Have you ever driven somewhere, gotten there, and forgot about the last minutes of the drive? You know that you were driving. But your mind must have been somewhere else, since you can't really remember the turns you made, the lights you stopped at, etc.
But, I'll bet that never happens to you when you're lost. When lost, your brain is working overtime to figure out what to do next.
When I recently interviewed Dr. Neale Martin, he explained that the difference in the two situations has to do with which part of your brain you were mostly using. When going on a routine drive, perhaps from home to work or vice-versa, you primarily use your subconscious or habitual mind. But when you are lost, or on the phone while driving, you primarily use your conscious or executive mind.
Importantly, as Dr. Martin lays out in his book "Habit: The 95% of Behavior Marketers Ignore," your subconscious or habitual mind controls the vast majority of human behavior.
For example, when you reach for a carton of milk from the supermarket, do you really think that much about it? Do you compare the different brands of milk and think "maybe today I'll try something new?" Or do you simply pick the same carton of milk you chose last time, and the time before, and the time before. Most of us do the latter.
Understanding these habits is critical to entrepreneurs who want to effectively market their products and services. For instance, once you sell a product or service, you should focus on ways to get the customer to buy again and again from you. According to Dr. Martin, once they buy seven times from you, buying from you becomes habit.
And so they buy again, and again and again. Until you do something like raise your prices or interrupt their service, which causes their executive mind to kick in and consider alternatives.
Likewise, when marketing a new product, you must leverage consumer behavior marketing techniques. Specifically, you need to make sure that your new product jives with people's habits. For example, if people are used to doing something one way, asking them to do it another way, even if that way is better, is oftentimes difficult. Entrepreneurs must make adopting their products and services as easy as possible and ensure that they don't contrast sharply to consumers' habits.
So, the next time you are driving and forget where you are or what you are doing, know that you don't have a Swiss cheese brain. Rather, you are so used to what you are doing that you're relying on your habitual mind. And remember, as a marketer, you must realize that your customers are also frequently using their habitual minds when making buying decisions. So, figure out ways to make buying your company's products and services their habit.
Dr. Martin made tons of great additional points that entrepreneurs can use immediately to become more effective marketers. Specifically, Dr. Martin revealed some great marketing insight and ideas including:
* The key link between emotions and decision-making, and how to leverage this
* How to dislodge customer habits
* The reason why Word of Mouth marketing is so successful
* The importance of getting feedback and the best place to get it
To hear a short clip of the interview, click the blue triangle on the player below:
Growthink University members can download the full interview here: http://www.growthinkuniversity.com/members/378.cfm
When Jay Turo and I founded Growthink a decade ago, we each had a ton of responsibilities.
We had to find new clients, serve clients, develop our website, answer incoming phone calls, manage the books, pay receivables, negotiate partnerships, and so on and so on.
Like other successful entrepreneurs, as we grew our company, we knew we had to hire great people. There is no way that Jay and I could have possibly managed everything the company had to accomplish.
In fact, according to management guru Peter Drucker, an entrepreneur must narrow their role as they grow their organizations. The entrepreneur must focus on the areas that provide the most value to the organization, and delegate the rest.
Yes, your ability to determine what to delegate and to delegate to the right people is the only way to grow a successful company. As author Jim Collins states, "the most important decisions that business people make are not 'what' decisions, but 'who' decisions." That is, determining "who" should do the work is absolutely essential to the work getting done right, and the company being successful.
As a result, it's no coincidence that new ventures succeed, or fail, based on the quality of people they hire. It's no coincidence that Apple was so successful with a key early employee like Guy Kawasaki. Or that PayPal was so successful with Steve Chen, Chad Hurley and Jawed Karim as key early employees? (Steve, Chad and Jawed would later found YouTube.)
Simply put, your ability to hire the right people is absolutely critical to your success as an entrepreneur.
In order to teach you how to hire like an expert, I interviewed Dr. Geoff Smart. Dr. Smart is the Chairman & CEO of ghSMART, which helps companies and investors identify the right people to hire to ensure that they can achieve success. He is also the co-author of the current New York Times Bestseller "Who: The A Method for Hiring."
Interestingly, part of his research in conducting his book was interviewing more than 20 billionaires and 60 CEOs, investors, and other thought leaders, so Dr. Smart was able to learn real-world methodologies that allow entrepreneurs like you to hire with precision.
During our interview, Dr. Smart gave tons of actionable information. Some of the highlights included:
1) Tap referrals when seeking new employees: 77% of successful hires come through referrals. That is, by asking your employees and advisors/friends/colleagues who they know that could be "rock stars" in the open position, you can find great talent.
2) Don't just create a job description. Rather than simply creating a job description for your open position, create a "scorecard." Among other things, this scorecard should focus on the desired outcome of the employee. For example, rather than saying that the employee will be responsible for calling on prospects in Indiana, the scorecard must include numeric sales and prospecting goals (e.g., must make 10 to 15 sales calls/day and close $250,000 worth of sales each quarter). Importantly, entrepreneurs should also use the scorecard to judge employee performance after hiring them.
3) Probe in your interviews. Most interviews don't unmask the real information and insight you need to make quality hiring decisions. For example, if a salesperson said they generated $2 million in sales in their last job, it might seem very impressive. But, only by asking the three "P" questions can you really tell if it was. These questions include how the $2 million compared to the Previous year's sales in that territory, how the $2 million compared to the Planned amount of sales, and how the $2 million compared to sales by the individual's Peers.
Dr. Smart made tons of great additional points that entrepreneurs can use immediately to start building stronger teams and achieve more success. In fact, we are in the process of hiring more customer support staff for Growthink University, and will be employing his techniques immediately.
To hear a short clip of the interview, click the blue triangle on the player below:
Growthink University members can download the full interview here: http://www.growthinkuniversity.com/members/376.cfm
And finally, let's give thanks. Iam not proud of it, but I am still addicted to reading the Sunday NewYork Times. And what a tale of woe it is. And while I know the #1 ruleof modern media - "if it bleeds, it leads," please just stop.
Betweenthe dire talk of global warming, global terrorism, and global finance,if you don't catch yourself you can't help but feel sorry for not justyou, but for all of humanity.
It is 99% bunk. The world has NEVER offered more opportunities for a larger percentage of us tolive affluent lives, to do self-expressive, remunerative work, and tobe amazed daily by the wonders of modern technology and entertainment than it does right now.Be grateful for all that and more.
Happy Thanksgiving to all. May your holiday be blessed withthe rewards of hard work, of breaking bread with family and friends newand old, and with an attitude of gratitude for the bounties the futurewill most definitely hold.
At Growthink, our mission is "to serve the world's entrepreneurs." When I share this with folks, they often come back to me with "Who are these entrepreneurs that are your mission to serve?" Touché.
So who is and who isn't an entrepreneur?
I like Professor Arthur O'Sullivan's definition, from "Economics: Principles in Action" the best - "An entrepreneur is a person who has possession of an new enterprise, venture or idea, and assumes significant accountability for the inherent risks and the outcome. He or she is an ambitious leader who combines land, labor, and capital to often create and market new goods or services."
Wow, this is good. Let's list out individuals that obviously fit this description. Then, let's dig deeper and talk about those who may not label themselves (nor may society) as entrepreneurs but by golly per Professor O'Sullivan's definition above they certainly are:
First, the "obvious" entrepreneurs:
Individuals STARTING New Companies. New companies, startups of all shapes and forms, across all industries, all around the world. The classic "man (or woman) with a plan" entrepreneur.
In the U.S. alone, this represents the more than 6 million new businesses started every year, and the many, many millions more contemplated. The figure worldwide is a BIG multiple of this.
Thank heavens for all of them - according to a famous M.I.T study new business starts account for more than 2/3 of all net new job creation. Especially as by far the biggest economic issue facing America (and the world, for that matter) is job creation, these entrepreneurs truly hold the key to our nation's and the world's long-term prosperity more than any other group.
Individuals LEADING Small Companies. Per that M.I.T study, the other 1/3 of net new job creation comes from the so-called "gazelles," - rapidly growing, emerging companies. The most common statistical definition of these are the 641,000 U.S. firms with between 20 to 1,000 employees. They, along with startups, account for more than 62% of all private sector employment.
Anyone that has spent even a day at a gazelle can literally breathe the entrepreneurship in the air. The best of them are led by deeply ambitious men and women walking the talk of American business. The President, in his inaugural speech, described them best:
"Rather, it has been the risk-takers, the doers, the makers of things - some celebrated, but more often, men and women obscure in their labour, who have carried us up the long, rugged path towards prosperity and freedom."
Let us hope he and our Washington leaders think often of these inspirationally hard-working folks when crafting governmental policy in the months and years to come.
Now very importantly, not all small business people are entrepreneurs. The key phrase in Professor O'Sullivan's definition when evaluating whether one is, or is not, is ambitious leader.
All of us know small business men and women - that while certainly possessing of many wonderful attributes - for whom it would be a big stretch to describe them as "ambitious leaders."
To best illustrate, I suggest you attend a meeting of your local chamber of commerce and hear how much of the debate is focused on problems and grievances versus vision and possibility. Sad, but true.
The "Non-obvious" Entrepreneurs
I find the startup and small business entrepreneurs worthy of great praise and respect. In some ways, I am even MORE impressed with those that demonstrate strong, ambitious, principled entrepreneurial leadership in the contexts of bureaucracy, politics, and vexing social challenges.
Here are a few:
Individuals that are Accountable for Change and Growth at BIG companies. Into this category falls Executives like General Motor's Interim CEO Fritz Henderson. Now I know that GM maybe the last company that comes to mind when one thinks of entrepreneurship. But given the beyond monumental challenges of making that elephant dance, Mr. Henderson certainly meets the criteria (whether he will make the grade only time will tell). He is certainly an ambitious leader with very, very significant accountability for risks and outcomes - huge taxpayer subsidies, tens of thousands of manufacturing jobs, American pride, etc. And his success will depend on his ability to lead GM to "combine labor, and capital to create and market new goods and services." Yes, if Mr. Henderson is to succeed at GM, he will only do so by walking, talking, and quacking like an entrepreneur.
Individuals With Leadership and Change Responsibility in Organizations of All Types. The challenges of leadership and accountability exist in ANY organization taking on meaningful and challenging objectives.
Bono, arguably the world's best known philanthropic celebrity, is an entrepreneur on two fronts. First, via his commitment to world-class creative output as the leader of the mega-rock band U2. And he is an entrepreneur, via his unique effectiveness as an activist and spokesperson and doer of big projects for causes close to his heart - human rights, third world debt relief, and AIDS and African development issues. If you think it is tough to get a city business permit, try getting governments of affluent nations to work together to solve global social challenges that barely garner a back-page sentence or two in the "it bleeds, it leads media" that voters back home call news.
In this vein, entrepreneurs exist in a wide host of non-profit and governmental institutions. Gary McDougal, former Partner at McKinsey and Company, who later in his life re-engineered the broken Illinois welfare system and made it a model nation-wide. Certainly an entrepreneur.
Whatever you think about his politics, while governor of Massachusetts Mitt Romney's re-structuring of the state's health care system, absolutely required a "think outside the box" entrepreneurial approach. Gail McGovern as President of the American The Red Cross, working to expand the branding of the organization beyond disaster relief, works entrepreneurially everyday to effect this transformation.
Global Entrepreneurs. Now more than ever ambitious individuals worldwide strive to not just be entrepreneurs per the American way, but to take the best of what we do and how we think and add to it and candidly, then to crush us. And I say more power to them.
Because entrepreneurship as its essence is about creation, and the success of one entrepreneur ANYWHERE results in a better life for everyone EVERYWHERE.
Two pieces of startling news to consider when thinking about how money is really made in our brand-driven 21st century economy:
1. James Cameron's 3-D beyond blockbuster "Avatar" - reported by the New York Times' Michael Cieply to have a total budget - production and marketing - in excess of $500 million!
Director Cameron, of Titanic, is blowing away ALL movie cost records here. To give a feel of the size of the bet that Cameron, Fox, and private equity partners Dune Entertainment and Ingenious Media, are taking on the film, Avatar may have to become one of the top-twenty grossing movies of ALL time just to break-even!
2. Ms. Kim Kardashian, kindly described by Wikipedia as "an American celebutante, socialite, model, actress, businesswoman, and television personality" is the 8th most followed person on Twitter. She trails only Ashton Kutcher, Britney Spears, Ellen Degeneres, Oprah Winfrey, and oh yes, the President of the United States.
This is relevant only because, whatever you think about the quality/lines of work and political leanings of others on the list, at least they have actually DONE SOMETHING to become famous.
Ms. Kardashian, for all of her obvious charms, is that particular modern phenomenon of seemingly being famous because she is, well, famous.
So You Say - So What?
Well, as any regular followers of mine can attest, at the core of my belief system and the Growthink investment strategy is the The Black Swan.
Popularized by the great Lebanese thinker and writer Nicholas Taleb in his New York Times bestseller of the same name, the idea of the black swan comes from the Enlightenment in Europe to describe a logical fallacy. In the 17th century, Europeans assumed that 'All swans must be white," because they had never seen a Black Swan. In the 18th Century, black swans were discovered in Australia.
The logicians of the time - most prominently John Stuart Mill- associated the term "Black Swan" to the concept that a "previously perceived impossibility may actually come to pass."
Taleb describes it best:
"What we call here a Black Swan (and capitalize it) is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable."
Taleb continues, "I stop and summarize the triplet: rarity, extreme impact, and retrospective (though not prospective) predictability. A small number of Black Swans explain almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives."
1) Everybody loves to place on a pedestal (and I put myself in this category for sure) the "pure" paths to entrepreneurial riches. It goes like this: Have a great idea, start a company, have venture capitalists back you, build the business with blood, sweat, tears, and brilliance, go IPO, be featured on the cover of Fortune, and everyone lives happily ever after.
It is what getting rich in America SHOULD be about. But the statistics tell a far different story.
Think about the size of Avatar's reach - a $300 million production budget? $200 million for marketing? There probably aren't 10 technology startups in the whole world with these kinds of numbers behind them.
And the nice thing about a movie versus a startup is that you can usually find out in real-time if you have something. Don't you think the VC's with their full portfolios of "waking dead" startups would like to find out as Fox will with Avatar, in like 2 weeks, if they have something?
2) "Vanilla" investment in business models, in corporations, LLCs and the like, are almost passing into the realm of quaintness. I come back to my good friend Rafe Furst and his brilliant idea of the personal investment contract.
Investing in any one of Ms. Kardashian's various companies (perfume, clothing, DVD projects) is highly risky and on the surface, not all that attractive. But being able to invest in the Kim Khardasian personality brand itself - with her top 1,000 website and 2.8 million Twitter followers (put this in perspective - Jim Kramer's Mad Money gets about 300,000 viewers/day) - is a sure-fire moneymaker.
3) Bet on the Unexpected. Check your ego firmly at the door when evaluating business models and investment strategies. Accept that you (and everyone) for that matter KNOWS NOTHING about what the future will hold other than the fact that we don't know what the future will hold.
That is philosophy - here is money-making: The big, big outlier events - the 1,000 to 1 shots and beyond - are always, always, always, UNDER-PRICED in the marketplace.
Bet on them.
I look forward to your attendance and feedback.
One of the absolute keys to a successful business plan is to create the right business plan milestones. Doing so is essential to securing investors and making real progress towards achieving your goals.
The story below illustrates the importance of business plan milestones, after which is some guidance regarding how you can create the right business plan milestones for your company.
There are lots of things that all of us do, and do as well as we have to, without thinking.
Like pumping gas.
I just pumped gas this morning. And thought nothing of it. Until now.
The fact is that I didn't just pump gas. Sure, the entire process of what I did was called pumping gas. But I did a lot of things that made up that process.
1. I pulled into the gas station.
2. I pulled next to a pump.
3. I put the car in park.
4. I turned off my engine.
5. I got out of the car.
6. I popped open the gas flap.
7. I swiped my credit card into the machine.
8. I typed in my zip code.
9. I pressed the button for the type of gas I wanted.
10. I unscrewed the gas cap.
11. I took the gas nozzle out of the machine and stuck it into my gas tank.
12. I squeezed the lever.
13. I waited while the tank filled up.
14. I put the gas nozzle back into the machine.
15. I pressed "no" I don't want a receipt.
16. I screwed my gas cap back on.
17. I shut the gas flap.
18. I got back in my car.
19. I turned on the engine.
20. I put the car in drive.
21. I drove off.
Wow. I did 21 things just to pump gas?
So who cares? Well, investors care. And partners care. And the success of your business cares.
Let me explain.
Your business is currently at point A. Where you want to go is to point B. Now getting from point A to point B requires you to complete milestones.
And the most important milestones are what I call "risk mitigating milestones." These are the milestones the help eliminate the risk of your company failing.
Let me give you some examples. For Google in its early days, risk milestones included completing their initial result ranking algorithms, getting customer to start using its search engine, and generating revenues.
Obviously once Google was generating a lot of revenues, it was not a very risky investment. But before customers starting using Google.com, it was very risky. And before its initial algorithms were developed, it was even riskier.
Every business has risk mitigating milestones. Investors obviously prefer to back businesses where more risk milestones have been removed. I know I do.
Would you prefer to back a restauranteur who just has a vision for a new restaurant; or would you rather back that same restauranteur after the ideal location has been determined, the restaurant has been built, the staff has been hired and trained, the local newspapers have given it a great review, and the restaurant now has 250 loyal patrons and is booming every night?
It is your job as an entrepreneur to identify your risk mitigating milestones. And not only do you have to identify them, but you need to prioritize them. So that every day you are spending quality time working to accomplish them (and not spending time doing things like replying to emails that seem to be adding value; but which don't actually put you closer to accomplishing your risk milestones).
But, actually, you can't work on completing your risk mitigating milestones each day until you break up each of these milestones into much smaller projects. For example, Google creating its initial algorithm and a restauranteur finding an ideal location are great milestones, but way too large to accomplish on a daily basis.
Each milestone needs to be broken down into numerous chunks; chunks that can be completed every day, and progress made. It's like writing a book. If you write one page every day, by the end of the year, you'll have a 365 page book.
And it's like pumping gas. You need to do a ton of smaller things in order to accomplish the big thing. And like with pumping gas, when you spend the time breaking the task into pieces, you often see how easy each piece is to accomplish.
Developing risk mitigating milestones is an absolutely essential component of your business plan, and belongs in your Operations Plan section. Investors need to understand these milestones and your projected timeline for accomplishing them. You need to understand them to prioritize your time and hire the right people at the right time.
If you still need to complete your business plan, let me send you my CD with seven more essential business plan secrets. I explain why I'm doing this and how you can get it now, on this page right here: