A few months ago, I posted a question on LinkedIn. I had a few reasons, one was to test the response rate on questions posted there, another was to see how many of my connections would respond, and lastly to see if any investors in or out of my connections would chime in.
Is it a good thing for a start-up with one diagnostic product to focus only on market share and selling the company or should it try to develop additional products? In other words, is, "One, done, then do it again" a good strategy?I got a range of responses, and even though I have not really changed my mind, I did appreciate the comments and I made 8 to 10 new connections. One suggestion I received was to open the question to a broader audience. I think putting it here on this blog is a good start.
A good friend has a great test and I think he should try of the one and not distract or waste time on anything else. I used to be an opponent of the "one-trick pony" but that has changed as I see investors wanting a quick exit.
It is not a question of retiring as much as it is a strategy issue. I think that if you do not have the resources, or product concepts, required to build a big company, then why fight to stay alive? Build the best value and do it again. I may be wrong, so I am asking. I do know of at least one example, where the founder has done this 4 or 5 times. In each case, he sells for $10 - 40 million after starting with $1 to 2 million.
I have heard from a few VCs about their preference and it runs from highly favorable to absolute avoidance of such models. This just proves that you can find an investor for any model, it may just take more time for some cases.
So, what would you do? Build and sell or create a company designed for the long haul?
I have had the opportunity to work with SoCalBIO, the industry organization for biotechnology, medical device, and biology related companies in Southern California, and I am beginning to wonder why people do not see more value in getting to know one another. In just the 6 weeks I have been at the task of trying to build membership in Orange County, I have found many situations where two or more company executives should be talking to one another and yet they do not even know of each other. I do what I can to bring parties together but I am not the business development person for either.
Here are some examples of fits that should be made. There is a company that is developing some new diagnostics, there is another run by one of the foremost IVD (In Vitro Diagnostic) device creators a live today. They should meet. There is a company that will need to get state enforcement to really make their product succeed. There is a company that has done that for corrosivity testing. They should meet. There is a company that does outsourced testing for pathology labs. There are many companies that would like to have pathology labs using their test. They should all meet.
I have been told repeatedly that I am really helping things to come together. That's nice to hear. I am only one person and I only know so much. It has been great to meet with the executives of the various Companies but that is not enough. Imagine if each of these leaders took it upon themselves to get to know at least 5 others. Then they could do for others what I am trying to do.
We all attend networking meetings in the hopes of increased business. As we mingle, we are hoping to find a deal, a contract, a job, or a new revenue stream. That can only happen if we get to know others and help others get to know us. As we help make connections, connections will fall to us. It may not happen the first time. It will never happen if you do not get out and mingle.
One frequent complaint I hear is that there are too many "service providers" at these meetings. It seems that as soon as you enter a room that accountants, lawyers, and consultants who want to help you for a fee beset you. The best thing to learn to do is to disengage quickly. It is not good for them to hang on you either but they feel like they may have a shot if you continue to talk to them. I am not suggesting that you treat them rudely, but rather help them to see that they are wasting their time talking to you. Be a little selfless in all that you do and I believe it will pay off in greater rewards in the end.
Anyone have some good networking stories or advice?
When I am working on business plans (not responsible for content or layout) I worry that I may accidentally disclose important information or insult one of my clients. I was also waiting for some feedback from my last post. Since none arrived I began to wonder if anyone was reading.
I recently viewed my visit reports and they are not fantastic, but people are still visiting. I will try to write at least once a week, if for no other reason that to reassure you that I have not given up.
If you are a member of LinkedIN click the link below to see my public profile, you probably have noticed the increases in my current occupations list. My recent involvement with SoCalBIO has been particularly rewarding. It will be the source of some very cryptic stories about some really fantastic things happening in the Biomed world of Orange County California.
I don't watch basketball very much. To me, it seems that all you need to see are the last few minutes to see the most important part of the game. The last few minutes last about 30 minutes anyway. But each year, as March Madness around the NCAA tournament grows more and more popular, I am reminded of the fact that "once upon a time" the NIT (National Invitation Tournament) was at one time the big dance. If you would like to know more about the origins of the NIT and NCAA tournaments you can always visit Wikipedia. This makes me think about how many once popular products, companies, TV shows, events, and people have faded over time. At times, these fades seem to happen very quickly and for no obvious reason.
Why do these fades happen?
- Indifference to Competition
- Over-confidence (Arrogance)
- Aggressive Advertising (Annoyance)
- Failure to Update
- Next Big Thing Arrives
There are of course, many things that can be learned from these fades:
- Nothing lasts forever
- Any leader can be overtaken
- Success does not require originality
- Bigger is not always better
- Familiarity breeds contempt
Some fades can be highly instructional:
(On a related note: the 10 year old Dell has died. RIP Roadwarrior!)
Some things that appear to be fading:
- Is it to early to consider Brittany Spears a fade?
- Has Christianity faded? Is it because Islam continues to grow?
Some things never seem to fade:
- Levi's 501 jeans
- Flowers as a symbol of romance
Rather than have a very long blog post, I will cover these fades and questions over the next few posts. That way we can explore the reasons and discuss them. If you have an illustrative fade you would like to discuss, please post a comment or send me an email.
(I was going to save this post for April 1 but then I thought people may mistake it for a hoax. It has been my expereince that posts made at night or posted early in the morning attract more readers.)
I love working on business plans with aspiring and serial entrepreneurs. The enthusiasm and creativity they have is invigorating. I enjoy my role as the one who helps point out inconsistencies or minor mistakes. I like to help them make the plan better. There are always differences in style but I think that is useful. If all BPs looked the same, they would get very boring very quickly.
I don't always enjoy the role of pointing out big errors or mistakes. At times, the error is just a miscalculation or missing explanation. Those are easy. It is the times where reason has left the discussion that I find most difficult. When a person does not understand that a population of 200,000 people will not all run to a store the day it opens, or that everyone will not buy a product simply because it is obvious to the inventor that the product is superior.
How do you tell someone their baby is ugly?
Why do some people think that they will be the exception to the rules? I hope they are the exception, but it seems better to plan for things to proceed in a normal or worse than normal manner. I try using a financial argument. Trying to get them to see the math does not work. I try to reason with them - you cannot work 100 hours a week for 5 year and expect everyone else to as well. Why would someone loan you $3 million at 0% interest just because they will be able to get their money back?
Just once, I would like for someone to provide me with an acceptable reason as to why they, when no one else is, will they be the exception to the rules or norm?
Every company goes through periods of high excitement and high anxiety. In most cases the difference in the way a company emerges from these moments has to do with the leader. A person who can pull the team together can capitalize on the excitement or anxiety. A person who falls apart, or displays weakness will lose control.
My favorite definition of a leader was something Marcus Buckingham wrote in, "The One Thing You Need to Know":
"Great leaders rally people to a better future."
He wrapped up a section on leadership with this paragraph, that I think captures the essence of how the followers feel.
So, as you strive to lead us toward a better future, remember that we need clarity, and that actions, both the symbolic and the systematic, can be wonderfully, comfortingly clear. If you can sort through all the actions available to you and identify the few that can grab our attention or alter our routines, then our confidence in you and your better future will grow strong.
With all of the various political, economic, and social leader wannabes we have shouting at us today, it is amazing how few of them get this very simple point. We who are to follow, want to follow someone who will actually lead with authority, clarity, and vision. Two out of three is not enough.
What do you look for in a leader?
Recently I was asked to explain my problem solving methodology. In a single sentence, it is this:
Find the optimal, perfect world solution, and see how close you can get to that.
The full answer is a bit lengthy but I'll summarize it here. The diagram, which will be part of Maps for Modern Magellans Volume 2, is what I call the Project Curves.
Elocution Phase (Talking)
- Determine the "real" issue. Too often, we treat the symptom not the disease.
- Understand the magnitude of the issue. What is the cost, brand impact, scope, extent, and frequency of the problem. This helps set the priority the situation receives and the resources that need to be allocated.
- Was an existing procedure, instruction, or regulation not followed? Why reinvent a solution that already exists? The real problem could just be a case of someone not following instructions.
- Is there a flaw in an existing procedure, instruction, or regulation? The fix could be very simple and again, require few resources.
- Assuming it is a new issue or an issue that has not been solved previously the following steps are used:
a. Brainstorming - be sure to write down possible solutions before evaluating them in much detail. It is very important that the first answer be written down so that the brain allows other solutions to come forward. It is a common practice to give the first thing that comes to mind greater weight than any subsequent thoughts (See Blink by Malcolm Gladwell)
b. Place the solutions along a range:
c. Approach perfection as much as possible within the limits of resources
Gap - between talking and doing
- After all of the talking has finished, make a decision based on reason and experience.
- Execute with boldness
- Review results and do better next time
As I said, this is an outline of my process. Many times, a problem does not require much effort. On other occasions, the amount of effort is significant and worth the time spent.
There is a tendency to put something together and then walk away. The hope is that the installation will go well and that the something will just work as it was intended for years and years.
It is more fun to work on new things than to maintain old things. The grass is always greener when compared to the dirt that was there before than it is when compared to the grass that grew there last year. The rate of success of a new product is often in high double digits. The change in sales for an old product is often in single digits or low double digits. People seem to enjoy talking about new products. Rarely is there much buzz about old reliable products.
Here are some examples of what I mean:
- Leaders write a directive for a new program, and then no follow-up (Leadership)
- Buying a car and then never going to have it tuned up (Personal Growth)
- Building a bridge and then not servicing it properly (Politics)
- Working to capture a market and then not launching well (Branding)
- Developing a new product, then not improving on it (Product Development)
One could argue on that last point, since the item was sold for 6 years and then the guys who wrote the OS ended up writing the OS for the iPOD. There may be better examples but the point is still made.
As one conquers more territory, there is more territory to maintain. The ancient empire builders learned this lesson. You cannot simply overrun a country and then move on if you hope to keep it. The downside is that the troops available for the next invasion are reduced with each capture. Empire builders knew this and would build new strength before moving on. They would install local leaders that were loyal or trustable and work to recruit new forces form the captured lands. As you consider the company budget, consider how much easier it is to keep the market share you have, rather than fight to get it back.
Politicians love to spend money on new projects because such efforts make headlines. They get no praise for money spent maintaining a bridge. If we learned anything from the bridge collapse in Minnesota it is this; we cannot ignore the present need to keep what we have. If we fail to spend the money where we already have investment, then we will fall victim to relentless decay.
As I work on business plans, I am constantly surprised by the lack of planning for anything other than growth. In the first year, this is understandable but after that, the company should have some base that it serves. Any company that has to rely on a constant stream of new customers will always fail. Repeat purchasing is a huge barrier to entry only when customers want to come back.
In the average company, should more money be spent on quality control or R&D?
Last Minute Changes:
There are still a few things to finish up after Super Tuesday but it looks like the last minute changes made by Senator McCain and Governor Romney were not the things they should have done. Given the close race in the southern states Governor Romney might, and we will probably never know for certain, have been better served by campaigning in Missouri and Georgia. Senator McCain should not have wasted time in Massachusetts. McCain should have gone to Georgia where he finished even closer to Mike Huckabee. As it stands, neither of McCain's opponents are officially out, but he could have had a more decisive day.
Perhaps the best example of not following through on a plan is that of Rudy Giuliani. His win in Florida and win big on Super Tuesday may have actually worked had he invested the time and effort to build momentum going into Florida. He did not need to win Florida. A decent showing would have meant that today, February 6, 2008 he might have had as many delegates as anyone else in the Republican race. Anyone who has ever launched a new toy knows that you cannot bring it out in November and hope to have big Christmas sales. You have to build awareness and a sense of desire for the product. The launch curve always starts at zero. Apple has had some stunning successes with new products but they have always built buzz for them before they were released.
What can we learn from the Democrats? It ain't over until it's over. I can't say who will be the victor but neither candidate looks to be on the ropes. The closeness of the race actually helps both get more media attention. This attention may cost the Republicans as their race becomes less interesting. I think I have said this before, "Pick a fight in public and both sides may profit." Consider Donald Trump and Rosie O'Donnell. Both had shows that were fading in the ratings. A good fight brought them both a lot of free media. Both of their shows improved dramatically in the ratings for a time.
What can you do to draw attention to your business that would get you free media?
Will that attention be a good thing?
As the political campaign hit Super Tuesday, it was interesting to see how the two frontrunners on the Republican side worked the day. After months of planning and organizing both candidates changed plans at the last minute. Gov. Romney headed back to California after it was reported that he had a sudden surge in the polls here. Senator McCain changed his plans when he heard the Romney was coming back to California.
What these events brought to my mind is the way companies make plans and then, as if all of that planning was useless, they do something else. It is not for me to say if these were good decisions or not. It is hard to imagine how a last minute visit would make any difference but it might. If nothing, the trips got more news coverage for one or the other.
How often do you spend a great deal of time pondering and planning only to go with your gut or hold off at the last minute? If you look at military campaigns failures often result from weak commitment. If you make a decision, shouldn't your reversal of that decision receive as much consideration? Failure to act can be bad, but acting in a half committed manner is often the worst course of action
Last minute information can cause or require a change of plan, but before you make that change, you really should consider all of the time and effort that went into the original plan. If the new information was actually considered before, then why does it have more weight now?
For my second volume, I have several chapters on decision-making. One of the key things to note is that we all have difficulty weighing information accurately. What is in the front of our minds often carries more weight than what is not. This is why in a taste test or beauty contest it is best to go first. People judge the first against an expectation or nothing. People judge the second and remaining entrants against the first.
What do you do to keep last minute fear or data from taking precedence over deliberated plans?