In a startup world full of ideas, it’s difficult to separate the Sitcom Startup Ideas from the good ideas. I must admit that I didn’t coin the phrase but am copying something that Paul Graham wrote in his post on How to Get Startup Ideas. To quote his post for those of you too lazy to click on the link, “Why do so many founders build things no one wants? Because they begin by trying to think of startup ideas. That m.o. is doubly dangerous: it doesn’t merely yield few good ideas; it yields bad ideas that sound plausible enough to fool you into working on them.”
And from the research I’m doing, it seems that most ideas that people start Techno with are ideas that could be classified Sitcom Startup Ideas. But there is a problem here as you could think of AirBnB as a Sitcom Startup. After all it was started by a few guys in San Fransisco who couldn’t pay rent so they put up a website to rent out three air mattresses. And Uber was started by another three guys who couldn’t stand waiting in the rain to get a taxi.
I suspect that Sitcom Startup Ideas are in the eye of the beholder. One VC’s sitcom is another’s documentary. After all, Bessemer passed on FaceBook, Google, and EBay. Not only did they pass, they ran away from these ideas and their founders as if they were nuts. You can see the list of all their epic fails here.
Paul Graham goes on to say that: “If you look at the way successful founders have had their ideas, it’s generally the result of some external stimulus hitting a prepared mind…..The verb you want to be using with respect to startup ideas is not “think up” but “notice.” “. Now I don’t want to criticize Paul Graham as he is much more successful than I will ever be but I don’t get the difference between thinking and noticing. After all, AirBnB and Ebay, were not noticed, they were thought up and then noticed.
I’m struggling to come up with a methodology of separating the Sitcom Startup Ideas from the good ones. (If I am successful in doing this maybe it will atone for my earlier bad ideas.) What I have seen as a trend is the good ideas are the things that come out of something the inventor or someone the inventor has actually talked to, would pay for in time or money. When founders stray from something someone would pay for then they risk creating a lousy idea.
And ‘someone’ is not a concept but a person, an actual living person who would put time or money towards purchasing whatever flows from the idea. I’m not married to this concept and still paying with it as it keeps me coming back to an expression I’ve been using lately: “Don’t find the problem, find the budget.”
I’m doing a piece of research with U of T that looks at where good business ideas come from and it’s making me look back at some of the very bad business ideas I’ve had over many years. It seems that age doesn’t prevent me from having bad ideas.
Several years ago I decided to try to solve the problem of strategy execution that bedevils many companies. This was a problem that I had had when I was CEO of Synamics. We could come up with strategies (whether they were good or not is another matter) but I felt we fell short in their execution. At the time I wished I had software to help keep track of whether my strategy was being executed effectively or not but I never got around to creating it.
Fast forward a few years and I kept seeing articles, many of them in the Harvard Business Review that reported that strategy execution is the biggest problem in business today. Even polls of CEOs will confirm that strategy execution is their biggest problem. So I figured, this is a problem that I had as a CEO and HBR says that this is the biggest problem in business today, so maybe this is a good idea for a business.
‘They’ say that when you’re starting a business you should look for a problem to solve, not create a product that goes in search of a market. So here I was, trying to solve a well documented problem. But was it successful? No, not even close. I teamed up with Mike Tobias at Mercanix to launch software and services to address problems in strategy execution and we bombed.
And when I say bombed, I mean that we couldn’t even find anyone to talk to. We went out to the market aggressively but met blank stares. I’ve spent some time analyzing what we did wrong and in the process I’ve learned a lot about launching new products. What I discovered when I did the analysis was that there really isn’t a market for what we created. But wait a second, this is documented as the biggest problem in business today but there is no market for a solution?
Well as it turns out, most companies haven’t assigned the generic function of strategy execution to anyone. (If you want to check this out, take a look at how many of your LinkedIn contacts mention strategy execution in their bios. According to my stats there are 100 people doing strategic planning for every one that is doing any strategy execution.) Most companies don’t have any one individual responsible for strategy execution as a job function. Instead they say that everyone is responsible.
So when no one person is responsible for something there is no one looking to buy software and services, even if the problem is the biggest one the company is experiencing. And with no one responsible for buying solutions, there is no one to talk to when you call up a company. So there is no market and you’ve come up with a bad idea.
It’s obviously not enough then, to base a company around a personal need or even around published problems. And if these aren’t enough of a source for an idea, then I’m trying to find out exactly where good ideas come from. The research I’m doing is telling me a lot but I thought I would ask the question in case any of you can add to the conversation. If you have any feedback, let me know. Where have your good business ideas come from?
I was thinking the other day about extreme value as a result of reading a blog about which retailers will survive when the middle class is eliminated. You can picture them. They are the Saks, Nordstrom, Tory Burch, Tiffany’s, Versace and John Varvatos of the world.
While luxury retailing continues to grow , mid-priced retailers are struggling. Abercrombie & Fitch, Aeropostale, American Eagle, Ann Taylor, J. Crew and the Gap as examples of brands which are struggling to differentiate and prosper.
I don’t think that this is particularly due to the loss of a middle class though but of a polarization in business strategy. Product developers and retailers have found that the most money is to be made delivering extreme value. As we get more sophisticated, the tendency is for us as consumers to search out products and services that add value to an extreme degree on one dimension of the quality, cost, speed triangle.
Consumers are tending now to look for extremes in value, sometimes in quality and other times in cost and it really doesn’t matter which socioeconomic group one is in. The best business strategies are exploiting those extremes.
The same thing is occurring in politics. As you look at the US primaries, several candidates on both sides, Trump and Carson for the Republicans and Sanders for the Democrats are exploiting the voter search for extreme value.
Extreme value hiring is also in full force with companies outsourcing to get the lowest cost on one end of the continuum and paying exorbitant salaries for talent on the other end.
This is happening because we have moved from mass marketing to highly differentiated, highly segmented markets. You can differentiate on both ends of the extreme value curve but not in the middle.
So how does this apply to work? Well if you want to be successful, you had better be defining yourself on the talent end of the extreme value curve. If you don’t then you’ll eventually be outsourced as employers will look for extreme value on the cost dimension when faced with an average bunch of prospects.
We’re doing something wrong in promoting gender equality and I think it starts all the way back to how we name babies. We have a patrilineal naming tradition that asserts to a baby girl that her father is more important than her mother. To me this is the beginning of gender inequality.
As my daughter is now expecting my first grandchild and it is to be a girl, I want her to start life thinking that she is just as important as any boy who is born. To do that I’m advocating a new tradition that a girl’s last name be the same as her mother’s last name.
I’ve written an essay that got published in the Globe and Mail today. It explains a new solution to stop gender inequality at birth.
Pass it on and be a part of a new trend towards true gender equality.
Check out the essay here.
One of my faithful readers pointed out a comment I made in my last post about Open Dialogue. It was when I referred to my reluctance to speak up recently about a bonehead move by a co-worker.
He said that in his experience, “Maybe the problem is that boneheaded moves slip by because nobody actually pays attention to boneheads in the first place. The other thing is that some bonehead invited the bonehead to participate in the dialogue, so we’re faced with a self-perpetuating bonehead circle of life.”
And that one comment opened up a whole new window to business behaviour. There are bonehead circles that arise in business when one bonehead hires another one, and then another one, and before long you have a group of boneheads.
If you’re thrust into a circle of these boneheads, it may seem surreal. You might wonder why everyone around you is thinking or acting in such a strange way. This is not quite as bad though as when you start to agree with them or act in the same way. Then you must wonder, have you become a bonehead too?
I think this is what happens over time. You get one or two boneheads in a group and entropy sets in. Sooner or later everyone begins to think and act in the same way and you have a bonehead circle.
That’s when the problems start. Bonehead circles can’t see problems or opportunities. They don’t recognize danger or come up with new, innovative and creative ideas. When you’ve got a bonehead circle no one is able to criticize other members of the circle.
And the inevitable result is like watching a good business get flushed down the toilet, boneheads and all.
I was naughty the other day and am feeling slightly guilty about it. Essentially, I found myself not willing to share my honest opinion and thus breaching all my rules about open dialogue.
I have always said it is better in a startup and in working with a close team that everyone be free to open up, share his or her opinion in a constructive manner and let the chips fall where they may. Honestly and open dialogue being the best policies.
But I have been criticized for being too critical. (What’s with that?) And since I’m constantly trying to remind myself to use more emotional intelligence (not being noted for that skill), I hung back and didn’t share my honest opinion.
This has led me to struggle with trying to figure out the best balance. How do you practice open dialogue but not be seen as being critical when someone is about to pull a totally boneheaded move?
Some people are great with criticism and others totally shy away from it, abhor it. Do you change your behaviour for those who don’t like criticism or do you just let loose and figure it is their problem.
I can hear those of you who are emotional intelligence gurus trying to tell me that you can deliver a critical message in an open manner and not turn the recipient into a quivering pile of goo. But sometimes it is easier just to stop with the open dialogue and shut up.
What I have decided is that we really need a Festivus Pole at work, available every day. It can be used just like during Festivus, for airing of grievances.
That way, if you’re touching the pole you get a complete bye on critical dialogue. And maybe the pole might even make you think best about how to communicate criticisms in a constructive manner.
I came to the realization the other day that we need a new term for startup failure. For some reason, articles such as this one, seem to link childhood failure in school and on the sports field with startup failure. But the linkage is just not there.
Let’s look at how we use the term failure.
If you take a course in school and do not pass, this is called a failure. And this is one place where the term is properly used. You have failed to pass.
Now in school again, if you lose a game of baseball, some people call this a failure but it is actually only losing a game. You haven’t failed when you lose a game because you can’t win every game the way you.
And look at the field of scientific research. I have a friend who is researching malaria. He has been at this for over 30 years. Is he a failure because he hasn’t cured malaria yet?
When you look at startups, we use the term startup failure to describe all sorts of different situations. If you look at the stats, something like 75% of startups fail, quite like batter stats in baseball.
But these aren’t really failures, they are startup attempts that are just like times at bat or scientific experiments. The problem with the term startup failure is that is lends such a negative connotation and a sense of shame to the entrepreneur.
When someone tries a new business venture they start out with a thesis or proposition that they need to test in the market. They try a bunch of tests until they get it right.
Some entrepreneurs get it right faster than others and they succeed. Others might be trying something more difficult and it may take longer but if they run out of money, they stop trying.
This unfortunately is called a startup failure when it really isn’t a failure. Much like a scientific experiment it is the act of stopping trying.
The Germans solve the problem by having so many different words that their meanings are nuanced and have much less chance of connecting with an negative emotional response. In German, academic failure is Schulversagen and liver failure is Leberversagen.
Startup failure in German is covered by the phrase Startfehler which effectively means Startup Error and this is closer to the mark but not there yet.
Since I have such a huge following in the blogosphere (not) I’m going to invent a new word which will immediately catch on. Going from the German for Stop Trying – “Stoppen zu versuchen”, I’m going to propose we use the term Versuchen for failure.
Thus a failed startup is now a versuchen startup. You can use the term in ways such as “I really versuched that startup” or “he’s a serial versucher.”
I feel better already.
I was preparing a talk for Techno at the Impact Centre recently recently on evaluating new innovations and I ran into this old proverb again: Necessity is the mother of invention.
I thought about it for a while and realized that the expression is very apt but that there is a corollary to it and that is that “Innovation depends upon Necessity.”
My thesis, which I presented in not quite so elegant terms to the Techno participants is that innovation only happens when people are forced to innovate. I’m not talking about the people who come up with innovative products or services but about necessity being a precondition to users actually adopting an innovation.
And why is this? It’s because for the most part, there are all sorts of natural barriers to innovation. You can probably summarize these natural barriers in a few buckets:
- Costs of implementing the new innovation.
- Risks of failure
- Changes required to behaviour
- Psychological barriers to change
And the biggest one of all I think is that people are generally lazy. They can expend no extra effort to do what they have always done but to innovate, they need to expend energy, time, and money.
I’ve seen lots and developed a few products and services that go absolutely nowhere in the market despite being real improvements over what is out there. When I look back at all of them I can find one of the barriers listed above standing in the way.
When all is said and done, there must be some powerful force to counteract the barriers to innovation. Unfortunately, having a better product just isn’t enough.
There must be some other force, whether it is regulatory, competitive, technological or economic that makes someone need to innovate. So I think the corollary works: Innovation depends on necessity.
Today’s TED Talk made me think long and hard about the issue of culture in startups, especially about how to create a culture of helpfulness. The research on the subject is quite clear, that helpful cultures outperform unhelpful ones hands down.
I’m struggling though with whether a culture of helpfulness is at odds with a results oriented culture. Is it possible to have both? If helpfulness leads to better results, should you focus on the end goal or on the process to get there?
I’m disturbed that I may have been mistaken my whole life, trying to create results oriented cultures when I know I would much rather work in a culture of helpfulness without the competition.
I left an organization a number of years because I just didn’t enjoy working there. I had ended up in a job I didn’t like and that was a good enough reason but fundamentally I didn’t like the organization.
Since then, I’ve struggled to define what it was exactly that I didn’t like. Over the years I have identified a number of factors that influenced my decision but until I watched this TED Talk, I didn’t see the whole reason. And that reason was that there was not a culture of helpfulness.
There may have been helpfulness within various teams in the organization but fundamentally there was no helpfulness between teams. Each team had its own budget and there was intense competition for and jealousy of other teams budgets. Results were team based and not organization based and there was intense competition to see who could be the shining star, individually or as a team.
This resulted in a general lack of helpfulness between teams, in fact it was so bad that teams would encroach upon each other, stealing good ideas and replicating programs. There was poor handoff of clients between teams and even a competition between teams for clients.
The problem was, that as bad as it was, the organization was not open to change. And his made it extremely frustrating when you needed to get things done in conjunction with another team. While the problems were easy to see and the consequences quite predictable, the organization was not open to analytical self criticism. Eschewing self-critical analysis, it buried conflict because candor was not safe.
Anyway, enough of my lamenting. Watch the video and think about your own organization. And if you need to either create or go find a culture of helpfulness.
There is a great TED Talk you should watch that went live yesterday. In the talk Bill Gross who is the founder of IdeaLab and has founded a lot of startups talks about some research he has done about why startups succeed and others fail.
“He has gathered data from hundreds of companies, his own and other people’s, and ranked each company on five key factors. He found one factor that stands out from the others — and surprised even him.”
And that factor is timing. It is his proposition that the one thing that contributed most to a business’s success was timing. The startups that came out at the right time succeeded and the ones that were early or late didn’t do as well.
Two other factors that he felt contributed to why startups succeed were the characteristics of the founding team and the degree of differentiation of the idea.
Unfortunately, as a recipe for success, that leaves a little bit lacking. You really should ask the question, then: “How do I get my timing right and how do I know this is a good time for my business?”
I think I have an answer for the question of timing. While I haven’t done the quality of the research that Bill has, I’ve been doing similar research for 15 years, trying to figure out why startups succeed. But more on that tomorrow.
Watch the talk, it’s only about six minutes long, and return tomorrow for my take on how you can get your timing right.