Business Insight Zone

Let’s tell a story.

Here’s an old trick with a new twist: If you’re stuck for what to do next in your work, especially at those levels between “grand corporate strategy” and “which thing do I do in the next ten minutes?,” write a case study — starring you, doing the work you do now — that peeks into the future.

Give yourself an 18-month window for the actions involved, and assume that you’re writing the case study another six months later, so that the trend of (successful!) outcomes from your efforts will be clear. I pick 18 months because Peter Drucker, among others, suggested it as a good, workable timeframe for turning even big plans into reality. To put it another way, it’s a timeframe that bridges the quarter-to-quarter focus on earnings and the five-year windows that go along with many overarching corporate strategies.

At the top of a piece of paper, write “18 months.” Next to it, write the Big Outcome achieved by that point — “Breakeven” or “Patent Awarded” or “First Mentor Class Graduated” or “Sold the Company” or whatever. On a line under that, write “15 months” and list some things that led into the Big Outcome. Keep breaking it down by steps: “12 months” . . . “9 months” . . . et cetera. Chop the time smaller as you get closer to the start of the project, since (a) the tone of many projects is set in the early going, and (b) these are the steps you may be able to envision better from where you sit now.

Tweaking and Writing

Once you’ve done this all the way back to the present, you may realize that the timeline is wrong. Maybe you need less than a year to get your new product idea off the ground. (Heck, for some things you might need less than a month.) Maybe you need five years to write your multivolume history of the Internet. If you figure out that the timeline is askew, just fiddle with the durations until it makes sense.

Now for the kicker. Don’t just leave the steps listed in outline form: actually write the case study. No big whoop — 800 words could be plenty — but let your imagination soar. Make up ambitious-but-believable numbers for site traffic, revenues, users, donors, contracts, or what-have-you; fill in glowing quotes from you, your ecstatic customers, and suitably impressed industry watchers. Talk about how the model is being copied and adapted by other forward-thinking organizations.

Two Problem-Solving Approaches In One

What you’re doing with this exercise is:

1. Thinking like an engineer. After President Kennedy established the goal of reaching the moon before 1970, the space program’s engineers broke down the mission into its parts. Knowing that they had to end up with astronauts landing safely back on Earth, they could formulate both the components of a successful moon shot (achieving Earth escape velocity, accurately computing and following flight trajectories, adequate air supply, etc) and the sequence of the missions that would build up to a moon landing. You’re doing the same thing here, albeit at a smaller scale. (Then again, I don’t know the size of your ambitions!)
2. Using narrative. Humans are drawn to stories. We want to make sense of things, and our explanations become more powerful when they fit into a narrative flow: A happened; B happened because of it; to everyone’s surprise, C came along and threatened to ruin everything; but, thanks to D, they all lived happily ever after anyway. Writing out a story with yourself as the forward-thinking hero could be a good way not only to capture in words the engineering problem you face, but to convince yourself that it’s really possible for you to navigate your way through it.

Now that your engineering/narrative project is done, you need to run with it. What’s the first thing you can do to turn your case study into a reality? Make it happen this week!

And while you’re at it, why not leave a comment to share your own best tactics for breaking down big problems into manageable chunks?

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Photo by Marco Arment.

It’s one of the big questions that emerged in the research for my article in the new issue of the UT McCombs School’s alumni magazine.

In Favor of Doggedness

Entrepreneurs must have endless determination to channel their passion into business success. In other words, there is no limit to how many doors they should knock on or how much hard work they should pour into their ideas.

Against Over-Doggedness

For the article, Gary Hoover, Trent Thurman, and Jay Drayer each volunteered stories about fellow entrepreneurs who stuck with a failed idea long after it was time to lay it to rest. These overly dogged businesspeople allowed themselves to be so stubborn that they went beyond persistence, to the point that they ignored clear market signals. In other words, they took a virtue so far that it became a fault when it clouded their business judgment.

The Takeaway

There’s a certain flexibility of mind required to succeed as an entrepreneur. Yes, you need a deep well of determination, but you must also be able to tell when your doggedness and passion needs a new outlet.

A metaphor: If you hit a brick wall and figure out that you can break through it, by all means grab your sledgehammer and start to work. But if you hit a solid stone wall that no sledgehammer will ever break, you’re better served to acknowledge it so that you can find your way under, over, or around it — or so you can address a different wall altogether.

Where do you draw the line on doggedness in business? When do you finally take “No” for an answer?

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Related items:

• “The Upside of Failure: Turning Uh-oh into A-ha!” in Texas: The McCombs School of Business Magazine
• Emerging from failure stronger than ever.
• When do you kill a business?
• When is it time to kill a project?

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Photo by sabianmaggy.

“Apple’s not THAT much better in terms of functionality, no matter how slick the outer design may be.”

“Apple’s biggest cash cow isn’t impressive for a technology company — it’s more about a business model than actually inventing new things.”

“Apple is a closed system. They insist that you play their game for both hardware and software.”

[Apparently I didn't make it clear enough in the first go-round of this that these things are what Apple's detractors say.]

Oh-by-the-way, Apple just posted terrific quarterly returns. If you had had the foresight to buy $1,000 of Apple stock at the start of 2005, it would be worth $6,184 as I write this. (Over the same period, $1,000 invested in the S&P 500 would have turned into $901.)

The best quote from that Dow Jones story (just linked) on Apple’s great quarter:

“What it confirms to us is Apple’s proprietary competitive advantages and that customers value Apple products greatly and believe its premium is more than justified,” [Kaufman Brothers analyst Shaw] Wu said.

As a result, analysts are hesitant to transfer Apple’s strong numbers to other electronic makers.

Durn tootin’. Apple’s not a bellwether for other companies; it’s a company that makes its own weather.

Consider that this is true even in the face of an economy that has stymied many consumer brands.

[The detractors can cry about Apple's prices etc. all they like. I'm sure Apple doesn't mind.]

Now, what if we all set aside our complaints about how bad the economy is, about how we can’t be expected to compete toe-to-toe with Company X, about how our industries are different from Apple’s (or Amazon’s, or Cisco’s, et al.) . . . and then we set about the task of making our companies into businesses for which an Apple-like premium is justified?

What would happen then?

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ADDENDUM: Here’s a story on the same theme from a different industry:

• 22 Magazines Are Actually Kicking Butt In 2009

The money quote:

What’s Meredith’s secret to surviving and thriving in such a tough environment?

Patrick Taylor, also of Meredith Corporation, says these titles “do a good job of building their brand” — especially on the Internet.

He says that by creating and maintaining easy-to-use websites, magazines create more exposure to their title. At the same time, they open up another avenue for ads and ways to sign up subscribers.

Simple, right?

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UPDATE, an hour later: Early comments made it clear that the first version of this was overly subtle, so I added the sentences within brackets, plus quotation marks around the title and opening lines.

The bullet: Gary Hoover, the serial entrepreneur who founded our company nearly 20 years ago, is joining the faculty at the University of Texas McCombs School of Business.

For more details:

• UT press item: Hoover Joins McCombs School as Entrepreneur-in-Residence
• Austin American-Statesman: Veteran entrepreneur Gary Hoover to coach, guide students at McCombs

Gary is one of the smartest people and most engaging speakers you could ever hope to encounter. Those McCombs students are in for a treat!

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Related post:

• And now a word from our founder . . .

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Forrester’s Josh Bernoff gives typically good advice in this post:

Wrong customer, or, the perils of dog food marketing

He talks about the college textbook market as a textbook (wince) example where one class of customers (i.e. professors) makes decisions about purchases used by another class of customers (i.e. students). He extends the lesson to other examples in both B-to-B and B-to-C settings. Then he drops the hammer:

Dog food marketers: beware. The more time you spend on the needs of the non-user customer, the less you are focusing on the user of your products, and the more vulnerable you become. If you empower that other customer to persuade you to make decisions not in the best interests of the the people who use your products, you are striding down the path to ruin.

His focus on user-customers is especially apt. Yes, in the short run, the non-user making initial purchase decisions seems more important, but in the long run the users will determine the fate of your product, your company, and, maybe, your entire industry. (See: recorded music.)

But the antidote is straightforward — even though it implies loads of hard work:

It doesn’t matter if you sell insurance, shoes, or web searches. If you always worry first about the one who uses your products, she will lead you into new business models, new features, and loyalty. Social technology means you can form a relationship with that customer, even if you send your invoices to someone else.

If you worry too much about that “other” customer, he’ll go into competition with you, insist on more discounts, drag you down as he goes out of business, or distract you, opening up room for competitors. User customers may have loyalty. Those other customers rarely do.

The ramifications are serious — maybe especially if you’re providing a B-to-B offering like a CRM system or (ahem) an information service.

Read it, ponder it, take it to heart.

Material Is Everwhere

The Venn diagram above was born a couple of weeks ago when I had lunch with Kristen Carney and Anthony Morales, the brain trust behind Cubit Planning. It contains an idea for how to take the work that you’re doing anyway and make it fodder for talking to different audiences — online, at conferences, in periodicals, or wherever — to build your reputation, your customer base, and your career.

Anthony worked at Hoover’s for many years before setting out on the path of the entrepreneur last year. Now he and Kristen are pouring themselves into their company, which ”builds technology that helps engineering firms get environmental clearance FASTER.” From the way they described it, they’ve found a good niche to serve. (This page explains what Cubit Planning does in more detail.)

Kristen, whom I’d never met before, was as inquisitive and outgoing as you’d hope an entrepreneur would be. The diagram above emerged when I was describing how she might find an endless stream of topics to blog about. (She’s a quick study — she blogged about it the same day.)

Applying the Concept

Kristen and Anthony are in an ideal position to discuss:

• their company’s domain of expertise (software-driven handling of NEPA documents),
• their experience as entrepreneurs (especially since they’re funded by the very interesting Capital Factory),
• their efforts to drum up business via social media, and
• any of the overlaps between these topics.

We talked about this in the context of their company blog, but it could apply to any media you use to promote your business — conference panels, lectures, Twitter, LinkedIn discussions, trade magazines, op-eds, you name it. The basic formula runs like this:

We make [product] for [users] via [means].

Write down that sentence — with the generic blanks filled in — for your own business. Vary the phrasing as needed.

• “We design warehouses for heavy industry using green building techniques.”
• “We make project-tracking software for hospitals using open-source programming.”
• “We build supply chains for retailers using advanced mathematical techniques borrowed from fluid dynamics.”
• “We sell authentic Japanese furniture to cost-conscious U.S. consumers via our Web site.”

What Arises from the Overlaps?

Start thinking about how the topics or domains within each sentence play off of each other, and how you could use that interplay to fuel your own business speaking and writing.

• The warehouse designers might have interesting things to say about how green building techniques apply to industrial buildings — whether we’re talking about boosting a company’s public image or helping it to control long-term costs. (That’s a crackerjack conference panel, right there.)
• The software developers could speak to audiences in health care, project management, open-source software, health care project management, etc.
• The CTO from the supply chain company could give guest lectures in universities about bringing applied mathematics to the world of consumer commerce.
• The furniture retailers could blog about bridging cultures, selling to consumers in a down economy, or what it’s like to compete in the shadow of big-name online retailers like Amazon.com.

See what I mean? Every aspect of what you do, and every overlap between the aspects, is potentially material that you could share with your audiences of customers, prospects, peers, vendors, analysts, and so on. In fact — and here’s the beautiful part — you will recruit new audiences for yourself by isolating and remixing these different aspects.

The Audiences Cubit Planning Might Attract

In the case of Cubit Planning, talking about the process of entrepreneurship opens them up to new audiences of entrepreneurs. The obvious audience includes other designers of Web-based software tools — the folks who already read Signal vs. Noise. But there are many others:

• Environmental entrepreneurs
• Business innovators who help customers deal with government regulations more efficiently
• Bootstrappers and venture-backed companies (Cubit Planning’s deal with Capital Factory puts it somewhere in-between)
• Austin entrepreneurs
• Female entrepreneurs
• . . .

And that’s just on the entrepreneurial side. There’s lots more they could say to engineering and architecture firms, micro-businesses using social media, and so on.

This is not, by the way, an original idea. Credit is due to Prof. Phil Agre of UCLA, who spelled out something similar in his amazing guide Networking on the Network: A Guide to Professional Skills for PhD Students.

In that guide, Prof. Agre talks about how the refined specialization that leads to good Ph.D. dissertations need not paint the scholar into a corner in terms of the audiences that he or she could address. If, for example, you study the impact of radar on air combat during World War II, it’s obvious that you’ll be able to speak to audiences of World War II buffs — but you could also write or speak about the advancement of technology during wartime, the impact of air combat on all the wars of the twentieth century, the technological improvements radar underwent from its invention until the present, how radar changed modern life, and so on.

The Moral of the Story

It’s not that you have to become an expert in many things. But you can take the expertise you’re already building every day and share it with people whose work shows them only part of a scene that you can’t help but see in the round.

Does this make sense? What do you think of it?

Not great times for the VC business, eh?

• Item: Venture Capital Fund-Raising Plunges In First Half (WSJ Venture Capital Dispatch)
• Texas venture capital funds raise zero (Dallas Morning News)

That being said, there will be good VCs (here’s one candidate, here’s another) who will come through this period stronger than ever. And, as I’ve suggested before, if the VC business collapses — and its own practitioners say that it’s “broken” — something new will rise in its place to fund innovation.

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Addendum, Thursday afternoon: You might also want to read this from the New York Times.

Venture Capitalists Look for a Return to the A B C’s

There will be “a ton of venture capitalists who disappear over the next 18 to 20 months, and it’s going to be painful for a while,” said Bryan Roberts, a partner at Venrock. “But the best thing that could have happened to V.C. is this economic crisis, because it’s lowering the flow of capital into these funds.”

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Last week someone pointed me to X.vu, which promises to be the shortest of the URL shorteners. I was happy to see it, because I shorten a lot of URLs for Twitter, LinkedIn, etc., and because my favorite shortener, IS.gd, has just tripped over into five characters behind the slash. (Like this: http://is.gd/106yp — and yes, this is a Twitter-geek thing.)

X.vu’s tagline is “Because Every Character Counts!” I’m sympathetic, because I can’t believe that people on Twitter are using all kinds of URL shorteners with names like tinyurl.com. I mean, TinyURL runs a good service, but its very name is several characters longer than the absolute minimum, which would seem to contradict the purpose of a URL shortener. X.vu also has an easy one-click way to post a shortened URL to Twitter. Nice.

But X.vu has apparently totally blown its own premise, based on what it puts after the slash. I just went to shorten an address, and got this result:

The service is new enough that, best I can tell, this really is the 1068th address it has shortened. But if it were really designed to make every character count, the new URL would be something like http://x.vu/gd — because it wouldn’t be counting up using only the decimal digits.

How many URLs can you shorten for each character length if you use only the digits 0 through 9?

• 1 character = 10
• 2 characters = 100
• 3 characters = 1,000
• 4 characters = 10,000
• etc.

How many can you shorten for each character length if you use the digits 0 through 9, the lower-case letters a through z, and then the upper-case letters A through Z?

• 1 character = 62
• 2 characters = 3,844
• 3 characters = 238,328
• 4 characters = 14,776,336
• etc.

You see my point, which is hardly arcane given that the other shortening services do this.

The moral of the story: it’s not enough to get a good little property (as the X.vu address is), and it’s not enough to build a nice little tool (which they’ve done). You still need to copy your betters where it makes sense to, and avoid designing anything in an avoidably stupid way.

Malcolm Gladwell is no stranger to the business world by now, what with the huge success of The Tipping Point, Blink, and Outliers. I can only wish that he had spent a little more time in his new piece for The New Yorker spelling out the business implications of his ideas. That’s not a criticism of the piece as it stands, so much as an acknowledgement that the ideas he talks about have enormous impact for the business world.

How David Beats Goliath

Following his typical M.O., Gladwell takes one idea or question — in this case, How do underdogs beat superior opponents? — and applies it across several fields.

He starts with a girls’ basketball team in Redwood City, California, which used a relentless full-court press to beat many teams that had better players and more experience. He extends the basketball lesson by interviewing Rick Pitino, the great college coach whose teams are likewise known for running the press. (Gladwell does not mention that John Wooden, whose record of ten national titles with UCLA remains unrivaled, also used the press.)

Gladwell extends his thesis through other examples, including the biblical story of David and Goliath, a war-games tournament, and T. E. Lawrence’s guerrilla tactics against the Ottoman Army in World War I. The commonalities he finds are that successful underdogs:

• Operate in real time, much faster than the established powers; and
• Replace ability with effort — especially effort targeted at the overdogs’ weakest points.

In basketball terms, the full-court press works so well because it takes good teams out of their zone of strength (executing a half-court offense) and forces them to play in uncomfortable, uncoordinated ways merely to bring the ball down the court at all. Lawrence’s attacks in Arabia worked so well because the tempo and fighting style of the Bedouin fighters he led was so different from the heavily-armed Ottoman troops they came up against. More than that, the Arabs sometimes did their damage without even encountering Ottoman forces — by sabotaging train lines in the middle of nowhere.

Gladwell didn’t mention another connection that I thought he might. When he talked about how Pitino coaches his players to look for and exploit the “rush state” in their opponents, and when he wrote that “David broke the rhythm of the encounter” with Goliath, I thought immediately of John Boyd, the fighter pilot whose work on “O.O.D.A. loops” has been praised by many, including Tom Peters and James Fallows. The acronym stands for “observe, orient, decide, and act,” and Boyd used it as a prescription for jet jocks (and, by extension, fighters of any type) to “get inside” the tempo — the corresponding loop — of an opponent.

Like most of Gladwell’s New Yorker pieces, the article is well worth reading, though I think he overdraws the moral of the story when he writes that

“We tell ourselves that skill is the precious resource and effort is the commodity. It’s the other way around.”

Given the devotion that Gladwell and I share for Anders Ericsson’s work on “deliberate practice” and the enormous effort it requires, I’m all in favor of praising effort at every turn. Too many of us balk at becoming excellent not because we genuinely lack the talent (or because our organizations lack the resources), but because becoming excellent requires a lot of hard, frustrating work.

That said, Gladwell does make the point that excellent basketball teams can beat the full-court press with high skill of their own. Mind you, many excellent teams aren’t prepared to overcome the press, if only because they so seldom face it. What the girls from Redwood City did was to hit their opponents with concentrated effort, precisely aimed at a key point of weakness that very few other teams ever exploited.

Gladwell knows this — indeed, he spells it out — but he sells short the complexity of the idea he’s unspooling when he suggests that skill is the commodity and effort is the precious resource. Routine skill like, say, dribbling a basketball is indeed a commodity, at least among basketball players. And effort is hardly in short supply among the teams that Pitino beats with the full-court press. What’s rare is the combination of skill and effort and discernment shown by Gladwell’s chosen underdogs.

Bear with me, because I don’t mean to come down hard on Gladwell, and this touches on some of the implications of Ericsson’s work that I’ve been trying to sort out.

• Skill is common. Genuine, distinguishing skill is in short supply (just ask any HR manager).
• Hard work is common enough. Yet genuine, obdurate, deliberate hard work to get better is in short supply (ask any sports coach).
• The type of discernment shown by Lawrence in the desert, or by Michael Jordan on the basketball court, or by an entrepreneur like Tony Hsieh of Zappos . . . that’s scarce.

Gladwell has written a fascinating piece on underdogs. Read it. Focus on effort, just as he says. But focus even more on how the right kind of effort multiplies skill . . . when it’s guided by discernment.

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Photo of Vignon’s renowned painting by Ed Uthman, used under a CC-Share Alike license.

Chuck Salter wrote a typically smart take on some of the technological advances in American medicine in this article:

The Doctor of the Future

It’s recommended reading if you care about health care. I’ve met Chuck and admired his work for years, so don’t take what I’m about to say as a criticism of him or his article.

He first points out some of the key problems with medical care in the United States: “Although we have the world’s most expensive health-care system, 24 countries have a longer life expectancy and 34 have a lower infant-mortality rate.” Then he explains how new generations of both doctors and technology are helping to address those problems, and how the “ability to expand and harness knowledge . . . makes cutting-edge information technology such a powerful driver of the emerging health-care revolution.” The article is interesting and well-reported, and it’s not Chuck’s job to go into every aspect of the health care equation in this country — which, you may have noticed, is complicated.

But as you and I think about addressing problems, we ought to be leery of putting too much emphasis on new technology to get us out of old problems. This applies just as well to great big problems like health care and climate change as it does to smaller ones like, oh, declining cash flows or increasing employee turnover in your own business.

Mind you, I like my high tech, and indeed I spent several enjoyable years covering it for Hoover’s, but it’s a trap to focus on technological solutions to the exclusion of behavioral ones.

Here’s what I mean: the advances that Chuck is writing about — things like social media-enabled telemedicine and robot-assisted surgery — clearly can do wonderful things for American medicine. But it wasn’t the absence of these things that led to the problems we face. We’re not 35th in infant mortality because we lack technology or money; we’re 35th because we haven’t behaved as smartly as (at least some of) the 34 countries ahead of us.

If you’re umpteenth in your industry, it’s probably not strictly because your technology is poor. It comes from a thousand little and big things that have compounded together over the years to render the whole less than the sum of its parts — just like the American health-care system.

Now, set aside your pipe dreams of technological fixes. How can you BEHAVE differently this week to put yourself in a better position?

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Photo by kokopinto, used under a Creative Commons license.