What Is An Idea Really Worth?

What Is An Idea Really Worth?

Quora is a website that allows anyone to ask any question for their peers to answer. It swings from the silly to the serious as you can imagine. One of the most common questions I'm asked to answer is the value of an idea. Just the idea. Not a product or service based on an idea, a blank sheet of paper with words on it that represent a thought.

Value of an idea?

The question is a good one. We all feel that we have the capacity to be creative and clever and develop something that is the route to fame and fortune. But there are issues with this train of thought:

[a] If we can imagine something that we don't have the skills to develop ourselves, how does that effect the potential value of the idea?

[b] If we tell someone the idea in the attempt to get someone with the skills we need to help, do we dilute the value of the idea - and if we continue to add people to create the solution, do we continue to dilute the value?

[c] If we have multiple ideas that connect, does that multiply the value?

As with a lot of the things I write about, there is a punch coming, so here it is:

Your idea is worth absolutely nothing ... regardless

Ideas are worthless without a way to execute them. There is no value at all in an idea that isn't made. There are number of well quoted entrepreneurs on this subject who all feel the same way on this, most notably Seth Godin who put 999 of his own ideas on line.  You can see that list of ideas here.

Execution of an idea 

The counter side to theory of ideas being worthless is that execution of ideas is priceless. Anyone skilled enough to take a concept through to completion and deliver it to the market is worth their weight in gold. These people are few in number, harder to find and even harder to hang on to, yet, we all need them.

The whole dichotomy is expressed beautifully in this diagram by Derek Sivers:

The most brilliant idea, with no execution, is worth $20.
The most brilliant idea takes great execution to be worth $20,000,000.
That's why I don't want to hear people's ideas.
I'm not interested until I see their execution.

Generating new ideas

I'm not suggesting with all this that you don't try and come up with new business ideas and innovation - its the life blood of not only business but of humanity. What I am suggesting is that there is a package of things that dictate if an idea is of any value.  A phrase I use a lot when I'm lecturing or mentoring students is:

"There is a fundamental difference between a good idea and a commercial one and you need to learn the difference."

Its vital for the purposes of not spending time and money on something that can not be delivered or profitable. Its unlikely that most people can have an idea and deliver it themselves - although increasingly as tools get better, digital products are getting closer in that respect. 

When you next think you've struck on an idea you should be sharing and mobilising all the people you know to help deliver it, not putting your efforts into keeping it a secret.

Social Media - The Filthy Truth

Social Media - The Filthy Truth 

Image copyright of biggerpockets.com

There are times I genuinely despair when I hear certain kinds of rhetoric or comments about social media. It is without doubt a social innovation of epic proportions but its relationship with business is not so clear-cut or obvious. There are avenues of thought on social media I can go along with and some that I think are myths and at the far end - people just taking advantage. This post is a reflection of how I feel about a few of these things. Feel free to disagree.

Gripe number 1 - customers.

Social networking should not be the primary method for reaching customers. Its "a" method but not the primary method. I get really fed up when people telling me that their business destiny is on-line and all their promotion is focused on social media. Its a massive false assumption that this will work long term.

"Human beings are social animals," said Keller, "and social influence has a much bigger impact on purchase decisions than marketers have realized." Adds Fay, "Our research proves that all forms of media and marketing motivate conversations and recommendations. It's a mistake to assume that social media is the best tool for implementing a social marketing strategy." - Ed Keller & Brad Frey

Gripe number 2 - Guru's.

Very tired of hearing people tell me they are a social media "guru". Guru is a word associated with religious enlightenment and teachings and is often misused. I hate it with a passion. Social media is not a religion and you are certainly not a guru.

Gripe number 3 - Activism.

There are far too many people who subscribe to the idea that activism over the internet works. It doesn't. Take the example of the London riots. Within moments social media networks were buzzing with talk about epic plans to clean-up the mess, with thousands promising help. However, when it came to the day, just a couple of hundred people with brooms turned up. Just because people say they will take action, doesn't mean they will in real life. 

I hear a lot of people talk about a "call to action" as if the person clicking or reading your social media will see it the same way. They don't and wont and I can prove it with the plethora of failed initiatives that cost millions of pounds and generated nothing.

Consider what a "like" or a "follow" actually means; it’s nothing more than a one-click temporary show of affection.

Gripe number 4 - Who owns this stuff? Certainly not you ...

LinkedIn and Facebook are public companies, they have shareholders. The fact is that investors are in control and dictating what the company does, calling the shots, focusing the executive management at profits.

Profit is broadly a good thing ... BUT ... it is their profits being maximised, not yours! How would you see it if it cost you money for each Friend or Like?

Never forget the reality is that they own the data, not you, so really you are building up the audience for them, not your business. The key is to protect yourself by bringing the data under your ownership and integrating the data into your systems, assuming you have one, which you should.

Gripe number 5 - The glass is not half full.

As much as social media brings a lot of positives and good it also exposes entrepreneurs and businesses to the not so good. I thought this was obvious but I still meet people who start with "I don't understand why someone would ..."

WAKE UP

Social networks provide four options that most humans don't have in a real world scenario.  

(a) No Guilt
(b) Mob Mentality
(c) Anonymity (relatively)

(d) No Accountability

What this all amounts to is the potential for extremely bad behaviour towards you or your business. If you don't like this potential outcome then stay offline. If you remain on-line then you need to by a small piece of 2x4 and strap it to your spine to stiffen it, this scenario at some point is going to happen to you. 

This list could go on for some time but I'm going to cap it there and ask you to consider 2 important questions:

(1) What are the compelling reasons for me to use social media in conjunction with my business?

(2) What are the risks associated with this?

It cannot be that you enter into social media gymnastics just because your competitors are. You will strive to perform more and more elaborately (as gymnasts do) to impress the judges (potential customers) but a mistake made could mean a fall that's critical - therefore you must judge the risks properly.

My final thought is this. In the internet age every business is a media company. Every Facebook post, every tweet, every image sent to Pintrest is an opportunity to tell a story and engage a potential customer. Consider the risks associated with social media and its inherent implications on your business and your sanity. Have a compelling reason for using it. All the best business brains know that risk taking is critical for business progression. The real trick is making a risk risk become a calculated risk. The it’s all about the calculated risks you take.

Business Mentor - Do You Need One?

Business Mentor - Do You Need One?

Image copyright of proactivesolutions.com

I was recently reading an article in the small business section of the Independent on-line newspaper about the different outcomes between small business owners that have a mentor and those that don't.  There were a couple of things about the article that stood out.

What is the real cause of a small business failure?

At the top of the article there is a hypothesis that whilst lack of funding in the early stages is a common cause of small business failure, there is a directly correlating effect with those businesses that had a mentor and those that different.  Its true that often a business mentor knows where and how to access different start-up funds but my feeling here is that the mentor often stops the entrepreneur from chasing funding, preferring instead to chase customers. If the funding was aimed at the mentor and the mentor is focused on customers for the new business, that to me seems the right way around. Its all too common for the new business to chase the funding to pay the mentor.

The article then goes on to point out that businesses with mentors survive at a higher rate than ones without them.

What is mentoring?

There is a very interesting assertion about what the interpretation of mentoring is:

And yet mentoring still feels a little woolly for many people – a fringe benefit it would be nice to have in an ideal world, but not intrinsic to a small business’s chances of success; certainly not more valuable than bank funding.

I would challenge this view whole-heartedly. Bank funding is something that every entrepreneur would ideally wish for, but this comment would make it sound like a good mentor is worth less than support by a bank. Personally I see this in reverse. Not only will a good mentor be with the entrepreneur through the good times and the bad - the mentor is capable of influencing the growth of the business in a way a bank never could.

If you're considering the idea of a business mentor and are not clear about what mentors do to deliver growth then there are a number of websites and organisations that can advise you, just not a bank.

Why do entrepreneurs not use mentors?

The next part of the article highlights that whilst there are a number of business mentoring programs - the take up of these schemes is actually quite low. So why don't entrepreneurs take up the mentoring on offer?

For me there are two different syndromes here.  One is just a basic fear, fear of an unknown. It's sometimes difficult for the entrepreneur to imagine that any mentor would understand or be interested in their business. They imagine (sometimes) that the mentor is going to try and change the business or even worse - tell them that the business won't work. As an experienced business mentor it is common for me to not fully understand a business when I first engage with it, but its also extremely rare to come across a new business that has no chance of success. All businesses have problems and good mentors focus on solutions to issues that are stopping the business from progressing.

The second reason an entrepreneur might not engage a mentor is ego. Its quite common to meet an entrepreneur who is not utilising a mentor relationship and get the sense that they feel they are better than any mentor, or that they have no problems that would require a mentor. If I get this feeling when I meet an entrepreneur for the first time I often do press them for an explanation of why they feel they don't need the support. Invariably you get a vague and narcissistic reflection on why they don't need a mentor.

Selecting a business mentor

Here are some personal thoughts on selecting a business mentor:

[a] Do you know someone already? Someone you have worked for/with previously? Someone you respect?

[b] Make a list of the issues and challenges you want the mentor to help you with and then match it to any names you had from [1] and see if there is a very positive fit with a certain person.

[c] Ask anyone you know with a mentor already how its working and get any tips or advice from them.

[d] Decide how you want to work with the mentor. Mentors are not there to tell you what to do, so decide up front how often / how much interaction you want. Possibly a little more in the early days and then tapering off slightly once the initial discussions are over.

[e] There are some excellent funding pots to help you pay for your mentoring. Do some research around your local area to find out what is available to you and how to access it.

I can't afford a mentor!

I hear this a lot. Paying a mentor can often be a problem. If you can find someone to work with you for free then there can still be a massive upside, but because your not paying them its possible they may not be available when you need them - they need to make a living too! The next temptation is to offer them equity for their help. Personally I don't recommend this - and as a mentor I don't take equity for my input/time. Speak candidly with your prospective mentor about payment, there is always some kind of deal to be done. I have a number of ways of engaging with small businesses that can't immediately pay for my time, I'm sure other mentors have the same capacity to do a deal.

My number one piece of advice is to work with someone you like. When things are not going well, working with someone you like is going to make things a whole lot easier. Any dislike of the mentor will come out quickly when things are difficult and tense. The mentor doesn't want this any more than you do.

If you would like to read more about the Growth Accelerator program under which I do a large amount of my mentoring, click here.

If you would like to read the original article as published by the Independent then you can find it here

Is your business Asda or Apple?

Is your business Asda or Apple?

This morning started off with a conversation with a budding entrepreneur. He's failed once already but is determined to get it right second time around. "What went wrong", I asked. "We didn't get the business position in the marketplace correct.", he replied.

It set me off thinking about the whole issue around how a business is perceived within its target market. Do potential customers really critique a business in this way consciously or is it conditioning over time by previous experiences?

My conclusion (at the moment) is that there is a scale for businesses to position themselves on that has two 800lb gorillas for bookends - Asda and Apple.

Asda

As now part of the gargantuan Walmart empire its hard to imagine that anyone has not been in an Asda supermarket at some point. Its stores are functional and in supermarket terms is risk-adverse. You wont find a new flavour of soup in Asda, you just find the existing flavours we buy in large quantities. They make it cheap and rely on volume to generate their profits.  A new soup flavour will come from being on sale in Morrisons and volumes reaching a significant level where Asda will step in and produce a low cost version.  Other supermarkets break new products in and Asda dominates that product when revenues are significant.

Apple

The Apple stores have become flagships for the company and its brand and a trip to the Apple store now for many shoppers is a real event. Apple essentially makes everything we don't actually need. No one "needs" an ipod, we "want" an ipod. The company has forged its place in the world and become the epicentre of consumerism by producing hugely aspirational items that establish our wealth and social status to others. As a company that is hugely successful it tends to make things that initially few can afford - the exact end of the spectrum to Asda - making Apple the other end of my scale. 

Innovation

Apple's business model and ongoing revenues are based on their ability to innovate new products to the market and not rely on other companies - Asda being the opposite. Both are massively successful therefore both strategies (one to innovate and the other to do nothing of the kind)fundamentally work. Is there a lesson here for other companies about their positioning in the markets they have targeted? Does being seen as an innovator give you a grossly different look and feel as a company than if you don't innovate and just develop products on top of existing markets?

Old Money

The other thing that I think factors in here is established brands. Both of these companies are not new, have significant war chests and can afford to take their time whilst contemplating where to take their business. New companies, particularly start-ups don't have this luxury and therefore need to be reasonably right with their market position in the first place, as a pivot would cost time and money they most likely don't have.

Position

So going back to this mornings interaction with my entrepreneur and his perception that positioning his business correctly could make or break it, I think he could be right. All entrepreneurs should probably take a look at their business and ask themselves if they are Asda or Apple.

If you're Asda then your proposition to the market is price based (cheap at a reasonable quality level and large volumes)and your marketing should reflect that to make sure there is no misunderstanding with your target audience.

If the answer to your Apple or Asda question is more towards Apple then your market proposition is around innovation, brand and social status (expensive, bespoke application, non-essential)where your marketing needs to scream quality and exclusivity and not suggest that everyone will have one any time soon.

Make It Rain

Make It Rain

There is a common phrase used in business to describe someone who delivers new business to the company - a lot of the time seemingly out of nowhere, "Rain maker".

The classic use of this terms was in reference to a sales person who delivered new clients on a regular basis but often from new markets or sectors. In more recent times the terms has been applied to marketing executives or media people who can create a storm of interest in something the company is developing or selling. 

In my mind I prefer the more classical interpretation, a rain-maker is someone who can see the opportunities outside of the companies existing business operations and bring new markets and sectors to the company rather than just pillaging around in the existing ones.

New Business Development is not Sales

I want to make a bit of distinction here. I see new business development as not the same things as sales. I see sales as being activity within existing markets - selling goods and services to companies that already buy/use them. I see new business development as being the creation of new markets and entry into new sectors using the existing products, services and technologies. This to me is where the real role of the Rain-maker exists.

Making it Rain

I do often act as a Rain maker on behalf of clients. I don't really have a specific strategy, it tends to vary dependent on what the client does, but here are some of the more generic parts of my rain making strategy:

[1] Connections: My network is large and well managed by me. It means at the start of each new interaction with each client I can map out a "sphere of influence" that I might be able to create. Initially this influence is targeted at sectors and markets that are close to the existing ones.

[2] Learn something new often: What this means is to take something completely random and learn something about it. I once went to the Boat Show at the NEC in Birmingham having no personal interest in boats and not having a client in that market. I came away from the show with a lead from a boat manufacturer that led to a £40k software contract for a client. I often buy a load of magazines about subjects I know nothing about to try and learn something that I might be able to map to an existing client.

[3] What's the problem?  Ultimately its still just about problem solving. If you go to any event and talk to the companies exhibiting. Ask them what the problems are they're facing. A lot of the time it will just be a conversation but probably 1 in 10 conversations someone will say something that I think I can do something about - and that is the start of the rain making for one of my clients.

[4] The power of suggestion: One of the things I have a lot of joy with is just standing with someone after they have given me a picture of their business and sector and I just start making suggestions. "what if your company could do x ...". Quite often if I just keep making suggestions eventually the other person will say something like "Hey, if we could do that it would be awesome" - again, the rain making starts here.

[5] Rinse and repeat: You can just do it once and leave it at that. It takes some concerted effort to keep heading out to events on the basis that you can come away from nothing. In my experience its not usually the case that you end up with nothing, I nearly always have something to follow up with after a days prospecting - and if nothing else you learn a lot about the subject (Its scary how much I know about the caravan market)

The upside of getting good at rain making is that it produces a larger number of sectors for your sales people to work in and allows existing products to have more customers in general. The downside of rain making is that its an acquired skill that takes time to develop and requires persistence to make it pay out for your business on a regular basis.

I've had some good successes with this strategy, a contract in the Japanese automotive industry for a UK based clothing firm, a children's play area business for a company that made exhibition stands, a wooden housing market for a company that built boats - so I know that its lucrative and extremely profitable when its all pulled together. Every established company should have a rain maker or strategy that allows consultants to rain maker for them.

Meaningful Meetings

Meaningful Meetings

In the past few days I've been to several meetings, which have had a variety of outcomes for me. What never ceases to amaze me is the random and haphazard way some people approach attending a meeting with little or no contemplation on how they get a return on the time and effort they invest into attending.

There are a number of reasons why I might want to attend a meeting:

• I will be in a position to sell my services to a client.
• I have something that I need to communicate face to face to one or more people I am actively working with.
• I stand to learn something that is useful to me.
• I will meet new people and expand my network, something which I rely on heavily.

As with most things in life there is another side to this, here are the reasons why I don't want to attend meetings:

• To make up the numbers and make the meeting to be seen to be more significant.
• To go over things that can be dealt with via other methods such as email.
• To turn up for the Monday meeting because its Monday and we always have a meeting on a Monday.
• Where there is no established agenda or specific topic for discussion that I recognise as being relevant to me and what I do.

Having worked in large corporate environments such as Virgin and Viacom I recognise the "meeting culture" when I see it. Conversely with start-ups they fail to recognise that some meetings are just necessary, they then fail to communicate anything on any significant level.

Here are some personal tips on meetings, both if your attending one or organising one.

Attending a meeting

• Ask the person inviting you to the meeting what relevance the meeting has to you (if its not obvious) and what role they are expecting you to play (expert advice, facilitator etc.)
• Ask the person inviting you for some kind of agenda for the meeting, just as bullet points.
• Ask the person organising the meeting if they expect to be making a decision in that meeting and if so on what?
• Ask the person what the expected duration of the meeting will be and ask them to cap it at that.
• Ask the person organising to give you a list of the other attendees so you can do some research on people if you're meeting them for the first time.

Once you have this information you're in a position to do make some decisions.  You might decide that your attendance isn't necessary, saving you the time. You might decide that you are only needed for part of the meeting. You might conclude that there is a person missing from the attendees that you feel should be there or that in fact the meeting is "too big" and should be broken down into smaller fractions - giving a better chance of a positive outcome.

Organising a meeting

When inviting people, send all the information they need to make a proper decision (time, date, location, directions, agenda, attendees)

• Ask attendees to feedback to you before the meeting on anything they think is missing from the agenda or anyone missing from the attendee list.
• Take minutes of any meeting that has more than 3 people attending and circulate them after the meeting.
• Stick to the time frame for the meeting.  Go through the agenda once quickly to establish with everyone what items on the agenda need more time/effort.  Don't get bogged down on the early points to the extent that later points are dealt with in 2 minutes to meet the time constraints.
• Don't organise meetings on the basis that its a recurring meeting based on time.  Monday morning meetings should only take place on the basis that its Monday and there is genuinely something that needs discussing.  Don't let meetings become rituals.
• Keep the meeting focused on the topics in the agenda, other subjects that arise should be dealt with on a different day on a different basis.
• Don't let people attending just drift through the meeting without contributing, if they have nothing to add, say or contend then they probably shouldn't have been there. Meetings where half the attendees are passengers tend to be fairly pointless.

Meeting Follow-On

You can have a lot of organised and relevant meetings but if the follow-on from the meeting is not as managed as the meeting itself then the value of the meeting is completely lost.  Meeting minutes establish who agreed to what and any criteria to those actions.  If the minutes are circulated then there is a universal record of those actions.  If you organised the meeting then you must put time aside to check and ensure that the actions that the meeting generated are delivered.  Too many meetings end with people having made agreements on tasks and activities that then are not delivered - essentially negating the whole process and rendering zero value for everyone concerned.

The Ethics of Planned Obsolescence

The Ethics of Planned Obsolescence

I'm working on a business plan at the moment that is somewhat different in type than my normal work.  It has a physical as well as software/digital element to it, I'm normally just seen as a software guy.

The physical element of the product interacts with the software side of it, this connection is what actually makes the product unique in its own marketplace.

When I start working on designs for software systems there are a number of criteria that I put down on a list to help me establish the key metrics for the design and the development. In this particular instance I went for:

• Portability
• Robustness
• Cost
• Performance
• Maintainable

What does this list mean in practice?

Portability: The software design and development should be as generic as possible to allow it to work on as many devices as possible with as little device-specific coding as possible.

Robustness: The code should be factored to be as simple as possible - the consequence would be that the code would be robust. If you try and be clever and complex with code it will inherently somewhat unstable.

Cost: The code should not require any specialist developers to create. Everything should be standard in every respect to allow the work to be achievable with the most common human resource.

Performance: The code should have a benchmarked set of performance criteria to ensure a certain level of efficiency across the code base on a per-platform basis.

Maintainable: This relates to the code being documented correctly, both the remarks within the code base itself and external documentation that covers the full code base and its construction.

Whenever I am making decisions for either the business plan or the technical specification for the software I will normally run down the list above and see how my thoughts hold up against the criteria I've laid down.

As you can see from the list above, my approach to creating software is to make the most reliable and manageable piece of software I can, using the lowest reasonable cost and creating a minimum standard in performance.  The question is if this approach is going to work well when there is a physical, non-digital component to the product?

What is "Planned Obsolescence"?

Planned obsolescence or built-in obsolescence in industrial design is a policy of planning or designing a product with a limited useful life, so it will become obsolete, that is, unfashionable or no longer functional after a certain period of time. Planned obsolescence has potential benefits for a producer because to obtain continuing use of the product the consumer is under pressure to purchase again, whether from the same manufacturer (a replacement part or a newer model), or from a competitor who might also rely on planned obsolescence.

This isn't a new idea. The Phoebus Cartel was a collection of the worlds largest producers of light bulbs in 1924. They agreed to change the duration the bulbs would last from 2500 hours to 1000 hours artificially - making users buy new bulbs more frequently. Move forward 60 years and we now find printer ink cartridges being produced under the same basic premise. 

What's the ethical dilemma?

The physical part of the product I am currently working with is small and plastic - therefore its a losable and breakable. In either circumstance the product is useless without the physical part. It would be possible to include a design change (at some cost) that would limit the chances of losing the plastic part. There are also choices to make about the material type and standards that the physical piece is made from to reduce the potential for it to physically break. The customer is essentially buying something that would appear to have a certain element of performance and durability and I know its going to stop working, fail or wear out quicker than the user would expect.

Both changes would increase the cost of the product - in terms of design and manufacture - which has the correlating effect in the business plan of making the start-up costs higher and that has the effect of it being harder for the company to make a profit and survive.

I can remove the obsoleting factors and create a harder business plan to deliver or leave the product as is - create obsolescence and give the business a better chance at the consumers expense.

The question at this point is am I being unethical by creating obsolescence?

Personal opinion

My personal feeling here is that I need to the right thing for the people paying me to write the business plan and the specification. The obsolescence needs to be identified in the document with options to remove that obsolescence documented as potential alternatives to the original plan. If the founders of the new company see the ethical side of this as being important they can delete the original option out and leave one of the better options in - its their choice. Equally, they could just delete my options and leave the original design and manufacture option in the plan - in the end its the option that has the biggest chance of success for the company. The hybrid solution is to start with the original design for a period of time and then transition onto one of the more ethical options as part of the companies ongoing development of the product.

Where does this leave me?

My approach to the software development can't really help me with the physical aspect to this product. The plastic aspect of the product will always be more susceptible to failure than the software as I can't apply the same principles to it. This could mean that the whole product (and therefore company) fails on the non-digital side of things. In the end there is a compromise between what's right and what's feasible, their not always hand in hand as concepts.