Growth Times

In my experience helping entrepreneurs, the most important success driver of any business founder is the capacity:

1. to know their success drivers,
2. and to keep everything they do tied to those.

So being able to keep one’s eyes on the prize and not get lost in the weeds is the top quality any good entrepreneur should cultivate. In this age of information overload, however, requests are being thrown at us from every direction, and in the midst of that flood it can quickly become difficult to discern what matters from the rest.

Luckily, whatever problems technology throws at us, the human brain can still solve.

One method I recommend to solve the focus problem is to create two living documents to keep you on track:

• A Masterplan, that lists both the overall goals for your business and the immediate milestones you are pursuing. Think of each as, respectively, your cardinal direction (I find that concept more flexible than a “destination”, which sets things a bit too much in stone), and the first island your boat should be headed to (in that same direction!)
• A To-Do List, prioritized roughly

A few implementation tips:

• Keep it simple. Both documents don’t have to be fancy. In fact, they really shouldn’t be. Try to keep them as concise and as clear as possible. The longer and fancier – as in feature creep - both documents become, the least chances you’ll use them and the more chances you’ll get lost on the way
• Use standard software. For the masterplan, use a text editor like MS Word. For the to-do list, use a spreadsheet program like Excel, with 2 columns: Task, and “Done” (and if you’re good at excel, you can add an automatic timestamp for the Done entry). If you want my excel template for the to-do list, email me at gregboutin “AT” growthroute.com
• Keep one version only. This one is obvious, but you should have only one version of each document. If you spread the information over more than one version, you’ll have version control issues, have conflicting objectives across the versions and won’t be able to assess the priority of tasks against each other as easily, so avoid that. Yes, even if you work on more than one business. If you want to create similar documents for your personal life, however, I recommend keeping those separate.
• Update them every time. Very important: always, always keep both of the documents updated. Those should be working documents. Remember, they should be the unique source of truth for your business goals and your tasks. Captains use maps, compasses and task lists for the same reason. Yes, captains have task lists too. Or they should, in any case.
• Start small. Iterate, completing each document over time, especially after each shower when you finally got some strategic thinking time!
• Prioritize to-dos intelligently. I suggest a prioritization based on a loose combined factor of importance and urgency as perceived by the entrepreneur. Some like to separate both, thinking what’s urgent is not necessarily important. I disagree. First, it complicates your list. Second, the more important it is, the more urgent it should be, and vice-versa. But sure, some things are very important and can’t be done today, due to some dependency. Then either list the dependency, if that’s an action you should do soon, or downgrade the to-do, or move it to the Masterplan and make it part of your ”first island”: it might be important but it’s not actionable immediately, which is the key criteria for a working list. What’s top of list is what you should do next.
• Align both documents. Check whether the actions you’re pursuing – which should be listed in your to-do list – further the goals in your masterplan. If not, or not much, scrap them. Understanding why some actions you listed do not align with the goals you expressed in the Masterplan may also lead you to revise those goals.
• Share, but own. You are welcome and even invited to share your masterplan with your trusted partner(s), and to ask them for inputs. But remember, you are the Captain, and for as long as you are, you continue to own and be responsible for those documents.

What’s your system? Have recommendations? Please share.

Lead building a business, business creation, commercialization, Entrepreneur, entrepreneurship, focus, innovation, masterplan, Start Up, tech venture, Technology, to do list

My friend Fred Sweeney of VG Partners pointed me to this interesting call for help by the biotech industry in Canada, whose start-ups are finding it difficult to raise money to survive, let alone thrive. In these times of hardships, the ventures with the least obvious path to commercialization and revenue are the ones who suffer first and most. Given the lengthy development cycles and uncertain payout, biotech ventures evidently stand at the frontline of the crisis.

What all that shows is that a start-up should at all times be able to articulate the revenue model it is proposing to pursue. It should tie all its current efforts to this model, or “reverse-engineer revenue” as per the expression I coined at GrowthRoute. Doing just that provide three benefits: one, you stand in first row against competing start-ups when comes the time for VCs to hand out cash; two, keeping your eyes on the prize helps you identify where to focus your efforts today, and better allocate your current resources; three, spending some time thinking about how you will make money could point to nearer-term sources of revenue you may not have thought of.

Without a destination and a map to get there, you can have a tight ship and yet run it in circles. Better to never count on the government to get you back on track.

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What do the Wii, iPod, iPhone, netbooks, Facebook, Rockband, and Twitter have in common?

All of the technology these blockbusters required was available before they were conceived. None of them hinged on any technological breakthrough. What Apple, Nintendo or Asus did was taking clues from the market and reassembling technological bits into one coherent solution for users. And not just coherent, but also simple and easy to articulate. The Wii? A video game console designed to maximize fun for friends and families. The netbook? A lightweight computer that fits in a handbag and lets you surf the web. The iPod? A simple music player that integrates nicely with an intuitive music store.

By reverse-engineering actual user needs, these companies opened up a vast market for people who don’t care about technology, don’t want to see technology, or hear about technology, and only want something that does the job. For the Wii, that would be a video game device that’s fun, entertaining, with a lightning fast learning curve.

It’s worth repeating: customers don’t buy technologies. They buy solutions. That’s even true of B2B customers. If your technology does not fill a specific need in the market, you might get funding for a pilot project, you might even get VC money (many venture capitalists used to be CTOs), but you won’t get replicable, exponential market success. That’s why it is worth wrapping a research effort around a user need that can drive market success.

Market success and competitive differentiation can come from a number of sources, and technology is only one of them. Peter Drucker talked about that extensively in his book Innovation and Entrepreneurship, detailing other systematic sources of successful innovation such as changes in demographics or perception. Drucker offered commercial banking and health insurance as examples. We can lengthen the list at will: in addition to the iPod and the other examples I provided above, take McDonalds, car sharing, or Lego. Technology often is an enabler, but rarely is it the only one, and rarely is it adopted in the market without some significant transformation.

As such, the concentration of human resources into technology, which I witness at a number of start-ups, strikes me as vastly unbalanced, and almost certainly throttling the potential of innovation. The existing venture ecosystem, especially in Canada where I live, reinforces this bias by funding and rewarding technology-driven innovation much more than the other forms of innovation, be it through government R&D grant and tax incentives, commercialization programs and technology-obsessed VCs, or ultimately the self-perpetuating cycle of market-myopic entrepreneurs breeding another cohort of market-myopic entrepreneurs, supported by investors just because that’s the way it’s always been and where the government and VC money goes.

The power is in the last mile. If you’ve figured out how your technology will help someone with something, it is worth a hundred times what it was before you did. Make it a million times more if you figured out how to monetize it as well. That’s why the Apple, Nintendo, or Harmonix (the creators of Rockband – check out this video in which they explain how they centered their development around the idea on togetherness rather than just music creation) of the world focus first on defining that market need. The others focus on developing a technology and then figuring out what to do with it. That succeeds too, at about the same rate one hits the jackpot on a slot machine*.

* unless a government program and/or a VC blinded by their unconditional love for technology bails you out, of course.

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Paul Graham this month writes on the risk of VCs becoming irrelevant as the cost of start-ups “approaches” zero.

I humbly disagree. The cost is just shifting from hardware and software to talent, processes, and marketing programs.

Paul Graham is claiming from what feels like an “entrenched techie” standpoint that I noticed more than once reading his blog – which I do respect and admire – that “the web has made marketing and distribution free”.

Not so fast.

What wizard is going to run your cheap adword campaign (or maybe adword is dead too?) How are people going to find your site? What’s your sale process and have you understood your audience? How are you going to answer those service calls and emails? Are you going to run the next Google on the cloud? There are costs associated with all of that, and, even if they are compressed by technology too, the investments required to keep differentiating yourself are increasing.

What’s worse perhaps is that, with all its focus on IT, Paul seems to forget that not all start-ups are web start-ups. How about biotech, cleantech, robotics? Is marketing and distribution free for those ones as well?

There is, as always, some truth in what Paul is writing – the man is smart – but in my view, VCs are certainly here to stay and scale those start-ups that can make it into serious money machines. What do you think?

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