Questions are places in your mind where answers fit. If you haven’t asked the question, the answer has nowhere to go. It hits your mind and bounces right off. You have to ask the question,you have to want to know,in order to open up the space for the answer to fit.via 37Signals founder Jason Fried paraphrasing Clayton Christensen.
I have an idea
Beggars can't be choosers! If you'd rather be a chooser, enter a market or a transaction where you have something to trade, something of value, or something to offer that's difficult to get everywhere else. If all you have is the desire to get picked, that is not sufficient. In the Front Half of Innovation you learned how to create ideas. To find an idea that you could build a business around or offer a new solution to customers of your employer. How do you get to be a “chooser”? Create a barrier to entry to your market. In early 2011, Apple filed a complaint against the Korean company Samsung, claiming that 28 Samsung devices infringed on Apple's intellectual property -- including a so-called design patent for a rectangular slab with rounded corners.
Kodak recently sold off all of their digital imaging patents for a total of $525 million in order to help pay off chapter 11 bankruptcy bills.
Big, huge companies are created from patents!
Kodak is an example of a company that failed to exploit the commercial opportunities of their patents and demonstrates that there is more to running a successful business than just having great ideas.
To get you started I highly recommend that you watch this video from the Khan Academy: Accounting class I also recommend that you download the Bootstrappers Bible by Seth Godin. Find a copy here: BootStrap Another great source: 57 startup lessons by Slava Akhmechet One more recommendation, subscribe to the The Wall Street Journal. You are in business, read about it! The WSJ has student rates, an Asian edition and “The Accelerators” section where all things important to small business and start-ups are discussed.
Why do startups fail
Depending on the business you have a 50% chance of surviving 5 years. What are the causes of failure?
- Lack of experience
- Insufficient capital (money)
- Poor location
- Poor inventory management
- Over-investment in fixed assets
- Poor credit arrangements
- Personal use of business funds
- Unexpected growth
- Low sales
Source: Small business failures
Here is a video, Richard White - An Entreprenuership Tale, describing ten years of life as a start up.
Tips from Sequoia Capital’s recipe which has been formed with their own ingredients and flavored by thousands of experiences. They want to find founders and management teams with ideas and companies where there is the chance for us to be shareholders for ten or fifteen years.
They try to change with the times without getting swept away by hype. They share the sense of confidence and apprehension felt by every successful entrepreneur. We always assume that anything is possible, while simultaneously imagining that others want to put them out of business. They try to stay young at heart and very hungry. And are always mindful of lessons learned – some painfully – that are eternal truths. Here are a sample:
- Few people are courageous enough to have conviction
- Technology is the best amplifier of a business
- Outperformance comes from doing a few things better than others
- High margins cushion mistakes
- Believe actions, not words
- Listening beats talking
- Capital intensity usually produces nightmares
- Massive success comes from patience. We own shares we bought two decades ago
- Never sell shares before IPOs, at IPOs, or immediately after IPOs
- Teams, and gradual improvement of teams, are the secret to long-term success
- Nothing lasts forever
- Will power
From Innovator of the Year 2012 | Technology, WSJ. Twitter emerged from Jack Dorsey's teenage obsession with the unruly urban tangle of his hometown, St. Louis. He would spend hours eavesdropping on the radio chatter from local ambulances. They would announce where they were and where they were going, he recalls, and I realized I could make a computer program that would plot their routes on to a street map. Before he had even turned 18, Dorsey managed to transform this effort into software capable of simplifying the whole dispatch process. He set about searching the Internet for the largest dispatch company in the world. When he found it, he quickly hacked into its corporate servers, sent a note to its CEO's unlisted e-mail address (both announcing the security breach and asking for a job) and then moved to New York to become its lead programmer. This work eventually fed into the creation of Twitter which allows vehicle fleets and regular people to broadcast instant status updates, with no need for specialized equipment, across the globe.
A man of widely varied interests, Dorsey is a genuine eccentric—not a mere collector of affectations. He treats his obsessions more as callings than as hobbies. When young, he studied botanical illustration under the tutelage of a master at the Missouri Botanical Garden, gazing for hours at the contours of ginkgo leaves. He later became fascinated by bespoke denim and enrolled in fashion design classes.
Dorsey delves deeply and intensely into whatever piques his curiosity, on the theory that innovation happens when disparate thoughts mesh. “It's important to demystify the term. Innovation is just reinvention and rethinking. I don't think there's anything truly, organically new in this world. It's just mash-ups of all these things that provide different perspectives—that allow you to think in a completely different way, which allows you to work in a different way.”
From Jack Dorsey's note book:
Life is found in the intersections.
- Our work is one of balance.
- design & engineering
- timeless & fleeting
- form & function We mix disciplines to improve our work.
Read more: Jack Dorsey
Initiative: Over coming lack of experience
Charles Foley was 18 when he told his mother he expected to invent things that would be used everywhere. At 67, the inventor has 130 patents to his credit, including one for the venerable party game Twister, which he invented in the 1960's and still sells today. But Foley, of Charlotte, North Carolina, is still at the inventing game. He recently revived one of his discoveries from the 1960's, an adhesive-removing liquid, and sold the rights to make and market it to a company headed by his son. He is also working on new designs for fishing floats and a home security system. Driven to search for success? Hardly. Foley is just following his bootstrapping nature on a journey that's lasted a lifetime. “I was born with a gift,” he shrugs. “Ideas pop into my head.”
And I can guarantee that if you don't feel like giving up today,
there will definitely be days when you do feel like giving up. Which
brings me to the most important, most concrete, most useful piece of
advice in the whole manifesto. Simple, but indispensable: Don't give
up. Surviving is succeeding. You're smarter than most people who have
started their own businesses, and smarter still than those who have
succeeded. It's not about what you know or even, in the end, about
what you do. Success is persistence. Set realistic expectations.
Don't give up.
Seth Godin “The Manifesto”
“The only way to do great work is to love what you do. If you haven't found it yet,
keep looking. Don't settle. As with all matters of the heart, you'll know when you find it.
And, like any great relationship, it just gets better and better as the years roll on.
So keep looking until you find it. Don't settle.”
Steve Jobs - Stanford News June 14, 2005
You need to be in the game to score!
For the long run
Persistence is an odd alchemy of hope, determination, resourcefulness and (truth be told, more than a little stubbornness). At its root is a personal vision; an actualization that is only visible to the person who holds it. It is only through dogged effort that this vision is filtered through the individual and manifested externally to the rest of the world. Sadly, countless wonderful ideas have never come to fruition because their Conduits lacked the discipline, courage or faith to be persistent enough to bring them to pass. So what is the key to persistence? “Success seems to be largely a matter of hanging on after others have let go.” ~ William Feather
Ideas Are Abundant; Drive Isn't
Perhaps the greatest factor that determines whether or not an entrepreneur will be successful isn't the business idea itself, but rather the entrepreneur's willingness to try (and keep trying) to turn the idea into reality. Great ideas are abundant, but it's what we decide to do with them that counts.
A visual of independence that I hold in my head: a lone hiker at the summit of a great mountain. From this height, she is able to look back at the obstacles she has overcome; the challenges she faced and the solutions she generated in order to circumvent them.
She had many opportunities to rest, and there were some switchbacks taken, some shortcuts that turned out to be dead ends, but her vision of reaching the mountaintop was the fuel that kept her going when it would have been easier to turn back.
There may have been other climbers along with her that would encourage her to do so, saying, “You’ve come so far! You’ve already achieved so much. You should be proud and happy of doing so well.” Persistence and belief in her goal are the keys to her blasting through those well-intentioned thoughts and attaining the summit. “…But the moment you turn a corner you see another straight stretch ahead and there comes some further challenge to your ambition.” ~ Oliver Wendell Holmes, Jr.
How many times have we begun a project only to be thwarted a few days, weeks or months into the task? Anyone who has attempted a goal has experienced unexpected delays, unforeseen outcomes and misjudged reality. These obstacles are tools meant to not only test your mettle, but to help you flex your independence muscles. At this stage in the game, your ability to assess and distill the lesson from the obstacle determines your next steps. How creative can you be? *Have* you been going in the wrong direction? How skilled are you at sifting out opportunity from chaos? What lessons will you learn? What will you leave behind as you make your ascent to the mountain top? “A door opens to me. I go in and am faced with a hundred closed doors.” ~ Antonio Porchia, Voces, 1943, translated from Spanish by W.S. Merwin
This quote reminds me of a movie reference from Cinderella. Two intrepid mice, Jaq and Gus, get the key to Cinderella’s room from the stepmother only to face a mind-numbing spiral of stairs to reach the top of the mansion’s turret, where they plan to free Cinderella. It was not going to be easy to continue. Sometimes, we work so hard toward a goal that when we finally achieve it, we are dismayed to find that it is merely an intermediate goal. Upon “succeeding,” we are faced with yet even more challenges. It can be very easy to feel discouraged at this point.
That is precisely why, at this time, that we must review our ultimate goal, our motivations for achieving it and refresh our vision of what it will mean for us to realize it. We must begin again, refocusing and persevering until we finish what we started. That is the way to independence.
On March 12th, 1973, founder of FedEx, Fred Smith secured just seven packages for the first night's run. He sent his salesmen back into the field, more than doubled his network to 25 cities, and re-launched the service a month later -- this time handling a grand total of 186 packages. Smith was so desperate for cash that he flew to Las Vegas to play the blackjack tables. He wired the $27,000 he won back to FedEx. Needless to say, Smith's persistence paid off.
The Human side of business
Zappos CEO Tony Hsieh: I haven’t looked at a résumé in years. I hire people based on their skills and whether or not they are going to fit our culture.
You might argue that the notion of a human business is a category error. Organizations are bureaucracies at their core, and it is hard to think of any formalized collective human endeavor, and especially any business, as being free of rules, structures, and processes. After all, these factors are what ultimately makes corporations (and nonprofits alike) reliable and trustworthy, and grants them their authority. Consequently, there appears to be a fundamental chasm between individual human behavior--which is expansive and multifaceted, ranging from the rational to the wildly irrational, sentimental, and unpredictable--and the design of organizations: rational, practical, results oriented, and engineered to perform consistently..
Here is an article from the WSJ discussing the importance of Culture to the small business: Culture
With empathy as the foundation, the evolutionary biologist Mark Pagel contends that we owe our success as individuals and as a species to our “social mind,” defined by our ability to form cultures. He considers it the vehicle for social learning and cooperation with strangers in the context of “mutual aid communities.” These communities are based on trust and like-mindedness, that is, familiar mores, traditions, and customs as well as shared values. Culture is key for collaboration, which is why it is such a fundamental asset to every company. The Online retailer Zappos says it “competes on culture,” and Nike, Starbucks, and Virgin have all created distinct narratives and tribal identities that turn their brands into movements. Grant McCracken even demands a chief culture officer in every organization, and companies such as Google, Eileen Fisher, and Affinity Lab already have one in place.
From 5 Keys To Building A Business That Doesn’t Bury The Humans At Its Core Tim Leberecht
For an excellent example of collaboration watch this excellent video:
Build your Team
How do you assemble a great team? First step might be to interview potential employees. There are many ways to discover potential partners. I am always looking for individuals that would be a good fit. There is the requirement for the right "technical skill set" and good team chemistry. I will pay to try out candidates by giving them short term assignments. The New York Times runs a column on Sunday tittled "The Corner Office. Here are a few comments from the 12/15/2012 column that resonated with me. "Let’s assume the skills are there. The most important thing is whether I want to hang out and talk with the person. It’s not a likability contest as much as it’s about chemistry. The first thing I always ask is, “What’s your story?” The way somebody answers that is a pretty good indication of what they’re all about. If they’re just talking about the job, I find that really unattractive. If I feel like they’re being sincere and honest about what it is that they want to do with their life, even if it doesn’t line up exactly with what we want in our position, I find that far more attractive. When you ask people, “What’s your story?” they can answer that a million ways, and where somebody goes with the answer is a pretty good indication of who they are. Again, it’s such an obvious thing, but you want to hire someone who you feel like you want to spend time with." Interview was with Karl Heiselman, the chief executive of Wolff Olins. To read the entire interview visit the NY Times site at: How to build a great team
Are you trying with all your might?
By this I mean, are you trying with everything you’ve got—your mind, your heart, your muscles, your esophagus and all your forgotten obscure organs? If the answer is yes, then you can skip to the next question; you already realize that the most reliable path to glory is base brute effort.
If the answer is no, then you need to decide why. Is it the project that is stopping you (you just don’t want to give that much on, say, making homemade soy candles) or is it your fear of being humiliated if you fail, having openly and fully used all of your resources? In the case of the former: You need to find something else to pursue.
Regarding the latter: Such fear is understandable. Committing to an effort that takes all of you also risks all of you. If you go splat and fail, you’ll have no feasible excuse. It wasn’t as if you waited until the last minute or blew your energy on something else. You dug down all the way to the lining of your soul. The upside, though, is that you will never, ever have to stay up at night pondering what you could have done differently or lie to yourself about what you actually did. You will end up at some kind of a peace, a place where failure might not feel like failure. It might feel like a setback for the project—or even a success for you as a human being. Read more: Oprah.com
Pele perhaps the greatest scoccer player of all time."I don't believe there is such a thing as a 'born' soccer player. Perhaps you are born with certain skills and talents, but quite frankly it seems impossible to me that one is actually born to be an ace soccer player. Success is no accident. It is hard work, perseverance, learning, studying, sacrifice and most of all, love of what you are doing or learning to do. Everything is practice."
"There’s a reason the Beatles didn’t give us “The White Album” when they were teen-agers. And if the surgeon who wants to fuse your spinal cord did some newfangled online accelerated residency, you should probably tell him no.No one succeeds at a high level without innate talent, I wrote: “achievement is talent plus preparation.” But the ten-thousand-hour research reminds us that “the closer psychologists look at the careers of the gifted, the smaller the role innate talent seems to play and the bigger the role preparation seems to play.” In cognitively demanding fields, there are no naturals. Nobody walks into an operating room, straight out of a surgical rotation, and does world-class neurosurgery. And second—and more crucially for the theme of Outliers—the amount of practice necessary for exceptional performance is so extensive that people who end up on top need help." Malcolm Gladwell
To quote Merlin Mann, "You don't let the guy with the broom control how many elephants are in the parade."
Leadership at Amazon
- Have Backbone; Disagree and Commit:
Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.
Vocally Self Critical:
Leaders do not believe their or their team’s body odor smells of perfume. Leaders come forward with problems or information, even when doing so is awkward or embarrassing. Leaders benchmark themselves and their teams against the best.
Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspires results. They think differently and look around corners for ways to serve customers.
Bias for Action:
Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.
Every Amazonian is guided by these principles.
from http://www.farnamstreetblog.com/2013/10/the-everything-store/ article by SHANE PARRISH on OCTOBER 24, 2013
Why do some people produce ideas? By produce I mean bring their ideas to fruition. Could it be Education, DNA, Environment, all the above or a combination or some other secret ingredient?
Two people recently in the news interest me due to a common trait, persistence. The first is Brian Drucker M.D. the researcher behind the drug Gleevec. He is one of three winners of the "American Nobel Prize" for the development of molecularly targeted treatments for chronic myeloid leukemia, converting a fatal cancer into a manageable condition. He started his work in the 1980's and in 1996 he began phase one trials. He discovered the trait that made the difference for many suffering from CML; perseverance. He is quoted saying" I think I am more perseverance than smarts. There's a basketball player who says, "hard work beats talent when talent doesn't work hard." Well, I work hard."
The other Dr. Rita Levi-Montalcini, a Revolutionary in the Study of the Brain, recently died at the age of 103. She started working on cell growth in 1936. A neurologist who discovered critical chemical tools that the body uses to direct cell growth and build nerve networks, opening the way for the study of how those processes can go wrong in diseases like dementia and cancer. She shared the Nobel Prize in 1986; yet another example of the power of persistence.
Both of these amazing people continued firmly or obstinately in a course of action in spite of difficulty or opposition, which is the definition of persistence. Read more about these two and others at: Innovation
“Price is the amount you can charge for the product or service you provide. Nothing difficult there. Cost is the debt you incur for providing that product or service to your customer. To complicate things a little, we are going to define cost as a combination of the variable costs (e.g. materials) and the proper allocation of fixed costs (e.g. rent). This forces us to straddle the fence between economics and accounting and bend the rules of both. The space between price and cost is margin. Accountants like to use the word profit. Stock market analysts talk about earnings. They all mean the same thing: what’s left over after all is said and done. By its nature, margin is a secondary measurement, one that we can know only by first knowing price and cost, but margin is also the most important measure in any business.” From pg3 'Fixed-to-flexible-the-ebook' A must read ebook found here: Margins
Buy Low Sell High
Intuitive! But not easy
Sounds easy. But a lot of companies and people don't follow this simple rule. Sometimes selling at a lost is a temporary strategy to gain back market share, or the supply and demand curves invert, or you are not aware that you are selling below cost due to fear or poor understanding of your costs. In the March 29, 2013 Wall Street Journal article “Mom and Pop Run With the Bulls”, when stock prices collapsed in 2008, the bear market wiped out half of the savings of Lucie White and her husband, both doctors in Houston. Feeling “sucker punched,” she says, they swore off stocks and put their remaining money in a bank. This week, as the Dow Jones Industrial Average and Standard & Poor's 500-stock index pushed to record highs, Ms. White and her husband hired a financial adviser and took the plunge back into the market.”
Cost accounting is often used within a company to aid in decision making, financial accounting is what the outside investor community typically sees. Cost accounting can be most beneficial as a tool for management in budgeting and in setting up cost control programs, which can improve net margins for the company in the future. For example: If you are making two different widgets in one plant how will you determine the amount of utility costs to allocate to each widget? An important discussion if you want to insure you are not losing money on every widget you sell. There are cost accounting classes offered at both the undergraduate and post-graduate level.
Read more about: Cost Accounting
An Anthropological Approach to Brands
When we look at brands through a cultural anthropological lens, it becomes more discernible as to why consumers tattoo themselves with the Harley Davidson or Nike logo in permanent ink to proudly claim membership of a tribe; sprinkle the rim of a Corona bottle with sea salt and insert a lime wedge to flavor the beer; never mind paying $2.59 for a cup of Starbucks when they can brew coffee at home for $0.07/cup. As we move into the consideration of symbolic perception, our concern with fields, organizations, and relationships shifts our framework of brand discourse to approach brands as vessels of symbolic meanings that evoke personalities and emotion through myth, rituals, symbolism and ethos.
Brand is a noun. It is a verb. It may be about what we do. But, overall, it is all about what is in the mind – the mind of the consumer and the mind of the employee.
Read more about: An Anthropological Approach to Brands
The term generally accepted accounting principles (GAAP) has a specific meaning for accountants and auditors. The American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct prohibits members from expressing an opinion or stating affirmatively that financial statements or other financial data “present fairly…in conformity with generally accepted accounting principles,” if such information contains any departures from accounting principles promulgated by a body designated by the AICPA Council to establish such principles. If you are not familiar with GAAP hire an Accountant. Ask him or her for advise on how to set up your company. What you need to satisfy legal and tax requirements. This is important!
The above photos were taken of two restaurants with unique location issues. The restaurant in the top series is located looking out onto a beautiful beach, hard to find, located away from foot traffic, and in an old neighborhood with lots of trash. This restaurant was purchased by two partners from Chicago and they were struggling to gain customers. On row two is a different set of locations issues. This restaurant is located in an area with foot traffic, near beautiful hotels, many nearby competitors with no view of the tropical landscape. This restaurant was always half full of customers.
Both restaurants have marketing strategies that need to be tailored to over come or complement their location.
A location issue with a different twist occurs due to on-line search engines. Where do you want your company located on Google's front page when a potential customer searches for your product or service? Is the second or third page good enough?
Retail locations are chosen based on search as well, which explains why gas stations and retail stores are often “clumped” together. Consumers learn the location of a product and organize their mind accordingly. While you may not remember the name of all three gas stations on the same corner, your mind tells you that is where to go to find gas. Each station, assuming all else equal, then has a 1/3 shot at your business which is much better than gas stations you don’t visit because the location doesn’t resonate with your minds search. In order to maximize traffic stores must find locations that consumers associate with a product.
Revisit the video by Callum Cooper
Visit the KickStarter Site here: KickStarter
Callum's video shown on Vimeo at Mine Kafon not only won 5th place in GE FOCUS FORWARD Filmmaker Competition but he was also successful raising funds to produce his mine sweeper on KickStarter. The KickStarter site is a great site to visit to study how successful start up entrepreneurs pitch their idea. Compare your presentation to Callum's.
The business cycle is the periodic but irregular up-and-down movements in economic activity, measured by fluctuations in real GDP and other macroeconomic variables. If a slowdown or a contraction is severe a recession occurs. This chart of the DJIA highlights the impact that a recession has on the value of public traded companies."In economics, a recession is a business cycle contraction, a general slowdown in economic activity. Macroeconomic indicators such as GDP, employment, investment spending, capacity utilization, household income, business profits, and inflation fall, while bankruptcies and the unemployment rate rise." source: Wikipedia
In 1974, I started to work at my first professional job and six months later was laid off. I had never heard of a recession. I have circled two recent recessions and the impact on the DJIA. As I write this in March of 2013 the DJIA has just passed its previous historical closing high. Lots of people suffer in an Economic downturn, businesses close, banks, and auto companies have to be bailed out by the government. From this comes new opportunities for growth rooting from new ideas. How do you survive to be ready for these opportunities? A strong balance sheet, good customer base, lines of credit, loyal employees, hard work and faith.
“When people think about creativity, they think about artistic work — unbridled, unguided effort that leads to beautiful effect. But if you look deeper, you’ll find that some of the most inspiring art forms, such as haikus, sonatas, and religious paintings, are fraught with constraints. They are beautiful because creativity triumphed over the ‘rules.’ Constraints shape and focus problems and provide clear challenges to overcome. Creativity thrives best when constrained.” Marissa Mayer, the Google VP for User Experience
The Enterprise Engineer
When the term “ Enterprise Engineer ” was first used it was an acknowledgment by the Executive team that there were Engineers that failed to understand that they were required to be interested, concerned, and involved in all aspects of the use of the system, subsystem or component they were responsible to design. That includes the function, form, material, cost, sustainability, recycleablity, use, misuse, installation, delivery, smell, feel, and future undefined use.
The same requirements apply to the idea you are proposing to build a business around. The business owner, Partner, CEO, President has these requirements plus all the responsibilities that come with hiring employees, tax laws, membership of a community. Indicating you were not aware of your responsibilities will not exonerate you!
Why would you want to be an owner of a start up? One word. Freedom! Go back and watch again the video of Menlo. Does Menlo CEO Richard Sheridan look afraid, No! Excited Yes? This is a man that controls his destiny.
Are these crazy times? You bet they are. But so were the days when we were doing duck-and-cover air-raid drills in school, or going through the scares of 9/11. There will always be crazy times.
So stop thinking about how crazy the times are, and start thinking about what the crazy times demand. There has never been a worse time for business as usual. Business as usual is sure to fail, sure to disappoint, and sure to numb our dreams. That's why there has never been a better time for the new. Your competitors are too afraid to spend money on new productivity tools. Your bankers have no idea where they can safely invest. Your potential employees are desperately looking for something exciting, something they feel passionate about, and something they can genuinely engage in and engage with.
You get to make a choice. You can remake that choice every day, in fact. It's never too late to choose optimism, to choose action, to choose excellence. The best thing is that it only takes a moment -- just one second -- to decide.
Before you finish this paragraph, you have the power to change everything that's to come. And you can do that by asking yourself (and your colleagues) the one question that every organization and every individual needs to ask today: Why not be great?