Leadership Archives

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.

Not every bat is a hit

Trying new stuff is part of the fun of running a business. During the past ten years or so we’ve tried five new business ideas: one was a flat out failure, one is slightly better than a financial wash and three have worked quite well. (That’s a pretty good success rate considering the old baseball adage: you must bat 10 times to get three hits!) And while the wins are the most fun and profitable, I don’t regret the things we tried that didn’t work out either. As my father used to tell me, “If you do nothing, you’ll make no mistakes.”

The failed venture involved licensing a specific software application we developed. Similar to the findings described in the new book Just Start: Take Action, Embrace Uncertainty, Create the Future, our new venture was a modest undertaking. It involved only myself and one employee and a limited test with one client. When it didn’t work as planned due to technology limitations, we simply abandoned the effort with very little lost revenue.

Determined to continue exploring new revenue streams, however, we decided to try selling our courseware directly to other training firms. As the authors of Just Start report, successful serial entrepreneurs “use the means at hand” when embarking on a new venture. That was the principle at work in this example from Intertech. Our investment in developing software training courseware is already built into our business model since that is what we use in our existing classroom and virtual training classes.

We also employed another Just Start principle: “stay within your acceptable loss.” To sell our courseware directly we used Yahoo (www.intertechcourseware.com) to create a storefront, which limited our upfront investment.

And we’re also embracing the final Just Start adage to “manage expectations.” While relatively small given our overall sales, we are doing better than just breaking even. Not bad for a venture with little upfront cost or risk!

Next post: Winning big by starting small.

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.

Getting Things Done. Just Do It!

Nike’s “Just Do It!” may go down in business books as one of the most successful corporate slogans of all times. Americans in particular seem intuitively to understand the simplicity and common sense behind this concise call to action. So why do so many companies have difficulty launching new ventures? Why do so many organizations bog down in “analysis paralysis,” leaving potential moneymaking new revenue ideas behind in the process?

In my book “Building a Winning Business,” takeaway #37 is titled “Just Do It!” In that short chapter I counsel readers that “It’s better to take action than to procrastinate while obsessing about perfection.” I also advise managers not to let things grind to a halt over a single issue. Business writers and educators Leonard A. Schlesinger, Charles F. Kiefer and Paul B. Brown take this advice to a whole new level in their new book, Just Start: Take Action, Embrace Uncertainty, Create the Future (Harvard Business Review Press, March 2012).

Schlesinger is the president of Babson College. Kiefer is the president of Innovation Associates and Brown is a longtime contributor to The New York Times. Together, they have spent years studying how entrepreneurs “create new products, services and business models in situations where the old methods of analyzing, forecasting, modeling, planning, and allocating don’t work.”

Their bottom line: “Successful entrepreneurs don’t just ‘think different,’ they translate that thinking into immediate action, often eschewing or ignoring analysis. Rather than predict the future, they try to create it.”

In the four posts to follow, I will tell you about their findings (see the March 2011 Harvard Business Review for a more in-depth summary of their insightful new book) and share how this same logic has helped Intertech to move ahead in some key areas of our business

Let ‘em know how they’re doing!

Remember former New York Mayor Ed Koch, who was fond of asking, “How’m I doin?! While Koch was more brazen than the typical modest Minnesotan, his need to know if he was measuring up to expectations is fairly universal. In the study of thriving workplaces that I’ve been writing about in this series on happy employees, offering performance feedback was identified as one of the four most important things managers should do.

The study authors Gretchen Spreitzer, professor of management and organizations at the University of Michigan’s Ross School of Business, and Christine Porath, assistant professor at Georgetown University’s McDonough School of Business, note in their article “Creating Sustainable Performance” (HBR Jan/Feb. 2012):

“Feedback creates opportunities for learning and the energy so critical for a culture of thriving. By resolving feelings of uncertainty, feedback keeps people’s work-related activities focused on personal and organizational goals. The quicker and more direct the feedback, the more useful it is.”

Once again, I think the good professors are spot on. While the annual performance review is an HR requirement, the best feedback happens in real-time (or as close to it as we can get). We do old-fashioned things like handwriting notes to congratulate a team member on a particularly job well done. But as a technology firm, we also enjoy using social media as a tool for feedback. We’ve set up a site, similar to Facebook but only for Intertech people, where we can post comments, questions, ideas and the like. I make it a point to “like” comments (when I actually do!) do everyone can see that I value their participation. This has become a very popular “social media” site at my company.

On a more formal basis, we employ KRAs — or Key Result Areas – as a tool for giving meaningful performance feedback. I can’t take credit for KRAs; that belongs to Dale Carnegie. But I can tell you that they’re a great tool for creating employee accountability. In my book, Building a Winning Business, I explain how we use KRAs to create alignment between an individual employee’s goals (and bonuses) and the company’s goals. Like company goals, each individual should have three to five KRAs for the year and they should be ranked in order of importance.

After defining KRAs, employees meet regularly throughout the year with their managers to make sure everyone is on track and has the resources they need to actually accomplishing their KRA goals. The beauty of this approach is that there are no surprises at performance review time. If someone has been missing the mark, KRAs allow for coaching and correction in real time.