find the signal in the sound. They listen to what is not being said.

Myth 5: Successful people focus on what the competition is doing.
Truth: Very successful people focus on what they can do better.
The "winningest coach in America" is Larry Gelwix, the former Head of the Highland High School rugby team. His team won 418 games with only 10 losses in over 36 years. One of the key questions he challenged his players to ask was “What’s important now?" He didn't want his players getting distracted with what the other team was doing. He wanted them to play their own game.

Last week I took a tour of the Kennedy Presidential Library in Boston, Massachusetts. One of the quotes there grabbed my attention. John F. Kennedy said, "The great enemy of the truth is very often not the lie, deliberate, contrived and dishonest, but the myth, persistent, persuasive and unrealistic."

The myth here is celebrated in modern culture: it’s someone who is capable, driven and wants to win and be popular. They have been rewarded for their willingness to take it all on, fit it all in and just make it happen. They believe doing more is better than doing less. I call this type of person a Nonessentialist.

Still, there is a new hero in our story. She asks, “What is essential?” and is willing to eliminate everything else. He says no to the less important activities so they can give themselves fully to the few things that really matter. It is a path that takes courage. It may require making the tradeoff between short-term popularity and long-term respect. It leads to a greater sense of control and even joy. But as an added benefit it also seems to be the thing that distinguishes the successful from the very successful.

5 Brazen Insights on How to Build a Better Small Business

Photo: Indochino.com

 

When it comes to starting a business, sometimes having a great idea is the easy part. Building a successful business around that idea takes vision, knowledge and sometimes a bit of luck in the form of favorable market conditions.

 

There’s another thing that is often the difference between a successful and unsuccessful business venture: savvy business advice. Whether you hear it from specialists in the field or personal connections with industry knowledge, it’s important to weigh the wise counsel of experienced business minds.

In that spirit, let’s look at five key insights from leading professionals on how to build a better business.

1. Keep your financial house in order.

   When you start a business, it’s not uncommon to wear many hats — often by necessity. One area where it’s easy to make a critical mistake is finance. There’s more to it than making payroll and meeting tax obligations. Not that paying taxes isn’t important. Steve Klitzner of Florida Tax Solvers says, “One of the most important things for small business owners to do is to pay their quarterly taxes on time.”
   
   Klitzner says not doing so “can lead to penalties and cause the business owner to pay more than they already owed on their taxes.” Business owners should also consider that they may miss out on favorable tax deductions simply from lack of experience. While handling your own taxes saves money in the short-term, it may end up being far more costly in the end, if not handled correctly.

2. Protect your brand.

   In business, the health of your brand is almost everything. Be more than a brand caretaker — be an ultra-vigilant brand watchman. This goes for everything from online reputation management to potential trademark infringement. Concerns about infringement cut both ways.
   
   If you accidentally find your company infringing, it could lead to potentially ruinous legal bills. Trademark attorney Josh Gerben recommends business owners perform a top-to-bottom trademark search prior to starting a business. An experienced trademark attorney will ensure your proposed trademark is free for use– and give you peace of mind.
   
   Gerben suggests, “Instead of spending a lot of money to build equity into a brand that may be infringing on someone else’s trademark rights, it is highly recommended that you hire a trademark attorney to do a professional trademark search.”"A trademark search performed by an attorney will help to ensure your trademark is truly clear to be used in the marketplace.” By following Gerben’s advice you can avoid a potential legal minefield — which is the last thing any new business needs.

3. Protect your company with small business insurance.

   Insurance is one of the costliest aspects of running a business; involving paperwork and administration. So many business owners pass on business insurance and hope for the best. Ryan Hanley says entrepreneurs should avoid that approach at all costs. Hanley, author of the Albany Insurance Professional blog, suggests that “skimping on insurance — especially health insurance — is like playing Russian Roulette with your future.”
   
   While bypassing insurance will save money upfront, the incurred costs of unexpected medical care is often catastrophic to a business. If you or your employees aren’t healthy, chances are the business isn’t healthy either. Hanley encourages business owners not to consider insurance a luxury. He says it is best viewed, not in terms of current price, but in terms of future cost.

4. Market your business effectively.

   Even the best managaed small business doesn’t get very far without effective marketing. On the other hand, great marketing can sometimes compensate for other areas where a business is lacking. For businesses without a large marketing budget, it’s sometimes difficult to know where to deploy your resources.
   
   One way to market economically is through an online presence. A well-designed company website is critical for all businesses. Internet marketing strategist Jeff Shjarback says that your company website “is an excellent way to increase sales and generate new leads. A website not only draws people in, but offers you a space to communicate with possible customers, current customers and post content pertaining to your business.”
   
   Once you’ve mastered the basics, optimize online marketing efforts through the savvy use of social media platforms. Building fans through services such as Facebook, Twitter and Instagram helps generate the best kind of awareness — word of mouth. Other techniques such as search engine optimization (SEO) and e-mail marketing can also build your brand and customer base.

5. Plan for future success.

   It’s never wise to enter into any situation without careful consideration of the facts and circumstances. It’s even less wise to enter into business that way. A well thought out business plan is vital for success. It helps you design your business approach and gives you a chance to consider variables that are certain to pop up later. It will also give you a good read on the true feasibility of your business model.
   
   Business plan specialist Dick McCormick believes that startups “don’t have to develop a written business plan to start a business. But a comprehensive, realistic plan will greatly increase your chances of being successful. Would you build a house without a blueprint? Would you drive cross-country without a map?” Starting a business without a well-reasoned plan is a good way to seriously diminish your odds of success. A thorough plan will guide you and make sure your business has the solid foundation it needs to flourish.

Zack Kirchin is the senior author at TheTechFortress, a blog that references the latest technology, gadgets, news and more.

Make Time for the Work That Matters

To identify the tasks you need to drop or outsource, take this interactive assessment.

More hours in the day. It’s one thing everyone wants, and yet it’s impossible to attain. But what if you could free up significant time—maybe as much as 20% of your workday—to focus on the responsibilities that really matter?

We’ve spent the past three years studying how knowledge workers can become more productive and found that the answer is simple: Eliminate or delegate unimportant tasks and replace them with value-added ones. Our research indicates that knowledge workers spend a great deal of their time—an average of 41%—on discretionary activities that offer little personal satisfaction and could be handled competently by others. So why do they keep doing them? Because ridding oneself of work is easier said than done. We instinctively cling to tasks that make us feel busy and thus important, while our bosses, constantly striving to do more with less, pile on as many responsibilities as we’re willing to accept.

We believe there’s a way forward, however. Knowledge workers can make themselves more productive by thinking consciously about how they spend their time; deciding which tasks matter most to them and their organizations; and dropping or creatively outsourcing the rest. We tried this intervention with 15 executives at different companies, and they were able to dramatically reduce their involvement in low-value tasks: They cut desk work by an average of six hours a week and meeting time by an average of two hours a week. And the benefits were clear. For example, when Lotta Laitinen, a manager at If, a Scandinavian insurance company, jettisoned meetings and administrative tasks in order to spend more time supporting her team, it led to a 5% increase in sales by her unit over a three-week period.

While not everyone in our study was quite that successful, the results still astounded us. By simply asking knowledge workers to rethink and shift the balance of their work, we were able to help them free up nearly a fifth of their time—an average of one full day a week—and focus on more worthwhile tasks with the hours they saved.

Why It’s So Hard 
Knowledge workers present a real challenge to managers. The work they do is difficult to observe (since a lot of it happens inside their heads), and the quality of it is frequently subjective. A manager may suspect that an employee is spending her time inefficiently but be hard-pressed to diagnose the problem, let alone come up with a solution.

We interviewed 45 knowledge workers in 39 companies across eight industries in the United States and Europe to see how they spent their days. We found that even the most dedicated and impressive performers devoted large amounts of time to tedious, non-value-added activities such as desk work and “managing across” the organization (for example, meetings with people in other departments). These are tasks that the knowledge workers themselves rated as offering little personal utility and low value to the company. 

The Work That Knowledge Workers Do 
There are many reasons why this happens. Most of us feel entangled in a web of commitments from which it can be painful to extricate ourselves: We worry that we’re letting our colleagues or employers down if we stop doing certain tasks. “I want to appear busy and productive—the company values team players,” one participant observed. Also, those less important items on our to-do lists are not entirely without benefit. Making progress on any task—even an inessential one—increases our feelings of engagement and satisfaction, research has shown. And although meetings are widely derided as a waste of time, they offer opportunities to socialize and connect with coworkers. “I actually quite look forward to face-to-face meetings,” one respondent told us. “A call is more efficient, but it’s a cold, lifeless medium.”

Organizations share some of the blame for less-than-optimal productivity. Cost-cutting has been prevalent over the past decade, and knowledge workers, like most employees, have had to take on some low-value tasks—such as making travel arrangements—that distract them from more important work. Even though business confidence is rebounding, many companies are hesitant to add back resources, particularly administrative ones. What’s more, increasingly complicated regulatory environments and tighter control systems in many industries have contributed to risk-averse corporate cultures that discourage senior people from ceding work to less seasoned colleagues. The consequences are predictable: “My team is understaffed and underskilled, so my calendar is a nightmare and I get pulled into many more meetings than I should,” one study subject reported. Another commented, “I face the constraint of the working capacity of the people I delegate to.” 

Some companies do try to help their knowledge workers focus on the value-added parts of their job. For example, one of us (Jordan Cohen) helped Pfizer create a service called pfizerWorks, which allows employees to outsource less important tasks. We’ve also seen corporate initiatives that ban e-mail on Fridays, put time limits on meetings, and forbid internal PowerPoint presentations. But it’s very difficult to change institutional norms, and when knowledge workers don’t buy in to such top-down directives, they find creative ways to resist or game the system, which only makes matters worse. We propose a sensible middle ground: judicious, self-directed interventions supported by management that help knowledge workers help themselves.
 
What Workers Can Do Our process, a variant of the classic Start/Stop/Continue exercise, is designed to help you make small but significant changes to your day-to-day work schedule. We facilitated this exercise with the 15 executives mentioned above, and they achieved some remarkable results. 

Identify low-value tasks. Using this self-assessment, look at all your daily activities and decide which ones are (a) not that important to either you or your firm and (b) relatively easy to drop, delegate, or outsource. Our research suggests that at least one-quarter of a typical knowledge worker’s activities fall into both categories, so you should aim to find up to 10 hours of time per week. The participants in our study pinpointed a range of expendable tasks. Lotta Laitinen, the manager at If, quickly identified several meetings and routine administrative tasks she could dispense with. Shantanu Kumar, CEO of a small technology company in London, realized he was too involved in project planning details, while Vincent Bryant, a manager at GDF SUEZ Energy Services, was surprised to see how much time he was wasting in sorting documents. 

Decide whether to drop, delegate, or redesign. Sort the low-value tasks into three categories: quick kills (things you can stop doing now with no negative effects), off-load opportunities (tasks that can be delegated with minimal effort), and long-term redesign (work that needs to be restructured or overhauled). Our study participants found that this step forced them to reflect carefully on their real contributions to their respective organizations. “I took a step back and asked myself, ‘Should I be doing this in the first place? Can my subordinate do it? Is he up to it?’” recalls Johann Barchechath, a manager at BNP Paribas. “This helped me figure out what was valuable for the bank versus what was valuable for me—and what we simply shouldn’t have been doing at all.” Another participant noted, “I realized that the big change I should make is to say no up-front to low-value tasks and not commit myself in the first place.” 

Off-load tasks. We heard from many participants that delegation was initially the most challenging part—but ultimately very rewarding. One participant said he couldn’t stop worrying about the tasks he had reassigned, while another told us he had trouble remembering “to push, prod, and chase.” Barchechath observed, “I learned about the importance of timing in delegating something—it is possible to delegate too early.”

Most participants eventually overcame those stumbling blocks. They delegated from 2% to 20% of their work with no decline in their productivity or their team’s. “I overestimated my subordinate’s capability at first, but it got easier after a while, and even having a partially done piece of work created energy for me,” Barchechath said. A bonus was that junior employees benefited from getting more involved. “[She] told me several times that she really appreciated it,” he added. Vincent Bryant decided to off-load tasks to a virtual personal assistant and says that although he was concerned about getting up to speed with the service, “it was seamless.” 

Allocate freed-up time. The goal, of course, is to be not just efficient but effective. So the next step is to determine how to best make use of the time you’ve saved. Write down two or three things you should be doing but aren’t, and then keep a log to assess whether you’re using your time more effectively. Some of our study participants were able to go home a bit earlier to enjoy their families (which probably made them happier and more productive the next day). Some unfortunately reported that their time was immediately swallowed up by unforeseen events: “I cleared my in-box and found myself firefighting.”

But more than half reclaimed the extra hours to do better work. “For me the most useful part was identifying the important things I don’t get time for usually,” Kumar said. “I stopped spending time with my project planning tool and instead focused on strategic activities, such as the product road map.” Laitinen used her freed-up schedule to listen in on client calls, observe her top salespeople, and coach her employees one-on-one. The result was that stunning three-week sales jump of 5%, with the biggest increases coming from below-average performers. A questionnaire showed that employee responses to the experiment were positive, and Laitinen found that she missed nothing by dropping some of her work. “The first week was really stressful, because I had to do so much planning, but by the middle of the test period, I was more relaxed, and I was satisfied when I went home every day.” 

Commit to your plan. Although this process is entirely self-directed, it’s crucial to share your plan with a boss, colleague, or mentor. Explain which activities you are getting out of and why. And agree to discuss what you’ve achieved in a few weeks’ time. Without this step, it’s all too easy to slide back into bad habits. Many of our participants found that their managers were helpful and supportive. Laitinen’s boss, Sven Kärnekull suggested people to whom she could delegate her work. Other participants discovered that simply voicing the commitment to another person helped them follow through. 

With relatively little effort and no management directive, the small intervention we propose can significantly boost productivity among knowledge workers. Such shifts are not always easy, of course. “It’s hard to make these changes without the discipline of someone standing over you,” one of our study participants remarked. But all agreed that the exercise was a useful “forcing mechanism” to help them become more efficient, effective, and engaged employees and managers. To do the same, you don’t have to redesign any parts of an organization, reengineer a work process, or transform a business model. All you have to do is ask the right questions and act on the answers. After all, if you’re a knowledge worker, isn’t using your judgment what you were hired for?

Julian Birkinshaw is a professor of strategy and entrepreneurship at London Business School and the author of Becoming a Better Boss. Jordan Cohen is a productivity expert at PA Consulting Group and the recipient of the 2010 grand prize from the Management Innovation eXchange (MIX) for his previous work at Pfizer.

You Need to Grow Your Business… So What’s Stopping You?

Posted by Kathbern Associates. 

Time, cash and people. That’s it.

Most companies want to grow, and to grow profitably, but they are often hampered by a few critical weaknesses in these three key areas and the lack of a clear plan to grow over the next 3 years. This is very typical, particularly for more entrepreneurial organizations where owners find it difficult to look around corners and peer into the future.

So what does it take to grow?

Time
Time is the great equalizer. No matter who we are, each of us has only 7 x 24 hours each week. We can waste our time or be efficient in its use, but the amount available is constant.

With the right strategy, most businesses will grow at some rate (as the population increases for example) but time alone is not a means of distinguishing how fast one business can grow versus the next.

Cash
Growing companies eat cash. As sales expand – so do accounts receivable and inventories. This “working capital” need is often misunderstood and underestimated by business owners and can really limit their ability to grow. If the rate of growth is modest, then the cash generated by the company may be sufficient to meet these increasing working capital needs, but many owners don’t want to have their growth limited to the rate at which the company can self-finance.

The problem is usually solved by increasing a bank line of credit or by the owner (or other investors) putting more cash into the business, to the extent that they can.

People
Having the right people on board is really where any business can exert a strategic advantage over its competitors. With the right people, the right things get done and get done effectively. With the wrong people, even if their activities are effective, the goals may be wrong.

It has often been said that investors would prefer to invest in a great management team that has a mediocre product or service, than to invest in a mediocre management team with a great product or service. The great team can be relied upon to make the best of a weak product or service, or migrate away to one that is superior, whereas the mediocre management team will likely bungle their stewardship of the great product or service that they have.

Getting the right people on board (or “on the bus” as we like to say) doesn’t happen by accident. It requires a dedicated determination on behalf of owners to search widely and with great patience to find “the best” members for their teams and then to create an environment in which “the best” will feel that they can make a worthwhile contribution, be recognized for their achievements and receive above average rewards if they are successful.

Take Action
If you are serious about growing your business, follow these steps:

1. Identify and address any immediate barriers to growth or threats to survival.
2. Develop a clear vision of the future, including a workable 3 year growth plan along with the means to achieve it.
3. Develop a basic organization structure that will support the 3 year plan.

Without this kind of planning you may find yourself hampered by the day-to-day focus on driving revenue and controlling costs without proper direction.

Posted by Kathbern Associates. 

If you would like guidance to move forward on this, Kathbern’s Accelerator Program has been designed address this critical need. Contact us at accelerator@kathbern.com to schedule a free 90 Minute Starter Session which will help you to see your goals more clearly and to identify the major issues that may be preventing you from reaching them.

How The Most Successful People Think Differently To Solve Their Biggest Challenges

Paul B. Brown, Contributor

Invariably, when presenting a new approach to solving problems, authors, pundits and commentators go to great lengths to “prove” why everything that existed before they presented their argument has been a waste of time.

That’s just silly. 

You know why people attack everything that has come before. We live in a hyper-competitive environment when it comes to getting someone’s attention and so if you have something new, you may feel compelled to come up with a gimmick such as “everything you know is wrong” in order to get people’s attention.

We understand why they do this, because it would have been extremely tempting to go down this road ourselves.

We have developed a proven approach to dealing with uncertainty in all forms, i.e. what you should do when you don’t know what to do. 

We know it works because it is the same approach that the people who are masters at dealing with uncertainty—successful serial entrepreneurs—use. (There is nothing more uncertain than starting a business, and serial entrepreneurs are masters at it.) 

 

The clichéd image of entrepreneurs coming up with an idea, laboring feverishly to perfect it, and delivering their creation to the market fully-formed is not what usually happens. The much more typical path is that they come up with an idea. They take a small step toward implementation to see if anyone is interested, and if it looks like some people are, they take another step forward. If they don’t get the reaction they want, they regroup and then take another step in a different direction.

In other words, they:

• Act.
• Learn (from that action)
• Build (off that learning)
• Repeat, i.e. they act again.

 

That cycle continues repeats until the entrepreneur succeeds, knows she is not going to, or decides there is another, more appealing opportunity to pursue. As we said, the approach serial entrepreneurs use when faced with the unknown (starting a business) will work for you when you face the unknown of any kind.

So, does this mean you should scrap your traditional ways of problem solving?
 
Absolutely not.

You shouldn’t use this approach exclusively. The way we all were taught to solve problems that are predictable—how do we introduce our existing product into an adjacent market; how many refrigerators will we sell during a recession—works just fine. You have historical precedents and data to draw on.

When you do, predict away.

When you don’t, try what we are advocating. It gives you an additional tool. It does not replace the ones you have.

We concede presenting a new idea this way is far less dramatic then screaming “EVERYTHING YOU KNOW IS WRONG.”

But it is honest, the process has been proven, and it should be helpful.

Paul B. Brown is the co-author (along with Leonard A. Schlesinger and Charles F. Kiefer) of Just Start: Take Action; Embrace Uncertainty and Create the Future recently published by Harvard Business Review Press.