10 things some entrepreneurs don’t understand

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  1. The business. I have seen founders who aren’t technical start technology companies, founders who figure that financial issues can be delegated such as accounting, taxes, etc., founders who don’t know modern leadership or corporate culture concepts. Such founders figure someone else can understand, make the right decisions and implement properly. Delegation can work but don’t delegate understanding, delegating could mean opportunities missed or less than optimal solutions implemented. The founding team needs to understand each aspect of the business.
  2. Every assumption in a plan is a risk. Every assumption is a non-fact, to say there are no risks means there are no assumptions and thus everything is a fact even future oriented information such as potential market share. Founders need to view their start-up as turning assumptions into facts.
  3. Some founders believe it’s OK to lie or exaggerate to customers, investors, partners and employees as long as the founders deliver on their promises. Exaggerating and lying, set a corporate culture where issues are allowed to fester until they become problems and individuals become self centered in their orientation and place their own enrichment above the positive impacts for the customer, investors, etc. It also increases risk for customers when potential issues and clarity on how risks are alleviated are not explained.
  4. All businesses are about people, saving them time, saving money, accomplishing their goals, etc. it’s why employees work there and customers buy. Understanding motivation, perspectives, expectations and how customers will evaluate the company and its offering are necessary.
  5. Customer’s risk. The customer is taking a risk buying from a new company. Marketing has to be two pronged: how does the start up’s solution solve the problem and will the solution deliver on its potential, the start-up needs to eliminate the risk of a bad purchase for the customer.
  6. The market. The market is in constant evolutionary change. Start-ups need to be able speak about how their solution fits where the market is going over the coming years, particularly in conjunction with other solution possibilities. I have seen too many start-ups that are variations of a theme which current solution providers will someday incorporate into their solution.
  7. A founder might have a vision and a broad and detailed understanding of how to accomplish it, but many struggle to communicate that to others in our attention deficit world. We need to be able to communicate a spaceship sized idea to a compact car sized attention span.
  8. Fixed costs vs variable costs. A business model has to have the proper balance between fixed and variable costs. If the business has a potential for large volumes of customers or will evolve quickly as the business model is better understood then an initial fixed cost and variable cost structure needs to be appropriately planned. In general, if the model will evolve it might be better to have a more variable cost structure thus allowing the financial structure to evolve with the business.
  9. Emotional commitment. A start-up is a significant trial of emotional strength. The start-up will likely have more negatively stressful events than positive accomplishments. This can wear down one’s commitment and passion. Founder’s need an unswerving reason why they are doing this start-up, it can’t just be about getting rich.
  10. Constant validation. Your idea and approach will need to evolve, what worked yesterday might not work today. A founder needs valid and reliable validation sources that constantly reality check ideas.

Learning and Decisions in a Data Driven, AI World

tay-ai-twitter-bot-mlmThe world is undergoing a significant change in how decisions are made and implemented, and, processes are completed. Historically, decisions were influenced by factors such as experience, organizational politics, external realities, priorities, constraints, risk, and education. With the advent of Artificial Intelligence (AI), the internet of things producing a deluge of real time data, real time metrics, virtual teams, and, bots (software)  that can perform processes on our behalf, are we witnessing the end of organizational decision making involving insights (drawn from experience), creativity, and innovation? Is it possible we will see a day in which bots make and implement all business decisions?

In my conversations with MBA students in a wide variety of industries the impact of technology on decision making is a keen topic of interest.  Since AI hasn’t taken over decision making yet, decision making is evolving to merge domain theories (for example, marketing or finance theories and concepts), insights drawn from experience, real time data, humanistic perspectives along with social good priorities such as ethics and the environment.

Perhaps it’s the mash up of theories, data and experience that leads to creativity and innovation? For many people, they need to form a system level understanding of how data, theories and experience along with implementation realities interact as a foundation for making their insights, observations and conclusions. In other words, they need a deep or “gut” level understanding before their mind has that desired creative burst resulting in an insight. This gut level understanding can be derived in a variety of ways, for example, learning many different theories, ideas and perspectives or investigating problems and solutions that are done in other fields, for example, accountants learning about the issues and solutions that lawyers have. Another way is through structured business cases. Cases are time compressed experiences but have a limitation in that they tend to have only one decision point and not a series of integrated decision points where the choice of one decision impacts the possibilities of the next decision. However, simulations do have this potential, in addition, simulations can combine the humanistic and people issues in the decision environment. Creating such simulations is an area of interest of mine and why I co-founded experientialsimulations.com as a mechanism to give students that “gut” level of understanding of topics such as project management and entrepreneurship. Until the day that we need to pay homage to our robot overlords, I see a continuing potential for human creativity derived from mashing data, theories and experience gained from real world and simulated activities.

Entrepreneurship in large organizations

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Across the globe, universities and colleges are offering entrepreneurship courses, it’s been my experience that only around 10% of students in a mandated or even open entrepreneurship course are actually considering starting a company and even fewer actually do. So what about the other 90+%? There is still value in entrepreneurship courses for those that migrate to established companies.

Intrepreneurs are those that bring an entrepreneur’s skills in creativity and risk taking to established organizations. Intrepreneurs could be considered change agents, their potential is to help the organization go to where it needs to go. Intrepreneurs need much of the same skill set as entrepreneurs. A typical entrepreneurship course discusses team, financing, market, etc in a business plan structure. The business plan idea was originally adapted from large organizations that needed a structure to articulate the value of a proposed new initiative.  We don’t need an entrepreneurship course to specially learn how to do a business plan that could be an extension of a marketing or strategy course. One value that an entrepreneurship course brings to an aspiring intraprenuer is the opportunity to practice implementing new initiatives in a controlled scaled-down environment where all aspects are considered such as team, market, etc. By controlled, I mean an environment where each element of a new initiative is represented and time is compressed i.e. months into minutes or hours.

Entrepreneurship combined with project management provides two interesting knowledge areas that could for a foundation for an intrapreneur learning environment and something that we have been working on with two simulations: Traction and Milestone (see www.experientialsimulations.com).

But I was wondering what other knowledge areas should an intrapreneur have experience in, beyond marketing and finance?

Teaching project management to all professions

07_desktop_380x220 Typically, the teaching of project management is focused on teaching those that will one day become project managers as their profession. In the university environment, project management is often taught as a course to all students regardless of intended profession. The definition of a project can be loosely defined, for example, non-project management fields also do “projects”, however, they might refer to them as initiatives or similar such words, for example, psychology experiments or marketing campaigns or engineering or organizational restructuring.

So why is project management not taught to all professions?

Perhaps it needs to be scaled down when teaching it to other professions, for example a sociology or marketing student could derive benefit from acquiring knowledge of WBS and GANTT structures.

It’s easy to imagine projects that would apply to different professions and teach the basic concepts and methodologies. This suggests that training/educational programs should also be of interest to a wide variety of professions including the use of learning tools that focus on experiential learning such as simulations. Training schools and universities should broaden their target market to include other professions and teach PM, perhaps in a scaled down form, as part of every professional’s toolkit.

There are a number of tools available, including open sourced versions of project management tools, and simulations, (I have been developing a simulation called Milestone, see http://www.experientialsimulations.com).

Entrepreneur vs Project Manager: the team

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This article explores the concept of team in entrepreneurship and project management.

In project management, the team focus is around best use of the team and development of the team to reach optimal productivity, concepts such as organizational structures and Tuckman’s team stages come into play. The team is supported by processes. Processes are activities that individuals use to accomplish goals. This inherently assumes that the best use of the team is the optimal triad match between processes, goals and people. A role of project management is to understand the current situation of that triad and enhance each aspect perhaps through the use of information technology.

In start-up companies, there can be fewer structured or standardized processes, indeed the organization is evolving and processes have not stabilized yet. Therefore the focus on teams is different than a project management, the focus in a start-up is on making a team that can create their own dynamic structures, with an eye to the adhoc, evolving and experimental nature of the startup.

Therefore the skills between the teams in start-up and a project tend to be different. In some ways, a start-up company is similar to a project and could benefit from project management tools and techniques, where the difference lies is in the nature of processes and the skills required of the team.

In a project, the team must have the ability to implement goals through processes. However, accomplishing goals often involves the interaction with others and thus communication is a desirable skill along with effective followership. While in a start-up company, the team must have the ability to influence others, operate in an information deficit and information uncertainty environment and thus perseverance, common understanding on values, goals and roles, and, diversity in experience are key.

While there would be an overlap in some of the aforementioned focuses or skills, we can see the difference in focus. This suggests that selection and training in project management and start-ups needs to be somewhat difference but there are similarities. The team in a project and a start-up both need empowerment, value statements and understanding of goals. Experience in suitable environments tends to help produce require skills and I tend to advocate simulations as a method of gaining an understanding of the importance of such skills, see http://www.experientialsimulations.com

Project Management – People Skills Template?

9550067-Background-concept-wordcloud-illustration-of-people-skills-Stock-Illustration.jpgIn the Project Management Institute Body of Knowledge there is the Human Resources area which describes the processes for effective use of stakeholders including team development. Within the team development selection there are described a variety of approaches for increasing a team’s capability such as training and reward systems. However, the section doesn’t directly refer to concepts such as: leadership approaches, ethics, and organizational culture which are defining elements of an environment in which interactions, decisions and perceptions are formed. This environment creates the basis for concepts such as fairness, innovation, creativity and motivation. It’s these soft skills or people oriented skills which organizations see a need for, for example, project failure can be linked to poor motivation, bad leadership, misperceptions and lack of outside-the-box thinking which in turn are linked to the aforementioned concepts.

Currently we don’t see a plan template or approach for project managers to develop such environments, however, the benefit of one is clear. Our Milestone simulation (www.experientialsimulations.com) doesn’t provide such a plan to players but creates an environment in which these concepts are emphasized and perhaps will form part of their thinking when they become project managers.

It would be interesting to develop such a template and provide it as part of the PMBOK or maybe as an addendum. If you have such a template please share with the rest of us.