The fox knows many things, but a hedgehog knows one big thing.
- Ancient Greek Aphorism
Isaiah Berlin, in 1953, famously referenced this as a jumping off point for an essay on the relative importance of two kinds of knowledge, on the one hand that of principles and ideas, and on the other hand that of "ways of the world," street smarts, and technique.
I was reminded of it recently by an old and wise colleague, as we were evaluating an investment opportunity, and the relative importance of the executive team’s operating experience versus their big picture strategy and growth model for the business.
His point was that while those executives were certainly “foxes” - great resumes, hard workers, and excellent communicators - they were lacking as “hedgehogs,” pursuing an inefficient and difficult to scale business model.
We passed on the investment.
And it occurred to me how so many of us think and work like them - tens of millions of knowledge workers all over the world that know and do a lot of “little” things - how to code, talk, email, text, post, and tweet, but how too often doing so crowds out the "Deep Work" necessary to arrive at and execute upon business models that scale.
Perhaps the most vexing "focus" challenge of modern business, but for the disciplined executive one surprisingly easy-to-overcome through asking one simple question:
Does a particular bucket of stuff really make me and my company money or does it not?
Because focusing on making money almost always means focusing less on:
And more on:
And when we reflect on it, isn't this not just the stuff that makes us money, but is also the stuff we almost always enjoy and find the most fulfilling?
Isaiah Berlin's full "The Hedgehog and the Fox" essay can be read here.
Timeless, ancient wisdom worth applying to our frenetic, modern day.
The other day, my wife came home from a meditation class with a sheet of paper. On it was a verse written by Mother Teresa. Supposedly, these same words were written on the wall of Mother Teresa’s home for children in Calcutta, India. They were as follows:
While I believe these words to be true for all people, I find them especially relevant for entrepreneurs.
As entrepreneurs, we have elected to take on a challenging life, and a business life that is clearly harder than that of the average worker. We must constantly take risks, and success is never guaranteed.
As a result, to succeed as an entrepreneur takes a special mindset and commitment. Thinking and acting like an ordinary individual will get you ordinary results. And ordinary results just don’t cut it as an entrepreneur. Unless you act extraordinary, you can’t possibly achieve the success you desire.
This being said, below are my entrepreneurial comments and thoughts to Mother Teresa’s writings.
People are often unreasonable, illogical, and self-centered.
Forgive them anyway.
These people may be your customers, your employees, your investors and/or your family (who I will hereafter call your “constituents”). Forgive such actions when you come across them. And try to surround yourself with people who don’t do them.
If you are kind, people may accuse you of selfish, ulterior motives.
Be kind anyway.
Be kind to your constituents. If not, they will not follow you.
If you are successful, you will win some false friends and some true enemies.
Some of your current constituents will not want to see you succeed. Succeed anyway. And create a new group of constituents as needed (perhaps a peer group or Board of Advisors) of successful people you want to emulate and who DO want you to succeed.
If you are honest and frank, people may cheat you.
Be honest and frank anyway.
Be honest in all your dealings with your constituents. Entrepreneurs who cheat never win; it always catches up with them. If someone does cheat you, learn from it and don’t let it happen again (yet still be frank and honest).
What you spend years building, someone could destroy overnight.
As an entrepreneur, your job is to build, build, build. Build a great company. But while building, think about ways that others will NOT be able to “destroy” you. For example, a business model in which you have customers on a subscription plan (think mobile phone service providers) is very hard to destroy. Always think about ways in which you can “lock up” customers, employees and other constituents. How can you make it so that they’ll never want to leave you?
If you find serenity and happiness, others may be jealous.
Be happy anyway.
Yes, when you achieve success as an entrepreneur, many others will be jealous. And many will call you “lucky.” Yes, you’re “lucky” because you have the right attitude and mindset that allowed you to work hard and persevere. And you’re “lucky” because you invested your time reading articles (like this one) and learning the skills you needed to become a successful entrepreneur.
The good you do today, people will often forget tomorrow.
Do good anyway.
Keep doing good to your constituents. Doing good once is not enough. Continue to astound your customers, employees and others so they follow you to the finish line.
Give the world the best you have, and it may never be enough.
Give the world the best you've got anyway.
To succeed as an entrepreneur, you need to give 100%, and keep giving it. Never surrender. Never back down. Rather, persevere and make it happen. And if the best you have isn’t enough, then get others (advisors, peers, employees) who can give alongside you so collectively you ARE able to give enough.
You see, in the final analysis, it is between you and God.
It was never between you and them anyway.
Succeeding as an entrepreneur is more about you succeeding within yourself and less about you beating out a competitor. If you are thinking and acting the right way, you will naturally surpass your competition and achieve great success.
Right now is the time for you to “do it anyway” and become the successful entrepreneur you’re capable of becoming!
Don’t chop water when you should be carrying wood.
- Old Zen Proverb (updated for the 21st Century)
Last week, I wrote about the connection between vision, strategy, and action in a business, and how great organizations find the balance between:
a) Making the right changes at the right time and
b) Having the discipline to “keep on keeping on” and just doing more of what is working.
Note well that b) is particularly hard to maintain when the tasks and activities that ARE working become repetitive and lack in excitement and drama.
So how does do executives find this balance - between being creative and just keeping their heads down and plowing forward?
Well, luckily in the past few years a large and impressive business literature has sprung up that codifies best practices of how to find this all-important balance.
It can best be summarized by the phrase “immersion plus spaced repetition” and goes like this:
1. Everything, of course, begins with ideas, with the best ones arising from a series of introspective strategic planning and goal-setting sessions that clarify objectives and the obstacles standing in the way of their accomplishment.
This immersive process - done at least annually but at the best companies quarterly - both defines what needs to be done and inspires all to take on the hard work of getting it done.
The value of inspiration cannot be underestimated – Thomas Edison famously said that “genius was 99% perspiration and 1% inspiration” but that 1% “spark” is uber-critical in propelling an organization through the various thresholds of change.
2. But, as anyone that attended an exciting or invigorating conference or strategic planning session can attest (and as I am sure Mr. Edison reflected on often during long nights at the lab), inspiration fades over time.
Even worse, when the inspiration is not followed through on, cynicism can set in and actually leave an organization worse off than if the planning sessions were never done in the first place!
So how to avoid this distressing fate?
3. Well, by keeping the ideas, goals, and objectives of the planning session alive through their regular review and adjustment.
Think of it this way - if a well-run strategic planning session is the essence of good leadership, then repetitive goals reviews are the essence of good management.
Great managers check in with their teams as often as daily - if only for 5 or 10 minutes - to review the day’s objectives and to keep the shorter term work flow aligned with the longer term planning and mission objectives.
The old adage that the only way to eat an elephant is one bite at a time is never more true than when is comes to these spaced and repetitive management check-ins.
When done right, they measure, acknowledge, and reward incremental progress and prevent the desire for the perfect from getting in the way of the doable and the done.
Then, the organization reconvenes and reviews progress against stated goals, assesses what worked and what didn’t, and then refines and updates the key goals and objectives.
And after this next round of strategic planning, what is done?
Well, the spaced and repetitive management check-ins begin anew.
Wood is chopped, water is carried.
Following this simple but disciplined formula, over time great ideas become great realities, businesses are built, and legacies and fortunes are made.
And for investors, far more than technology these “above the line” leadership, management, and company culture disciplines separate the well-run companies to back from the disorganized ones to avoid.
So what are you waiting for?
In writing his book, "Rich Habits - The Daily Success Habits of Wealthy Individuals," author Thomas C. Corley studied the daily habits of hundreds of wealthy and poor people.
He defined wealthy people as those earning at least $160,000 annually and owning assets of at least $3.2 million. Conversely, he defined poor people as having an annual income below $30,000 and less than $5,000 in assets.
Read below to see the stark differences between the two groups.
1) Maintain a to-do list
Answer for successful entrepreneurs: Maintain a To Do List
2) Wake up 3+ hours before work
Answer for successful entrepreneurs: Most entrepreneurs pretty much work all the time, and clearly work more than the general 9-5 work day. I prefer highly organized work to a ton of work. But either way, you need to put in the hours to succeed as an entrepreneur.
3) Listen to audio books during commute
Answer for successful entrepreneurs: Educate yourself during your commute. EVERY single one of the video training products I offer has an audio download component so you can listen to them during your commute. Yes, I did this on purpose.
4) Network 5+ hours or more each month
Answer for successful entrepreneurs: Network more. Networking is a great way to meet great people who can become: investors, mentors, advisors, customers, employees, partners, etc. If you need more of any of these things, then network more.
5) Read 30+ minutes or more each day
Answer for successful entrepreneurs: Read at least 30 minutes each day. Here I’m probably preaching to the choir, since you’re reading this essay of mine - good job!
6) Live a healthy lifestyle
Eat less than 300 junk food calories per day
Exercise aerobically four days a week
Answer for successful entrepreneurs: Treat your body well. You need the physical and mental energy to succeed.
7) Use television smartly
Watch one hour or less of TV every day
Watch reality TV
Answer for successful entrepreneurs: Don’t watch too much television and when you do, don’t watch garbage.
The final, and most important habit for the world’s wealthiest entrepreneurs is that they have built and sold their companies. Of Americans with a net worth of $5 million or more, an overwhelming 80% of them are entrepreneurs who have sold their businesses.
So, in summary (and feel free to print this out):
1. Maintain a To Do list
2. Wake up early/work hard
3. Listen to audio books during your commute
4. Network more
5. Read 30+ minutes each day
6. Maintain a healthy lifestyle
7. Don’t watch too much (or garbage) television
8. Build a sellable business
When you think about it, none of this is really that hard. Yes, YOU can do it!
Every business needs a vision - a clear definition of what its leadership seeks the business to become.
And every business needs a strategy - a road map of how the business will reach its vision.
Once the vision and strategy are clear (and yes, this is hard), the next step is action planning – the day-by-day mapping of how all of this good but sometimes theoretical “stuff” will actually get done.
This, involves determining which projects will be completed (and as importantly, which ones will NOT be done), by whom and when, and how many resources - work hours, money, and assets - will be required.
Now, this is lovely for the whiteboard but what a company's strategic plan more often than not looks like is this:
Unclear, Unshared Vision. With all the time most management teams spend talking to each other, it's surprising how often they have different pictures of what everyone is supposed to be doing and in what direction they are supposed to be heading.
It's the hard and repetitive job of leadership to repeatedly communicate the plan (i.e. the vision, the strategy, and the day-to-day road map of how to get there) until all are on the same page.
And then rinse and repeat.
Planning Once Per Year, Out Of Routine. So many of us, right around New Year, think about our personal goals for the year ahead.
Similarly, many businesses work on their yearly plan during the same month of every year.
And then they forget about it.
The best businesses, in contrast, create, refine, and live their business plans in real time, every day.
Yes, this is hard, now more than ever because of…
The Tyranny of the Urgent. A HUGE challenge to executives and businesses attaining greatness is how difficult it is, because of technology, to not let those “urgent, but NOT important" activities dominate our days.
More than ever, we must fight for the time and attention to do the great and important work, and block out those insidious distractions everywhere and always around us.
No Process or Methodology For Strategic Planning. A best practice is to focus on vision and strategy in one set of sessions, and then on the day-to-day action planning, accountabilities, and progress measurements in another.
In discussing vision and strategy, we are in creative mode, exploring any and all options and ideas.
In contrast, figuring out action plans and accountabilities are best suited for separate, more “Tough Love” and analytical-type meetings.
With appropriate time set aside for vision, strategy, and action planning, a business can experience the collective joy that comes from knowing exactly what it is striving toward and how it will get there.
Everyone at the business will feel more grounded, balanced, and centered.
Being so all will come to work with greater purpose and passion.
And, at the end of the year, we will all have far more to show for our efforts.
Great leaders delegate. They get other people to do the work for them. They focus on vision and strategy, and getting their people to perform at their highest possible level. And when their people perform, the company executes on the strategy and achieves its vision.
While much about leadership has been written over the years, much of it has changed. Because many of the old rules and strategies, such as the “it’s my way or the highway,” strategy no longer apply. People are different today than they were even a decade ago. We have different needs and thinking, and nurturing your team to get them to perform is more complex.
In fact, when it comes to outsourced employees, leadership is even more complex. Because when you can’t look your employee in the eye, it’s hard to tell if they’re bought into your strategies and goals, and if they will perform to your standards.
What makes this so more important is that any good HR strategy nowadays includes outsourcing. Because outsourcing certain roles allows your company to achieve great progress at a significantly lower expense, and without increasing your fixed costs which decreases flexibility.
This being said, the following are five things a great leader would never do when managing their outsourced employees.
1. Rely exclusively on email. Email is generally the easiest way to communicate with outsourced employees, particularly if they live in different time zones. However, email is rarely the most effective communications method, particularly when you want to motivate people. Rather, make sure that occasionally you also use telephone calls and video calls using services such as Skype. By seeing your employee, and having them see you, you can gauge and influence their levels of engagement and excitement.
2. Give vague directions. If someone’s seen you do something several times, and then you ask them to do it, they might do a good job. But if someone’s never seen you do something, particularly when they don’t work in your office, they’ll generally fail wildly. Unless, that is, you give them precise directions. When you outsource a task, be sure to document precisely what you want done and why. This will guide the employee and set expectations for them to meet.
3. Wait to see finished work. When you outsource a project to someone, don’t wait until the end to judge their work. Rather, check in periodically. Ideally, break the work into pieces. For example, if an outsourced employee is responsible for creating a video, natural pieces or project stages might include: 1) writing the video script, 2) sketching or finding the images to be included in the video, 3) creating a video draft, 4) finalizing the video. If you wait to see the final video, you inevitably will be disappointed. Rather, check in after each stage and provide feedback. The end result will be infinitely better.
4. Fail to set deadlines. Employees, particularly outsourced employees who don’t see you, need deadlines. If not, they’ll generally take way too long to complete a task. When employees work in your office, they should have deadlines too; but, because you see these employees, if there is a deadline, you’ll simply remember to tell them. You don’t have this luxury with virtual employees, so make sure they know the deadline for each of their projects.
5. Fail to give time expectations. Even when you set a deadline, you still must set time expectations, particularly if you are paying your outsourced employee on an hourly basis. While two people can both complete a project in a week, for example, you’re clearly paying a ton more if one worked ten hours per day and the other two. So, at the beginning of each project, have the employee give you an estimate of the work hours, and have them check in periodically to let you know if their estimate is on track or not.
When you outsource properly, you can dramatically grow your company at a fraction of the cost as your competitors. But, make sure you avoid these leadership mistakes; when you do, you can effectively manage your outsourced workforce to get the most benefit from this key HR strategy.
“Good businesses are ethical businesses. A business model that relies on trickery is doomed to fail.”
- Charlie Munger, Wesco Financial Corporation Annual Meeting, 2009
I am blessed as part of my work to regularly moderate executive team strategic planning and group sessions for companies and organizations that have been around for a long time, including:
• One of the oldest continuously operated hospitals in the Western United States, founded in 1887 and whose Board Chair is one of the most famous investors in the world.
• One of the largest commercial collections agencies in California, boasting of more than 20% of Fortune 500 companies as their clients, and now entering its 85th year.
• A Michigan - based, automotive tool supply company that this year will celebrate its 70th anniversary and whose founders trace collaborations back to Walter Chrysler and other giants of the car business.
• One of the United Kingdom's largest multi retailer voucher and prepaid gift card companies (2015 revenues US$ 420 million+), that this year will celebrate its 50th year in business.
While these organizations compete in vastly different industries and cultures there is within them all a common “longevity core” that has allowed them to navigate, pivot, and win through various and multiple storms and dramatic shifts in their markets where the vast majority of their competition have not.
And always when I moderate these kinds of sessions, and ask executives to share the “Whys” of their companies, what they stood for when founded and how that meaning has evolved over time what comes often to mind is the theme of one of the greatest and most under-rated business books of all time – Arie de Geus' The Living Company.
In it, the author shares a lifetime of research and study as to why some companies and organizations “live…through the upheaval of change and competition over the long haul.”
As de Geus’ so eloquently writes:
The idea of a living company isn't just a semantic or academic issue. It has enormous practical, day-to-day implications for managers. It means that, in a world that changes massively, many times…you need to involve people in the continued development of the company. The amount that people care, trust, and engage themselves at work has not only a direct effect on the bottom line, but the most direct effect, of any factor, on your company's expected lifespan. The fact that many managers ignore this imperative is one of the great tragedies of our times.
This inspirational and almost idealistic point may seem contestable in our age so dominated by tech high-flyers (to say nothing of the tenor of the current political campaign!) that seem to have gained their prominence through such a powerful combination of IP prowess, network effect, and first-mover advantage that really any company culture and any collection of reasonably talented individuals could run them well.
For a short time, maybe yes.
But to sustain themselves over periods measured in decades, to transition leadership and management through generations require a robust, flexible, and truly “living” culture.
And that in turn requires something we don't talk enough about in business nearly enough – leadership.
The kind of leadership that once was the obvious expectation for persons granted the blessing and privilege of being at the head of an organization of any size.
The type of leadership that does not sacrifice the long-term for the sake of the short-term.
The type leadership whose goal is not “an exit,” but rather a contribution - to shareholders, to employees, to customer, to community.
Leadership that knows that a handshake and one's word is a better and more appropriate form of agreement between gentlemen and gentlewomen than a contract can ever be.
And leadership that recognizes that to survive and prosper through multiple generations is both an amazing accomplishment, and a charge to keep.
The charge to not only match the good and hard work of those that have gone before us.
But given the opportunities afforded by our technological and global age, to far exceed them.
In growth and profits, absolutely.
But, in character, principle, and doing the right thing too.
What makes up and how does one develop a great financial forecast for a smaller, privately held company?
Should the forecast be “realistic” – i.e. feel “doable” and in line with past results or…
…should it be “aspirational,” not hot air by any means but also representative of goals that makes managers feel more than a little anxious as to their ability to attain them?
What is the actual “projections-making” process? Is Microsoft Excel the only “tool” option?
How much industry, market, and competitive research should be done to benchmark our forecast against relevant comparables?
And perhaps most poignantly, if there is not a regulatory or shareholder requirement, why even do it?
Answers to these questions and great way to think about the process and purpose of financial projections can be had via what I call the “HMCBW” approach - examining the Historical data, the Market conditions, the Competition, the “Bottom-Up” assumptions, and finally and most importantly what management Wants.
It looks like this:
#5. Let History Be Our Guide. The first thing to do in assembling projections is to evaluate what was, and was not, financially accomplished by the business in the past.
While the previous period (most usually the previous year) is usually most indicative, there is also great wisdom to be had in looking back to more chronologically distant periods as well.
This is especially important in our now seemingly permanent “uneven” economic environment, driving the need to defend our assumptions in various (bullish to bearish) future market and competitive scenarios.
#4. How Big is My Market? Undertaking a formal and comprehensive study of a business’ industry, market, and competition usually leads to one of two results - either the target market is much smaller and less lucrative than surmised or…
…it is defined so imprecisely and broadly as to uncover faulty strategic thinking / an unsound business model.
Either outcome, both painful, naturally lead to the kind of hard introspection and business model re-positioning upon which solid financial projections (and ultimate business success!) depend.
#3. How is the Competition Doing? We live in this most amazing time where our competitors - as part and parcel of their sales and marketing strategies - just post to the Net their business models for all to see.
Additionally, amazing tools like CapIQ, Hoovers, IBISWorld, LexusNexis, Statista, and Follow.net give us inexpensive access to often shockingly accurate financial data (even profits!) on even the smallest and most secretive of private companies.
Utilizing this data as benchmarks for our projections is incredibly powerful. We do not need to be wed to how our competitors do it, but we would be foolhardy to not study and learn from them.
#2. Bottom-up! The business analytics revolution - as represented by the dozens of SaaS business process applications and productivity tools (with their incredible reporting functionality) - allows for the assembly of Bottom-Up financial projections with an “actual data” specificity like never before.
This might look like building revenue projections based on the conversion ratios of web traffic to inquiries (phone, e-mail, text, etc.) to proposals, to sales, to retention, to ongoing revenue.
These bottom-up models, in addition to being powerfully predictive, are also highly insightful as to the performance of various aspects of an enterprise - its marketing, its salespeople, the quality and efficacy of its products and services, etc.
#1. What Does Management Want? The fuzziest - but also by far the most important factor when developing projections is just asking what management and ownership want to see happen.
What kind of revenue and profit projections will inspire and embolden? Will force to the forefront the need for breakthrough business model thinking and doing?
Answering these “inspirational” questions is fundamentally important in assembling projections that serve the objectives of managers and owners, and not the other way around.
Historicals. Market size. Comparables. Bottom Up. Want.
Follow this five step model in building your growth, revenue, and profit projections and watch the Manna from Heaven flow!
Your website is a critical component of your marketing strategy. If set up properly, your website can be the source of tons of new customer leads. And even if they hear of you elsewhere, in many cases, customers will still visit your website to learn more about you.
So here are 5 quick and easy ways to make your website more effective.
#1: Establish a blog
Setting up a blog is the easiest way for you to continually add new content to your website.
And each piece of content you add is another opportunity for someone to do a search (on Google.com, etc.) and find your company.
Also, your blog posts can be used to show your subject matter credibility, and further prove to prospective customers that you are the best provider in the market.
#2: Promote your blog posts
In addition to adding new blog posts (ideally once per week, and at a minimum twice per month), make sure to promote your posts.
You can promote your posts by posting them on Facebook, Twitter and other social media sites.
Your goal is to drive more traffic to your blog posts. Also, try to get visitors to comment and/or ask questions about your posts. And then, respond to their questions and comments.
Finally, remember that each question posed by your visitors may be a great topic for a future blog post.
#3: Create videos
Particularly if you don't like to write, create videos.
Videos that teach prospective customers how to do something are extremely valuable. And they can be used to "soft-sell" your product and/or services.
For example, let's say you offer carpet cleaning services. A short video teaching people how to tell if their carpet is in need of cleaning would be extremely valuable. And, people who watched it would be prone to purchase your service.
#4: Add sharing buttons
Particularly if the content on your blog is good, make sure it's easy for visitors to share it.
You can quickly and easily accomplish this by adding buttons that allow people to share your posts on Facebook, Twitter, LinkedIn, StumbleUpon, and other social media networks.
This is how blog posts go viral; by making it easy for others to share them.
#5: Make your website mobile and tablet friendly
More and more people are visiting websites from their mobile devices and tablets. But not all website look good on these sources.
Make sure your website does. If it doesn't, there are some inexpensive services that manage this for you. Such services can tell when a visitor is not coming from a desktop, and will automatically push them to a version of your website (which they create and host) that is more mobile/tablet friendly.
Each of these five tips can be implemented very quickly and easily. And they will result in more customers and sales. So make completing this a priority.
Suggested Resource: Want to learn my complete strategy for methodically maximizing your online traffic, leads, sales and profits? Then check out my Ultimate Internet Marketing System.
Both Crowdfunding and Peer-to-Peer Lending are great new ways to raise money for your business. Below I explain the differences, and some of the advantages and disadvantages of each. I end by determining which is better.
Peer-to-Peer (or P2P) Lending is one person lending money to another person at a pre-defined interest rate. It's basically debt capital without the bank or traditional "middle man."
The benefit of P2P Lending is that 1) the interest rates are typically lower, and 2) the likelihood of getting the loan is greater than the likelihood of getting a traditional bank loan.
There are several popular websites that connect borrowers and lenders directly. The biggest two are:
The downside of P2P lending is that you need to repay the loan and that there are limits to how much you can raise (generally only $25K at a time).
Crowdfunding is raising money from the "crowd" or general population. In Crowdfunding, you don't need to repay the amount raised. Rather, you give rewards (usually the product you want to develop) or equity to those who fund you.
The most established rewards-based Crowdfunding websites are:
On the equity side, Crowdfunding if still extremely new and still only limited to accredited investors (expect this to change shortly). Crowdfunder is one of the leaders in the equity based Crowdfunding market now. We will see how it grows and other sites pop-up as non-accredited investors enter the market in 2014.
So, Which is Better?
I prefer Crowdfunding over Peer to Peer Lending because of the potential to raise more money through a larger group of people, and not having to pay the money back. I also like that all the people who crowdfund you 1) are potential future customers, and 2) can spread the word about your business.
However, the two funding sources are NOT mutually exclusive, so definitely consider using BOTH Crowdfunding and Peer to Peer Lending, since both are great forms of funding.
Suggested Resource: Do you want Crowdfunding? If so, don't try to raise it from scratch -- the 14-step blueprint already exists. Get the Crowdfunding blueprint here.