Month: May 2012

Winning big by starting small

If you’ve been following this current series of posts based on the new book by Leonard A. Schlesinger, Charles F. Kiefer and Paul B. Brown called Just Start: Take Action, Embrace Uncertainty, Create the Future (Harvard Business Review Press, March 2012), you know about the “Act-Learn-Build” approach to getting new initiatives off the ground. And you know it’s an approach that I heartily endorse. Today I want to explain why.

Intertech has grown its business revenue by 34% percent in the past year thanks to three new ventures that all were begun with a modest investment: virtual training, remote consulting and our developer training reseller program.

In the case of virtual training, we started very slowly by spending about $25 thousand to build one room capable of accommodating the technical requirements of providing developer training on a virtual basis. Amazingly, we recouped that initial investment in a matter of months. Since then we have expanded our virtual training facilities dramatically and by the end of last year 40 percent of our public enrollments were virtual.

With remote consulting we were totally shooting in the dark. Specifically, we did not know if customers would be comfortable working with us remotely, particularly in areas where we are considered national leaders (TFS, Azure, iPhone and Android).  At the end of the day, heavy marketing to create awareness and leveraging the infrastructure we already use to deliver training allowed us to effectively provide IT consulting services remotely.  Is it working?  We recently landed a deal with a firm out of South Korea.

What we learned from our initial foray into this area was those customers were completely indifferent to our physical location as long as we consistently deliver as expected. Because this new venture is highly profitable, we continue to invest in technologies to facilitate smooth communication and document sharing.

Our training reseller program is the other “hit” I’d like to tell you about. In this instance, we created a program that allows other training companies (in other markets) to promote our courses and receive a percentage of the sale when their students attend our live instructor-led courses.

This arrangement is a win-win because larger training firms often do not want to invest in creating developer training courses since it represents a relatively small percentage of revenue compared to the rest of their business. They pay nothing to list our courses in their materials and receive revenue if their students choose to attend, all the while providing value to clients by helping to satisfy an important niche training need. Intertech has generated hundreds of thousands of dollars in new business thanks to the reseller program.

Next post: The secret behind these successes.

Act-Learn-Build

What do you call people who are experts at navigating extreme uncertainty while minimizing risk? Serial entrepreneurs is the correct answer according to the authors of Just Start: Take Action, Embrace Uncertainty, Create the Future (see previous post for complete citation).  Serial entrepreneurs don’t start with a predetermined goal in mind. Rather, they allow opportunities to emerge.

“Instead of focusing on optimal returns, they spend more time considering their acceptable loss; instead of searching for perfect solutions, they look for good enough ones,” write authors Leonard A. Schlesinger, Charles F. Kiefer and Paul B. Brown

In other words, serial entrepreneurs act first, learn from those first small steps and then build on the lessons learned. Sometimes the lesson is that it’s not worth going further. Other times it’s clear that opportunity exists and further steps should be taken to maximize it.

An in-depth study of 27 serial entrepreneurs by an associate professor of business administration at the University of Virginia’s Darden School of Business, Saras D. Sarasvathy, confirmed that “act-learn-build” is a surprisingly effective way to create new products and services.

Here’s how it works in a nutshell, as summarized in the article “New Project? Don’t Analyze—Act” in the March 2012 issue of Harvard Business Review:

Act: Take a small step toward a goal.

Learn: Evaluate the evidence you’ve created.

Build: Repeat steps 1 and 2 until you accomplish your goal, realize you can’t, or opt to change direction on the basis of new information.

“You’re not flying blind, you’re moving forward carefully, eyes wide open. You’re alert to any looming danger—or opportunity,” write authors Schlesinger, Kiefer and Brown.

They go on to note: “We acknowledge that action before analysis can be, well, unpredictable—and messy. And we concede that it’s antithetical to the way most organizations work. However, in the long term, taking lots of small steps actually reduces risk, which makes such an approach ideal for tackling challenges and getting fledgling initiatives off the ground, particularly in today’s skittish corporate environment. And such innovation is critically important not only for companies that want to stay competitive but also for enterprising employees who want to feel fulfilled in their jobs.”

I could not agree more wholeheartedly. In my subsequent posts in this series I will explain how the “Act-Learn-Build” approach has worked in practice at Intertech.