Typically, I like to write about entrepreneurial companies in this space, but today’s Wall Street Journal has a very interesting story about one of the very largest companies in America…Wal-Mart. The story is Wal-Mart Tries to Recapture Mr. Sam’s Winning Formula by Miguel Bustillo. The story is a cautionary tale of what happens when you try to expand by being something you aren't and in the process, forgetting about your core customer. The good news if you are a Wal-Mart shareholder is that it appears that they now "get it' and are back focusing on that customer who they previously were taking for granted. Which of course, is bad news for Target and other competitors.
From the beginning of the article:
Wal-Mart Stores Inc. is in the midst of its worst U.S. sales slump ever.
When it reports earnings on Tuesday, the retailer is widely expected to post its second straight year of declining domestic same-store sales.
Wal-Mart's struggles are the result of a misstep: To jump-start lethargic growth and counter the rise of competitors such as cheap-chic rival Target Corp., executives veered away from the winning formula of late founder Sam Walton to provide "every day low prices" to the American working class. Wal-Mart, the world's biggest retailer by sales, instead raised prices on some items while promoting deals on others.
Company executives acknowledge having miscalculated and are adjusting their strategy again. The big question is how quickly the mammoth chain can turn itself around.
And from the end of the article:
"Wal-Mart just went and broke it," said mechanic Mike Craig, 41 years old, lamenting that he could no longer find honey, which is now next to the peanut butter instead of near the salad dressings. "I just don't like what they did at all."
So once again, Wal-Mart is back to cramming wood pallets of $8.97 boxed wine and $8 Justin Bieber CDs into the store's corridors, recreating the messy procession of discount merchandise in the main aisles that the company calls "action alley." Now analysts are concerned that, in changing direction again, Wal-Mart risks alienating whatever higher-scale shoppers it had gained.
Tuesday, February 22, 2011
Monday, February 21, 2011
Bringing the Change
Dwain DeVille sent over the blog, Jack Griffin's Ouster: Lessons from a Failed "Change Agent" by Julia Kirby and at first, I wasn’t that sure I even wanted to read it. After all, it’s about a media guru and as the post points out, there is nothing the media world likes to do more than write about itself. But as I read on, I realized how often we’re thrust into situations in new jobs or when we buy a company… that we have to bring change into an organization. As someone who has had to bring change more than a few times, I particularly liked her six lessons when you’re faced with being the person who has to bring about that change. From the blog:
Avoid the term "change agent." The strange thing about Griffin's case is that he appears to have applied this "kick me" sign to himself. In most cases, it's the board that puts the word on the street that a change agent is coming. Try to keep that from happening. It's not as though the organization won't hear the news, and it's insulting. It casts veteran managers as part of the problem, not forces for positive change themselves. As one Time Inc. veteran complained to me, "it's not as though all of us had just been sitting on our thumbs." That is a classic, and predictable, response.
Gauge the internal hunger for change. It's one thing to be the agent of change in an organization that realizes it needs it; it's quite another when you're the only one in the room convinced of that. A big problem at Time, at least as far as Griffin was concerned, was that there was no such sense of a burning platform. People, therefore, would perceive any change as being done to them, not for them. It's not impossible to take a comfortable organization and get it excited about a quest, but it definitely affects how you should frame the mission.
Arrive without a vision. Reportedly, Griffin showed up on day one of his new job with a manifesto in hand. When I heard this, I couldn't help but recall some great advice from leadership gurus Jim Kouzes and Barry Posner. "Somehow, through all the talk over the years about the importance of vision," they observed, "many leaders have reached the unfortunate conclusion that they as individuals must be visionaries." They spell out for less incisive thinkers what the future holds and therefore how the enterprise must be transformed. "Bad idea!" say Kouzes and Posner. "Yes, leaders must ask, "What's new? What's next? What's better?" — but they can't present answers that are only theirs. Constituents want visions of the future that reflect their own aspirations."
Go directly to "us". As leadership expert Steve Reicher and his colleagues convincingly argue, great leadership involves tapping into the psychology of "us" versus "them." This means that job #1 for a leader is to go native, immediately taking the side of the organization, uniting it against a common enemy, and building consensus on what "we" should do. From this perspective, it's clear how the work of anyone fighting the status quo is fraught with the potential to be misread. Ask yourself honestly whose side you are on — and if it's not your organizations, don't blame them for hating you.
Act as catalyst not cattle prod. Chances are, there is change energy to be tapped in the organization at some level. To get at it, think first of what might be holding it back, and address those things. As in chemistry, a catalyst lowers a barrier to effect a transformation — it doesn't apply a shock.
Surround yourself with new friends. Of all the new-manager missteps Griffin is accused of, probably the worst is his decision to surround himself with cronies. It's an understandable temptation, when you don't yet know your new colleagues well enough to say who's brilliant and trustworthy, to just recruit some folks you already know to have those qualities from past experience working with them. But nothing — nothing — is more alienating to your inherited team than to suddenly be on the outside of the inner circle looking in. It doesn't help that, in Griffin's case, the cronies were also perceived to be carbon copies of himself.
Avoid the term "change agent." The strange thing about Griffin's case is that he appears to have applied this "kick me" sign to himself. In most cases, it's the board that puts the word on the street that a change agent is coming. Try to keep that from happening. It's not as though the organization won't hear the news, and it's insulting. It casts veteran managers as part of the problem, not forces for positive change themselves. As one Time Inc. veteran complained to me, "it's not as though all of us had just been sitting on our thumbs." That is a classic, and predictable, response.
Gauge the internal hunger for change. It's one thing to be the agent of change in an organization that realizes it needs it; it's quite another when you're the only one in the room convinced of that. A big problem at Time, at least as far as Griffin was concerned, was that there was no such sense of a burning platform. People, therefore, would perceive any change as being done to them, not for them. It's not impossible to take a comfortable organization and get it excited about a quest, but it definitely affects how you should frame the mission.
Arrive without a vision. Reportedly, Griffin showed up on day one of his new job with a manifesto in hand. When I heard this, I couldn't help but recall some great advice from leadership gurus Jim Kouzes and Barry Posner. "Somehow, through all the talk over the years about the importance of vision," they observed, "many leaders have reached the unfortunate conclusion that they as individuals must be visionaries." They spell out for less incisive thinkers what the future holds and therefore how the enterprise must be transformed. "Bad idea!" say Kouzes and Posner. "Yes, leaders must ask, "What's new? What's next? What's better?" — but they can't present answers that are only theirs. Constituents want visions of the future that reflect their own aspirations."
Go directly to "us". As leadership expert Steve Reicher and his colleagues convincingly argue, great leadership involves tapping into the psychology of "us" versus "them." This means that job #1 for a leader is to go native, immediately taking the side of the organization, uniting it against a common enemy, and building consensus on what "we" should do. From this perspective, it's clear how the work of anyone fighting the status quo is fraught with the potential to be misread. Ask yourself honestly whose side you are on — and if it's not your organizations, don't blame them for hating you.
Act as catalyst not cattle prod. Chances are, there is change energy to be tapped in the organization at some level. To get at it, think first of what might be holding it back, and address those things. As in chemistry, a catalyst lowers a barrier to effect a transformation — it doesn't apply a shock.
Surround yourself with new friends. Of all the new-manager missteps Griffin is accused of, probably the worst is his decision to surround himself with cronies. It's an understandable temptation, when you don't yet know your new colleagues well enough to say who's brilliant and trustworthy, to just recruit some folks you already know to have those qualities from past experience working with them. But nothing — nothing — is more alienating to your inherited team than to suddenly be on the outside of the inner circle looking in. It doesn't help that, in Griffin's case, the cronies were also perceived to be carbon copies of himself.
Friday, February 18, 2011
Tell Me Another Story
Yesterday I heard Mark Russell of Eric Mower and Associates give a wonderful presentation on marketing to the Entrepreneurial Society of Central New York. As a part of Mark’s presentation, he spoke about the power of stories as it relates to your brand and showed the brilliant piece called The Man Who Walked Around the World. Great piece of storytelling that makes you just want to keep watching. If you get the chance to hear Mark talk about marketing and branding, make a point of doing that.
Thursday, February 17, 2011
Launch Box Digital
I ran across this post about Launch Box Digital at the blog of Sramana Mitra, a Silicon Valley entrepreneur and strategy consultant who founded 1M/1M.
Written by guest authors Irina Patterson and Candice Arnold
I am talking to Chris Heivly, executive director of LaunchBox Digital, an accelerator program for entrepreneurs based in Durham, North Carolina. The program structure and workings are similar to Y Combinator and TechStars.
Irina: Hi, Chris. Let’s start with a bit of history.
Chris: LaunchBox Digital started in 2008 in Washington, D.C. We ran an accelerator session in the summer of 2008 and summer in 2009 in Washington, D.C. Last year, we decided to move that to Durham, North Carolina, and ran an accelerator session in the fall of 2010.
We have a full-year physical location now in a really cool restored tobacco warehouse. The address is 334 Blackwell St. in Durham, North Carolina. It’s called the American Tobacco campus. There are about 35 software companies as well as venture capitalists and venture banks. It’s a nice, tight little ecosystem of entrepreneurs, mostly software-oriented entrepreneurs as well as some other businesses.
Irina: Do you still have accelerator sessions?
Chris: We do. It only runs three months of the year. We’ve taken space all year round, and we’re augmenting the three-month accelerator with some mini programs that can also offer value to entrepreneurs in the area. This is the first year we’ve had full year space, where someone like me is committing time all year round. We’re going to do more than the three-month accelerators.
Irina: What kind of organization is LaunchBox Digital?
Chris: It’s definitely a for-profit. It’s set up like a venture fund. We’ve secured funding from a bunch of limited partners around the area. We then invest in up to 10 companies a year, in our accelerator session. We take a piece of equity for that – 6%. It’s set up like a venture fund.
There’s a group of us at LaunchBox Digital that [will] manage that fund over the next four years. We hope that some of those companies provide a nice exit, which provides a return back for our investors, like a standard venture fund.
Irina: Do you invest in all of the companies you incubate?
Chris: Yes. The way the program works – by the way, this is very similar to Y Combinator and Tech Stars. If you’re familiar with those, it’s a similar model.
We have an application process. We accept up to 10 companies. If you’re accepted and you come in to the program, we provide an investment of $20,000 per company. For that, we take a 6% common equity interest in you. That’s the investment part.
Then we offer the program, which is all about mentorship and guidance. That runs for three months. We provide space, $20,000, advisory, and mentorship and for that, we take 6%.
Irina: If entrepreneurs are accepted and they have to come to North Carolina, they pay their own travel expenses, right?
Chris: That’s correct. They have to be here for the three months of the program. We built some arrangements outside of Launch Box with some of our partners to help facilitate their finding short-term leases for three or four months. We try to make that as easy as possible for them.
Irina: Do you have an industry preference?
Chris: Sure. At the highest level, they’re all software . . . there’s got to be a fairly large software component. We’re not doing pharma or life sciences or medical devices or dry cleaners or restaurants. These are all software or Web-based companies. To give you an example, we had seven companies that we went through in our first session here in Durham. There were two healthcare IT companies. There was a social media tool. There was a Web analytics company. There was a Web-based fantasy sports meets gaming, kind of a new gaming craze, a different spin on that. We had a Groupon-like company that came through. They’re pretty broad in scope, but they’re all software oriented.
Irina: At what stage of development do you prefer them to be when they come to you for acceleration?
Chris: It’s funny, that target keeps moving around a bit, but for the most part – well, to give you an example, we had one company that had a concept and had not written one line of code before they applied. At the same time, we had a company that had more than 40 paying customers. Generally, most companies are between alpha and pre-revenue. I just gave you two examples of someone who wasn’t an alpha and someone who was generating revenue. So, concept to less than $500,000 in revenue is the typical target.
Written by guest authors Irina Patterson and Candice Arnold
I am talking to Chris Heivly, executive director of LaunchBox Digital, an accelerator program for entrepreneurs based in Durham, North Carolina. The program structure and workings are similar to Y Combinator and TechStars.
Irina: Hi, Chris. Let’s start with a bit of history.
Chris: LaunchBox Digital started in 2008 in Washington, D.C. We ran an accelerator session in the summer of 2008 and summer in 2009 in Washington, D.C. Last year, we decided to move that to Durham, North Carolina, and ran an accelerator session in the fall of 2010.
We have a full-year physical location now in a really cool restored tobacco warehouse. The address is 334 Blackwell St. in Durham, North Carolina. It’s called the American Tobacco campus. There are about 35 software companies as well as venture capitalists and venture banks. It’s a nice, tight little ecosystem of entrepreneurs, mostly software-oriented entrepreneurs as well as some other businesses.
Irina: Do you still have accelerator sessions?
Chris: We do. It only runs three months of the year. We’ve taken space all year round, and we’re augmenting the three-month accelerator with some mini programs that can also offer value to entrepreneurs in the area. This is the first year we’ve had full year space, where someone like me is committing time all year round. We’re going to do more than the three-month accelerators.
Irina: What kind of organization is LaunchBox Digital?
Chris: It’s definitely a for-profit. It’s set up like a venture fund. We’ve secured funding from a bunch of limited partners around the area. We then invest in up to 10 companies a year, in our accelerator session. We take a piece of equity for that – 6%. It’s set up like a venture fund.
There’s a group of us at LaunchBox Digital that [will] manage that fund over the next four years. We hope that some of those companies provide a nice exit, which provides a return back for our investors, like a standard venture fund.
Irina: Do you invest in all of the companies you incubate?
Chris: Yes. The way the program works – by the way, this is very similar to Y Combinator and Tech Stars. If you’re familiar with those, it’s a similar model.
We have an application process. We accept up to 10 companies. If you’re accepted and you come in to the program, we provide an investment of $20,000 per company. For that, we take a 6% common equity interest in you. That’s the investment part.
Then we offer the program, which is all about mentorship and guidance. That runs for three months. We provide space, $20,000, advisory, and mentorship and for that, we take 6%.
Irina: If entrepreneurs are accepted and they have to come to North Carolina, they pay their own travel expenses, right?
Chris: That’s correct. They have to be here for the three months of the program. We built some arrangements outside of Launch Box with some of our partners to help facilitate their finding short-term leases for three or four months. We try to make that as easy as possible for them.
Irina: Do you have an industry preference?
Chris: Sure. At the highest level, they’re all software . . . there’s got to be a fairly large software component. We’re not doing pharma or life sciences or medical devices or dry cleaners or restaurants. These are all software or Web-based companies. To give you an example, we had seven companies that we went through in our first session here in Durham. There were two healthcare IT companies. There was a social media tool. There was a Web analytics company. There was a Web-based fantasy sports meets gaming, kind of a new gaming craze, a different spin on that. We had a Groupon-like company that came through. They’re pretty broad in scope, but they’re all software oriented.
Irina: At what stage of development do you prefer them to be when they come to you for acceleration?
Chris: It’s funny, that target keeps moving around a bit, but for the most part – well, to give you an example, we had one company that had a concept and had not written one line of code before they applied. At the same time, we had a company that had more than 40 paying customers. Generally, most companies are between alpha and pre-revenue. I just gave you two examples of someone who wasn’t an alpha and someone who was generating revenue. So, concept to less than $500,000 in revenue is the typical target.
Monday, February 14, 2011
Tell A Story
I learned a lot of things during my time working for the Walt Disney Company. But one of the most important things I learned is the power of stories. For those of us in the nonprofit space, while it’s often easy to quote lots of statistics dealing with numbers of clients helped, students, people helped; there is nothing more powerful than telling a story about the folks we work with. Keep in mind, that whether you work for a nonprofit or a for profit organization, stories are a powerful way to tell others what you're doing and how you're doing it.
Thanks to our friends at McKinsey and Company who forwarded this article along…take a look at The power of storytelling: What nonprofits can teach the private sector about social media.
Thanks to our friends at McKinsey and Company who forwarded this article along…take a look at The power of storytelling: What nonprofits can teach the private sector about social media.
Friday, February 11, 2011
The Senator Comes to the Falcone Center
Great day today for the Falcone Center for Entrepreneurship as United States Senator for New York Kirsten Gillibrand was at our South Side Innovation Center this morning. Senator Gillibrand convened a roundtable discussion to hear from veterans and area business leaders about how the government might work to ensure jobs for New York veterans. During the session, the Senator discussed her plans to provide tax credits for businesses who hire vets, provide more job training for veterans, and better facilitate the transition from active duty to the job market.
The Post Standard’s follow-up article provided information about the session. The South Side Innovation Center is a 13,000 square foot community based microenterprise incubator operated by the Whitman School of Management at Syracuse University. The SSIC, which was opened in 2006, offers offices with phones, computers and furniture; shared conference rooms; training and resource rooms; a resource library; large equipment use and reception area services at a low cost to local entrepreneurs. The SSIC currently houses 24 resident businesses, serves 300+ non‐tenant clients, and provides training, workshops, classes, networking, and mentoring opportunities to approximately 1,000 other individuals and entrepreneurs.
The Post Standard’s follow-up article provided information about the session. The South Side Innovation Center is a 13,000 square foot community based microenterprise incubator operated by the Whitman School of Management at Syracuse University. The SSIC, which was opened in 2006, offers offices with phones, computers and furniture; shared conference rooms; training and resource rooms; a resource library; large equipment use and reception area services at a low cost to local entrepreneurs. The SSIC currently houses 24 resident businesses, serves 300+ non‐tenant clients, and provides training, workshops, classes, networking, and mentoring opportunities to approximately 1,000 other individuals and entrepreneurs.
Tuesday, February 8, 2011
I Apologize...I Mean I'm Sorry...I Mean Our Company Screwed Up
Over the weekend I read through the current issue of Inc. Magazine. Several stories caught my eye, but I wanted to call to your attention the one about how to deal with things when you have a real, honest-to-goodness-company-killing problem. The article in the magazine is titled, How to Ride a Storm, (re-titled on-line How to Turn Disaster into Gold) by Jason Fried and it describes a serious problem that the author’s company, 37signal’s had with a key product, named Campfire. If you have an entrepreneurial company…or if you’re planning to launch…read through the article and see what they did because at some point or another, you’re going to have to say to your customers or stakeholders…that you’ve messed up. And you’ll also have some fun reading through the author’s comments about how some companies go about “apologizing” when they screw up.
Here’s a section from the article:
So here's what we did when Campfire went down. First, we posted regular updates on the status page of our company's website. We let people know we were working on the problem. As we figured things out, we shared the results. And if we still didn't understand something, we admitted as much. That's OK with us. What isn't OK is leaving people in the dark. Everyone's afraid of the dark when their data are involved.
We also took to Twitter. My business partner David Heinemeier Hansson responded to more than 100 tweets from customers. "We're battling demons on all fronts and losing. It's pathetic, I know," David tweeted to one customer. "We're spending the goodwill we've built from years of reliable service like it's going out of style." "So sorry for the disruption," he wrote to another. "You can only say duh! so many times before people just think you're annoying. We're way past that," he wrote.
We responded to every complaint and took the blame every time—even when people went overboard and launched into personal attacks. There was no fighting back, no attempt to save face. We messed up, we knew it, and we let every customer know that we knew it.
And our customers responded with enormous goodwill. "37signals has been giving a free lesson in customer service and honesty the past few weeks," one customer tweeted. "Way to go on being awesome and communicative to your customers," said another. Such expressions of support were really heartwarming—and evidence of how honesty, openness, and personal attention to a difficult situation can turn the darkest moment into one of the brightest.
We decided to give every Campfire customer a free month of service. We were down for only a few hours, total, but the downtime was spread out over multiple days. Besides, we didn't earn our customers' trust in December, so we didn't earn their money, either. We have thousands of paying Campfire customers, so this wasn't a cheap or easy decision. But it was the right thing to do.
Finally, once we figured out what went wrong and took steps to make sure it wouldn't happen again, we wrote a full post on our product blog detailing exactly what had happened. We started with a general overview that could be understood by everyone. Being in the software business doesn't give you license to speak in code. Yes, some of our customers are technically gifted. But most of them aren't, so speaking in tech jargon can cause even more confusion. That said, we also delved into the technical details for those who care about those kinds of things. And we added a link to the announcement inside Campfire, so all our customers would see it. You can read the product blog post at productblog.37signals.com/products/2010/12/campfire-outage-explanation-and-service-credits.html.
Here’s a section from the article:
So here's what we did when Campfire went down. First, we posted regular updates on the status page of our company's website. We let people know we were working on the problem. As we figured things out, we shared the results. And if we still didn't understand something, we admitted as much. That's OK with us. What isn't OK is leaving people in the dark. Everyone's afraid of the dark when their data are involved.
We also took to Twitter. My business partner David Heinemeier Hansson responded to more than 100 tweets from customers. "We're battling demons on all fronts and losing. It's pathetic, I know," David tweeted to one customer. "We're spending the goodwill we've built from years of reliable service like it's going out of style." "So sorry for the disruption," he wrote to another. "You can only say duh! so many times before people just think you're annoying. We're way past that," he wrote.
We responded to every complaint and took the blame every time—even when people went overboard and launched into personal attacks. There was no fighting back, no attempt to save face. We messed up, we knew it, and we let every customer know that we knew it.
And our customers responded with enormous goodwill. "37signals has been giving a free lesson in customer service and honesty the past few weeks," one customer tweeted. "Way to go on being awesome and communicative to your customers," said another. Such expressions of support were really heartwarming—and evidence of how honesty, openness, and personal attention to a difficult situation can turn the darkest moment into one of the brightest.
We decided to give every Campfire customer a free month of service. We were down for only a few hours, total, but the downtime was spread out over multiple days. Besides, we didn't earn our customers' trust in December, so we didn't earn their money, either. We have thousands of paying Campfire customers, so this wasn't a cheap or easy decision. But it was the right thing to do.
Finally, once we figured out what went wrong and took steps to make sure it wouldn't happen again, we wrote a full post on our product blog detailing exactly what had happened. We started with a general overview that could be understood by everyone. Being in the software business doesn't give you license to speak in code. Yes, some of our customers are technically gifted. But most of them aren't, so speaking in tech jargon can cause even more confusion. That said, we also delved into the technical details for those who care about those kinds of things. And we added a link to the announcement inside Campfire, so all our customers would see it. You can read the product blog post at productblog.37signals.com/products/2010/12/campfire-outage-explanation-and-service-credits.html.
Thursday, February 3, 2011
New Patent Process
Today’s Wall Street Journal has an article that makes you scratch your head. The article, Expediting US Innovation Comes at a Cost by Angus Loten deals with an announcement from the Commerce Department about a new fast track process for patents. According to the article, “Until now, the U.S. Patent and Trademark Office largely has processed patents on a first-come, first-serve basis for a base fee of $1,090. Last year, the office granted more than 244,358 patents, up 27% from 2009. The process takes an average of 35 months to complete, and often includes costly legal fees—patent lawyers typically charge more than $25,000, depending on the complexity of the application.” The article then goes on to explain that a new process, which is a part of the White House’s Startup America initiative, “would cut the process to just 12 months for $4,000, along with upfront processing and publication fees of $430.”
While for many of the students and entrepreneurs that we talk with, the notion of speed- to-market is more important that the patent, but for those faculty and students that we deal with that do need patents, I think this new process is well worth the extra dollars.
The reason I mention it’s a head-scratcher is that article seems to feel that it will create an unfair playing field for entrepreneurs, giving those with more money quicker access to the patent process. If a professor or student was sitting in front of me today, I would recommend get the extra three grand from family or friends and get the process rolling. Especially since the patent office is going to fast track only 10,000 applications in the first year of this new process, it makes sense to do it.
While for many of the students and entrepreneurs that we talk with, the notion of speed- to-market is more important that the patent, but for those faculty and students that we deal with that do need patents, I think this new process is well worth the extra dollars.
The reason I mention it’s a head-scratcher is that article seems to feel that it will create an unfair playing field for entrepreneurs, giving those with more money quicker access to the patent process. If a professor or student was sitting in front of me today, I would recommend get the extra three grand from family or friends and get the process rolling. Especially since the patent office is going to fast track only 10,000 applications in the first year of this new process, it makes sense to do it.
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