The table below will give an outline off tools and there specific use
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| Matrix |
This a record of my life, work and play as a Serial Entrepreneur, raised over £150 million and founded / co-founded six companies, listed one on the AIM and made trade sales of three others.
Thursday, October 20, 2011
Lean Six Sigma Tools
This will be an introduction to Lean manufacturing tools :
The table below will give an outline off tools and there specific use
The table below will give an outline off tools and there specific use
Wednesday, September 28, 2011
Profile
Gordon Whyte
Introduction:
I am an entrepreneurial senior operations executive with broad experience in General, Operational and Change Management of which more than 20 years at senior international level. I have managed multi-disciplined teams delivering complex projects worldwide in high technology based businesses, including multinational and start up businesses
Business experience includes:
• Hands on experience off managing six company start ups / SME’S with P&L responsibility
• Strategic business development, with hands on face to face customer experience
• Extensive senior operations experience, setting up new manufacturing operations, or developing outsourced manufacturing operations
• Developing business plans and financial modelling
• Leading fund raising both in Europe, North America and Middle East.
• Leading technology transfer and IP / Patent development
• Establishing and expanding businesses ensuring high profitability.
• Main business focus has been Semiconductor, Electronics, Photonics, Solar / Cleantech and Display technology
• Lean manufacturing implementation
Main achievements include:
• Led manufacturing division to be profitable after two years from start up ‘ and doubled revenue year on year prior to successful IPO in ’96 and subsequent sale to SDLI (USA)
• Introduced four new products to the market including the worlds first 10 GHz integrated driver modulator in 2001
• Launched world’s first optical ASIC platform for complex optical integrated circuits.
• Reduced customer returns by 40% and improved delivery performance by 50% with a cost reduction of 20% overall.
“Doing what is required to achieve the target”
To conclude: broad international experience, sound knowledge of value-added
mechanisms in different industries, understanding of all stakeholders
requirements, customised solution provider, profitability, sales and result orientated.
Email: gordonw63 at yahoo dot com
Thursday, September 22, 2011
Working out the point at which your new business becomes sustainable
How to calculate your break-even point
Your break-even point is the point at which your business is producing enough revenue each month to cover all your fixed and variable costs. Once you reach this point, any additional income generated each month is profit.
Estimating as accurately as you can when you will reach this point is an expected part of your business plan. In other words, you need to work out exactly how much you will need to sell each month, and at what price, to break even.
Before you can work this out you need to determine your start-up costs and monthly running costs, taking into account any fixed costs, such as repayments on loans, salaries, etc, as well as variable costs (costs which will vary depending on how much you sell, such as manufacturing costs, freelance costs, etc). You then need to build in your projections of how many products you will sell, or how much demand you will have for your service, per month.
By comparing your projected monthly revenues against your total monthly costs, you should be able to come up with a point at which you start to move into profit, that is, your break-even point.
Calculating the break-even point will give you an excellent idea of the costs involved in your business and the level of sales you will need to generate to cover your costs, which in turn will affect your overall business strategy.
How much business you have to generate (either number of products or units of service) in a given time to break even can be calculated using the equation below. You will break even when:
Total revenue per month = Total costs per month
Unit sale price × Unit sales = Total monthly fixed costs + (Unit variable cost × Unit sales)
(Unit sale price × Unit sales) – (Unit variable cost × Unit sales) = Total fixed costs
(Unit sale price – Unit variable cost) × Unit sales = Total fixed costs
Unit sales per month = Total fixed costs/Unit sale price – Unit variable cost
Once you know how much you need to sell in one month to break even, you can work out from your sales projections how long it will take for your business to reach this point. You can also see in the table the elements of the equation that you need to change to reach the break-even point sooner.
Thursday, September 08, 2011
Good advice on starting up an SME
This is a good read and a well laid out summary of the challenges of starting a company I found it on http://www.startups.co.uk/ , It started me thinking around the subject of fast growth, how it can mask company inefficencies, but on the other hand it allows you to have cash to fix problems quickly and without budget constraints.....
Company name: Versarien Ltd
Website: www.versarien.co.uk
Founders: Neill Ricketts, Will Battrick, Jim Murray-Smith
Age: 41, 32, 61
Based: Gloucestershire
Staff Numbers: 3
Date started: 20/12/10
Tell us what your business does:
Versarien is an advanced materials company specialising in a new form of metal foam with exceptional heat transfer properties.
Where did the idea for your business come from?
Versarien is commercialising a technology that has been developed from a Technology Strategy Board project. The original concept was the product of some research from the University of Liverpool but Versarien has significantly developed this original idea.
What’s your unique selling point?
The material replicates structures that occur in nature – in this case with a very large surface area and excellent heat transfer properties. The product is unique in that it is very scalable, material-efficient and cost-effective to manufacture.
What were you doing before starting up?
I am a graduate mechanical engineer who is passionate about UK innovation and manufacturing. I was made redundant from my last job as a main board director of a UK technology PLC. This company was one of the best performing shares on the AIM market during my time there and created significant shareholder value.
Have you always wanted to run your own business?
I have run my own business previously. I find the constraints of most organisations and the inability to think outside of the box very frustrating. I like to develop good teams that outperform expectations. However some corporate people tend to be intimidated by this fast progress. I like to work in companies that do not limit their success by their own blinkered approach.
What planning did you do before you started up?
We worked hard (and continue to work hard) to plan. We spent a large amount of time on developing a good business plan. A number of contacts aided in the market research.
How did you raise the money to get started?
We are still raising money and it has been a very difficult few months. Raising money for a pre-revenue business is one of the hardest projects I have ever done. It is harder to raise a small amount of cash than a much larger one. We have had a few rejections but only if our technology didn’t fit a sector.
Is your product manufactured in the UK or abroad?
Our product is manufactured in the UK in small numbers at the moment. We use the capacity which is available in the supply chain when needed and source our raw materials in the UK.
What challenges have you faced and how have you overcome them?
We have had to be very creative in trying to manage a limited budget and still achieving everything we need to. We have had to forego wages and put everything we have into the business. Prioritisation has been the key, in my humble opinion, and using every trick in the book to beg, borrow – but not steal.
Where is your business based?
We are currently operating from my office in Gloucestershire (at home), but we are hoping to move into a factory unit shortly. We have located a very favourable unit on a revitalised Rank Xerox site in Mitcheldean, and Gloucestershire First has been very supportive in helping us.
How have you promoted your business?
We have networked heavily, cold-called and built a website. Our marketing is in its infancy and we have just commissioned a press release that will be distributed to our target sector.
How did you decide how much to charge for your product?
We have looked heavily at the market and our offering provides a higher performance for the same price.
How many staff do you have?
We only have three at the moment and another three waiting to join. We tend to use sub-contract services and contacts when needed.
What has your growth been like?
We are not in a position to offer our product in volume yet, but we hope to be profitable in month nine of the plan. We are ahead of where we thought we would be.
What’s the impact on your home life been like?
The lack of available funding and the pressure to keep going has been very disruptive on home life. The constant stress and will power to ‘maintain the faith’ is very difficult. Everyone wonders why you bother and why you don’t get a ‘normal’ job. It can be very lonely. The team around me is very supportive though and I have a great network of people in similar situations.
What would you say the greatest difficulty has been in starting up?
The greatest difficulty has been finding a way to get to the funding that is available. The current flux generated by the reorganisation of government support hasn’t helped, but it is there if you work hard at it.
What was your first big breakthrough?
There have been a few, but the best would be either attaining a generous Technology Strategy Board grant, securing our first substantial commercial order or getting through to the final of a national competition.
What would you do differently?
I would not have relied on optimistic funders, but chosen to use the funds we had to get on with the doing – and done less of the talking. Given hindsight I would have bootstrapped the business at a much earlier stage.
What advice would you give to budding entrepreneurs?
I’d advise to set a good plan, to be very critical of your plan and to ask for lots of advice. If you can find a mentor who has gone through it then you will learn a lot. Turn over every opportunity out there.
Where do you want to be in five years’ time?
We hope to take the company public in three years and that it will be a significant global materials supply company by this stage.
Wednesday, August 24, 2011
Your guide to raising capital
If you need to calculate cap tables...want to know "if I sell for $100M, how much money does everyone receive" this web site by Jeff Boardman (founder of LearnVC), will supply the tools to help work these things out..it is also stuffed with good information on raising capital for the entrepreneur. Have a look round and see what you think.....www.learnvc.com
have a great week...
Regards
Gordon
have a great week...
Regards
Gordon
Thursday, August 11, 2011
Some tips on Pitching...
Lessons from the Den, week 2: how to ensure you’ve got the facts at your fingertips
Failing to grasp the key figures is one of the most dangerous mistakes in pitching (despite what we saw in the latest episode of Dragons' Den)8 August 2011
If The first two episodes of this year’s Dragons’ Den are anything to go by, it seems you can make all manner of mistakes in your pitch and still walk away with money, providing your idea is good enough. First we had Georgette Hewitt, who went to pieces during her presentation in last week’s show and still secured a £60,000 investment; then, last night we saw the husband-and-wife team of Liz and Alan Colleran lose all grasp of figures in the face of the Dragons’ scrutiny, and still wangle £80,000 out of newest addition to the panel Hilary Devey.
However, despite these two successes, it’s hard to escape the conclusion that, in both cases, the investment was secured in spite of the pitch, not because of it. In fact the Collerans’ mattress-and-duvet combo might well have secured an even better investment from one of the Dragons had they not made such a dogs’ dinner of their financials.
In real life, a pitch with such obvious flaws may not have received such sympathetic treatment – so it’s important to avoid the mistakes the Collerans made if you pitch for investment yourself. If an investor asks you for hard facts, and you reply “we’d know when we get back to the office” as Liz Colleran did, many angels and VCs would eat you for breakfast – so it’s important you know your business inside and out before you sit down to present your vision.
Here are five tips to ensure you’ve got all the answers at hand before you meet the investors:
1. Make sure you know your financials in every detail
When pitching to an investor, you need to be able to talk about your financial history – not just the sales, profit and turnover you recorded last year, but for every year since you started trading. It’s also important to have firm figures for overheads such as fuel, bills and rent, and for your overall wage bill.
An investor will be really impressed if you can tell them about economies of scale. Daniel Priestley, a business guru who has previously hosted training events with ex-Dragon James Caan, told us:
“Many products are expensive to make in small runs, but as soon as you hit certain numbers, it’s all profit – that’s the point at which an economy of scale is reached. You need to know exactly where this point is.”
2. Map out your product strategy
As well as thinking backwards – how do I explain what’s already happened to my business? – you also need to be able to explain your strategy, and map out the way you want to take the business forward in as much detail as possible. According to Daniel Priestley, “you need to look at your product strategy. What is the product, and how does that product make money, how much money is available to market that product, and what could be the second or third product down the line?”
Like the Collerans, the trio of Christian Hartmann, Tom Callard and Martin McLaughlin managed to snare a Dragon’s investment with their mainstream popcorn product. However, once again, their pitch was riddled with errors and omissions.
According to Daniel Priestley, they were “quoting their costs, rather than how much they would sell the product for. They needed to tell the Dragons how much they would sell to retailers for, how much mark-up they would make, and what they would make further down.”
3. Back up every claim
If you’re going to make a big claim, you need to be able to back it up – as we saw when the two DJs talked about jumping from £40,000 to £500,000 profit, without any substantiating evidence. The Dragons ripped them to shreds for this throwaway forecast, and what had begun as a promising pitch lay in tatters.
If the DJs had been able to cite forward orders, or asked an independent source, such as a business mentor, to back up their forecasts, they may have been able to convince the Dragons that their ambitious targets were achievable. If these resources hadn’t been available, they should have set their sights much lower. As Daniel Priestley told us, “if they’d quoted a more normal forecast, say £80,000 to £120,000, they’d have had more chance.”
4. Understand the market
When the hopeful with the bath Bluetooth system said he wanted to charge £400 per unit, you knew he’d lost his audience. He had fallen into the classic trap of judging the product through his own eyes – convinced of the genius of his invention, he had set a whopping price tag on it without thinking about what consumers would actually pay.
In working out the market rate for your product, you can use forward orders, written expressions of interest, customer receipts – even quotes gleaned from your own market research. With this kind of supporting information behind you, you stand a chance of luring an investor – but if not, you’re probably going to leave empty handed.
5. Understand what the investor’s looking for
Ultimately, you have to try and put yourself in the investor’s shoes – why would they put their hard-earned cash into your company? An angel or VC isn’t going to risk their money without good reason, so you need to have a clear picture in your own mind of what they’re looking for.
With this in mind, it’s crucial that you market your company as a grown-up, fully-fledged enterprise, rather than a fleeting dream. As Daniel Priestley said, “most of [the Dragons’ Den applicants] refer to what they had as an idea, and descried it as an idea. It’s much more powerful to describe what you’re offering as a product or a business. When you suggest an idea to your mate in the pub, that’s appropriate – but an investor wants to know whether you’ve got a product or business.
“You need to show you have intellectual property, you have distribution, you have brand, you have market acceptance, you have a passionate team committed to the project, and you’ve got some sort of barrier to entry. Remember that entrepreneurs aren’t talking in the language of speculation – they’re talking in the language of value.”
Article on www.startups.co.uk
Failing to grasp the key figures is one of the most dangerous mistakes in pitching (despite what we saw in the latest episode of Dragons' Den)8 August 2011
If The first two episodes of this year’s Dragons’ Den are anything to go by, it seems you can make all manner of mistakes in your pitch and still walk away with money, providing your idea is good enough. First we had Georgette Hewitt, who went to pieces during her presentation in last week’s show and still secured a £60,000 investment; then, last night we saw the husband-and-wife team of Liz and Alan Colleran lose all grasp of figures in the face of the Dragons’ scrutiny, and still wangle £80,000 out of newest addition to the panel Hilary Devey.
However, despite these two successes, it’s hard to escape the conclusion that, in both cases, the investment was secured in spite of the pitch, not because of it. In fact the Collerans’ mattress-and-duvet combo might well have secured an even better investment from one of the Dragons had they not made such a dogs’ dinner of their financials.
In real life, a pitch with such obvious flaws may not have received such sympathetic treatment – so it’s important to avoid the mistakes the Collerans made if you pitch for investment yourself. If an investor asks you for hard facts, and you reply “we’d know when we get back to the office” as Liz Colleran did, many angels and VCs would eat you for breakfast – so it’s important you know your business inside and out before you sit down to present your vision.
Here are five tips to ensure you’ve got all the answers at hand before you meet the investors:
1. Make sure you know your financials in every detail
When pitching to an investor, you need to be able to talk about your financial history – not just the sales, profit and turnover you recorded last year, but for every year since you started trading. It’s also important to have firm figures for overheads such as fuel, bills and rent, and for your overall wage bill.
An investor will be really impressed if you can tell them about economies of scale. Daniel Priestley, a business guru who has previously hosted training events with ex-Dragon James Caan, told us:
“Many products are expensive to make in small runs, but as soon as you hit certain numbers, it’s all profit – that’s the point at which an economy of scale is reached. You need to know exactly where this point is.”
2. Map out your product strategy
As well as thinking backwards – how do I explain what’s already happened to my business? – you also need to be able to explain your strategy, and map out the way you want to take the business forward in as much detail as possible. According to Daniel Priestley, “you need to look at your product strategy. What is the product, and how does that product make money, how much money is available to market that product, and what could be the second or third product down the line?”
Like the Collerans, the trio of Christian Hartmann, Tom Callard and Martin McLaughlin managed to snare a Dragon’s investment with their mainstream popcorn product. However, once again, their pitch was riddled with errors and omissions.
According to Daniel Priestley, they were “quoting their costs, rather than how much they would sell the product for. They needed to tell the Dragons how much they would sell to retailers for, how much mark-up they would make, and what they would make further down.”
3. Back up every claim
If you’re going to make a big claim, you need to be able to back it up – as we saw when the two DJs talked about jumping from £40,000 to £500,000 profit, without any substantiating evidence. The Dragons ripped them to shreds for this throwaway forecast, and what had begun as a promising pitch lay in tatters.
If the DJs had been able to cite forward orders, or asked an independent source, such as a business mentor, to back up their forecasts, they may have been able to convince the Dragons that their ambitious targets were achievable. If these resources hadn’t been available, they should have set their sights much lower. As Daniel Priestley told us, “if they’d quoted a more normal forecast, say £80,000 to £120,000, they’d have had more chance.”
4. Understand the market
When the hopeful with the bath Bluetooth system said he wanted to charge £400 per unit, you knew he’d lost his audience. He had fallen into the classic trap of judging the product through his own eyes – convinced of the genius of his invention, he had set a whopping price tag on it without thinking about what consumers would actually pay.
In working out the market rate for your product, you can use forward orders, written expressions of interest, customer receipts – even quotes gleaned from your own market research. With this kind of supporting information behind you, you stand a chance of luring an investor – but if not, you’re probably going to leave empty handed.
5. Understand what the investor’s looking for
Ultimately, you have to try and put yourself in the investor’s shoes – why would they put their hard-earned cash into your company? An angel or VC isn’t going to risk their money without good reason, so you need to have a clear picture in your own mind of what they’re looking for.
With this in mind, it’s crucial that you market your company as a grown-up, fully-fledged enterprise, rather than a fleeting dream. As Daniel Priestley said, “most of [the Dragons’ Den applicants] refer to what they had as an idea, and descried it as an idea. It’s much more powerful to describe what you’re offering as a product or a business. When you suggest an idea to your mate in the pub, that’s appropriate – but an investor wants to know whether you’ve got a product or business.
“You need to show you have intellectual property, you have distribution, you have brand, you have market acceptance, you have a passionate team committed to the project, and you’ve got some sort of barrier to entry. Remember that entrepreneurs aren’t talking in the language of speculation – they’re talking in the language of value.”
Article on www.startups.co.uk
Thursday, July 28, 2011
Communicating With Your Investors
Some Thoughts on Communicating With Your Investors
By Rob Go of NextView Ventures
Given that small institutional seed rounds are becoming more and more common, I thought I’d share a few of my thoughts on how to best communicate with investors. After raising this sort of round, it’s usually the first time an entrepreneur has to think about putting some structure of investor updates and communications. These aren’t set in stone, but some practices that I think make sense and have been effective.
1. Do investor due diligence. Before thinking about investor communication, I go back to the importance of doing due diligence on your potential investor to understand what their expectations are and what their behavior is typically like. My partner Dave blogged more about that topic here. The worst thing is to be misaligned after the investment about what you think is appropriate for the company and what your investor might think makes sense.
2. Establish a board, or a board-like governance structure. This seems intimidating, but has many benefits. First, getting investors to commit to board involvement is a great way to make sure your VC is committed to your seed round (that is, if you have a large VC in your round). Second, if you are planning to raise VC money in the future, it’s helpful to have established the cadence of regular board interactions early, and I think it’s actually good discipline to do this and get regular feedback from your board members. Plus, it helps you work out the kinks of running a board so it’s not such a shock to the system come the series A. I typically prefer small boards of just 3 people. Larger ones can work too if everyone collaborates well together. The nice thing about small boards is that you can also invite your strategic angel investors to come periodically to contribute as well without things getting too unwieldy. Just make sure they do their homework beforehand and can contribute!
3. Some of our portfolio companies have informal boards. It’s more of a regular investor “stand up” meeting that is pretty efficient. But the expectation is that the major investors are present and engaged, and for the most part, this has been true. Sometimes, our co-investors have sent 2 partners to these meetings, so it’s nice to know that it’s being taken seriously. Of our 13 portfolio companies, 10 had/have formal boards during the seed stage, and the rest had a more informal structure.
4. Make investor communications short, but frequent. I like the cadence of a 1-2 hour board meeting every 4-6 weeks. In the meantime, a weekly or bi-weekly update I think is helpful to keep investors caught up (I prefer this in email form because it’s more efficient for everyone). The goal of this level of communication is not to get the approval from your investors on your performance. The goal is to make sure that your investors are armed with the information they need to help you.
5. Pre-wire and focus. The goal of your 2-hour board meeting should be to spend as little time as possible on general updates and non-critical governance issues. Regular business updates should already be absorbed by your investors through your written updates. What you do want to spend time on is the 1-3 most critical strategic issues that you are facing and need practical help on. I’m an advocate for a quick chat with board members a few days before the meeting to say “ok, you get where the business is right? Can we agree to focus 50%+ of our time on issue A and B?”. This is a good way to introduce tough conversations too, so that you don’t get an unthoughtful gut reaction, but a constructive discussion about challenging issues like fundraising, missed targets, disfunction in the exec team, etc.
6. Give assignments and follow up. I’m always surprised when investors need to ask “how can we help?”. Remember, we all tell our LP’s that we are immensely helpful to our portfolio companies, so make us follow through on that! The best way to make sure that investors follow through on what they say they will do is to get them to say what they will do publicly and follow up publicly. A follow up can be an email that says “as next steps, thanks in advance to investor A helping with X, investor B helping with Y, and thanks to investor C for already doing Z!”.
http://robgo.org/about/
By Rob Go of NextView Ventures
Given that small institutional seed rounds are becoming more and more common, I thought I’d share a few of my thoughts on how to best communicate with investors. After raising this sort of round, it’s usually the first time an entrepreneur has to think about putting some structure of investor updates and communications. These aren’t set in stone, but some practices that I think make sense and have been effective.
1. Do investor due diligence. Before thinking about investor communication, I go back to the importance of doing due diligence on your potential investor to understand what their expectations are and what their behavior is typically like. My partner Dave blogged more about that topic here. The worst thing is to be misaligned after the investment about what you think is appropriate for the company and what your investor might think makes sense.
2. Establish a board, or a board-like governance structure. This seems intimidating, but has many benefits. First, getting investors to commit to board involvement is a great way to make sure your VC is committed to your seed round (that is, if you have a large VC in your round). Second, if you are planning to raise VC money in the future, it’s helpful to have established the cadence of regular board interactions early, and I think it’s actually good discipline to do this and get regular feedback from your board members. Plus, it helps you work out the kinks of running a board so it’s not such a shock to the system come the series A. I typically prefer small boards of just 3 people. Larger ones can work too if everyone collaborates well together. The nice thing about small boards is that you can also invite your strategic angel investors to come periodically to contribute as well without things getting too unwieldy. Just make sure they do their homework beforehand and can contribute!
3. Some of our portfolio companies have informal boards. It’s more of a regular investor “stand up” meeting that is pretty efficient. But the expectation is that the major investors are present and engaged, and for the most part, this has been true. Sometimes, our co-investors have sent 2 partners to these meetings, so it’s nice to know that it’s being taken seriously. Of our 13 portfolio companies, 10 had/have formal boards during the seed stage, and the rest had a more informal structure.
4. Make investor communications short, but frequent. I like the cadence of a 1-2 hour board meeting every 4-6 weeks. In the meantime, a weekly or bi-weekly update I think is helpful to keep investors caught up (I prefer this in email form because it’s more efficient for everyone). The goal of this level of communication is not to get the approval from your investors on your performance. The goal is to make sure that your investors are armed with the information they need to help you.
5. Pre-wire and focus. The goal of your 2-hour board meeting should be to spend as little time as possible on general updates and non-critical governance issues. Regular business updates should already be absorbed by your investors through your written updates. What you do want to spend time on is the 1-3 most critical strategic issues that you are facing and need practical help on. I’m an advocate for a quick chat with board members a few days before the meeting to say “ok, you get where the business is right? Can we agree to focus 50%+ of our time on issue A and B?”. This is a good way to introduce tough conversations too, so that you don’t get an unthoughtful gut reaction, but a constructive discussion about challenging issues like fundraising, missed targets, disfunction in the exec team, etc.
6. Give assignments and follow up. I’m always surprised when investors need to ask “how can we help?”. Remember, we all tell our LP’s that we are immensely helpful to our portfolio companies, so make us follow through on that! The best way to make sure that investors follow through on what they say they will do is to get them to say what they will do publicly and follow up publicly. A follow up can be an email that says “as next steps, thanks in advance to investor A helping with X, investor B helping with Y, and thanks to investor C for already doing Z!”.
http://robgo.org/about/
Wednesday, July 20, 2011
A Gold Key to Success for the company founder
I read a book by Randy Komisar "The Monk and the Riddle" a must read for anyone wanting to start thre own company, the essence of the book for me was that your start up is not your retirement policy, it is your life, it is something you can do for the rest of your life, it is your passion...see the article below by a Charlie O'Donnell , Charlie is a Principal at First Round Capital in NYC ..this is a interesting a so true spin on Customer development
live in the problem not in the solution how customer develop
I'm not a lean startup zealot, but there are obviously lots of aspects of it that can lead to a ton of insights about your business. Talking to customers is, of course, a good thing. I'd never argue against it.
I have seen, however, the customer development process wind up looking like a street corner salesman selling watches out of the inside of his coat. "Don't what this?" "What about this?" "I've got more in the car of my truck if you want them in blue."
What's lacking is an innate understanding of the customers problems before they go through the ideation phase. I find that some of the most sound entrepreneurial efforts are one where the founder has lived the problem uniquely in some way. Either they actually were the customer (and by customer I mean someone who pays for this kind of service) or they've literally spent years thinking about it--as an enthusiast or insider. I didn't come from the recruiting industry when I started Path 101, but I had been obsessed with career discovery as a mentor and educator for eight years before I thought of an idea I wanted to pursue.
That's different than, "hasn't this happened to you?" kind of approaches. Just because you had to wait on a line once doesn't mean you know nearly as much as the person in charge of people flow and traffic at Madison Square Garden. Similarly just because you've been to a conference doesn't mean you know nearly enough to provide the industry with a game changing piece of software to run them all. Its possible, but unlikely.
If you don't have unique insight into the nature or the problem, customer development is going to be random and unproductive. Its like being a doctor where you don't know why the patient is sick, but they feel better after you give them a Tylenol. It may appear like you've solved the problem, but it was just dumb luck that you addressed a symptom. That won't do much in terms of informing you as to a long term course of treatment or what happens when your Tylenol doesn't solve the problem as well as you thought it did.
I think a lot of companies suffer this when they're in new entrepreneurial ecosystems or ones outside of major cities where innovation is happening in the biggest industries. The startups tend to be really consumery spins on things they've seen on Techcrunch--as opposed to more organic solutions to problems they've experienced uniquely.
The first time I ever met Chantel Waterbury from Chloe & Isabel, she told me in detail about the issues in the direct sales jewelry business--a huge market but one that suffers from inferior product quality and poor branding. People don't exactly associate "fashion forward" with "tupperware for jewelry". To have enough insight into how to solve that, you need to be more than just someone who likes jewelry. You need direct experience to understand how to get high quality and stylish fashion jewelry made at a reasonable price. She launched fashion jewelry for major brands and was the top seller of CutCo knives on the West Coast--paid her way through college doing it. Sure, she'll pay attention to her customers, but she's starting from a position of experience that at least puts her in the right ballpark day one. That's what makes customer discovery a place to hone your idea with relevant feedback and not a random spin of the Wheel of Startups.
http://www.thisisgoingtobebig.com/ Blog of Charlie O'Donnell
Wednesday, July 13, 2011
Are your customers killing your business
3 Signs You’re Trying Too Hard to Please the Customer
Somewhere between the tragic Casey Anthony verdict and the final Space Shuttle launch, you may have heard about the slow train wreck that is Rupert Murdoch’s now-defunct News of the World.
If not, then here’s all you need to know: People working for the British tabloid are alleged to have hacked the voice mail accounts of numerous public figures, including members of the royal family and a murder victim. By shutting down the newspaper, it’s thought that its owners will be able to derail an official investigation.
I mention Murdoch’s problem for two reasons: First, I worked for Dow Jones & Co., which News Corp. now owns, after graduating from journalism school. And second, because I think I have a unique understanding of what happened, if the allegations against the newspaper prove to be true. I wrote my thesis on journalism errors, and I’ve made a few big mistakes myself, so I know what the now unemployed reporters at the News must be going through. I feel for them.
The News of the World’s sin isn’t “losing its way” as it claimed in its farewell edition last week. It was a much more common one in the corporate world: It was trying too hard.
Simply put, the reporters wanted so badly to give their readers what they thought they wanted, that they allegedly went too far to deliver it. In a hyper-competitive environment, that’s an easy thing to do–in every industry.
Three Signs A Business Has Gone Overboard
In an effort to provide the best possible service, companies often go too far to please. Here’s how:
1. They talk too much. Answering the phone, “Good morning, how may I bring a smile to your face today?” or signing off with, “Have a magical day!” aren’t just annoying to some customers. They often smack of insincerity. One well-known luxury hotel chain used to require its employees to use words like, “certainly” instead of “yes” and “my pleasure” instead of “OK” when interacting with guests. That drove some of its customers nuts, who often thought they were trapped in some kind of 19th-century costume drama.
2. They hover. This frequently happens on the sales floor with inexperienced salespeople. Instead of letting a customer browse, associates attach themselves to the “prospect” and follow that person around the floor. More experienced salespeople will give the customer a little room. But customers still know they’re being followed, and it can make them uncomfortable. The only thing worse than that are employees who openly fight over who gets credit for the sale. That’s not service; it’s stalking.
3. They wanna be your friend. A little hyperbole, particularly used in advertising, is perfectly acceptable for most shoppers. But with the growth of social media, companies are trying to present themselves as more than just customer-friendly and transparent. They also want to be your buddy. Check the Facebook or Twitter accounts of your favorite businesses, and you’d think you’ve found your long-lost friend. Nothing can be further from the truth.
Sure, all these things can irritate consumers. But they’re not as much of a turn-off as a company that isn’t trying at all.
No one knows how the hacking scandal will end. But I’d hate to see news organizations owned by News Corp. try less hard, if doing so means the product is boring and predictable.
Then again, I’m something of a contrarian, if not a heretic. I don’t think journalism is a religion. In the 21st century, it’s become just another form of entertainment for most consumers — including me.
By Christopher Elliott Who is a consumer advocate, syndicated columnist and curator of the On Your Side wiki. He’s the author of the upcoming book Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals, which critics have called it “eye-opening” and “inspiring.” You can follow Elliott on Twitter, Facebook or his personal blog, Elliott.org or email him directly.
Somewhere between the tragic Casey Anthony verdict and the final Space Shuttle launch, you may have heard about the slow train wreck that is Rupert Murdoch’s now-defunct News of the World.
If not, then here’s all you need to know: People working for the British tabloid are alleged to have hacked the voice mail accounts of numerous public figures, including members of the royal family and a murder victim. By shutting down the newspaper, it’s thought that its owners will be able to derail an official investigation.
I mention Murdoch’s problem for two reasons: First, I worked for Dow Jones & Co., which News Corp. now owns, after graduating from journalism school. And second, because I think I have a unique understanding of what happened, if the allegations against the newspaper prove to be true. I wrote my thesis on journalism errors, and I’ve made a few big mistakes myself, so I know what the now unemployed reporters at the News must be going through. I feel for them.
The News of the World’s sin isn’t “losing its way” as it claimed in its farewell edition last week. It was a much more common one in the corporate world: It was trying too hard.
Simply put, the reporters wanted so badly to give their readers what they thought they wanted, that they allegedly went too far to deliver it. In a hyper-competitive environment, that’s an easy thing to do–in every industry.
Three Signs A Business Has Gone Overboard
In an effort to provide the best possible service, companies often go too far to please. Here’s how:
1. They talk too much. Answering the phone, “Good morning, how may I bring a smile to your face today?” or signing off with, “Have a magical day!” aren’t just annoying to some customers. They often smack of insincerity. One well-known luxury hotel chain used to require its employees to use words like, “certainly” instead of “yes” and “my pleasure” instead of “OK” when interacting with guests. That drove some of its customers nuts, who often thought they were trapped in some kind of 19th-century costume drama.
2. They hover. This frequently happens on the sales floor with inexperienced salespeople. Instead of letting a customer browse, associates attach themselves to the “prospect” and follow that person around the floor. More experienced salespeople will give the customer a little room. But customers still know they’re being followed, and it can make them uncomfortable. The only thing worse than that are employees who openly fight over who gets credit for the sale. That’s not service; it’s stalking.
3. They wanna be your friend. A little hyperbole, particularly used in advertising, is perfectly acceptable for most shoppers. But with the growth of social media, companies are trying to present themselves as more than just customer-friendly and transparent. They also want to be your buddy. Check the Facebook or Twitter accounts of your favorite businesses, and you’d think you’ve found your long-lost friend. Nothing can be further from the truth.
Sure, all these things can irritate consumers. But they’re not as much of a turn-off as a company that isn’t trying at all.
No one knows how the hacking scandal will end. But I’d hate to see news organizations owned by News Corp. try less hard, if doing so means the product is boring and predictable.
Then again, I’m something of a contrarian, if not a heretic. I don’t think journalism is a religion. In the 21st century, it’s become just another form of entertainment for most consumers — including me.
By Christopher Elliott Who is a consumer advocate, syndicated columnist and curator of the On Your Side wiki. He’s the author of the upcoming book Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals, which critics have called it “eye-opening” and “inspiring.” You can follow Elliott on Twitter, Facebook or his personal blog, Elliott.org or email him directly.
Thursday, April 21, 2011
R&D tax credits explained ( Maybe)
R&D tax credits can help bring a company so extra income, you have to be smart on documentation of projects and improvements but it very interesting to see where you can recoup soem of your costs, but my advice is seek council from a recognized advisor some one who knows your industry and has a track record, ask around , or talk to your auditors. I found this article which will explain the basics. Enjoy
R&D tax credits explained
The government tax break that gives you money back for investing in innovation,
The chancellor announced sweeping changes to the research and development (R&D) tax credits system in his 2011 budget, offering greater encouragement for entrepreneurs to invest in original research and product design. But what exactly do the changes entail, and what do they mean for small businesses?
Essentially, the changes announced the budget have significantly increased the tax breaks available to companies which invest in research and development.
Under the new rules, a company which runs a dedicated R&D scheme can claim up to 200% relief on corporation tax for any money they spend on the project; essentially, this means the company will pay no tax on the cost of its programme, and receive an additional 100% corporation tax discount. The amount of relief will rise to 225% in 2012.
Furthermore, for those companies which make a loss on their R&D programme, the government is now offering payable credit for up to 24% of the project's total cost - a major boost for the tech start-ups which are being strongly encouraged by the current administration.
Definition
But before everyone starts rushing out an investing in a ground-breaking research project, it's important to know what an R&D project actually is. There's no point splurging thousands of pounds on R&D if it doesn't meet the government's criteria for relief.
At its most simple, R&D refers to research which directly contributes to the creation of new and innovative products, processes and services, or simply the enhancement of knowledge and understanding. The project must have wider relevance, and benefit, beyond the profit margins of the company carrying out the work. If you're thinking of carrying out an R&D project purely for your own ends, you won't get tax credits for it.
On the other hand, if you want R&D tax credits, you must prove the research is linked to what your company does. If you make industrial cleaning products for a living, and then suddenly decide to build a new type of spaceship, the government won't look favourably on your R&D application.
Finally, it's important to know what sort of industries and sectors qualify for R&D relief. The credits are primarily designed for companies in the science and technology sectors, such as manufacturing, engineering and hi-tech; if your company operates in the humanities or social sciences sectors, you probably won't get much joy in applying for relief.
It's also worth noting that your research must be original - i.e. it should not duplicate research which has already been done - and your findings must be borne of a systematic process - if you've just got lucky with a random piece of investigation, or happened upon an amazing discovery while going about your usual business, you'll be wasting your time if you go in search of credits.
How can you apply to get an R&D tax break?
If you feel that the work you are undertaking, or plan to undertake, qualifies for R&D tax credits, it’s imperative that you apply for consideration. As the old saying goes, there is no harm in asking. If you fail to apply for R&D tax breaks, you could miss out on valuable savings, putting your entire project at risk and damaging the viability of your business.
All claims relating to R&D tax credits must be included in your company tax return, or amended return. As a small business, you should put a tick in box 99 of the form to pinpoint the size of your company, then insert a figure for the enhanced expenditure in box 101 – this is the amount you spent on the R&D project, multiplied by 2.
The normal time limit for making your claim is two years after the end of the relevant Corporation Tax accounting period. This figure should also be included in your calculations of the profit (Box 3) or the loss (Box 122).
And the boxes don’t stop there – you’ve also got to put the amount payable in boxes 87, 89 and 143 – and put an X in the ‘repayment due for this return period’ box, found on page 1.
Ref www.startups.co.uk
R&D tax credits explained
The government tax break that gives you money back for investing in innovation,
The chancellor announced sweeping changes to the research and development (R&D) tax credits system in his 2011 budget, offering greater encouragement for entrepreneurs to invest in original research and product design. But what exactly do the changes entail, and what do they mean for small businesses?
Essentially, the changes announced the budget have significantly increased the tax breaks available to companies which invest in research and development.
Under the new rules, a company which runs a dedicated R&D scheme can claim up to 200% relief on corporation tax for any money they spend on the project; essentially, this means the company will pay no tax on the cost of its programme, and receive an additional 100% corporation tax discount. The amount of relief will rise to 225% in 2012.
Furthermore, for those companies which make a loss on their R&D programme, the government is now offering payable credit for up to 24% of the project's total cost - a major boost for the tech start-ups which are being strongly encouraged by the current administration.
Definition
But before everyone starts rushing out an investing in a ground-breaking research project, it's important to know what an R&D project actually is. There's no point splurging thousands of pounds on R&D if it doesn't meet the government's criteria for relief.
At its most simple, R&D refers to research which directly contributes to the creation of new and innovative products, processes and services, or simply the enhancement of knowledge and understanding. The project must have wider relevance, and benefit, beyond the profit margins of the company carrying out the work. If you're thinking of carrying out an R&D project purely for your own ends, you won't get tax credits for it.
On the other hand, if you want R&D tax credits, you must prove the research is linked to what your company does. If you make industrial cleaning products for a living, and then suddenly decide to build a new type of spaceship, the government won't look favourably on your R&D application.
Finally, it's important to know what sort of industries and sectors qualify for R&D relief. The credits are primarily designed for companies in the science and technology sectors, such as manufacturing, engineering and hi-tech; if your company operates in the humanities or social sciences sectors, you probably won't get much joy in applying for relief.
It's also worth noting that your research must be original - i.e. it should not duplicate research which has already been done - and your findings must be borne of a systematic process - if you've just got lucky with a random piece of investigation, or happened upon an amazing discovery while going about your usual business, you'll be wasting your time if you go in search of credits.
How can you apply to get an R&D tax break?
If you feel that the work you are undertaking, or plan to undertake, qualifies for R&D tax credits, it’s imperative that you apply for consideration. As the old saying goes, there is no harm in asking. If you fail to apply for R&D tax breaks, you could miss out on valuable savings, putting your entire project at risk and damaging the viability of your business.
All claims relating to R&D tax credits must be included in your company tax return, or amended return. As a small business, you should put a tick in box 99 of the form to pinpoint the size of your company, then insert a figure for the enhanced expenditure in box 101 – this is the amount you spent on the R&D project, multiplied by 2.
The normal time limit for making your claim is two years after the end of the relevant Corporation Tax accounting period. This figure should also be included in your calculations of the profit (Box 3) or the loss (Box 122).
And the boxes don’t stop there – you’ve also got to put the amount payable in boxes 87, 89 and 143 – and put an X in the ‘repayment due for this return period’ box, found on page 1.
Ref www.startups.co.uk
Monday, April 18, 2011
Job Advert for Micro Electronics packaging process engineer
I am looking for a Process engineer with the requirments below, if interested please email me on:
T: +44(0)1506 403 550
Process Engineer Job Outline.
Degree or HND with relevant experience.
5 years industrial experience in the development/manufacturing of microelectronic or optoelectronic products.
Relevant experience in the any of wafer saw, wirebond, pick and place and precision placement equipment.
Familiarity with Telcordia, Jedec and IPC reliability requirements for optoelectronic, and semiconductor products/packages.
Knowledge of assembly processes for optical components such as LEDs, laser diodes and photo detectors including optical alignment would be an advantage Proven ability to manage technical projects to successful completion.
General Experience of working with external customers.
Used to working in small multi-skilled teams.
Good communication skills.
Tuesday, April 05, 2011
Entropy and change management
From Toilet Paper to Typhoons: Why managers need to let go
During one of the episodes of the Wonders of The Universe series on BBC One, Professor Brian Cox introduced us to the concept of entropy. Entropy is a term used by physicists to explain the way in which things move inexorably from an organised to less organised state. As Professor Cox explained, this is the natural law of the universe. For example, when we build a car we take raw materials such as metal, leather, plastic and glass and arrange them in a highly organised way to make a car. But if we then leave that car for long enough the metal will rust, the glass will become brittle and break and the leather will dry out and turn to dust. If the car is left for a very long time it will eventually disappear altogether. This thought left me wondering about the nature of organisations. If a progression from order to chaos is the natural order of the universe, then is this same pressure present in organisations and, perhaps more importantly, what is the optimum position for an organisation between the extremes of rigid inflexibility (low entropy) and complete chaos (high entropy)? This question is not as crazy as it might at first appear. Take as an example of an organisation with a low entropy value the last company in Britain to produce hard toilet paper. For those of you lucky enough to not know what this is, hard toilet paper was shiny on one side and formed painfully sharp edges when scrunched up. It was however what people used to wipe their bottoms until the introduction of soft toilet tissues in the 1950s. However, the hard paper was cheaper and it was not until the 1990s that the last UK company making hard toilet paper went out of business. Clearly, that organisation was so set in its ways and so resistant to change that the introduction of soft tissue, quilted tissue or even moisturised and scented tissue completely passed it by. Perhaps the reason for this seemingly blinkered approach can be found in the history of organisations and in particular in the philosophy and practice of management. Developed in the late seventeenth and early nineteenth centuries, the purpose of management was to enable the business-founders who led the industrial revolution to coordinate the activities of the huge workforces they employed. Prior to that, most businesses were small cottage industries where a formal management process was not needed. Because the workers in those early organisations were the means of production, their activities needed to be coordinated and closely supervised. So, when Henry Ford said he wanted all his Model T cars to be black, he used his managers to ensure that his orders were carried out and that each and every car was indeed black. Provided that either nothing changes or that the pace of change is slow enough for the business founder or chief executive to anticipate and direct all the necessary changes, this low entropy organisational model works well. Indeed, the massive growth in prosperity of the Western economies during the last 150 years or so stands as testament to just how well it has served us. More recently though the pace of change has accelerated to unprecedented levels. The combined effects of mechanisation and globalisation mean that a new innovation launched on one side of the world today can be copied and become a commodity product within a matter of weeks. For example, did you know that the Disney Corporation releases, on average, a new product every 3 minutes, or that most consumer goods companies will today be selling products that did not exist 6 months ago and that will no longer exist in 6 months time? In this fast-moving world where the number of decisions an organisation needs to take every day vastly exceeds the capacity of a single person, the traditional role of management in enforcing blind obedience to directions from above has changed. Today's managers need to be leaders of change as well as supervisors of the process. And in this environment, too much stability is a bad thing! So to be more agile and more receptive to change, an organisation needs to be less stable and therefore more chaotic. To illustrate the benefits of this higher entropy model, take the case of the Typhoon Eurofighter. This aeroplane was deliberately designed to be the least stable aircraft in the world. It is in fact so unstable that if it were not for the numerous computer systems that monitor and control its every movement, it would be impossible to fly. Yet it is this instability that also makes it the most manoeuvrable aircraft in the world. In the Typhoon the pilot is therefore not really piloting the aircraft at all, that is done by computer. They are instead acting as a leader – setting direction and initiating changes. The challenge in building the Typhoon was therefore to find the right balance between chaos and organisation. Too much chaos and the aircraft would be un-flyable, too little and it would not be sufficient manoeuvrable. In organisational life this same dilemma is represented by the balance between management and leadership skills. The discipline of management is all about stability while the discipline of leadership is all about change. John Kotter, the legendary Professor of Leadership at Harvard University famously summed it up in his book "Leading Change" when he said that in times of stability a balance of 80% management 20% leadership is appropriate, but that in times of change these percentages should be reversed. Since no one would dispute that in organisational life the pace of change is greater today than at any time in the past, the question we should all be asking ourselves is whether we have got the balance between management and leadership right, or whether our organisational entropy score is too low?
About the Author Alistair Schofield is Managing Director of Extensor Limited.
www.extensor.co.uk
Friday, March 18, 2011
How to know when a venture capitalist may really be your friend
How to know when a venture capitalist may really be your friend ?
Light hearted look at this subject....
Live from the Cleantech Forum, the largest investor conference for energy and environmental technologies, our take on how to tell if the venture capital investor you are talking to really may be your friend. Only partly tongue in cheek.
1) when you ask how things are going, he moans about all of his portfolio companies who are suffering; and doesn’t tell how all of them are getting traction.
2) when you ask whether they’re actually investing this year, he tells you no, their fund is full but he refers you to an investor who has just raised a fund (and doesn’t tell you, “oh yes; we’ve still got one or two deals left to do and we’re exploring raising our next fund” – VC code for I’m out of money.
3) when you ask for advice, he actually tells you the terms of the last couple of deals they’ve done.
4) in your due diligence, he shows you the business plan of one of his portfolio companies who competes with you – instead of handing yours to them.
5) he starts offering to meet at YOUR office and then picks up the tab for lunch.
6) he gets your kid an internship at one of his companies.
And, the final way you know the VC you are talking to may really be your friend:
7) he hands you his resume.
Have a good week....and by the way a VC never makes friends with anyone but another VC :)
Light hearted look at this subject....
Live from the Cleantech Forum, the largest investor conference for energy and environmental technologies, our take on how to tell if the venture capital investor you are talking to really may be your friend. Only partly tongue in cheek.
1) when you ask how things are going, he moans about all of his portfolio companies who are suffering; and doesn’t tell how all of them are getting traction.
2) when you ask whether they’re actually investing this year, he tells you no, their fund is full but he refers you to an investor who has just raised a fund (and doesn’t tell you, “oh yes; we’ve still got one or two deals left to do and we’re exploring raising our next fund” – VC code for I’m out of money.
3) when you ask for advice, he actually tells you the terms of the last couple of deals they’ve done.
4) in your due diligence, he shows you the business plan of one of his portfolio companies who competes with you – instead of handing yours to them.
5) he starts offering to meet at YOUR office and then picks up the tab for lunch.
6) he gets your kid an internship at one of his companies.
And, the final way you know the VC you are talking to may really be your friend:
7) he hands you his resume.
Have a good week....and by the way a VC never makes friends with anyone but another VC :)
Thursday, March 10, 2011
Three steps to building a better top team
Three steps to building a better top team
When a top team fails to function, it can paralyze a whole company. Here’s what CEOs need to watch out for:
Few teams function as well as they could. But the stakes get higher with senior-executive teams: dysfunctional ones can slow down, derail, or even paralyze a whole company. In our work with top teams at more than 100 leading multinational companies,1 including surveys with 600 senior executives at 30 of them, we’ve identified three crucial priorities for constructing and managing effective top teams. Getting these priorities right can help drive better business outcomes in areas ranging from customer satisfaction to worker productivity and many more as well.
1. Get the right people on the team . . . and the wrong ones off
Determining the membership of a top team is the CEO’s responsibility—and frequently the most powerful lever to shape a team’s performance. Many CEOs regret not employing this lever early enough or thoroughly enough. Still others neglect it entirely, assuming instead that factors such as titles, pay grades, or an executive’s position on the org chart are enough to warrant default membership. Little surprise, then, that more than one-third of the executives we surveyed said their top teams did not have the right people and capabilities.
The key to getting a top team’s composition right is deciding what contributions the team as a whole, and its members as individuals, must make to achieve an organization’s performance aspirations and then making the necessary changes in the team. This sounds straight-forward, but it typically requires conscious attention and courage from the CEO; otherwise, the top team can underdeliver for an extended period of time.
That was certainly the case at a technology services company that had a struggling top team: fewer than one in five of its members thought it was highly respected or shared a common vision for the future, and only one in three thought it made a valuable contribution to corporate performance. The company’s customers were very dissatisfied—they rated its cost, quality, and service delivery at only 2.3 on a 7-point scale—and the team couldn’t even agree on the root causes.
A new CEO reorganized the company, creating a new strategy group and moving from a geography-based structure to one based on two customer-focused business units—for wholesale and for retail. He adapted the composition of his top team, making the difficult decision to remove two influential regional executives who had strongly resisted cross-organizational collaboration and adding the executive leading the strategy group and the two executives leading the retail and the wholesale businesses, respectively. The CEO then used a series of workshops to build trust and a spirit of collaboration among the members of his new team and to eliminate the old regional silo mentality. The team also changed its own performance metrics, adding customer service and satisfaction performance indicators to the traditional short-term sales ones.
Customers rated the company’s service at 4.3 a year later and at 5.4 two years later. Meanwhile, the top team, buoyed by these results, was now confident that it was better prepared to improve the company’s performance. In the words of one team member, “I wouldn’t have believed we could have come this far in just one year.”
2. Make sure the top team does just the work only it can do
Many top teams struggle to find purpose and focus. Only 38 percent of the executives we surveyed said their teams focused on work that truly benefited from a top-team perspective. Only 35 percent said their top teams allocated the right amounts of time among the various topics they considered important, such as strategy and people.
What are they doing instead? Everything else. Too often, top teams fail to set or enforce priorities and instead try to cover the waterfront. In other cases, they fail to distinguish between topics they must act on collectively and those they should merely monitor. These shortcomings create jam-packed agendas that no top team can manage properly. Often, the result is energy-sapping meetings that drag on far too long and don’t engage the team, leaving members wondering when they can get back to “real work.” CEOs typically need to respond when such dysfunctions arise; it’s unlikely that the senior team’s members—who have their own business unit goals and personal career incentives—will be able to sort out a coherent set of collective top-team priorities without a concerted effort.
The CEO and the top team at a European consumer goods company rationalized their priorities by creating a long list of potential topics they could address. Then they asked which of these had a high value to the business, given where they wanted to take it, and would allow them, as a group, to add extraordinary value. While narrowing the list down to ten items, team members spent considerable time challenging each other about which topics individual team members could handle or delegate. They concluded, for example, that projects requiring no cross-functional or cross-regional work, such as addressing lagging performance in a single region, did not require the top team’s collective attention even when these projects were the responsibility of an individual team member. For delegated responsibilities, they created a transparent and consistent set of performance indicators to help them monitor progress.
This change gave the top team breathing room to do more valuable work. For the first time, it could focus enough effort on setting and dynamically adapting cross-category and cross-geography priorities and resource allocations and on deploying the top 50 leaders across regional and functional boundaries, thus building a more effective extended leadership group for the company. This, in turn, proved crucial as the team led a turnaround that took the company from a declining to a growing market share. The team’s tighter focus also helped boost morale and performance at the company’s lower levels, where employees now had more delegated responsibility. Employee satisfaction scores improved to 79 percent, from 54 percent, in just one year.
3. Address team dynamics and processes
A final area demanding unrelenting attention from CEOs is effective team dynamics, whose absence is a frequent problem: among the top teams we studied, members reported that only about 30 percent of their time was spent in “productive collaboration”—a figure that dropped even more when teams dealt with high-stakes topics where members had differing, entrenched interests. Here are three examples of how poor dynamics depress performance:
The top team at a large mining company formed two camps with opposing views on how to address an important strategic challenge. The discussions on this topic hijacked the team’s agenda for an extended period, yet no decisions were made.
The top team at a Latin American insurance company was completely demoralized when it began losing money after government reforms opened up the country to new competition. The team wandered, with little sense of direction or accountability, and blamed its situation on the government’s actions. As unproductive discussions prevented the top team from taking meaningful action, other employees became dissatisfied and costs got out of control.
The top team at a North American financial-services firm was not aligned effectively for a critical company-wide operational-improvement effort. As a result, different departments were taking counterproductive and sometimes contradictory actions. One group, for example, tried to increase cross-selling, while another refused to share relevant information about customers because it wanted to “own” relationships with them.
CEOs can take several steps to remedy problems with team dynamics. The first is to work with the team to develop a common, objective understanding of why its members aren’t collaborating effectively. There are several tools available for the purpose, including top-team surveys, interviews with team members, and 360-degree evaluations of individual leaders. The CEO of the Latin American insurance company used these methods to discover that the members of his top team needed to address building relationships and trust with one another and with the organization even before they agreed on a new corporate strategy and on the cultural changes necessary to meet its goals (for more on building trust, see “Dispatches from the front lines of management innovation”). One of the important cultural changes for this top team was that its members needed to take ownership of the changes in the company’s performance and culture and to hold one another accountable for living up to this commitment.
Correcting dysfunctional dynamics requires focused attention and interventions, preferably as soon as an ineffective pattern shows up. At the mining company, the CEO learned, during a board meeting focused on the team’s dynamics, that his approach—letting the unresolved discussion go on in hopes of gaining consensus and commitment from the team—wasn’t working and that his team expected him to step in. Once this became clear, the CEO brokered a decision and had the team jump-start its implementation.
Often more than a single intervention is needed. Once the CEO at the financial-services firm understood how poorly his team was aligned, for example, he held a series of top-team off-site meetings aimed specifically at generating greater agreement on strategy. One result: the team made aligning the organization part of its collective agenda, and its members committed themselves to communicating and checking in regularly with leaders at lower levels of the organization to ensure that they too were working consistently and collaboratively on the new strategy. One year later, the top team was much more unified around the aims of the operational-improvement initiative—the proportion of executives who said the team had clarity of direction doubled, to 70 percent, and the team was no longer working at cross-purposes. Meanwhile, operational improvements were gaining steam: costs came down by 20 percent over the same period, and the proportion of work completed on time rose by 8 percent, to 96.3 percent.
Finally, most teams need to change their support systems or processes to catalyze and embed change. At the insurer, for example, the CEO saw to it that each top-team member’s performance indicators in areas such as cost containment and employee satisfaction were aligned and pushed the team’s members to share their divisional performance data. The new approach allowed these executives to hold each other accountable for performance and made it impossible to continue avoiding tough conversations about lagging performance and cross-organizational issues. Within two years, the team’s dynamics had improved, along with the company’s financials—to a return on invested capital (ROIC) of 16.6 percent, from –8.8 percent, largely because the team collectively executed its roles more effectively and ensured that the company met its cost control and growth goals.
Each top team is unique, and every CEO will need to address a unique combination of challenges. As the earlier examples show, developing a highly effective top team typically requires good diagnostics, followed by a series of workshops and field work to address the dynamics of the team while it attends to hard business issues. When a CEO gets serious about making sure that her top team’s members are willing and able to help meet the company’s strategic goals, about ensuring that the team always focuses on the right topics, and about managing dynamics, she’s likely to get results. The best top teams will begin to take collective responsibility and to develop the ability to maintain and improve their own effectiveness, creating a lasting performance edge.
About the Authors
Michiel Kruyt is an associate principal in McKinsey’s Amsterdam office, Judy Malan is a principal in the Johannesburg office, and Rachel Tuffield is an alumnus of the Sydney office.
The authors wish to acknowledge the contributions of Carolyn Aiken, a principal in McKinsey’s Toronto office, and Scott Keller, a director in the Chicago office.
Friday, February 18, 2011
Are You Ready to Start Your Own Business?
Are You Ready to Start Your Own Business?
By Elaine Pofeldt
We’ve all hatched potential escape plans from our desks, and if you're reading this, you're one of those people who want to get past the daydreaming phase. Look, if you have a great idea (that part is up to you) and do a bit of smart planning (we'll help with that), starting your own company within the year isn't as out of reach as you might think.
Rocket Lawyer's Charley Moore
Take Charley Moore. Through his experiences advising small business owners as a corporate lawyer and later selling a software product called Family Lawyer, he noticed a vast, unmet need in the marketplace in 2007. New startup founders urgently needed help with preparing documents like incorporation papers and business contracts for employees — but couldn’t afford to hire a lawyer for every legal task.
So six months later with his own capital, he launched Rocket Lawyer, a website that helps small business owners prepare legal documents based on templates created by attorneys. The key to launching quickly, he says, was a small team and a well-defined project. The five-employee startup took off, and quickly attracted the attention and $3 million in funding from a small group of investors and Lexis Nexis. The company now does about $10 million in annual revenue.
Moore isn't the only one who's been busy launching, recession be damned. In 2009 the number of new startups reached its highest level in 14 years — even exceeding the startup boom peak of 1999-2000. And 2011 brings new advantages: Washington's renewed focus on small business has helped bring about a $30 billion federal loan fund and incentives for banks to start lending again to small businesses, a new tax break that could let you deduct health insurance costs for yourself and your family from self-employment taxes, and a host of other benefits for startup founders.
So will 2011 be the year you become your own boss? Let's get down to the nitty gritty details as to how you can make it happen, both personally and financially. Read on for some key questions to ask yourself:
1. How important is it for you to maintain your lifestyle?
Even if your business grows quickly, you're probably going to have to forgo a salary in the beginning so that you can reinvest your earnings in the business. Unless you rely primarily on a spouse or partner’s income, you may have to make some tough choices that affect everything from your social life to your children’s education.
When Sara Morgan left her corporate career as a Web developer five years ago to start her own Web consulting firm, the divorced mother had three children to support, private school tuitions to pay and a mortgage. To give herself the financial freedom she needed, she sold her house in Baton Rouge and bought a cheaper one in a small town with good public schools, so she didn’t have to pay tuition. She now pays herself 60 to 70 percent of her former salary but has more time with her children and says she’d never go back to corporate America. “In some ways, I feel I would rather go to jail,” says Morgan, who loathed the office politics and stress.
2. What could make you fail?
It may seem pessimistic to list potential threats to your business and look for ways to mitigate them before they’ve even happened. But blind optimism is not your friend now. This exercise, known as a risk analysis, is essential for successful business ownership, says Nat Wasserstein, a crisis manager with Lindenwood Associates.
He recently worked with a company that leases the coin-operated amusement rides that sit in front of many stores. When the owners did a risk analysis, they realized that the greatest potential threat to their business was a poor relationship with any of the store managers who controlled the turf in front of the stores. Result: The owners made it part of their business plan to keep the managers happy by, for instance, volunteering to move the rides any time a sidewalk sale was planned. Today, the business is thriving.
3. Are your significant others on board?
It's one thing to ask a spouse to become the primary breadwinner for a while or to take on more childcare, if necessary. But the bigger question to ask is if he or she will back your "plan B" in a worst-case scenario — like, say, raiding your joint retirement savings in a cash-flow crunch. “People often focus too much on the business plan, and there’s not enough alignment with the life plan,” says Andrew Sherman, a partner at Jones Day who advises many small business clients.
4. How much money does your family depend on to survive?
Be realistic about how much you’ll need to live on — and run your business during the pre-revenue phase — and make sure you have at least that much money saved before you get started. Many business owners have to close up shop earlier than planned because they’re undercapitalized and don’t anticipate likelihoods like customers who pay them late. You don’t need the stress of wondering where next month’s mortgage payment is going to come from.
5. Are your other investments tied up in stocks or other potentially volatile investments?
You may want to reinvest them in safer vehicles, like bonds, CDs or fixed income securities. Your risk is this new business.
6. Do you have access to additional capital if you need it?
When women’s fashion designer Gaby Basora got an order from Barney’s and then a slew of other retailers who wanted to sell her clothes five years ago, she had to quickly borrow $320,000 from friends and family. The bold move paid off. She now generates $4.5 million in sales and released a collection, Tucker by Gabby Basora, in Target in September. Better yet, she isn’t up to her ears in debt, thanks to a decision to keep operations lean. “I have paid back most of those loans,” she says.
By Elaine Pofeldt
We’ve all hatched potential escape plans from our desks, and if you're reading this, you're one of those people who want to get past the daydreaming phase. Look, if you have a great idea (that part is up to you) and do a bit of smart planning (we'll help with that), starting your own company within the year isn't as out of reach as you might think.
Rocket Lawyer's Charley Moore
Take Charley Moore. Through his experiences advising small business owners as a corporate lawyer and later selling a software product called Family Lawyer, he noticed a vast, unmet need in the marketplace in 2007. New startup founders urgently needed help with preparing documents like incorporation papers and business contracts for employees — but couldn’t afford to hire a lawyer for every legal task.
So six months later with his own capital, he launched Rocket Lawyer, a website that helps small business owners prepare legal documents based on templates created by attorneys. The key to launching quickly, he says, was a small team and a well-defined project. The five-employee startup took off, and quickly attracted the attention and $3 million in funding from a small group of investors and Lexis Nexis. The company now does about $10 million in annual revenue.
Moore isn't the only one who's been busy launching, recession be damned. In 2009 the number of new startups reached its highest level in 14 years — even exceeding the startup boom peak of 1999-2000. And 2011 brings new advantages: Washington's renewed focus on small business has helped bring about a $30 billion federal loan fund and incentives for banks to start lending again to small businesses, a new tax break that could let you deduct health insurance costs for yourself and your family from self-employment taxes, and a host of other benefits for startup founders.
So will 2011 be the year you become your own boss? Let's get down to the nitty gritty details as to how you can make it happen, both personally and financially. Read on for some key questions to ask yourself:
1. How important is it for you to maintain your lifestyle?
Even if your business grows quickly, you're probably going to have to forgo a salary in the beginning so that you can reinvest your earnings in the business. Unless you rely primarily on a spouse or partner’s income, you may have to make some tough choices that affect everything from your social life to your children’s education.
When Sara Morgan left her corporate career as a Web developer five years ago to start her own Web consulting firm, the divorced mother had three children to support, private school tuitions to pay and a mortgage. To give herself the financial freedom she needed, she sold her house in Baton Rouge and bought a cheaper one in a small town with good public schools, so she didn’t have to pay tuition. She now pays herself 60 to 70 percent of her former salary but has more time with her children and says she’d never go back to corporate America. “In some ways, I feel I would rather go to jail,” says Morgan, who loathed the office politics and stress.
2. What could make you fail?
It may seem pessimistic to list potential threats to your business and look for ways to mitigate them before they’ve even happened. But blind optimism is not your friend now. This exercise, known as a risk analysis, is essential for successful business ownership, says Nat Wasserstein, a crisis manager with Lindenwood Associates.
He recently worked with a company that leases the coin-operated amusement rides that sit in front of many stores. When the owners did a risk analysis, they realized that the greatest potential threat to their business was a poor relationship with any of the store managers who controlled the turf in front of the stores. Result: The owners made it part of their business plan to keep the managers happy by, for instance, volunteering to move the rides any time a sidewalk sale was planned. Today, the business is thriving.
3. Are your significant others on board?
It's one thing to ask a spouse to become the primary breadwinner for a while or to take on more childcare, if necessary. But the bigger question to ask is if he or she will back your "plan B" in a worst-case scenario — like, say, raiding your joint retirement savings in a cash-flow crunch. “People often focus too much on the business plan, and there’s not enough alignment with the life plan,” says Andrew Sherman, a partner at Jones Day who advises many small business clients.
4. How much money does your family depend on to survive?
Be realistic about how much you’ll need to live on — and run your business during the pre-revenue phase — and make sure you have at least that much money saved before you get started. Many business owners have to close up shop earlier than planned because they’re undercapitalized and don’t anticipate likelihoods like customers who pay them late. You don’t need the stress of wondering where next month’s mortgage payment is going to come from.
5. Are your other investments tied up in stocks or other potentially volatile investments?
You may want to reinvest them in safer vehicles, like bonds, CDs or fixed income securities. Your risk is this new business.
6. Do you have access to additional capital if you need it?
When women’s fashion designer Gaby Basora got an order from Barney’s and then a slew of other retailers who wanted to sell her clothes five years ago, she had to quickly borrow $320,000 from friends and family. The bold move paid off. She now generates $4.5 million in sales and released a collection, Tucker by Gabby Basora, in Target in September. Better yet, she isn’t up to her ears in debt, thanks to a decision to keep operations lean. “I have paid back most of those loans,” she says.
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