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Entrepreneurs: How High is Networking ROI?

Thursday, September 26th, 2013

http://www.flickr.com/photos/davidorban/3275759439/Hey entrepreneurs, you heard it here from a founder a year before another founder said it in Fast Company.

“It” is the time you waste at so many of the events dedicated to startups and the personalities that populate the entrepreneurial ecosystem.

Networking is presented as the great equalizer; providing situations that are supposed to bridge the chasm faced by new founders and those with well-connected Rolodexes.

But believing that is in the same league as believing in Santa Clause, the Easter Bunny, the Tooth Fairy or the Silicon Valley Meritocracy.

There is no way to minimize the intensity and energy—mental, physical and psychical—involved in founding and building a company; the most likely result of adding networking to the schedule is faster burnout and more damage to your other relationships.

One of the most important skills a founder (or anyone) needs is the ability to prioritize.

To that end, skip the networking and at least 70% of the time you spend on social media and spend it on high ROI actions, including time with family and friends.

You’ll be glad you did.

Flickr image credit: David Orban

If the Shoe Fits: The Myth of Meritocracy

Friday, August 30th, 2013

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mThose who like to believe that tech is a utopian-like meritocracy need to wake up to reality.

Silicon Valley is indeed a meritocracy for those to whom these criteria are not hurdles. But others—the blacks, women, and Hispanics whom it overlooks—find it an elite private club from which they are excluded. — Vivek Wadhwa (see the entire article series here)

According to Mitch Kapor, who founded Lotus and (for those of you who are too young to remember) sold it to IBM in 1995 for $3.5 billion, the idea that all it takes is hard work and a god product to be a success in the Valley is pure fantasy.

“There’s an admirable belief about the virtues of meritocracy – that the best ideas prove the best results. It’s a wrong and misguided belief by well-intentioned people.”

The idea that merit matters goes further down the drain when you see comments, such as the most recent one from Paul Graham of Y Combinator fame.

One quality that’s a really bad indication is a CEO with a strong foreign accent. I’m not sure why. It could be that there are a bunch of subtle things entrepreneurs have to communicate and can’t if you have a strong accent. Or, it could be that anyone with half a brain would realize you’re going to be more successful if you speak idiomatic English, so they must just be clueless if they haven’t gotten rid of their strong accent. I just know it’s a strong pattern we’ve seen.

Or this comment.

I would be reluctant to start a startup with a woman who had small children, or was likely to have them soon. But you’re not allowed to ask prospective employees if they plan to have kids soon…Whereas when you’re starting a company, you can discriminate on any basis you want about who you start it with.

Kapor now runs Kapor Capital, a for-profit venture firm focused on funding minorities whose ideas are focused on improving opportunities for the poor through education, sees the world very differently.

“We have a responsibility to give people opportunities to do what they can do. It’s a fundamental tenet of democratic society. Libertarians who believe in a completely minimalist state, and don’t feel we have that responsibility, are harming humanity.”

Choosing a role model is a private decision. 

Who will you channel? Mitch Kapor or Paul Graham?

Image credit: HikingArtist

Ducks in a Row: Red Hat Culture

Tuesday, April 9th, 2013

http://www.flickr.com/photos/ny-insurance/6813596277/These days most CEOs acknowledge the importance of culture.

Most incoming CEOs either want to protect and extend that current culture (think Apple) or radically change one that isn’t working (think Yahoo).

There is also a percentage that want to revamp the culture in their own image even whether the current culture is working (think Home Depot) or not (think Penney’s, which I wrote about last month, and that just fired their ex Apple CEO yesterday).

Red Hat CEO Jim Whitehurst was in the first group when he joined in 2007, but it was a real stretch (more like an unexpected bucket of ice).

He came from Delta Airlines command and control culture to a cultural meritocracy based on an open source mindset.

He calls it a “meritocracy” meaning leaders arise based on their brains, not their spot on an org chart.

The chaotic nature, the fact that people can call me up whenever and often call me an idiot to my face. We yell and we debate and we have these things out. Our culture matches the culture around open source, so the people who want to be involved in open source feel at home.”

The proof that it works is in the pudding of revenues and retention.

Red Hat, the first and only open-source software maker to crack $1 billion a year in revenues, is growing like mad.

The company has about 5,700 employees now, hiring about 1,000 workers in 2012. It will hire another 600 to 800 in 2013.

Yet the attrition rate of his R&D group—the company’s biggest group of engineers—is only 1.5%, compared to an industry average of about 5%.

Those are numbers any CEO would be bragging about, no matter what industry.

While merit rules and open source attitudes are sacred, Red Hat is in no way a democracy.

Red Hat still has managers and those managers are still responsible for decisions.

“It’s about transparency not democracy, I can make wildly unpopular decisions and at times I have to do that … as long as I have gotten feedback and articulated my reasons clearly, I can do that.”

It doesn’t need to be. People don’t want to work in a company where decisions are based on majority rule; what they want is to be heard.

They want to know that their colleagues, whether bosses, peers or subordinates, will listen to them and discuss the merits of their thought/idea/complaint no matter who they are or what they do.

Even if you didn’t click any of the above links be sure to check out these 12 Red Hat Management Tips.

The more you implement them the more things will change or, as I keep telling clients, to change how they act change how you think.
Flickr image credit: Dave Lobby

When Will They Ever Learn?

Wednesday, April 3rd, 2013

http://www.flickr.com/photos/wissenstransfer/7648831920/I was going to call this post “How to Make Money,” but then I remembered the lyrics from Peter, Paul and Mary’s hit song and decided it was a much better title.

After all, diversity of all kinds is a war and it’s one being lost in companies every day, whether they are old line industries or the supposed meritocracies of the tech world.

And not just diversity in the form of race and gender, but in terms of management.

Funny how so many companies that don’t “get” the need for a great culture that spawns a happy, therefore productive and innovative, workforce also don’t get diversity in fact.

They all get happy and diverse in theory and in talk, but unfortunately theory and talk frequently never make it to fact.

The facts, however, speak for themselves.

Analyzing the performance of Fortune’s “100 Best Companies to Work for in America” over a 28-year period, the author found that these firms generated higher yearly stock returns than comparable companies not on the list. They also systematically beat financial analysts’ earnings estimates, an indication that job satisfaction is an important variable that the market does not fully value. –strategy+ business (free registration required)

And the real numbers of the future carry their own warning.

The figures highlight the rapid growth in the Hispanic and Asian populations, both of which have surged by more than 40 percent since 2000. Hispanics were 16.7 percent of the population in July 2011 and Asians were 4.8 percent. The black population has grown 12.9 percent since 2000 and makes up 12.3 percent of the nation. Non-Hispanic whites rose only 1.5 percent from 2000 to 2011, slower than the national growth of 9.7 percent, and are now 63.4 percent of the population.

It also turns out that hiring those pesky females in senior positions and putting them on your board pays off handsomely.

Over the past six years, companies with at least some female board representation outperformed those with no women on the board in terms of share price performance, according to the latest study by the Credit Suisse Research Institute.Credit Suisse

But the stats I really love come from Dr Genevieve Bell, a Social Scientist/Anthropologist at Intel Corporation.

So it turns out if you want to find out what the future looks like, you should be asking women. And just before you think that means you should be asking 18-year-old women, it actually turns out the majority of technology users are women in their 40s, 50s and 60s. So if you wanted to know what the future looks like, those turn out to be the heaviest users of the most successful and most popular technologies on the planet as we speak.

So for all those stuck in the command & control past or believe, as Carl’s and TV advertisers do, that the world actually turns on 18-34 years old males I suggest you update your prejudices and get with the program.

Flickr image credit: Tanja Föhr

What is Diversity?

Monday, June 25th, 2012

http://www.flickr.com/photos/lumaxart/2137737248/Last Thursday we looked at the need for women employees (with clout) considering the new reality where women have become the majority of early adopters.

Let me make something crystal clear; diversity involves far more than people looking different—true diversity will occasionally make you uncomfortable.

Not the discomfort that stems from bigotry, but the kind that that rattles our assumptions and makes us think.

Rather than reinventing the wheel I am reposting (with light editing) something from several years ago that hits the true diversity nail on the head.

Is Your Team Diverse Or Just Look It?

In an earlier post about diversity I ended with this—

Another way to look at it is that if spending $100 results in a bottom line increase of $1000, did you really spend the $100, or did you gain $900? That $900 that wouldn’t be there if you hadn’t invested the initial $100.

Any increased spending on diversity development is an investment and will be more than offset by the increases in innovation, productivity and revenues.

The real question is how do you define diversity?

Old diversity focuses on diversity of race, gender, orientation, creed and national origin.

New diversity includes all of the above plus diversity of thought.

Think about it, with a little effort a manager can create a diverse group who all think the same way—George W. Bush’s initial Cabinet looked diverse, but their MAP (mindset, attitude, philosophy™) was homogeneous.

It’s far more difficult to put together a group of totally diverse thinkers. Managers tend to hire in their comfort zone and more and more that refers to how people think, rather than how they look.

So what can you do to ensure that you’re building a truly diversified team?

Here are five key points to keep in mind before and after hiring.

  1. Avoid assumptions. People aren’t better because they graduated from your (or your people’s) alma mater, come from your hometown/state or worked for a hot company.
  2. Know your visual prejudices. Everybody has them (one of mine is dirty-looking, stringy hair), because you can’t hear past them if you’re not aware of them.
  3. Listen. Not to what the words mean to you, but what the words mean to the person speaking.
  4. Be open to the radical. Don’t shut down because an idea is off the wall at even the third look and never dismiss the whole if some part can be used.
  5. Be open to alternative paths. If your people achieve what they should it doesn’t matter that they did it in a way that never would have crossed your mind.

Most importantly, if you’re totally comfortable, with nary a twinge to ripple your mental lake, your group is probably lacking in diversity.

Flickr image credit: lumaxart

Entrepreneurs: Gals and/or Guys?

Thursday, June 21st, 2012

http://www.flickr.com/photos/67835627@N05/7301107446/in/photostream/For years I’ve wondered why the target of advertisers and companies was 18-35 year old males; a target that, based on my experience and observations, was incredibly fickle and rarely had the money to spend that other demographic groups had.

But what did I know?

Apparently more than I thought.

If you are a startup, especially a tech startup, you need to do two things.

First take a hard look at stats that could make or break your success.

It turns out women are our new lead adopters. When you look at internet usage, it turns out women in Western countries use the internet 17 percent more every month than their male counterparts. Women are more likely to be using the mobile phones they own, they spend more time talking on them, they spend more time using location-based services. But they also spend more time sending text messages. Women are the fastest growing and largest users on Skype, and that’s mostly younger women. Women are the fastest category and biggest users on every social networking site with the exception of LinkedIn. Women are the vast majority owners of all internet enabled devices–readers, healthcare devices, GPS–that whole bundle of technology is mostly owned by women. –Genevieve Bell, Intel researcher

Along with the stats, you would do well to keep in mind that women are social creatures who love to share—especially tips and opinions.

Then take a hard look at your staff.

How many women have been hired? In what roles? How many are in a position to provide input to your products or services? How often is that input applied, i.e., how much weight does “her” opinion actually carry?

Does it matter? Are her ideas really so different?

It definitely does matter if you plan to sell to her.

And the one thing you should have learned in the course of your life, whether you are 20 or 60, is that boys and girls are different.

They do not

  • think alike or even about the same things in the same way;
  • use language the same way (“men negotiate status; women talk for connectivity” –Deborah Tannen)
  • run on the same time table;
  • consider the same things important or
  • prioritize similarly.

The list goes on and on.

Given that, how do you propose to develop products and services they will pay for if your whole team thinks like a guy because they are guys?

““““““““““““““““““““““

Sunday was Father’s Day and I shared Martin Sheen’s thoughts on fatherhood, but the thoughts from some of Silicon Valley’s “hottest dads” are definitely worth the read.

I WANT  YOUR STORY
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Share the story of your startup today.
Send it along with your contact information and I’ll be in touch.
Questions? Email or call me at 360.335.8054 Pacific time.

Flickr image credit: moodboardphotography

Entrepreneurs: Entrepreneurial Women Then and Now

Thursday, June 14th, 2012

http://www.flickr.com/photos/sepblog/3941048713/How much has really changed for entrepreneurial women in the last 50 years?

Not as much as you might think or as much as meritocracy hype might lead you to believe.

In the actual world of advertising in 1966, when the current season [of Mad Men] began, the most talked-about figure on Madison Avenue was the trim and determined Mary Wells, who hopscotched over the era’s endemic prejudices to develop Wells Rich Greene, the iconic agency she would run for more than two decades.

One reason stories like Mary Wells are so startling is that there are so few of them.

Yet even these successful women entrepreneurs are disappointing when you consider that most are in fashion, cosmetics/beauty products, advertising, retail, media, etc.

Although funding a tech company is almost as difficult for women as it always has been they are having more luck getting web startups funded—but  it’s still an uphill battle.

Would you expect anything different when high profile experts in the entrepreneurial community are still making stupid comments more suited to the 1950s.

One advantage startups have over established companies is that there are no discrimination laws about starting businesses. For example, I would be reluctant to start a startup with a woman who had small children, or was likely to have them soon. [emphasis added] But you’re not allowed to ask prospective employees if they plan to have kids soon…Whereas when you’re starting a company, you can discriminate on any basis you want about who you start it with. –Paul Graham, prominent investor and co-founder of Y Combinator

Sex is a long way from being out of the picture as Candace Fleming, founder or Crimson Hexagon, learned.

Another potential backer invited her for a weekend yachting excursion by showing her a picture of himself on the boat — without clothes.

(And I doubt that he looked like a Chippendale.:)

The point of all this is that women aren’t going to slink back to the kitchen anytime soon.

They will keep overcoming obstacles to have babies.

Some of which will grow up to be IPOs, while others will be entrepreneurs.

(If you are hung up regarding women entrepreneurs next week’s post will show you why your attitude is sure to hang you out to dry.)

~~~~~~~~~~~~~~~~~~~~~~~~~~~

FYI

The Institute for Corporate Productivity (i4cp) is conducting a survey that looks at social media regulation within organizations, such as how companies are embracing new platforms as a productivity tool as well as restricting access – or even asking for Facebook passwords.

Participants completing this survey will receive a free copy of the preliminary results, which will be sent to you once all responses are collected and analyzed. Privacy is important to us; your responses will be combined with others, and your personal information will remain confidential.

SUBMIT YOUR STORY
Be the Thursday feature – Entrepreneurs: [your company name]
Share the story of your startup today.
Send it along with your contact information and I’ll be in touch.
Questions? Email or call me at 360.335.8054 Pacific Time.

Flickr image credit: Search Engine People Blog

Ducks in a Row: Why is Culture an Uphill Battle?

Tuesday, November 22nd, 2011

With all the research and resulting proof, much of it expressed in dollars, why is it so difficult for companies to execute good cultures?

There is no lack of advice and how-to help available and in a variety of ways, from consultants to books, blogs to videos.

Real-world facts show that good culture is still elusive; one of those ‘should’ actions that are frequently talked about, but often not done.

You create the culture in which those subordinate to you work, no matter your level of management, from team leader to CEO,

CEOs set overall company culture, while subordinates then create, intentionally or not, their own culture that either copies it, is synergistic to it or diametrically opposed to it.

The only guarantee is that whatever culture emerges will accurately reflect its creator’s thoughts, values, beliefs—in other words, MAP.

And therein lies the reason and the problem.

All the cultural intelligence focuses on good culture, with touchstones such as fairness, trust, authenticity, merit, etc.

If those attributes aren’t the bedrock of your own MAP then it’s impossible to implement a culture that embraces them.

So if you are looking to change a non-performing culture or improve a mediocre one, be sure to look deep inside yourself first to know what is possible and what won’t stick unless you change first.

Flickr image credit: zedbee

Leadership’s Future: Teacher Motivation

Thursday, April 15th, 2010

If you were the boss and 40% of your employees said they were more interested in non-monetary rewards and felt that evaluating them on a single factor for jobs that required multiple skills were unfair would you proceed anyway with merit pay based on a single factor and expect it to be a good motivator?

teachersThat is the basic question in the drive for merit performance for teachers.

A March survey of teachers provided an inside look at their thoughts.

Teachers don’t want to see their students judged on the results of one test and they also want their own performances graded on multiple measures.

Most value non-monetary rewards, such as time to collaborate with other teachers and a supportive school leadership, over higher salaries. Only 28 percent felt performance pay would have a strong impact and 30 percent felt performance pay would have no impact at all.

Of course, worker input won’t slow management’s moving forward (rarely has, rarely will)

The biggest problems with merit pay is defining and applying valid measurement of success.

For example, only 6 percent of teachers surveyed said graduating all students with a high school diploma was one of the most important goals of schools and teaching, while 71 percent said one of the most important goals was to prepare all students for careers in the 21st century.

Whereas standardized test are the holy grail of school administrators.

Merit pay has a checkered background whether you are looking for proof that it works or proof that it doesn’t.

The problem isn’t the money, it’s the structure put together to award it.

Keeping it fair means keeping it free from political pull and other forms of favoritism. It means acknowledging that teachers can’t control what is happening to the kids in their classes and finding a way to account for that.

“Your mother and father just got a divorce, your grandfather died, your boyfriend broke up with you: those kinds of life-altering events have an effect on how you do in class that day, through no fault of the teacher whatsoever.” –Debra Gunter, middle school math teacher in Cobb County, Ga.

One survey result was surprising because it actually creates more work for teachers, but it was held by the majority.

A majority of teachers surveyed said they would like to see tougher academic standards and have them be the same in every state, despite the extra work common academic standards could create for them.

This definitely makes sense, especially given the mobility of the US population, but it’s unlikely to ever pass muster with state and local school administrators. It would also be interesting to see how it flies helicopter parents, considering it’s their complaining that has fostered termination of “tough” teachers.

Money has always been the quick fix, used by managers and parents alike, to achieve their desired ends, even though there is no proof that it is effective or sustainable. And there is no reason to think that teachers are any different.

I think that if the structure and standards aren’t improved along with embracing merit pay then success is unlikely.

What do you think?

Image credit: JadeGordon on flickr

Pay For Performance

Monday, March 30th, 2009

In a post last week I asked for opinions on the ideas presented in a series of articles in Business Week on managing smarter but especially one that claims that “treating top performers the same as weaker ones is ‘strategic suicide'” and said I would add my thoughts in a future post.

Bob Foster left two interesting comments (well worth your time to click over and read). Regarding pay for performance he tells the story of a company where everybody from the CEO down all quit.

“Taking on the task to salvage the company, I hired new people that met unusual qualifications: they had to be qualified for the job they were applying for; they had to be unemployed and available immediately; they had to work at sub-standard wages; they had to work while knowing the company could close at any minute; and they had to work without supervision. The team that came together produced a highly successful company, and it was not because of high pay, or performance bonuses (there were none). The team stayed together, and performed, because of mutual respect, trust, appreciation, and consideration—people were ‘valued.’ To me, this is the truest form of ‘pay for performance.'”

I agree that trust was one of the key ingredients in what Bob accomplished, but it wasn’t the only one—or maybe I should say that it needs to be based on fairness and honesty.

Bob says the pay was ‘sub-standard’, but I assume that it was universally sub-standard relative to position and experience. If he had chosen to pay part of the team, say 10% more than their peers, the team wouldn’t have coalesced.

And that is exactly why I disagree with the idea of paying top performers, AKA stars, big sign-on bonuses or higher salaries than their peers.

  • Based on my own experience, 98% of star performers become stars as a function of their management and the ecosystem in which they perform. Change the management, culture or any other parts that comprise that ecosystem and the star may not survive.
  • Just as a chain is as strong as its weakest link there is no star in any sport, business, media, etc., who can win with a team that is subject to constant turnover and low morale.

Consider this common example.

Two people are hired at the same time with the same background, same GP0 and similar work experience, but with the one exception. One graduated from a ‘name’ school and the other from a community college. Starting salary is $50K, but the manager adds a 20% premium to the first candidate’s offer on the basis that she must be better to have gone to that school.

Neither candidate lived up to their potential because the manager made poor choices. In doing so he set both up to fail but for different reasons; one thought she had it made and the other that he was low value.

Merit bonuses fairly given for effort above and beyond acceptable performance levels make sense as long as they don’t come at the cost of developing new talent.

But one problem with ‘pay for performance’ is the pay often comes before the performance, but there are others and I’ll discuss them more Thursday. In the meantime, here are links to five posts from 2006 that give more detail on the trouble with stars.

Stars—they’re in your MAP

More about stars and MAP

Rejects or stars?

Star compensation

Retaining Stars

Image credit: sxc.hu

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