Tag Archives: Strategy

THE DEADLY THREE!

THREE ASSASSINS THAT CAN QUICKLY KILL ANY VENTURE!

Ever heard the old adage that, “Business is about relationships.”?

I would bet that most of us have and understand this as a fundamental key to the success of any enterprise.  Many of the opportunities we are able to pursue in business stem from our relationships. Our relationships are key to our ability to raise capital, make that business critical sale, or simply recover after things have not gone according to plan.

This post is about what I have found over the years to be the three deadliest killers of business. They are destroyers of our relationships, whether they be with our friends, customers, or investors. These killers with ninja-like precision divert us from our goals, make us suffer from needless delays and alienate us from success.

Make no mistake, any profit-making venture MUST employ these mercenaries and apply them to the cause. The true danger lies in letting these guys run amok, in either your psychology or in the business, unchecked.

Assassin #1 : Pride

AKA Ego, Vanity, Honor, Hubris, The Brand Promise

THE DANGER OF THE DOUBLE-EDGED SWORD

Pride, in this group of three, is potentially the most dangerous, since it is a double-edged sword and a necessary component of any successful venture. Any negotiator knows how important it is to know the value of the deal and have the ability to project that value confidently.

The danger is when one possesses an inordinate or irrational sense of value.

Although ego is often associated with CEO’s and artists alike, there are times when what would ordinarily be a healthy level of self-confidence turns to fear, e.g., of failure, loss of time, money, and the oft most-dreaded loss of reputation.

Risk goes hand-in-hand with success. Oftentimes the riskiest ventures are the very ones that will yield the greatest gains upon success.  Excessive levels of pride can interfere with our ability to take that necessary, but risky, step, whether it be a conciliatory call  to an upset customer or those disappointed investors after missing last quarters revenue targets. Although failure may have very real consequences, fear of failure should never be the obstacle to pursuing a viable venture.

Pride can keep you from seeing  or asking for what you truly need when it is most important.

It can keep you from letting go of old grudges that keep you from truly achieving success. Finally, pride in its negative aspect can keep us from making the self-assessments and taking the corrective actions that we invariably need to make during the life cycle of our business.

Pride generally goes before the fall, but in my experience it is generally too late by the time you are in free fall to find a parachute and reorient yourself so that things work out in your favor.

Pride can  keep you from seeing why you failed.

I do not like having to acknowledge my personal failures. I imagine no one does. Pride and our personal sense of self-esteem often walk hand-in-hand. Everyone fails, and it is important to be able to  take an honest look at those failures to ensure that the next engagement is not simply a repeat of the same set of mistakes made in the last venture.

Remember, experiencing failure does not make you a failure; letting failure stop you from achieving your goals, if those goals are realistic, is what separates the achievers from the failures.

Excessive pride is a relationship saboteur.

Arguments where our “pride is a stake” quickly devolve into no-win situations, since even if we are technically correct  we tend to leave the “loser” with the feeling that we do not respect them and do not care about preserving their sense of dignity. In the case where the “loser” is your friend, co-founder, customer, or investor the stakes are high and the chances of damaging your relationship over the long term are profound.

In the end this particular assassin can lead us to win the proverbial battle while losing the war in one fell swoop of its “vorpal” blade.

Assassin #2: Greed

AKA Selfishness, Excess, Piggishness

In modern business, greed as a principle is generally thought by the lay person to be a good thing. It is not. Greed is the second deadliest threat to business and it works by rendering an enterprise unsustainable.

For the purposes of this post, greed is wanting more than the market is willing to bear. That is not to say that you cannot offer your products at price points that offer phenomenal margins.

It is often the case that businesses are able to charge what might seem to many ridiculously high prices and do so ad infinitum as long as there is appropriate demand. Profit making in this category should not be considered greed, since generally business in this category is usually backed by a brand or some other competitive advantage like a patent, contracted infrastructure, low cost source of materials or a set of services that may simply be quite difficult for competitors to replicate and serve as a barrier to entry to those who aspire to take a chunk out of your market share.

Greed is a powerful motivator. The quest for “more and more” drives just about every aspect of consumer economics.

GREED IS OFTEN A CATALYST FOR ECONOMIC BALANCE

And just like its associate pride, greed unchecked is a certain destroyer. Often greed acts as a catalyst for balance.

In the case of consumer products and services, greedy companies generally find that they have competitors seeking to grab marketshare. Big companies tend to be slow companies when it comes to reacting to market disruptions and, although it is arguable if this ultimately is to the benefit of consumers, it is generally considered a beneficial outcome to have multiple providers in a free market economy.

A MARKET WITH ZERO ACTIVITY IS A BALANCED MARKET

Greed can also destroy markets and opportunity  by destroying demand (which zeros supply) and, although on its face it may seem counter-intuitive, a market with zero activity IS an inherently balanced market. Put bluntly, excessive greed can destroy your opportunity to enter the market as well as the market itself. For a recent example one need look no farther back than the Emergency Economic Stabilization Act, signed in 2008 authorizing $700 billion dollars in bailouts for a set of companies deemed “Too Big to Fail”; an expensive lesson to say the least.

The nature of the destructive activities tied to greed vary but include excessive valuation of shares (your mother may think that your eco-friendly napkin company is worth $10 a share but trying to retain that value for a Series A round is NOT going to happen), to poor product economics (it costs us .35 USD per recycled paper napkin produced but they are completely carbon neutral), to an overly aggressive consumer pricing model ($1 per napkin to the eco-saavy consumer sold in a box of 10) are all quick roads to oblivion.

Management can also set policies that cripple the company’s ability to make a market as well. It may not be the case that your top sales performers request for 20% commission is an act of greed; it may be well deserved and it is greed (or that prime assassin pride) that has you balking at the idea.

GREED CAN BE CURTAILED

From the perspective of your customer, always do your best to understand what they value in your product or service and then do your best to master its efficient delivery. Of course this is easier said than done, and that’s why you are offering that magical product or service to a customer who is probably quite happy to let you handle all of the tedious delivery details.

If the customer is not happy, then they are still looking for a solution and your relationship is in jeopardy from the next competitor that comes along offering one.

Assassin #3: Misalignment

AKA Dystopia, Complacency, Misunderstanding

If you are sure that you have the right strategy, tech or business model but you cannot seem to close the deal, maybe it is this third, and potentially most insidious of the assassins sabotaging your success.

Strategy is not sufficient for success. Execution is critical. Alignment is often the difference between strategic success and ignominious failure.

MISALIGNMENT IS PASSIVE AGGRESSIVE. 

Just ask Senior Management.

Organizational misalignment operates like cancer and often it is difficult to detect and virtually impossible to cure by the time it has reached the attention of senior management. If you have ever been in a large organization that seems to reorganize once every few years then you have definitely experienced crisis management around organizational misalignment.

Of course often senior management is the cause for the very misalignment it is trying to avoid or resolve because the top down approach is better at allowing management to explain things to shareholders or third-party stakeholders than it is at allowing the easy flow and adoption of solutions provided by the employee-base on the front lines.

In the case of large organizations, senior management is often able to author and adopt a strategy. Communicating this strategy to the employee base is always problematic, but it generally is the case that, given the correct information, the general goals of senior management are communicated in such a way that the lower level employees or members of the team are able to more or less regurgitate the goal set.

The fundamental problem is that communicating a set of goals is not sufficient to have your employees make decisions based solely on the achievement of those goals. The primary reason for this is simple; most employees do not report directly to senior management and are not empowered to do so. They report to the person who is ultimately responsible for giving them raises and making sure that they are able to work in a tolerable, if not enjoyable, environment.

Usually the above is not an inappropriate approach for the employee but it is absolutely the adoption of this “Business as usual because nothing has truly changed for me!” viewpoint that stops organizational change in its tracks.

SMALLER VENTURES DIE BY MISALIGNMENT AS WELL

Misalignment can happen when you least expect it.

When your “friends and family” backer dies and the family decides that this last investment was either not sound, taking too long to develop a return, or because of tax timing it may be better to pull the plug and take the loss to offset gains in other areas.

Or when your partner has made a deal with your competitor to sell their stake in the business you both founded.

Or when that federal subsidy you were banking on lapses due to  lack of congressional alignment.

Just like cancer, misalignment kill indiscriminately and is often aided by factors beyond your control.

DEATH BY A THOUSAND DECISIONS… OR JUST ONE OR TWO BAD ONES

Successful execution requires a variety of things to align; people, process, product or service, delivery and cost. All of these things must be initially aligned and remain in alignment for reproducible success.

Since we as leaders are aware of this from the start, it is our job and unending challenge to ensure the capacity to maintain adequate protections against nefarious enemies to our enterprise.

Speaking strictly from experience, our failure to do so may be the reason that years down the road we are weighed down by the demise of a venture we truly believed in.

One of the attractions of entrepreneurship is that the next big opportunity is always there waiting to be discovered.  One of the best decisions I believe you can make before embarking on that next journey is to prepare yourself for the inevitable onslaught of the three above. Fortune does favor the bold.

Good luck to us all!

Todd

TRUMP: The Last T. Rex?

This week’s top news story was again Donald Trump.  No surprise there. His voice is loud, honest and clear.

THE MAN, THE MYTH, THE ROBBER BARON?

Trump, a billionaire real estate mogul, prolific entertainer, and now politician is a modern day robber baron. I say that with the respect due for those few American barons that have mastered the financial and political system so completely that they are virtually above the law and social precepts. These men include the likes of Rockefeller, Ford, Sloan, Hearst, and Getty.

None of these names associated with his own would offend Mr. Trump, and frankly the majority of American free enterprise is modeled on entrepreneurs both young and old aspiring to become the next name numbered amongst these icons of enterprise.

A fundamental difference between these men and Trump is that the majority preferred to exercise their influence the same way Trump had become accustomed to wielding his own influence; through the funding of campaigns and back room deals. I do not think this prior approach was due to the humility of these men, but simply reflective of two fundamental facts; the first that the position of president would distract these men from building their empires, which in their respective eras were vastly influential. The second is that, although in certain arenas these men were competitors, it was hard to engage in free enterprise under the limitations imposed by public service, especially service so carefully watched as that of the POTUS.

WITH ALL THAT SUCCESS, WHY APPLY FOR A JOB?

It begs the question why Trump would decide to trade his clear influence for, arguably, the toughest job in the world. I believe Mr. Trump would answer this question the way he has answered this in the past, i.e., because he wants to, “make America great again!”

Of course, although I am far from an expert of the plethora of conflict of interest policies that swirl around the office of the presidency it might also be the case that a wall paid for by a foreign entity would be open to bidding by what is ostensibly a Trump-controlled entity. The “Great Wall of Trump” might be just the thing to make a man thought to be worth around $3 billion shortly after groundbreaking worth upwards of $50 billion.

He has argued, and I must say that I agree, that the United States is on the verge of becoming, if it has not already become, a second or third world country. Before anyone starts arguing that “we still have the greatest economy in the world today, that we still have positive population growth, that the Dow is still above, or at least near, 18000 (forget about that 1000 point one day drop…it was a fluke)”, and another million details that simply serve to obscure the forest by focusing disproportionately on the trees, the simple fact is that one of the core reasons for his popularity is that the average American doubts the attainability of the American dream.

The fact is that there is a large pool of people who believe immigrants, both legal and illegal, have a better chance of buying that house with a white picket fence than those who are native born.

The members of that pool with children are fearful that their children will have less opportunity than they had.

Trump, like Rockefeller, is an aggressive businessman, and generally is a shark amongst guppies. But perhaps the biggest difference between Trump and those others mentioned is that, as a class, what was once the “silent majority” is now feeling the pressures often felt by minority groups; albeit a vocal minority that may now feel the need to openly do what in the past was not necessary to openly declare given the circumstances.

THE DEMOGRAPHIC CLIMATE IS CHANGING

In the next 40 years Latinos will become the dominant racial affiliation in no fewer than six U.S. states. According to the most recent figures released by Pew Research, “Since 1970, the Hispanic population has grown 592%, largely because of the arrival of new immigrants from Latin America — especially Mexico. By comparison, the U.S. population overall has grown 56% over the same period.”

For Asian Americans the Brookings Institute recently released estimates predicting the doubling of their category of the population, achieving an effective growth rate of 129% by 2060.

According to the U.S. Census Bureau during this same period the forecast for the black population trends slightly upward, and the nation’s white population trends downward.

THE RISE OF TRUMP REX

If we had the ability to see a live tyrannosaurus rex in captivity I am sure it would be an awe inspiring attraction and generate some of the largest, if not the largest,  revenues of any venue it may happen to appear at. The T.rex of lore was a smart, insatiable, apex predator dominant until its extinction.

In the end a similar sense, that is, of impending extinction may be what is spurring on Trumps supporters. A sense of impending doom, as if perhaps our great country may go the way of the dinosaur if something is not done quickly pervades the current presidential campaign. Of course it is actual terrestrial climate change that we blame for helping foment the end of the reign of mighty tyrannosaurus rex. Right now the greater focus is obviously the political climate.

Yet as dominant as Trump Rex appears today, I am still not sure the meaty prize he has set his eyes upon will not be the very thing that diverts him from it. The same ability he has to cut through topics or people to simplify the debate is more often divisive than substantive. The Tyrannosaurus ate what it killed and did not leave enemies behind. As efficient and unapologetic a predator as Trump may seem to be he seems just as efficient at making enemies. It seems only a matter of time before Trump Rex bites off more than he can chew.

BEING POPULAR NOT NECESSARY TO WIN

To win the popular vote Trump will need the support of Latino and Asian Americans. Of course, the electoral college has been known to “trump” the popular vote from time to time. Since the founding of our country, from as far back as 1824 (Adams vs. Jackson) until as recently as 2000 (Bush vs. Gore) the popular vote has not been sufficient to elect and seat the president no less than four times.

Ultimately no matter what November has in store, as it has always been the case it will be up to us, united and not divided, to make it (the world) a better place. I hope we can keep America great while we’re at it!

Todd