Business is about people. How do competitors think? What will they do next? How do customers decide? Pressure to succeed and an uncertain world tempt us all to think others are stupid or malicious. Teams and leaders believe decisions are made because of stupidity. Or that the competition is out to get them. Thinking this way leads to bad decisions. And a stressful life. It is almost always wrong. Put yourself in others shoes. And do the right thing for your business.
I spotted this recent article by Y Combinator partner Aaron Harris . He raises part of an important mindset that is needed to succeed in business. His article points out that it is naive and dangerous to assume that the competition is stupid. I would go much further.
People love to attribute motives and rationale to third parties. Whether it is bosses, colleagues, customer or suppliers. It is one of the biggest mistakes in business. No matter how someone’s behaviour looks, you don’t know why they act in the way they do. Repeat that. You. Don’t. Know. Why.
Don't Fall For Conspiracy Theories
So many discussions centre around stupidity. Even more often I heard people explaining badness. How and why customers or competitors were acting with deliberate malice. I am a big believer that the best approach to the market is to put yourself in your customer’s shoes. Believing others are stupid or bad fails to achieve that. Identifying malicious or stupid motives works against you in three main ways:
Stress Is The Only Outcome
Number 3 is important. It arises because this kind of behaviour always ends up focusing on the negative. It is a symptom of paranoia. “Why are they out to get us?” is the basic mentality.
It is human nature to fear that others will do us harm. In a group situation jealousy and malice add fuel to this fire. I saw most stress and distress caused by this downward spiral in my time in the corporate world. Teams have a special vulnerability. Another human instinct is to defend the tribe. It is so easy for members of team to become convinced that management are working against them. Failing to reward success. Giving more money to other people.
Stress in the workplace is a major problem for society. Negative spirals based on mythical animosity are a major cause. Startup founders and teams are vulnerable to these challenges at least as much as anyone else.
Your Fear Is Wrong
The flip side is that these motives are almost always wrong. Grand conspiracies and complex schemes don't exist in the real world. Your competition don't think only about damaging you. Even isolated or individual acts of malice tend to be carelessness or misunderstanding. People are not bad. They are different from you. They have different goals and pressures. But true nasty, evil people? I can think of at most two in the last 32 years. And I may be wrong about those.
One area where this does extra harm is when working across cultures. Normal behaviours and just common courtesies are different across cultures, countries and continents. Small areas can contain many different cultures. We recognise this in Europe but forget that it is also true in the Middle East, Africa or Asia. Experiencing different cultures is the real joy of working across international borders. Software and startups give us a historic opportunity to enjoy this experience. Don’t spoil it by not taking the time to understand.
The summary is simple. Listen to what people say and watch what they do. This is all the information you have. Be honest, smart and professional in your responses. Base your actions and communications on the best information you have. If you are dealing with another culture, do some research and find out what is normal.
Don’t speculate. Don’t assume. People want to be nice and to be liked. They are striving to achieve their own goals. Sometimes these will conflict with yours. That’s business life. Finding a way for everyone to win is much more rewarding than stressing about non existent attacks.
Avoid this kind of thinking. Start from the basis that others are just like you. Except maybe smarter and nicer. It will be better for your business, your peace of mind and your health.
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Feedback informal and improves all business relationships. Process and evaluation can interfere with feedback signals. So it is better to keep them separate. Using informal channels and frequent, two way discussion are key to effectiveness. Feedback is a skill which should be part of your lifelong learning approach. Improving will help you make better decisions and build better business relationships. It so important maybe we should call it feedforward.
Feedback - A Key Business Skill For A Startup
Giving and receiving feedback is one of the most important parts of business. It takes high level communication and learning skills in both directions. Large enterprises often use the word “feedback” to describe a set of internal processes. Staff reviews, Peer feedback. Team evaluation. And so on.
But feedback is a part of every business relationship. A startup is receiving feedback from customers, community and investors every day. Every minute in fact. In these terms, quality feedback makes a huge contribution to making good business decisions. It provides the best evidence you have for the needs, attitudes and goals of customers. Or investors and other stakeholders.
The problem is that feedback is often wrapped up with judgement and assessment. You need to separate the process and listening associated with feedback. Keep the management decisions and actions apart or you will pollute both. When you ask for feedback from someone who knows what you will do with it, their bias changes their response. It can work both ways. Over generous and positive feedback is more common than the negative and nasty kind. Both are of little value as input to your future plans.
Leaders often say “We need honest feedback to help us make the right decisions”. Even saying this tilts the playing field. Natural human behaviour is to give feedback which influences those decisions. Recognising this kind of behaviour is the thinking behind The Mom Test. Rob Fitzpatrick’s excellent book is all about persuading potential customers to tell you the truth. To share their real views of your product or idea.
Why Feedback Matters
It is worth learning this lesson. The benefits of feedback go well beyond improved decisions:
Small Business Consulting - How Great Feedback Works
Feedback is a core skill for anyone in the commercial world. Both giving and receiving. It can be learned and developed like other important capabilities. After 30 years of receiving, giving and observing feedback, here are my tips:
Startups begin with a feedback process. Customer discovery is the foundation of every success. Finding real world problems and designing solutions which offer real customer benefits. You will know that this is not easy. The techniques are hard. When it is done well the information can be full of contradictions and inconsistency. Getting information from customers and acting on it are two different things.
All feedback is like this. Hard to get the truth but worth it in the end. It is the only way to align your business with customers. And the best approach to developing your team. In a startup your first experience is receiving feedback. You will soon be giving it as well. The cycle never ends. Innovation, response to demand and business improvement are all built on this base.
Feedback is integral to building a team, building relationships and growing your customer base. On reflection maybe we should call it feedforward! For more small business consulting tools that will help drive your startup, subscribe to our newsletter below.
Great teams are a feature of the startup scene. Founding groups made up of committed, talented people. On the surface leading this kind of group should be easy. But it does not work that way in the real world. Simple, short term incentives don’t work. Providing the right challenge and setting an overall direction are necessary. Then have the courage to allow everyone to express their own intelligence and ambition. In their own way. The results will be amazing.
Success in a startup depends on the team. New ideas, great product, efficient business model, innovative marketing all count. But is the people who deliver the prize. The best startups have great teams. Full of talent and potential. High motivation coupled with passion and commitment. In theory leadership should be easy in this environment.
Not As Easy As It Looks
The real world is different. A startup is like a group of high performing professionals. The leadership challenge is similar to a surgical team or a big law firm or a global consulting project. Herding cats is the most common metaphor for these types of team. Traditional leadership approaches don't work so well. Natural routes like setting clear goals are not suitable. Aligning incentives and establishing defined roles is not enough.
Here are three reasons why leadership of high performing teams is different:
Ask Don't Tell And Other Startup Leadership Rules
Allow Your Team To Find Their Own Way
To some extent no motivation is needed when you have a team like this. Yet you still want to maximise the potential. The first rule is work. Great professionals needs good work and plenty of it. In my career in professional services, boring tasks were the second biggest problem. Lack of work was the largest by far. Good people hate being idle. Overwork was never an issue. At least in the short term. In the medium and long term persuading people to take breaks was a challenge.
Work also needs to be new and challenging. Even a routine, tedious task which is OK one time. If it is new to the worker it will be tolerated. Doing the same thing over and over is the reverse. No matter how exciting and engaging, the best people lose interest fast. Ask for a repeat might work. By the third or fourth attempt, all motivation disappears. Once a professional has proven his technique and banked the experience, he or she wants to move on.
One other simple rule about work. Ask don’t tell. Command and control never works with talented self motivated people. For any task no matter how important or urgent you ask the person to do it. My old firm employed over 150,000 people. Even in an organisation of this size the global leader would ask the lowest intern about the simplest task. For example to make a photocopy or fetch a coffee. it was never a written rule. But everyone understood the basic respect involved.
So far a startup is in a great position to motivate the team. There is never any shortage of work. And the pace of change makes sure that new challenges are not in short supply. Does this complete the incentive picture?
Not quite. The risk is that a group of individual talents will pull in random directions. Brilliant flashes will abound but nothing will connect. How can the energy and intelligence focus on a collective goal? Set a clear simple strategy and allow the team to find their own way of achieving it.
Leaders need to allow each individual freedom and responsibility. Communication is the critical skill. Each member of the team needs to understand the same end goal. This is not as straightforward as it sounds. When a group of smart committed people listens to the same message at the same time, they each find a different meaning. Set the scene with the group but then take the time to engage each individual. The leader needs to know how each team member thinks and behaves. Adapt the conversation to find the right focus one by one.
If you lead a great startup team you are lucky. Working with great talent is a joy and a privilege. Achieving the impossible with a passionate group is the most fun you can have. Recognise and nurture each individual. Make the whole even better than the sum of the parts.
World Class Small Business Consulting A Startup Can Afford
One of the challenges facing non technical startup founders is outsourcing development work. It is a regular question when I do my small business consulting for startups. So I am delighted to share this guest post from my friend Michael Romilly (@MRomilly) at Waracle. Waracle (@WaracleUK) are trusted by the UK & USA's most innovative businesses to be mobile app developers. They know what they are talking about....
It’s tough going creating software in the mobile age. There’s a tonne of stuff you need to think about. If you’re currently attempting to mobilise an existing web/desktop based software application, the whole thing can seem extremely challenging. Mobile development requires a specific way of thinking and unique expertise, which makes reskilling your existing team of developers challenging. Trying to spin up an entirely new team of mobile developers can also be hard and this is why many brands and businesses turn to an outsourced/agency model in the first instance. This is one of the best ways to get your app into the market quickly and enables you to taper mobile thinking and expertise into your development team gradually over time.
Build, Operate, Transfer
We refer to this approach as a BOT (build, operate, transfer) model. BOT focuses on enabling your company to get a mobile app to market quickly, whilst helping your existing team gain valuable mobile insight from an experienced team of app developers. We refer to this process as ‘positive contamination’ because it offers a commercially and technically risk-managed approach to developing your first suite of mobile applications and diffusing the right thinking and skills into your team. But many brands and businesses struggle to engage effectively with app development agencies because they aren't equipped with the right information.
Build, Operate, Transfer
One of the key problems is the fact that good mobile app developers are in high demand and short supply. This means they tend to be selective about the projects they get involved with. If your project, or approach is perceived as being risky or under-prepared the likelihood of obtaining a costing and timeline is severely diminished. You need to think carefully about your mobile strategy and follow these steps:
1) Define Your Key Measures Of Success
You should always start with the end in mind. Think about what success looks like for your project. This is one of the first questions any mobile app development agency should be asking.
You should think carefully about the following questions:
It’s not always easy getting this part right. Once you understand what success looks like, you can work backwards from this exact point. Your key measures of success should inform the direction of your project at every step. Starting out with a half-baked vision of what you’re trying to achieve is never going to be enough. If you can clarify your thinking at the planning stage it will dramatically increase the chances of your app being successful. Work out exactly what you want from your app and this will help to inform it’s ongoing design, development and optimisation.
2) Get Buy-In From Your Stakeholders
Before you speak to an app development agency, you should conduct a comprehensive stakeholder consultation. This should enable you to get buy-in from key decision makers within your business. Getting the right people involved early in the process will help accelerate the design and launch of your app. Stakeholder buy-in massively adds credibility to your project when approaching a mobile agency and will dramatically increase your chances of getting a comprehensive quote that includes a costing and realistic timescale.
It’s like anything else, you’ll get back what you put in. The more preparation you do at the front end of the project, the more likely you are to get back a realistic scope document with costing and timeline.
3) Create A Detailed RFP
In order to create a detailed RFP (request for proposal) you need to define the scope of your project. This should all relate to your key measures of success and performance indicators. In terms of developing an MVP (minimum viable product), every feature within your app should be designed with these key measures of success in mind. Your RFP should contain a comprehensive summary of what your app is and what you want it to achieve. You should also think about your existing data systems and outline clearly how your app should be integrated inside your existing business processes. Having this information clearly documented will accelerate the time it takes for a mobile agency to respond to your enquiry and helps add credibility to your project.
Think clearly about which platforms you want your app to target. Is it an iOS app? Is it an Android app? Is it both? Do you want to develop for iOS first and evaluate it’s performance before investing in Android (this is quite common)? These are all questions you’ll need to think about and it’s important to demonstrate an understanding of the market you’re competing in. You’ll need to think about how your app will scale if you’re lucky enough to engage a large number of users.
If you’re currently trying to work out how to commission an app development project, try our app readiness test and one of our business development team members will be in touch to discuss your requirements.
4) Be Clear About Your Timescales (Be Realistic)
For many app development companies, balancing resource is a complex and ongoing challenge, so your project start date and overall timeline will be directly governed by the three previous steps that we’ve discussed in this article. If you have all of the above elements in place, you’re probably almost ready to approach an app development agency. Having a realistic understanding of when your project needs to start and finish will help your chosen app development agency to schedule the required resource according to your goals. You need to think hard about what you’re trying to achieve, be realistic about how long things take (usually longer than you first anticipate) and factor in a buffer in case things take much longer than you expect. If there are external project dependencies and third parties who can influence the momentum of you project, this also needs to be factored into your project timeline.
5) Consider Your Budget
Developing software is complex. In order to get to grips with the cost of the project and your required budget, it’s essential to have an understanding of these associated complexities. You’ll need to be able to demonstrate to a mobile development agency that you have a clear idea of how the software will work and integrate with your existing business systems.
Very often, clients vastly underestimate the cost of marketing. Designing and developing your app is the equivalent of reaching first base. It’s absolutely paramount that you consider how you’re going to market and promote your app and develop a projected cash flow based on the associated marketing activities. The app store is extremely competitive and standing out from the crowd is tougher than ever. You should consider how to optimise your app and think about other creative ways to spread your message.
Here’s something that will help you frame the scope of your project and think about a budget: http://www.kinvey.com/app-cost-estimator
If you’re a business in the market for a mobile app, contact Waracle today to kick start the conversation.
Small Business Consulting A Startup Can Afford - Subscribe To Our SaaS Newsletter
People are the most vital asset of any Startup. The founding team, the early hires, marketing guys, software gals, interns and freelancers are all essential to success. What is the best way of managing performance? How can feedback be shared between peers? Is there a good model for allocating rewards? These are tough questions and there is no HR department, no set of processes and no track record to help answer them.
Talking and listening
Fortunately there are some simple principles to follow. Managing, reviewing and evaluating people is all about talking and listening. Processes, reporting lines, formal measurement all have a place especially in larger organisations. The value lies in time spent with people, preferably one to one, asking open questions, listening heedfully and sharing honestly and directly.
See the whole board
Past and future performance are the product of many factors. Try to make sure you cover a wide range of areas when talking to your people. Technical skills, teamwork, communication, leadership skills, energy and commitment are all part of the picture. Many Startups have plenty of hard metrics to use and these can be valuable but the wider picture is also important.
One useful tip is to look at the performance of teams to shine a light on individuals. Even in the early stages, different groups of people will have contributed to each project or task so every individual will have a unique combination of teams to which they have contributed. Reflecting on how these teams have performed can be very insightful.
Make sure any appraisal or evaluation is not a one way process. Upward feedback and peer to peer review are a great way of enhancing your credibility as a leader. More importantly, it is also a great way to learn and improve.
Openness and honesty
Lack of “transparency” is a common complaint about appraisal processes in large corporates. The reality is that some judgement is always involved - people are expressing opinions about people. An exactly measurable and predictable outcome is not possible. Openness and honesty are the watchwords. Be as direct and clear as you can and ask the same of all your people. This is especially important when dealing with reward. Pay, share awards and bonuses in small Startup teams are often the hardest choices facing a CEO. You can’t always get agreement but you can at least be clear about the reasons.
Keeping the books
Process is less important in the early stage environment but there are a couple of points to keep in mind. Try to have feedback and review often enough to be fresh and relevant. A fixed time schedule may not work but review of key projects such as a major product release could make sense. Keep some form of written record of the outcome which both parties to the review would recognise. You may never need this but employment law is a minefield and proper record keeping could save enormous amounts of time and money.
Performance matters but potential counts
Think about past performance but also about future potential. As a Startup it is the ability of your team to grow with the business that is most important. It is also what matters most to each individual. Of course reward for effort is welcome but guidance and options for developing, learning and leading are the best motivation in my experience.
Whether you are giving a hard message or rewarding a brilliant performer, be open and honest, talk about the person not just the numbers and reflect true potential. Even those who leave your company as a result will thank you.
Teaming with Startups
Having written about teams last week, I found myself attending an Informatics Ventures event titled “Teaming with Startups” at in Glasgow this week. It was another excellent event from Danny, Ronnie and the team and I must add a word for the venue. The Inovo building in George Street looks like an excellent new facility. It has been renamed Scotland House and is the headquarters of Team Scotland during the Commonwealth Games so it had an extra something special for the day.
The speakers included John Innes, former CEO of Amor Group and a number of promising early stage companies. As it turned out, much of the theme was actually about bringing in new people as opposed to forming founding teams. I thought it would be worth sharing some thoughts this week on hiring great people, including some useful advice from the speakers at the event.
We all make mistakes
Hiring is a tough part of leadership. I have lived and worked through at least three major recessions and even in the toughest economic times there is always a shortage of good people. Good people also tend to be loyal and successful so they are not often on the market even when you do find them. As a consequence, even the best of us are prone to make mistakes.
I often used to share a beer and a laugh with a group of senior partners from my previous firm talking about the worst recruitment errors each of us had made. A good friend of mine was generally the winner when he reminded us of the guy he hired on a six figure salary who did not sell a single pound’s worth of work or bill a single hour in two years.
The Cardinal Sins of Recruitment
When the talk turned serious, it usually boiled down to three core mistakes, all common and all fatal:
Hiring is a strategic priority
In the end there is no substitute for spending time talking to potential recruits. I am not a huge fan of the word interview. This is not a one way process. Especially in a Startup environment but in truth in any worthwhile job the new recruit is taking as much, maybe more risk than the hiring company. Of course, this makes the process time consuming. Do not be afraid to spend the time. This is strategic investment just as much as product development or marketing plans. In fact hiring and developing the right people is the best investment you can make.
Interview, interview, interview. At the end whatever notes you have, ask yourself one question “will it be fun having this person as part of your team?” Yes is the only answer that works.
One of the entrepreneur challenges posed at the 9Others dinner on 16 July concerned bringing someone into the founding Startup team. Not sure I had many ideas on the night to now about how best to do this but it did get me thinking about teams. The theory supports this view as well. Professor Jason Greenberg from NYU Stern concludes that 65% of Startup failures are due to team issues rather than product or market failure. I have already written a couple of times about the importance of teams when making a Startup investment decision and I think this is true for the vast majority of investors. So what makes a good Startup team?
Teams need leadership. This doesn’t mean someone has to be “in charge” but for any task there needs to be direction and ambition. Leadership also means followership. Whoever is providing the direction, the others need to follow for that moment or that idea. Note one other basic fact. In a one person team there can be no leaders by definition.
Whatever the number it will be a very small group so chemistry between the individuals is essential. You can checklist the skills required but how they combine is an art not a science. A past history of working together (and not trying to kill each other!) is the only reliable indicator but may not be possible. One other thing I look out for is inclusiveness. If everyone’s ideas are not valued highly then the group probably isn’t working. It is also crazy. If you only have three people, leaving someone out is a pretty spectacular waste of resources.
Logically you might think that a passion for the business would also be a good sign of an effective team. Certainly passion is required and heart on the sleeve passion is often the most welcome sense from any Startup pitch. However, just because everyone is passionate does not mean that they can harness those passions together so be careful not to rely on just this.
Of equal importance with passion is commitment. Any great Startup is a long tough haul. A failing Startup is even harder. The core founding team needs to be on board for the duration. One tough aspect of this can be the way equity is shared in the business. There is no right answer to the value of each individual and it is very much a choice for the team. As an investor though I will look to be confident that all of the founders are motivated by their share.
Mind the gap
This is a pretty tough list and it could be much longer. One article I found in researching this piece offered 101 tips for building a Startup team! Bear in mind that in every team there will be gaps. In fact I actively look for gaps. A team with no gaps is either trying to kid me or is just kidding themselves. Deceiving yourself about weaknesses is one of the worst mistakes you can make.
There is one last thing that overrides all the others and is the one gap that can’t be covered. Action. It is easy to create a group of friends. A successful business team is much more than friends and so much harder to build. The Startup team needs to do things, not necessarily fast, not always right, sometimes not even well but there is no progress without action.
“Its hard to beat a person who never gives up.” - Babe Ruth
How Metrics Damage Teamwork and Morale....
“There’s no I in team” is one of the most hackneyed, happy clappy management cliches. It has a less well known but equally tired companion “All of team is in measurement but it is completely screwed up.”
Let me try to explain. A few years ago the firm I worked for elected a new leader. Less than a year later he brought in an outsider to run the business unit I worked in. Both leaders were more charismatic and inspiring than their predecessors. Both men have gone on to achieve great things, in many ways transforming their businesses and achieving profitability and growth in very difficult economic circumstances. Many of their priorities were similar and one common area was an emphasis on greater collaboration, hunting in packs as it is sometimes called, to leverage the power of the whole organisation. Both failed to make real progress in this area.
There are many reasons for this but one is the use of performance metrics. In my business, the previous boss had always believed that performance should be rewarded on the basis of team performance. He had never tried to measure it. At the end of each year, we would simply have a conversation. How did you do? was never the first question. Why did this account over perform? How can this group do better? were more typical. At the end, we would look at my contribution to those team achievements or struggles and reach a conclusion.
The new man and his leadership group took a different approach. He announced that collective rather than individual performance would be the new philosophy, perhaps without realising that it was actually the old approach as well. His management group backed this up with a series of measures in every arena. Revenue, profitability, utilisation, investment, compliance, relationship strength and many more were measured and reported weekly. In the face of consistently strong performance, some landmark new client engagements and the acquisition of brilliant new talent, one of the most important measures of morale went into reverse. Staff satisfaction and engagement scores dropped every six months and after a few years, employee turnover started to rise inexorably.
Why did this happen and how can Startups learn from this experience? The answers are complex and as yet little understood. Essentially this is a human problem. If you measure something and translate that into a message for a machine, the outcome will be entirely predictable. People are different. The messages that individuals and groups take from any given metric are impossible to predict. I love the Amazon “two pizza” rule which says a team can be no larger than can be fed with two pizzas. But even this with say a dozen people has many different moving parts. It is not just 12 individuals and one team. Every group of two, three or more people has its own dynamic with within the team. All have a different view of the team leader (if there is one). The law of unintended consequences basically runs riot in this environment. One of the wrongest and therefore most dangerous sayings in the dictionary of tired cliches is “What gets measured gets done.”
Anyone who follows this blog may be confused, didn’t we say a few weeks ago that measurement was really important to Startups? True and it is but it can also cause problems. Teamwork is also vital in the intense, close knit environment of a Startup. There is a simple answer. No internal measures. None. Nil. Nada. Zip. All measures should be directly linked to the customer. Winning them, keeping them happy, delivering what they need. No matter how precise, resist the temptation to measure internal performance. Forget attendance, productivity, quality and everything else. Truthfully, if I was running a large business again, I would be sorely tempted to do the same thing. Especially if it was a service business.
Perhaps I am too negative. We have the opportunity to develop metrics that could not have been imagined a few years ago. Which measures have been used successfully to build teams and drive business change? Where have you seen measurement work effectively? I would love to read your comments.
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.