So you want to launch a business...

The Winner's Circle - Jim Scapa

I first met Jim Scapa way back in 1986. He was pushing the envelope back then, and continued to do so over the following 25 years. Back then Altair had about 20 employees.  Now they have over 1300.  Back then they had only a handful of clients. Now they serve over 3,000 businesses world-wide. As with our other Winner's Circle contributors, I asked Jim a single question: what was the single most important strategic decision that you have made? His answer follows below, and it is a truly classic example of a fundamental entrepreneurial rule of thumb.

What you are doing must truly matter to your clients, and it must set you apart from your competition.

Here is Jim's story. 

To me, the most important strategic decision I have made was to invest in the HyperWorks business model back in 1999. At the time, most of my organization was opposed to this direction as they saw the short term risk of cannibalizing existing revenue streams. Since most of my team are engineers and extremely analytical, many developed impressive spreadsheets to demonstrate to me the weaknesses of my model and argued strongly in our open, dialogue rich culture. After one year of hand wringing and listening to all points of view, I went against the common wisdom and rolled out HyperWorks units.  

The HyperWorks Unit (HWU) licensing concept was the first in our industry to utilize a pay-per-usage system, drawing units (tokens) from a central pool served globally.  It was quite a revolution in the engineering software sector where licensing was typically restrictive; often geographically limited or hard-coded to machine ID’s.  In addition, the clever “leveling” vs. “stacking” concept – assigning a unit value to each product in the suite and charging only for the highest priced product - offered tremendous value and flexibility in using products within the suite.

Today this model is the backbone of our value proposition. Customers recognize Altair’s commitment to deliver a broad solution set of best in class technology, backed by best in class engineering know-how and service for a very fair price. We continue to increase the value by adding new products and paying attention to evolving technology and business trends.  We also continue to tune the model to adjust to the trends as we see them.

We see our business model as a fundamental advantage. With that in mind, we applied for, received and have periodically extended patents on it. We also invest in the technology to make the model work well for customers and for ourselves.

Exceptional products.  Responsive service.  Breakthrough, exclusive pricing model.  And the MOXIE to make it real.

Result: remarkable success!

Money - the universal scorecard

Daniel Pink, in his best-selling book, Drive, presents a solid case for re-examining many of the commonly held notions about motivation.  And he is not alone in asserting that time-honored cash incentive programs simply do not work as intended, and, in fact, may actually be counter-productive in many instances.  Specifically, Pink calls out autonomy, mastery, and purpose as "intrinsic" motivators, possibly even in the same power class as hunger and sex.

As I replay conversations with entrepreneurs I have known, I am called to re-interpret comments about the desire to "get rich" as a convenient wrapping for a deeper need - the desire for personal autonomy.  Autonomy, after all, is one of the "things" that riches actually deliver.  Simply to have money, after all, is not the same as to spend money.

People buy (as all great salespeople know) feelings, not products.  They may say that they want the high performance of a sports car; but they may really want the feelings of power and desirability that come from being seen in such a vehicle.  Likewise, it is easy to map an expressed desire for riches onto the more subtle feelings that riches can enable.

People, says Pink, also crave the feeling of mastery, that they are really good at something, and constantly getting better.  Well, earned money is certainly a handy scorecard for that one.  Most freshly rich people got that way by being really good at something, even if it was something illegal.  Bad crooks don't get rich, after all.

Finally, Pink points out that people tend to want to feel that they are part of something bigger.  He calls that "purpose."  Guy Kawasaki, in The Art of the Start, calls it "meaning."  And Jim Flowers (that's me) uses the word Purpose to encompass both Motivation (me-first stuff) and Meaning (others-first stuff). It turns out, oddly enough, that you can do a lot of good things for others if you have enough money.

So, where is all this taking us?  It demands that we look beyond the money.  As an aspiring entrepreneur, or someone working with entrepreneurs, it does seem like a good idea to pry open the hidden door behind the obvious cash factor, and figure out what that cash represents, what it might enable.  That's really where the drive is coming from.  And that drive is a key determinant of the MOXIE supply that will be available to fight through all the obstacles in the way of success.

Money is not a true motivator.  It's an enabler.  But it is a really handy scorecard.

Five words that define leadership

Volumes have been written on the topic of leadership, mostly by people with far more impressive credentials than mine.  So I am going out on a very shaky limb when I assert that five words are sufficient to define leadership in a useful manner.  But, what the heck, entrepreneurship is all about risk.  I'll take one.  Here are my five words:

Vision.  Commitment.  Execution.  Focus.  Principles.

Of course, it really takes a few more words to make clear what deeper message is embedded in those five; but not many. 

Vision...

  A clearly expressed vision of a more desirable future state of affairs is paramount, whether you are leading a nation, a company, a club, a family, or just yourself.  Leaders enable change.  Their vision defines it.  A journey begun without a particular destination is not a journey at all.  At best, it is a sightseeing tour.  At worst, it is a waste of precious time and energy.

"Imagination is the beginning of creation. You imagine what you desire, you will what you imagine and at last you create what you will."

George Bernard Shaw

"Management by objectives works if you first think through your objectives. Ninety percent of the time you haven't."

Peter Drucker

Commitment...

A leader's firm and unwavering commitment to relevant action, rather than to specific measurable objectives, demonstrates his understanding of human behaviors and limitations.  I can control and take responsibility for my actions.  I cannot control the response of the marketplace to my actions.  I can commit to make 25 sales calls.  I cannot guarantee that any of my targets will actually buy. 

So, I must firmly commit to act in what I presume to be the most relevant manner, given my vision for the future and my circumstances at any particular moment.  And I have written before about why commitments are far more useful than goals.

"If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours."

Henry David Thoreau

"Inherent in every goal is permission to stop trying."

Jim Flowers

Oh, and, by the way, along with commitment comes that fearsome beast, accountability.  If I say I'm going to do whatever, I have to do it.  No ifs, ands, or buts.

Execution...

Actually, with regard to all those relevant actions, execution alone is far from sufficient.  What is required is impeccable execution.  Clearly, my best effort must be good enough to complete my selected action; but it absolutely must be my best effort.  Otherwise, my competitors and the complexity of the market will generally defeat me.

“We are going to relentlessly chase perfection, knowing full well we will not catch it, because nothing is perfect.  But we are going to relentlessly chase it, because in the process we will catch excellence.”

Vince Lombardi

Focus...

Focus.  Focus.  Focus.  This word appears to be the mantram of great leaders. 

I first told this story back in about 2005.  It still works.  At least, I think so. 

Picture this.  You want to penetrate an office wall.  You run at it, arms and legs flailing.  What happens?  A broken nose, perhaps.  In animated cartoons characters pass through walls, leaving an opening precisely the shape of their bodies.  That doesn’t work in real life.

You have a chance to penetrate that wall, however, with a well-directed and fully committed fist.  The martial arts people will tell you that they strike a target that is beyond the barrier.  To break a board, they strike beyond the board.  That makes the board only an incidental nuisance along the way.

And people with true focus are never distracted by the fleeting sparkle of meaningless shiny objects.

"The secret of success is constancy of purpose."

Benjamin Disraeli

"The ability to focus attention on important things is a defining characteristic of intelligence."

Robert J. Shiller

Principles...

"Back of every noble life there are principles that have fashioned it."

George Lorimer

In my experience, good things don't just magically happen.  The actions that result in positive outcomes generally have to pass the acid test of noble principles, such as these:

• The fundamental importance of honesty, integrity, and responsibility;
• The inherent worth and dignity of every single person;
• The importance of justice, equity, and compassion in all relationships;
• The enlightening power of a continuing, free, and responsible search for truth and meaning;
• The right and the responsibility of each individual to act in good conscience in moderating behaviors, both personal and corporate;
• Respect for the interdependent web of all existence upon which we all depend for survival.

Five words.  Fourteen syllables.  Leadership defined.  Think Abraham Lincoln, Mohandas Gandhi, Martin Luther King, Jr. Think also about great leaders you have known personally, but who acted on a smaller stage and never became famous.

Vision.  Commitment.  Execution.  Focus.  Principles.

Are you a leader?

Are you headed for burnout?

"Laughter and tears are both responses to frustration and exhaustion. I myself prefer to laugh, since there is less cleaning up to do afterward."

     - Kurt Vonnegut

A startup business is a great place to get worn out.  If you find yourself in that sad state, here's some great advice from Tara Rodden Robinson.  It appears she was running low on MOXIE, but caught herself in time.

Looking back, there were warning signs.

* Going through the motions.

* Heard it all before.

* Stale. All my ideas were past their expiration dates.

* Attention span on empty.

Don’t let this happen to you. If you see these signs, then stop, drop, and roll.

Stop: running around only fans the flames that are burning you out.

Drop: out of sight, out of mind, out of your routine, out of your daily normal.

Roll: in the grass, in the sunshine, in the ease of an unplanned, spontaneous day.

Thanks, Tara!  Every so often we all need permission to crash productively.

Spells and Incantations

"We are generally the better persuaded by the reasons we discover ourselves than by those given to us by others."

Blaise Pascal

"You can't convince anybody of anything.  You can only give them more information."

Arthur Scharff

If your start-up plan includes exceptional Magic, you have a fighting chance for survival.  But simple possession of Magic does not put your wizardry into action.  It must be released and directed by means of carefully crafted spells and incantations.  Powerful Messages are always required.

My experience tells me that engaging the listener as an informed decision-maker is more powerful than ordering the listener to take some particular action.  That is not to say that marketing and advertising messages should be limited somehow to cold, industrial-strength facts.  Au contrere!  We have all been informed that buyers act on expectations of feelings.  So, informing them that others have, in fact and regularly, experienced those feelings by taking the desired actions is a classic strategem.  Testimonials work.

It's also perfectly acceptable, and logically important, to lead your listener/decision-maker to your preferred conclusion.  I've quoted Barry A. Densa before.  Here's a portion of what he says...

Assemble and present your credentialing elements, your evidence–your entire body of incontrovertible proof–in clear and linear fashion.

Allow your proof to lay the groundwork for what is to come. Create strong and overwhelming direction and momentum.

So, my friendly local entrepreneur, it would appear that Mastery of the art of incantation will serve you well. Click here for a comprehensive list of spells revealed in the Harry Potter tales.  Or, check out the advice of the various marketing communication wizards available to you, at no cost, courtesy of the world wide web.  Above all, start with good writing.  That is your personal magic wand.

I'm not losing. I'm learning.

"Life is like playing a violin in public and learning the instrument as one goes on."

    Samuel Butler

Breaking news.  You heard it here first!  Unskilled violinists don't receive much applause.  And off-target products and services don't sell. 

So, what happens to the aspiring violinist who cannot move his audience?  What happens to the entrepreneur whose first product flops?

My son is a musician.  His career choice has exposed me to all sorts of people and situations that would have otherwise been forever hidden from me.  A few years ago, we were visiting a college as part of the audition tour required of every music major.  During such visits the aspiring performer is interviewed and then demonstrates his skill for the professors who will be charged with transforming him into a reliable applause generator.  The parents wait in the hall.

The halls of these music institutes are festooned with all sorts of flashy concert posters and album ads, of course.  But they are also home to a wealth of inspirational materials.  Here is a keeper.

"Amateurs practice until they get it right.  Professionals practice until they can't get it wrong."

Wannabee entrepreneurs (and musicians) try only until they hit the first serious obstacle.  Then they lose, precisely because they believe they are losing. 

Winners keep at it until they succeed.  They win because they understand that they are not losing, but that they are learning.

For a scientist, an experiment that does not confirm the hypothesis is not a failure.  It is a useful stepping stone to a fresh hypothesis.  For a musician, a bad review provides clarity on how the performance can be improved.  For an entrepreneur, a rejected product is a clear message about the true needs of the marketplace.

Product acceptance is disappointing?  You have two choices.  Declare defeat and go find a job.  Or address the current biggest complaint and try again.  Then repeat the cycle as long as your Moxie holds out.

Ultimately, you will learn so much about your Market that you can't get it wrong.  You will have mastered your Magic.

By the way, the musicians and the scientists all have Mentors.  They are built into the system.  I'm just saying...

How to eat a five hundred pound marshmallow

"Plans are only good intentions unless they immediately degenerate into hard work."

                                    Peter Drucker

The vast gorge that lies between noble intent and significant achievement is, of course, quite real, and widely documented.  Lofty goals are commonplace.  Noteworthy achievement?  Not so much.  And this is particularly true for entrepreneurs and their ambitious startup plans.

Many years ago one of my friends presented me with a clever metaphor that I have since used on a regular basis.  Speaking about one particular challenge, he said, "This is like a five hundred pound marshmallow.  I can't even get a firm grip on it, let alone eat it.  But if I chop it up into bite sized pieces, I can at least make some progress." 

It seems to me that the vast gorge between intent and achievement might be addressed in the same manner.  So - I hereby offer a simple experiment that you may perform in the comfort and security of your own office. 

How to eat a five hundred pound marshmallow...

Commit to specific, short-term, relevant actions that are obvious and powerful pre-requisites to lofty outcomes, rather than to the outcomes themselves.  Hold the outcomes in mind, of course.  But focus on the actions, one at a time.  Select one.  Complete it.  Review your situation.  Determine what the next most relevant action should be, and take it.  Repeat as needed.

Example.  Don't resolve to increase sales by $1,000,000. 

Instead, visualize your business as vibrant and prosperous, larger than it is today, with more clients, placing larger orders.  Then execute one specific, measurable, immediate, relevant action on the path to that prosperity.  Perhaps it might be to make five prospect calls today.  After those five calls are made, assess the fresh information.  The next most useful action might be to make five more calls; or it might be to compose a new introductory pitch; or it might be to lower prices by 10%.

Bonus: every time you actually complete one of those relevant actions, you get an accomplishment boost, a nice recharge for your Moxie.

So, remember the old English proverb, "If wishes were horses, beggars would ride."  Transform your vision into meaningful action.

P.S.  This system also works for New Year's Resolutions.

Four really useful habits

I'm pretty darned sure that these four things will take most anybody a long way down the road to achievement and contentment: clarity of vision, commitment to relevant action, adherence to noble principles, and focus. 

1. I try to stay in touch with what really matters. 

What really matters to me is not what other people tell me should matter.  It's what my own deepest inner voice tells me.  It's what I think about when I find myself awake in the middle of the night.  It's what I want to share with the people I love.  It's my vision of an ideal world.  It's how I want my life to work out.

2. I commit to relevant actions, not outcomes. 

I can control the actions I take.  But, except in trivial cases, I can't control the outcomes they will produce.  Life is simply too complicated.  There are too many uncontrollable outside influences.  If I arbitrarily decide that I will sell 100 widgets, I may or may not succeed.  If, on the other hand, I commit to improving the specific skills, techniques, and work habits related to selling, my effectiveness will definitely increase.  If I can master the details, I will then sell as many widgets as the marketplace permits me to sell.

3. I constantly test my vision and my actions against my fundamental principles. 

I assume you have principles.  I do.  Most people appear to have at least a few.  Some wise person once told me this.  "If you can't talk about your vision with your grandmother, think it over just one more time.  If you wouldn't want your action to appear on national television, reconsider your commitment to that action."

4. I do my best to stay focused. 

Just say no to more good ideas!!  I like Jonathan Mead's take on this.  He says that people who can ignore their good ideas "don’t chase the stuff that seems to have potential, but doesn’t really matter. They only do the stuff they must do: what they’re insanely passionate about and what they were born to do."  Focus also preserves a person's precious supply of MOXIE.  That's a big, big deal for an entrepreneur trying to succeed in a risky startup situation.

Ignorance is risk

"Ignorance gives one a large range of probabilities."

                      George Eliot

"Nothing is worse than active ignorance."

                                             Johann Wolfgang von Goethe

"Never let your persistence and passion turn into stubbornness and ignorance."            

                                Anthony J. D'Angelo

To be an entrepreneur is, by definition, to risk.  Risk management is all about reducing uncertainty, somehow minimizing the number of possible outcomes.  There is no greater risk, therefore, than to take aggressive action in the face of serious uncertainty.

To translate that into the terms I commonly use in this blog - don't let your Moxie override your Mastery of Market and Magic.

Here's a simple test for the level of ignorance-risk inherent in your startup plan. 

• Are you entering a Market in which you have never done business?  Yes or No.

• Is your Magic (product or service) something truly new to the world?  Yes or No.

"Yes" answers suggest that your Mastery of the Market or the Magic are probably questionable.  Two "yes" answers suggests very high risk.  One "yes" suggests more moderate risk. 

Good news!  Ignorance can be corrected, starting with location and recruitment of Mentors who have deep personal knowledge of your Market and/or your Magic.

What to do next...

Focus.  Mastery.  Measurability.

Success has a lot to do with focusing limited resources.  Here’s an exercise to start you on the path to that focus.

Make at least three copies of the simple outline that appears below.  You fill out one of them.  Ask two or more of your Mentors to do the same.

I’m facing a wall.  Success is on the other side.  If my new enterprise is to succeed, to penetrate the wall, it must excel at each of the following Three Dominant Factors:

1.     
2.     
3.     

I will gauge progress toward the Mastery I seek according to these clear Measurability criteria:

1.     
2.     
3.     

 

If there is some level of disagreement on the Three Dominant Factors (and that is highly likely), repeat until opinions converge.

This is as clear as it gets.

Mastery

“We are going to relentlessly chase perfection, knowing full well we will not catch it, because nothing is perfect.  But we are going to relentlessly chase it, because in the process we will catch excellence.”
                                                                                    - Vince Lombardi

Focus, focus, focus.  Practice, practice, practice.

Of course, no one can excel at everything; but excellence in a few, key disciplines seems typically to spell the difference between a painfully stable company (or a failure) and a remarkable success.  In fact, in my experience, a company that masters a few dominant factors can tolerate mediocrity in other areas.

Picture this.  You want to penetrate an office wall.  You run at it, arms and legs flailing.  What happens?  A broken nose, perhaps.  In animated cartoons characters pass through walls, leaving an opening precisely the shape of their bodies.  That doesn’t work in real life.

You have a chance to penetrate that wall, however, with a well-directed and fully committed fist.  The martial arts people will tell you that they strike a target that is beyond the barrier.  To break a board, they strike beyond the board.  That makes the board only an incidental nuisance along the way.

"OK, Jim," you say; "but please boil all this down to something that is usefully simple." 

You win.  Here it is.

To achieve success, you must first define success and fully commit to it.  Then you must focus your limited resources, in order to act with maximum available force, meanwhile reducing barriers to incidental nuisances.  And never confuse the barriers with the target itself.

•    Define success
•    Fully commit
•    Focus limited resources
•    Act with maximum available force
•    Reduce barriers to incidental nuisances