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Archive for May, 2011|Monthly archive page

Offshoring

In Uncategorized on May 31, 2011 at 8:18 pm

Economists argue that offshoring is a win-win phenomenon

Oct 28th 2009 | From The Economist online

Offshoring—the wholesale shifting of corporate functions and jobs (particularly those of back-office workers in it and accounting-type roles) to overseas territories—is what gave outsourcing a bad name. It is important, however, to note a crucial distinction between the two:

• Outsourcing need not necessarily result in job losses in a particular territory or country. A job can simply be handed over to another organisation of the same nationality and geographical location where (the company handing it over hopes) it can be carried out more efficiently. Sometimes that other organisation may be in another country, but more often than not it is not.

• Offshoring, however, does involve shifting jobs to another country, but it may not involve transferring jobs to another organisation. For example, a company may simply decide to move its local customer services operation to one of its own subsidiaries abroad. That is offshoring, but it is not outsourcing.

Economists argue that offshoring is a win-win phenomenon: the country that sends the work abroad gains from lower costs, and the country that gains the work gets extra jobs. But countries sometimes panic about the scale of offshoring. When production jobs moved en masse to China and other cheap labour destinations, rich-world governments did not worry unduly because they thought that their workers could glide painlessly from manufacturing jobs to service jobs. Who, they thought, would begrudge giving up a lifetime on the factory floor for a lifetime in a clean, antiseptic office?

The real problem arose when the service jobs also started to go abroad, when every other service company’s call centre suddenly seemed to be based in Bangalore, in the middle of India, not Indiana. What were western workers going to move on to this time, once they had been priced out of the services sector?

At one stage, Americans became almost hysterical about the issue. A 2004 report by Forrester Research, a highly reputable firm, estimated that 3.3m American jobs would have gone offshore by 2015. This was immediately taken as a known fact. But the author of the report subsequently told the Wall Street Journal that his estimates were no more than “educated guesses”. As one commentator said: “The public’s intense desire to understand the scope of the problem has bred a reliance on statistics that even [Forrester] admits are based heavily on guesswork.”

In practice, the hysteria died down, even as the benefits of offshoring were being questioned more and more. Managers found it increasingly difficult to manage far-flung service operations in cultures they did not understand, and firms began to bring some functions back to their home base—especially call centres, where customers often found it difficult to explain localised problems to someone working in a totally different climate in a totally different time zone. Indeed, in 2006 an Indian call-centre operator opened a new centre in Northern Ireland.

Closely allied to offshoring is the concept of nearshoring, a phenomenon whereby companies shift operations, often IT-related ones, to foreign countries that are close to their own, but where they can still gain a labour-cost advantage—from the United States, for example, where Spanish is the second language, to Mexico; or from Japan to the Chinese city of Dalian, which was occupied by the Japanese for many years and where there are Japanese-speakers. Nearby countries are more likely to speak the same language as the country of the corporation doing the offshoring; they are more easily accessible at short notice; and they are unlikely to leave the short-stay visitor with jet lag.

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How to Train Yourself to Be Cool Under Pressure

In Uncategorized on May 31, 2011 at 8:08 pm

By Jessica Stillman | May 10, 2011

Last weekend after giving the okay for special forces soldiers to raid a compound where the world’s most wanted man was believed to be hiding, President Obama straightened his bow tie and went off to roast Donald Trump at the White House Correspondents’ Dinner. Funny and unruffled, the President gave no indication he was feeling the strain of his momentous decision. He was, in short, a pretty cool customer.

It was an impressive display of calm under pressure and inspires the question — how does he do it? Is the ability to handle stress an innate characteristic like height or eye color, or is it something us mere mortals can learn to do too? According to Justin Menkes, the author of new book Better Under Pressure, the answer is very much the latter. “Attributes have a range of genetic influence and the ability to deal with pressure is on the far side of the continuum in terms of preparation versus genetics. Your ability to deal with stress is overwhelmingly about preparation,” he told Entry-Level Rebel in an interview.

Obama-level coolness is within all of our reach, says Menkes, who reminds young people not to be overawed by cool performances from those in senior positions: “It is indisputable that they can do those highly pressured, extraordinary things that they see the masters do. The masters have been preparing for 40-45 years. Excellent, expert preparation got them there. They weren’t born a star.”

So how do you go about building up nerves of steel? Very much like you would go about building up abs of steel, says Menkes, who recommends a progressive increase in strain for those who want to toughen up. But be warned, like with physical exercise, strengthening your nerve isn’t necessarily comfortable:

There’s no simple A, B, C. You can’t just read books — it’s not like that. It’s not ‘OK, I put a little post-it on my desk for a daily mantra “Remember you’re terrific!”‘ That’s useless. You have to build inside your brain, your consciousness and your stomach a knowing that you can handle it.

You have to put yourself in situations that elevate your sense of stretch, whether it’s a presentation, public speaking or a task that causes you fear like taking lead in a Monday morning meeting. Take initiative on something, but not something that is over your head because what is essential is that your experiences along the way are positive.

If you put yourself in situations that are just so extreme, then the probabilities are you aren’t ready and it can go badly. Then your memory attaches negative experiences to pressure and that doesn’t help. We want you to associate elevated pressure with a confidence that you can handle it, and you do that by elevating the situations of stress where there’s a risk of failure but you’re well enough prepared for it that odds are it’s going to go well. You put yourself in several of those and then you have that internal memory of ‘I can handle pressure.’ And then you keep elevating it.

It may sound like a less than pleasant process, but Menkes insists that becoming a cool customer is key for business leaders of the future. “The biggest distinction in the 21st century is an ongoing elevation of pressure and complexity,” he warns. “That’s not going to go away, so you have to find a way to find it invigorating. The people that will thrive it are those who understand it, accept it and take advantage of it.” Better get practicing then.

How Navy SEALS Build Immunity to Stress

In Uncategorized on May 31, 2011 at 8:07 pm

By Sean Silverthorne | May 11, 2011

Navy SEALS are not allowed a bad day at work, and they certainly can’t let stress degrade their performance.

Stress reduction, or brain resiliency, can be learned, and you don’t have to be a member of an elite fighting force to do it, according to medical researchers who spoke at at a recent Harvard Medical School symposium on “Resiliency and Learning: Implications for Teaching Medical Students and Residents.”

George Everly, an associate professor of psychiatry at Johns Hopkins Bloomberg School of Public Health, has studied Navy SEALs and other groups that work under high stress. He said that people most likely to have developed an immunity to stress have a social support network, are optimistic, are persevering with a stout work ethic and value responsibility and integrity.

Resilience can be taught, said Everly, by incorporating these steps in your program.

  1. Allow people to experience success by assigning them to work with successful teams.
  2. Create an environment of safety and encouragement, coupled with mentoring and training.
  3. Promote “self-efficacy” — belief that we are agents of change, which is earned through personal accomplishment in the face of a challenge.

How to Promote Yourself without Seeming Like a Jerk

In Uncategorized on May 31, 2011 at 8:06 pm

By Dorie Clark | May 17, 2011

The first rule of a good personal brand is that it should capture people’s attention and make them want to get to know you better. That’s what help leads to job offers, promotions and consulting contracts. So how can you become more intriguing to the people you meet without seeming like a relentless self-promoter?

1.  Cultivate passions outside of your work.

People want to do business with people who are fun and interesting. You can (and should) differentiate yourself by being excellent at your job. But you can really stand out through your avocations. Become an expert at something – whether it’s chess or pole-vaulting. Travel widely – especially to places off the beaten path (you’re more likely to engage people’s interest if you talk about your trip to the Baltics instead of Paris).

2. Get ready for the Question.

The minute you enter a cocktail party, you’re going to be asked The Question: What have you been up to lately? Some people fumble and demur – “Oh, nothing much.” Or, even worse, they talk about something boring  – “Well, we went grocery shopping last weekend.” Frankly, there’s just no excuse to not have a ready answer that will lead to an interesting conversation. Try “We’ve been taking fencing lessons” or “I’m working my way through the collected works of Nabokov.” Almost anything is fine, as long as it’s personal, true, and not the lame answer you get from most people.

3. Find your wingman.

Many people worry about seeming like a self-promoter. They might have just completed an Iron Man Competition or published an op-ed in the New York Times, but they fear it’ll seem like bragging if they raise the discussion. Having a wingman, a friend who will talk you up, solves that problem. (Leil Lowndes discusses this to great effect in How to Talk to Anyone About Anything .) Of course, in exchange, you should talk up his or her accomplishments too.

4. Link your interests to work.

One secret to maximizing the value of your personal brand is linking your interests to your professional life. When talking about your activities, be sure to make the connections explicit, because many people won’t immediately see them. If your world travel has expanded your cultural understanding and knowledge of the European market, then make sure to mention ithat – don’t just drone on about what great meals you had. And almost any athletic undertaking can be positioned as honing the discipline you need to succeed at work. Being viewed as an expert in one field often “crosses over” and increases others’ perception of your knowledge in other areas. So leverage your skills and interests for all they’re worth.

Who do you find truly intriguing – and why? What other strategies have you seen people use to become more compelling?

Can Working Virtually Increase Happiness?

In Uncategorized on May 31, 2011 at 8:02 pm

By Wayne Turmel | May 18, 2011

Working virtually and flexibly are facts of life for many of us. For some it’s a blessing, for some a curse and for many it just is what it is–the way the world is going. For those of us who manage people virtually there are two questions: a) can working remotely make us happier, and 2) do the bean counters and policy makers care about our happiness so long as the work gets done?

Recent research shows it might not be an either/or question. Working virtually can increase employee happiness and satisfaction (if it’s done right) AND there’s a way to quantify that satisfaction to satisfy the money folk. The key is to do it right.

Philip Ross is the CEO of Cordless Group and Unwork.com. He’s an author who looks into the future of work. Bob Gaudreau’s an Executive VP at Regus, the world’s largest provider of flexible workspaces. They recently collaborated on a white paper called “VWork: Measuring the Benefits of Agility At Work”. Not surprisingly, (Regus, does after all, make their money renting temp and flexible office space) they found all kinds of benefits to working virtually. What’s more surprising is a forumla they use to show return on investment: what they call the “Agility Dividend”.

It measures three things: the “Efficiency Dividend” (property costs x fixed and operating costs), the “Productivity Dividend” (downtime x salary costs), and what they call the “Happiness Dividend” (commuting costs x time and cost savings).

It might be a stretch to suggest that our happiness is inextricably tied to our commute, but the numbers are pretty interesting. Most people in cities want a 10-15 minute commute, but most of us travel over 45 minutes each way. If we didn’t have to schlep to the corporate headquarters every day we could save a lot of time, stress and money.

This means that using so-called “third places” like temporary or shared office space, branch offices with “hotelling” capabilities and even the local Starbucks can give employees more choices in where and how to work. Technology makes it possible, the wide availability of choices makes it practical, what stands int he way much of the time is company policy (finance, IT and HR). That’s where convincing the people with the purse strings comes in.

According to Ross and Gaudreau, this isn’t a simple issue of the “soft and mushy” human side that so frequently gets discounted in company discussions. There are tangible benefits to increasing employee “happiness”.

  • The time saved in the commute almost always goes to productivity. Studies show that people who don’t spend lots of time getting to work actually spend most of that saved time working. If you can knock a half hour off your commute each day, that’s an hour we spend actually doing our jobs.
  • That number doesn’t include the amount of time and energy spent ducking or avoiding the commute. Quick, take a look around the conference table in any meeting at 3:30 on a Friday. How much real work is getting done even though people are present and accounted for?
  • As companies rethink the amount of office space needed, they’ll generally find that smaller regional or shared office space saves money over the costs of a single large headquarters.

Of course, one sure way to increase employee happiness is to give people choice in how they work best. For example, the study shows that the majority of us like the idea of actually going to work instead of working from home, we just wish it wasn’t so darned far away. We also would love to have some choice in the technology we use.

If companies can save money by getting more out of people while spending less on infrastructure that would seem to be a pretty good deal for all concerned. The trick, of course, is to create the policy and strategy consciously instead of just letting it happen by accident.

You can download the full report, “VWork: Measuring the Benefits of Agility at Work” here. Take a look and let us know what you think.

What The Most Successful People Do Before Breakfast

In Uncategorized on May 31, 2011 at 7:59 pm

By Laura Vanderkam | May 17, 2011

Mornings are a mad-cap time in many households. Everyone’s so focused on getting out the door that you can easily lose track of just how much time is passing. I’ve had hundreds of people keep time logs for me over the past few years (you can see some of mine here and here), and I’m always amazed to see gaps of 90 minutes or more between when people wake up and when they start the commute or school car pool.

That would be fine if the time was used intentionally, but often it isn’t.

The most productive people, however, realize that 90 minutes, 120 minutes or more is a long time to lose track of on a busy weekday. If you feel like you don’t have time for personal priorities later in the day, why not try using your mornings? Streamline breakfast, personal care and kid routines. Then you can use 30-60 minutes to try one of four things:

1. Play, read, or talk with your kids. Mornings can be great quality time, especially if you have little kids who go to bed soon after you get home at night, but wake up at the crack of dawn. Set an alarm on your watch, put away the iPhone, and spend a relaxed half an hour reading stories or doing art projects. If you have older children, aim for a leisurely family breakfast. Everyone talks through their plans for the day and what’s going on in their lives. If family dinners aren’t a regular thing in your house, this is a great substitute.

2. Exercise. You shower in the morning anyway, so why not get sweaty first? Trade off mornings with your partner on who goes out and runs and who stays home with the kids. Or, if your kids are older (or you don’t have any) work out together and make it a very healthy morning date.

3. Indulge your creative side. Lots of people would like to resurrect a creative hobby like painting, photography, scrapbooking, writing, even practicing an instrument. What if you went to bed a little earlier three times a week? Skip that last TV show or those last emails and get up a little earlier the next morning to put in some time at your easel before the day gets away from you.

4. Think. Strategic thinking time is incredibly important for seizing control of our lives. Spend 30 minutes in the morning pondering what you want to do with your time. You could also use this time to pray or read religious literature, to meditate or write in a journal. All of these will help you start the day in a much better place than if everyone’s running around like chickens with their heads cut off.

Note: Are you looking for a better start to your day, or to use your time more effectively in general? I’d like to do a few time makeovers of readers over the next few weeks. Email me if you’d be interested in logging your time, trying a few strategies, and sharing what you learn. Thanks!

8 Tips for Starting a Side Business While Working Full Time

In Uncategorized on May 6, 2011 at 7:38 pm

 

If you’re thinking about entrepreneurship, you’ve probably heard that you should start your business before you quit your day job.

It’s good advice, but not always practical. Depending on how many hours you have to put in at work, you may have very little time left for your business. The catch is that if you want to be a full-time business owner, you have to build up your business so that you’ll still be able to pay your bills. It can be hard to give up the security of a regular paycheck to pursue your dream of being an entrepreneur.

How can you balance being an employee while you’re moonlighting?

For one thing, you might not want your boss to know that you have something else on the side. You don’t want to appear to be expendable or less dedicated. Keep your business under wraps as much as possible. That also means you shouldn’t conduct your business at work, no matter how tempted you may be to bring your side business to your workplace. And with computer use monitoring becoming more pervasive in the workplace, you probably won’t have much privacy if you’re using company equipment for personal use.

Moving from employee to entrepreneur

If your goal is to leave your job and run your business, here are some steps you should follow.

1. Pick a date for when you’d like to make the move into running your business full time. Be realistic when you look at the calendar. The date has to feel comfortable and be something that you think you can do. 

2. Check your spending. How much money do you need for your business and for personal expenses? It may be tempting to continue to spend money because it’s regularly coming in, but once you’re no longer an employee, you won’t have that income. 

3. Start paying down debt if you can. Set up a payment plan for your credit cards. Create a budget for business expenses as well.

4. Get ready to spend more time alone. If your business is home-based, you won’t have the office co-workers around. Start networking now so that you can have a support system before you leave your job.

5. Get a plan together for what you want to accomplish in your business. Whether you use a business plan or a mission statement, have a clear idea of what your business is about and why you’re doing it. It’s not enough to go into business because you don’t want to work for someone else. Know what you’re getting into before you leave your day job.

Keeping your side business on the side

For some people, having a side business is part of a long-term plan, not an interim step. If you aren’t looking to leave your regular job, it’s less about growing your business than maintaining it. Here are some ways to balance the moonlighting with the "daylighting."

1. Set boundaries. Your clients may want more of your time, but your priority is your day job. Let them know what your business hours are and stick to them. If you end up working long nights, you won’t have the energy to accomplish what’s required on your job. You don’t want to put your steady paycheck into jeopardy because you’re not getting things done.

2. Be careful about how you use social media. In some cases, employers are checking up on what their employees are doing online. Depending on what type of business you have, promoting your side business on your social media profile may raise red flags. For instance, if what you do on the job is similar to what you’re doing in your business, you don’t want to appear to be in competition.

3. Extra money coming in from a side business can be a great supplement to your income. Resist the temptation to spend more because you’re making more money. Unless your business income is targeted for a specific purpose, you can end up spending it as fast as it comes in. Don’t put yourself in a position where the money is going out faster than it’s coming in — you may have to work harder at work and in your business to keep up the momentum.

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How Great Entrepreneurs Think

In Uncategorized on May 3, 2011 at 12:17 pm

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By Leigh Buchanan@LeighEBuchanan   | Feb 1, 2011

Think inside the (restless, curious, eager) minds of highly accomplished company builders.

What distinguishes great entrepreneurs? Discussions of entrepreneurial psychology typically focus on creativity, tolerance for risk, and the desire for achievement—enviable traits that, unfortunately, are not very teachable. So Saras Sarasvathy, a professor at the University of Virginia’s Darden School of Business, set out to determine how expert entrepreneurs think, with the goal of transferring that knowledge to aspiring founders. While still a graduate student at Carnegie Mellon, Sarasvathy—with the guidance of her thesis supervisor, the Nobel laureate Herbert Simon—embarked on an audacious project: to eavesdrop on the thinking of the country’s most successful entrepreneurs as they grappled with business problems. She required that her subjects have at least 15 years of entrepreneurial experience, have started multiple companies—both successes and failures—and have taken at least one company public.

Sarasvathy identified 245 U.S. entrepreneurs who met her criteria, and 45 of them agreed to participate. (Responses from 27 appeared in her conclusions; the rest were reserved for subsequent studies. Thirty more helped shape the questionnaire.) Revenue at the subjects’ companies—all run by the founders at that time—ranged from $200 million to $6.5 billion, in industries as diverse as toys and railroads. Sarasvathy met personally with all of her subjects, including such luminaries as Dennis Bakke, founder of energy giant AES; Earl Bakken of Medtronic; and T.J. Rodgers of Cypress Semiconductor. She presented each with a case study about a hypothetical start-up and 10 decisions that the founder of such a company would have to make in building the venture. Then she switched on a tape recorder and let the entrepreneur talk through the problems for two hours. Sarasvathy later collaborated with Stuart Read, of the IMD business school in Switzerland, to conduct the same experiment with professional managers at large corporations—the likes of Nestlé, Philip Morris, and Shell. Sarasvathy and her colleagues are now extending their research to novice entrepreneurs and both novice and experienced professional investors.

Sarasvathy concluded that master entrepreneurs rely on what she calls effectual reasoning. Brilliant improvisers, the entrepreneurs don’t start out with concrete goals. Instead, they constantly assess how to use their personal strengths and whatever resources they have at hand to develop goals on the fly, while creatively reacting to contingencies. By contrast, corporate executives—those in the study group were also enormously successful in their chosen field—use causal reasoning. They set a goal and diligently seek the best ways to achieve it. Early indications suggest the rookie company founders are spread all across the effectual-to-causal scale. But those who grew up around family businesses will more likely swing effectual, while those with M.B.A.’s display a causal bent. Not surprisingly, angels and seasoned VCs think much more like expert entrepreneurs than do novice investors.

The following is a summary of some of the study’s conclusions, illustrated with excerpts from the interviews. Understanding the entrepreneurs’ comments requires familiarity with what they were evaluating. The case study and questions are too long to reproduce here. But briefly: Subjects were asked to imagine themselves as the founder of a start-up that had developed a computer game simulating the experience of launching a company. The game and ancillary materials were described as tools for teaching entrepreneurship. Subjects responded to questions about potential customers, competitors, pricing, marketing strategies, growth opportunities, and related issues. (The full case study and questions can be found here.)

Quotes have been edited for length, though we wish we had room to run them in their entirety. Sarasvathy remained almost silent throughout, forcing the founders to answer their own questions and externalize their thinking in the process. The transcripts, riddled with "ums" and "ers," doublings-back on assumptions, and references to personal rules of thumb, read like verbal MRIs of the entrepreneurial brain in action.

Do the doable, then push it

Sarasvathy likes to compare expert entrepreneurs to Iron Chefs: at their best when presented with an assortment of motley ingredients and challenged to whip up whatever dish expediency and imagination suggest. Corporate leaders, by contrast, decide they are going to make Swedish meatballs. They then proceed to shop, measure, mix, and cook Swedish meatballs in the most efficient, cost-effective manner possible.

That is not to say entrepreneurs don’t have goals, only that those goals are broad and—like luggage—may shift during flight. Rather than meticulously segment customers according to potential return, they itch to get to market as quickly and cheaply as possible, a principle Sarasvathy calls affordable loss. Repeatedly, the entrepreneurs in her study expressed impatience with anything that smacked of extensive planning, particularly traditional market research. (Inc.’s own research backs this up. One survey of Inc. 500 CEOs found that 60 percent had not written business plans before launching their companies. Just 12 percent had done market research.)

When asked what kind of market research they would conduct for their hypothetical start-up, most of Sarasvathy’s subjects responded with variations on the following:

"OK, I need to know which of their various groups of students, trainees, and individuals would be most interested so I can target the audience a little bit more. What other information…I’ve never done consumer marketing, so I don’t really know. I think probably…I think mostly I’d just try to…I would…I wouldn’t do all this, actually. I’d just go sell it. I don’t believe in market research. Somebody once told me the only thing you need is a customer. Instead of asking all the questions, I’d try and make some sales. I’d learn a lot, you know: which people, what were the obstacles, what were the questions, which prices work better. Even before I started production. So my market research would actually be hands-on actual selling."

Here’s another:

"Ultimately, the best test of any product is to go to your target market and pretend like it’s a real business. You’ll find out soon enough if it is or not. You have to take some risks. You can sit and analyze these different markets forever and ever and ever, and you’d get all these wonderful answers, and they still may be wrong. The problem with the businessman type is they spend a lot of time with all their great wisdom and all their spreadsheets and all their Harvard Business Review people, and they’d either become convinced that there’s no market at all or that they have the market nailed. And they’d go out there big time, with a lot of expensive advertising and upfront costs, because they’re gonna overwhelm the market, and the business would go under."

The corporate executives were much more likely to want a quantitative analysis of market size:

"If I had a budget, I could ask a specialist in the field of education to go through data and give me ideas of how many universities, how many media, how many large companies I will have to contact to have an idea of the work that has to be done."

Sarasvathy explains that entrepreneurs’ aversion to market research is symptomatic of a larger lesson they have learned: They do not believe in prediction of any kind. "If you give them data that has to do with the future, they just dismiss it," she says. "They don’t believe the future is predictable…or they don’t want to be in a space that is very predictable." That attitude is a bit like Voltaire‘s assertion that the perfect is the enemy of the good. In this case, the careful forecast is the enemy of the fortuitous surprise:

"I always live by the motto of ‘Ready, fire, aim.’ I think if you spend too much time doing ‘Ready, aim, aim, aim,’ you’re never going to see all the good things that would happen if you actually started doing it. I think business plans are interesting, but they have no real meaning, because you can’t put in all the positive things that will occur…If you know intrinsically that this is possible, you just have to find out how to make it possible, which you can’t do ahead of time."

That said, Sarasvathy points out that her entrepreneurs did adopt more formal research and planning practices over time. Their ability to do so—to become causal as well as effectual thinkers—helped this enduring group grow with their companies.

Woo partners first

Entrepreneurs’ preference for doing the doable and taking it from there is manifest in their approach to partnerships. While corporate executives know exactly where they are going and follow a prescribed path to get there, entrepreneurs allow whomever they encounter on the journey—suppliers, advisers, customers—to shape their businesses.

"I would literally target…key companies who I would call flagship: do a frontal lobotomy on them. There are probably a dozen of those I would pick. Some entrepreneurial operations that would probably be smaller but have a global presence where I’m dealing with the challenges of international sales…Building rapport with partners, with joint-venture colleagues as well as with ultimate users….The challenge then is really to pick your partners and package yourself early on before you have to put a lot of capital out."

Chief among those influential partners are first customers. The entrepreneurs anticipated customer help on product design, sales, and identifying suppliers. Some even saw their first customer as their best investor.

"People chase investors, but your best investor is your first real customer. And your customers are also your best salesmen."

Sarasvathy says expert entrepreneurs have learned the hard way that "having even one real customer on board with you is better than knowing in a hands-off way 10 things about a thousand customers." Merely gathering information from a large number of potential customers, she says, "increases all the different things you could do but doesn’t tell you what you should do." Toward that end, many of her subjects described their preference for an almost anthropological approach to customer interaction: observing a few customers as they work or actually working alongside them.

"You can’t go out and survey customers and say, ‘OK, what kinda car do you really want?’ I believe very much in living it. If you’re gonna write a book about stevedores, go work as a stevedore for a period of time. My company was going to design and sell products for physical therapy, so I worked in rehab medicine for two years."

Corporate executives, by contrast, generally envisioned more traditional vendor-customer interactions, such as focus groups.

"I would like to get from them…by meeting with them or getting their input on what they think of the limitation of existing programs….just kind of sit and listen to them telling me…what new features they’d like. And I’d just listen to them talk, talk, talk and then be thinking and develop something between what they want and what’s possible technically."

Sarasvathy says executives rely less on firsthand insights, because they can afford to place bets on multiple segments and product versions. "Entrepreneurs don’t have that luxury," she says.

Sweat competitors later

The study’s corporate subjects focused intently on potential competitors, as eager for information about other vendors as about customers. "The corporate guys are like hunter-gatherers," says Sarasvathy. "They are hired to win market share, so they concentrate fiercely on who is in the marketplace. The first thing they do is map out the lay of the land."

"What information do I want about my competition? I want to see what kinds of resources they have. Do they have computer programmers? Do they have educational experts? Do they have teachers and trainers who can roll out this product? Do they have a support structure in place? Geographically, where are they situated? Have they got one center or lots of centers? Are they doing this just in English, or do they have different languages? I’d be wanting to look at the finances of these companies….I’d probably be looking at their track record to see what kind of approach they take to marketing and advertising so I know what to expect. I might look and see what people they hire, see if I can hire away someone who might have experience."

 

By the time entrepreneurs start seeking investment, of course, they should be as far inside competitors’ heads as they can get. But the study subjects generally expressed little concern about the competition at launch.

"Your competition is a secondary factor. I think you are putting the cart before the horse…Analyze whether you think you can be successful or not before you worry about the competitors."

And:

"At one time in our company, I ordered our people not to think about competitors. Just do your job. Think only of your work. Now that isn’t entirely possible. Now, in fact, competitive information is very valuable. But I wanted to be sure that we didn’t worry about competitors. And to that end, I gave the annual plan to every employee. And they said, ‘Well, aren’t you afraid your competitors are gonna get this information and get an advantage?’ I said, ‘It’s much riskier to not have your employees know what you need to do than it is to run the risk of competitors finding out. Cause they’ll find out somehow anyway. But if one of your employees doesn’t know why they’re doing their job, then you’re really losing out.’"

Entrepreneurs fret less about competitors, Sarasvathy explains, because they see themselves not in the thick of a market but on the fringe of one, or as creating a new market entirely. "They are like farmers, planting a seed and nurturing it," she says. "What they care about is their own little patch of ground."

Don’t limit yourself

Corporate managers believe that to the extent they can predict the future, they can control it. Entrepreneurs believe that to the extent they can control the future, they don’t need to predict it. That may sound like monumental hubris, but Sarasvathy sees it differently, as an expression of entrepreneurs’ confidence in their ability to recognize, respond to, and reshape opportunities as they develop. Entrepreneurs thrive on contingency. The best ones improvise their way to an outcome that in retrospect feels ordained.

So although many corporate managers in Sarasvathy’s study wanted more information about the product and market landscape, some entrepreneurs pushed back on the small amount of information provided as being too limiting. For example, the description of the product as a computer game for entrepreneurship:

"I would cast it not as a product but as a family of products, which might perform a broader function like helping people make career decisions. I always look for broad market opportunities."

And:

"I wanna use this product as a platform to attract other products literally to build a market-share play. I see this as a missionary product, an entrée into some of the best users and buyers."

The most fascinating part of the study relates to the product’s potential. Asked about growth opportunities, the corporate managers mostly restricted their comments to the game as described:

"It depends on how it’s marketed. I’m a little bit skeptical….I’m not certain entrepreneurs would go for that. Maybe they think they already know everything. But in terms of simulations for business schools or in further education, they seem to be very popular. And entrepreneurship degrees seem to be very popular as well. So, yeah, it could well be a lot of growth."

Here is where the entrepreneurs really let loose. Starting with the same information as one another and as the executives, they collectively spun out opportunities in 18 markets—not just academic institutions but also venture capital firms, consultancies, government agencies, and the military. As much as the ability to concoct new products, it is this tendency to riff off whatever ideas or materials are handy that defines entrepreneurs as a creative breed. Reading the transcripts, you can almost hear the enthusiasm mounting in their voices as the possibilities unfold:

"This company could make a few people rich, but I don’t think it could ever be huge…You might have a successful second product about how to succeed and get promoted within a large company….That would give you a market of everybody with aspirations at IBM, AT&T, Exxon, etc….You could make another product for students. How do I graduate in the top 10 percent of my class at Stanford or Harvard or Yale?…A lot about how to be a good student is teachable. Now you’ve got a product you can sell to every student in the country. Next there is negotiation. You could practice being a good negotiator. There’s not a salesman in the United States who wouldn’t buy one of those. Then you could genericize the thing to any situation which requires some sort of technical knowledge. Or learning situations within companies where you are trying to get people to understand that company’s methods or objectives. So maybe I’m gonna change my opinion about the growth potential. It’s easy to see how within an hour you could name 10 products that would each address huge markets, like all employees in Fortune 500 companies, who are rich enough to pay $100 for it. It could be a hit on the scale of the Lotus spreadsheet. You can see a several-hundred-million-dollar company coming from it."

You might also glean from the preceding that entrepreneurs are eternal optimists. But you don’t need an academic study to tell you that.

Leigh Buchanan is an editor-at-large for Inc.

How to Build a $3 Million Virtual Company

In Uncategorized on May 3, 2011 at 12:09 pm

By Donna Fenn | February 7, 2011

Lee Loree wanted three things:  to be his own boss; to have a flexible schedule; and to work in whatever location struck his fancy.  Employees, typically necessary if you want your company to grow significantly, were not on his wish list. “If I had employees, it would be tough to go play golf on Fridays if I felt like it,” he says. And so Loree built a $3 million virtual company, Innovative Sleep Solutions, with just one employee – Loree. Here’s how he did it.

  • Solve a common problem.  Back in 1999, Loree was an analyst at an investment banking firm, and while he was reading an annual report in the middle of the night, his wife suddenly woke up and, he says, “had a very lucid moment.” It got him thinking about sleep cycles and what causes up to wake up refreshed or groggy. “I don’t have a formal education on sleep,” he says. Wouldn’t it be great, he mused, if you wake up lucid and refreshed every morning? “So I read some books and I took some meetings with some people in the sleep industry who I found in the phone book,” he says. His idea was to develop a wearable product that would track sleep cycles and wake the user at an optimal time
  • Tap your network’s expertise. Loree had developed relationships with engineers he worked with at the investment bank. “I asked them if they knew anyone who could help me and I found a micro electrical engineer who I gave a little bit of equity to,” says Loree. “I was winging it. I took money out of my 401(k) and we worked in my basement at night.” Loree quit his job and spent two years developing the product with no salary. “Everyone told me I was crazy,” he says.
  • Prove your concept. By November of 2004, Loree had built a prototype — a watch that monitors your body while you sleep and continuously looks for your best possible waking times.  A second-generation product, called the Sleeptracker Pro, would be launched two years later and would also include a PC and software component to track sleep data over time.  Loree got the thumbs up from family and friends who tested the original product. “The challenge was ‘now I have this cool idea but how do I raise money?’” he recalls. So he put together a road show and, once again, used contacts he had made with his former employer to arrange meetings with some potential investors. He let them wear the Sleeptracker overnight and then analyzed the sleep data the next morning. Letting investors experience the product was a huge selling point; Loree got three offers of financing and “picked the one I liked the best.” In total, he spent $100,000 of his own money, and raised $250,000 from investors. His first product went to market in March of 2005.
  • Be persistent. The entire time that Loree’s product was in development, he was trying to find a manufacturer for his invention.  “I put out a RFP (request for proposal) to people doing things in the watch world,” he says. “And one person who runs a watch company gave me the name of a manufacturer in China.”  But the manufacturer would not give Loree the time of day (pun intended). “I worked on him for three years and bugged him,” says Loree. “He took my emails and my phone calls and even today he tells me that the only reason he stuck with me is that he liked my tenacity.” The result: Loree feels confident that his IP is safe with the manufacturing partner that he worked so hard to win over.
  • Be prepared. When the Sleeptracker first came to market, it was featured immediately on the gadget site Gizmodo.  Loree hadn’t counted on that, and was totally unprepared for the impact.  ”They put it up on their home page and our website exploded,” says Loree. “We weren’t Firefox supported, we had no international shipping, and we ran out of product in an hour. I had 500 emails from people saying ‘what’s wrong with your website?’” He had to scramble to ramp up his website, and to increase manufacturing to meet demand.
  • Think virtual. At that point, Loree had a feeling that the business may get bigger than he anticipated. Still, he was determined not to hire employees and that remains strategy today. Instead, he outsources everything, drawing upon 12-14 independent contractors who handle everything functions such as software development, public relations, SEO, and bookkeeping. Even his administrative assistant is virtual. Loree uses the same manufacturer in China, and works with a warehouse in Pennsylvania, a call center in the Pacific Northwest, and a virtual team of independent sales representatives and distributors in the U.S. and abroad. “The business is totally scalable because 95% of our products are sold through distributors,” says Loree. He boasts that last year, the company “ran on less than $10,000 in SG&A” (sales, general, and administrative expense). Of course, just because you don’t have employees doesn’t mean you don’t have to manage people. “It’s a lot harder to reach out to the guy who live out in British Columbia about being late with software,” says Loree. “And I didn’t; realize I’d be dong so many conference calls in the middle of the night.”  Still, it’s better than the alternative.

Last year, Innovative Sleep Solutions was number 766 on the Inc. 5000 list of fastest growing privately held companies – not bad for a virtual company. Loree also says he’s sold more than 100,000 Sleeptrackers worldwide without spending a nickel on advertising; about 1/3 of them went to gadget-hungry Asia. “The U.S. is actually one of our least mature markets,” he says. Ironically, he believes that new competition from companies like Wakemate and Zeo, will change that.  ”You would think that competition would be a bad thing.  But the biggest challenge is making people aware of who we are and what we do.  Having others in space tends to get the message out.”

Do you have a multi-million dollar virtual company? How did you do it?

The 7 Habits of Highly Successful Linkedin Members

In Uncategorized on May 3, 2011 at 5:31 am

July 14, 2009 By Randy Schrum

So what makes a highly successful Linkedin member? Here is what I have discovered as not only habits, but also "secrets" of the treasure chest on Linkedin.

1. They invest their time strategically by putting fresh content on Linkedin when it’s the best time to do so. Let me explain, for me weekends are times to prepare Linkedin content, but as you will notice most collaboration does not take place on weekends. So hold the great Q/A’s, the awesome discussion topics, or the great status updates until Monday and never late Friday. Think about what your audience is doing and be strategic.

2. They use their status update to post something new every 24 to 48 hours and 80% of those updates include a link that gives a call to action. Such as signing up for your next webinar, promotions to visit your blog, or visiting your corporate website etc…

3. They answer target specific questions that are related to their target market. This is great exposure for your business that Linkedin Pros are doing everyday!

4. They change their Picture profile every two months. This creates dialogue and interaction with your network. This is another way to keep your brand in front of everyone. Pictures are worth a thousand _ _ _ _ _ (fill in the blank)

5. They answer every Linkedin email/inmail. Maybe not timely, but they never waste an opportunity!

6. They post their company events on the events application provided by Linkedin and use this as a way to measure interest and involvement for such things as conferences, webinars, or seminars.  The events application has only been recently used by Linkedin Elite, but many are beginning to wise up to its amazing potential.

7. These highly successful members have identified their target markets on Linkedin, their goals on Linkedin, and are executing their plan every single work day. Social Media can be measured, but most don’t understand how to begin measuring their Social Media efforts because they have never identified their goals for using the Linkedin space. Once you have identified your goals then you can build a measurable matrix to anaylize your efforts. I hope you enjoyed these highlights that will help in your Linkedin efforts.