Do You Have What it Takes to be a Visionary?

Do You Have What it takes to be a Visionary?

Visionary. (noun). A person with original ideas about what the future will or could be like.  These visionaries will change the world for the better over time. Who are those visionaries around you?  Do you – or they – have what it takes to be a visionary?

Visionaries come from different walks of life and professions. But generally, they are activists, artists, scientists, engineers, entrepreneurs, and in, general, non-conformists. All have a different view of the problems they face. All have changed the world. We know who visionaries were in the past. Here’s a short selection of some of my favorites: Thomas Edison, Henry Ford, Albert Einstein, Gandhi, Walt Disney, John F Kennedy, Martin Luther King, Steve Jobs, and Elon Musk.

I decided to give my perspective on the characteristics of a visionary. This is not a well-researched statistical piece; it is based on what I have read and observed in my 30+ years of business and worldly experiences.

1. Open-mindedness. This refers to one’s ability to keep an eye open for new thinking and not be closed to new ideas just because they are different. In fact, actively seeking out new ideas would be ideal.
2. Values diversity of thought. Sometimes surrounding yourself with people from the same background provides a very narrow focus and homogeneous solutions to the problem. I like diversity of people and diversity of thought. That is how I like to construct cross-functional and matrixed teams and I find it amazing to see the robustness of decisions and options.
3. Action oriented.  There is a difference between a dreamer who thinks about a different world and a visionary who sees the different world and puts a plan in action to get to that point. If Martin Luther King’s Dream Speech just shared the dream of one world with all people created equal change would not have occurred or occurred as fast. Rather, he put into place activities that began to implement his dream.
4. Conviction.  If you are a visionary, you might be treading on existing ideas and values. Many people don’t like change. So visionaries have to have a firm conviction that they are right in seeing a new world even when many shun those new ideas.
5. Persistence. Coupled with conviction is the characteristic of persistence. Being visionary challenges prevailing wisdom and the road to change is fraught with difficulty, roadblocks, and potential legal and regulatory restrictions.  A visionary accepts those challenges and preseveres. A significant amount of energy comes from the visionary’s followers.
6. Inspiration.  We all know of inspirational and charismatic leaders. I used to think that inspirational leaders were vocal and can get a crowd excited by rhetoric. I was wrong. To be inspirational the visionary needs to deliver clarity in the new world order and be articulate in explaining the benefits.
7. Clarity. A fuzzy vision doesn’t work because with change, people must “see” and believe in an end result. Think about JFK’s speech on Sept 12, 1962 to 35000 people in Rice Stadium in Texas wherein he said “We choose to go to the Moon! .. We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard; because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one we intend to win..”  This was not a fuzzy vision of space travel but a clear goal and vision of space exploration taken with first steps to land a man on the moon in a specific time frame. And, of course, in 1969 I watched as we landed a man on the moon.
8. Boldness.  Along with clarity, the vision should be bold, something that is not just an incremental improvement but a major change, a major shift in the way things are done. Sometimes we call this a BHAG – a big hairy audacious goal. Boldness with conviction is critical because it rouses the energies within people to achieve success.
9. Risk-tolerance. Along with risk tolerance is the lack of fear of failure. Thomas Edison said that “I have not failed. I've just found 10,000 ways that won't work.”   He framed his end product in such a way as to give him the will to succeed. By positive thinking that he is closer to an end result, he was able to maintain his work ethic and develop the electric light bulb.

Are you born with these characteristics or can you learn them?  My personal belief is that there is some internal encoding of these characteristics in your DNA but that family and environment coupled with some good mentors and influencers will solidify these characteristics.  Reading biographies and auto biographies can also help understand the thinking of visionaries.

There may be other characteristics of a visionary and you can certainly add to this list.  When you attend entrepreneur events and innovation conferences think about how these apply to the people who present and the people whom you meet.  Then imagine you, the reader, having these characteristics and the opportunity to change the world.

C-Level Partners is dedicated to helping companies achieve value creation through revenue growth and margin improvement.  We can also help with your innovation plans, advisory services and helping establish a framework for innovation (see our blog on this subject at http://clevelpartners.blogspot.com/2016/10/how-to-institutionalize-innovation.html).  Or feel free to call me at 949 4394503 for a complimentary analysis.

Cheat Sheet to Innovate New Products and Services

Today, as part of TechCoastAngels (TCA), I participate in pre-screens and screenings (shark tanks), mentoring teams who have new ideas they want to pitch, and judging fast pitch competitions. Before I became an angel investor I worked in the corporate world as an intrapreneur. It is quite different in many ways but similar in other ways. I have found that what I learned in both the corporate world and the angel world can be shared with future innovators and visionaries and these ideas and templates can potentially help them to get funded and be more successful. I put some of these learnings into the following checklist.

Many entrepreneurs, especially those more technical, are sometimes ill-prepared to make a pitch. They get enamored with new technology. It’s interesting to note that many in the corporate world, too, have that same fixation. So, when I developed pointers for entrepreneurs as they pitch TCA, I believe that basically the same type of checklist can be used in the corporate setting as well. Whether a business model canvas is used or an opportunity template is developed, the same questions appearing on this checklist would need to be considered. In the end, the checklist is used to tell the story of why the opportunity, start-up idea, new product/service concept or new business model makes sense as an investment to be funded by third party investors, or internal corporate resources.

While this checklist presents a sequence that might work for some, I understand that each entrepreneur or intrapreneur may want to tell the story of the business or service or product in a way that fits their style and personality. Therefore, it is ok to sequence the presentation story in a different manner. For example, some intrapreneurs or entrepreneurs with a very strong background, having done similar ventures before, or those with exceptionally strong teams, may want to lead with the team structure.

Realistically though, in the first few minutes of the presentation, the entrepreneur or must state the problem that is being solved so that the “investors” listening to the pitch “get it.”  
Recognize that not all the points below will be answered in detail and some may not be answered at all. Yet, each of the 10 elements must be covered in some manner to tell a solid story of why the product/service or business is unique, sustainable, and a good investment with the potential to increase revenue and value for the investor or company if it is internally funded.

1. Summary of what problem is being solved and why your company/product/service is different

·         Problem customers face. Maybe there is a lead user (a potential customer that kludges a solution that can serve as the initial customer).

·         Short simple 15-30 second pitch on what the product/company/service is and why you are different from the competition (and there is always some form of competition, be it direct or indirect).

·         What you do relative to alternatives and why your solution is better. 

·         The entrepreneur or intrapreneur can state the vision for a product/company/service which may be much broader but he or she must specify the initial target.

2. Market Size (Answering the questions of what is the market, its size and growth potential)

·         Your specific target market in the short term.

·         Some mechanism to determine the size of the market.

·         What does that market look like? I.e. what is the “ideal” customer and how do you find them? 

·         Can you leverage existing partners, channels, relationships?

3. The company/product/service (Answers the question of how do you make the product/service or put the business together)

·         What is the technology to be used?

o   Patented or licensed?

·         What is the “architecture“ of the company and the product/service?

·         How do the pieces fit together?

·         What is the IP behind the company or the product? 

·         Is this an execution play, i.e. land grab or land and expand?

·         What is the unique differentiation of the product?

o   What is the brand promise?

o   How do you create a moat around your business or product?

·         What are the strategic control points, i.e. where do you have strength and why in distribution, unique customers, brand, IP?

·         Is the product scalable and to what markets and with what resources?

4. The Team (Answers the question of who will be responsible for execution of the plan if approved)

·         Executive team and past experiences and accomplishments.

·         Advisory or BoD that supplements exec team and how you can use the team to help your business get off the ground or grow.

·         Setting up the RACI (responsible, accountable, consulted and informed) of how you will get information, make decisions, and share those decisions with your constituents.

5. The Financial plan. (Answers the question relative to the goodness of the product/service or business and whether you can make money and have adequate margin.)

·         Growth path, i.e. product plan, partnership plan, channel plan over time.

·         Business model including pricing for different markets.

o   Growth plans and sequencing of new products, services, alliances, partnerships.

·         Metrics for determining success (Some examples follow yet may be unique to the industry).

o   Cost per acquisition

o   Time to close sales

o   Churn rate

o   Inventory turns

·         5-year revenue growth path, EBITDA.

·         Different revenue paths over a five year planning horizon.

o   Routes to revenue and business model for each.

·         Risk impact and contingency plans. (See our earlier post by Brian Newton on risk impact analysis.)

o   Risk includes technical, market, regulatory, key personnel, development, operations, resources, supply chain and manufacturing risks among other categories.

6. Competitive analysis

·         What is the brand and can you sustain the brand?

o   Part of an existing family or new product/service family?

·         The basis for your idea being different.

·         Feature differences.

o   Use “Harvey balls” for making comparisons of features and benefits

·         Sustaining the differences.

o   R&D

o   Marketing

o   Partnerships

o   Acquisitions

7. The Deal (if it is an externally funded deal)

·         Pre-money or current valuation if known.

·         Convertible note v. equity.

·         Prior investments/ cap table.

·         Capital and expense requirements (Required even if internally funded).

o   How long will the money last?

o   Will you need additional funding and if so when?

o   Organization growth plan

8. Use of Funds (What will you use the money for and over what period of time)

·         How will you spend the money and on each of the following categories.

o   Sales and marketing plan 

o   Operational plan

o   Distribution plan

o   Partnership plan

o   Development plan

·         What milestones will you achieve with the funding gained?

·         Will you need more funding, how much and in what time frame?

9. The Exit or Integration

·         What is your plan going forward?

o   Will this be a separate business? Product line? Merged with another entity?

·         Will you sell and to whom?

o   Why would they buy the company?

10. Summary

·         The five major take-aways from the pitch and a recap of why this makes sense to pursue.

These questions make sense and are easy to ask. Yet it takes significant strategic and tactical thinking to build an executable plan. Let me know your thoughts on this and how you think it integrates with other templates such as the business model canvas. Our belief is that if you can at least address these 10 questions, whether you are an intrapreneur or entrepreneur, you will have a better chance at success. If you want to chat further, feel free to contact me at dfriedman@clevelpartners.net or call me at 949 439-4503.

How to Institutionalize Innovation?

I am an innovator by nature. I am always trying to do something more, to try something different, and for the companies for which I worked, to move them ahead of the competition. And I have been at the forefront of innovation thinking for quite some time through my associations with the Product Development and Management Association in the past, an angel investor with TechCoastAngels, and an Entrepreneur in Residence at UCI’s Applied Innovation.

I have been asked by clients and start-ups if a company can institutionalize innovation. The answer is simple: You bet. And you have to have a culture and management that supports innovation.

Let’s step back for a moment. First, do you know the difference between creativity and innovation? Creativity is defined as the spark generating a new idea. Innovation takes the idea to a new level and the essence of innovation is implementation through execution. Now with that out of the way, can companies figure out a way to create innovation in their company? To me the answer is clearly YES! How do you do that?

What are the categories of innovation? Here’s one list that I put together and depending on the company and their goals, there may be other categories. For innovation to take place, it should be put in the context of the company’s strategic and business plans.

1. New products and services, ranging from line extensions, to new-to-the-company products, to new-to-the-world products.
2. New ventures putting companies together in different ways to solve a problem.
3. New market development such as paint companies introducing anti-bacterial paint for hospitals and children’s rooms. (Also can be classified as a new product.)
4. New business models – for example the SaaS model replacing ownership of resources.
5. New partnerships such as GM and Lyft or Apple and McLaren for autonomous vehicles.
6. New business practices like Home Depot implementing Velexo’s one button installation for new technology and equipment.

There are several models that can be used to define the architecture of innovation for a company but let’s take a simplistic approach. For each of these categories, I believe we can define five different ways the categories can be analyzed and the driver of innovation can be investigated. These areas include: customer, competition, competencies, technologies, and processes.

• Customer. Think about how you can develop new ideas. One concept is to make sure marketers and developers talk to customers on a regular basis. In Japan, engineers routinely visit customers to understand how they work with their current products and ask questions on what else is needed. Another thought for integrating customers into a company’s product development cycle is to include customers on internal development teams as we did when I was at Connexion by Boeing. Or set up a living lab where customers can play with new concepts and ideas as I believe Ford has done in the past as it designed new cars and continues to do with their new designs.
• Competition. Looking at the competition can give insights into what is possible. Perhaps you can build off of what the competitor is doing and does it better, faster, cheaper by using new technology or developing new processes. Tools such as Spider Diagrams and SWOT analysis can provide perspective and focus.
• Competencies. I like what Intel does and how they go about innovating. They are not afraid to make their current products obsolete and in fact, they are always thinking two steps ahead. Their competence is engineering skills. But even Intel misses the mark and has left opportunities for others in the mobile chip area such as AVAGO/Broadcom, NXPI (in the process of being acquired by Qualcomm), Skyworks and others. Companies can focus on building their competencies in various ways such as partnerships with schools/universities, labs, and even smaller, more nimble companies. An attendant benefit which we often see is that the larger company buys the smaller company because of the smaller company’s unique competencies.
• Technologies. This, to me, is the kingpin for growth. I am probably biased as I am a technologist by training who converted to marketing and to being a business executive. Technology, above all, provides corporations the opportunity to think about the Art of the Possible. Technology can be developed internally as it used to be at Bell Labs or IBM, or can be acquired through licensing deals with universities, individuals, or start-ups.
• Processes. Companies can look at new processes as a way to innovate. Think about ways to do self-service support for various products and services. What if a car dealer set up a few bays to enable customers to do their own repairs using their equipment and their parts? Think about Sears which has a fleet of service vans and can set a new process such that when a customer orders a washer/dryer the customer can push one button to have it installed. This is process change enabled by new technology, e.g. Velexo, which benefits both the customer and the company.

What are we missing from this model? The key requirement for innovation in a company is when senior management drives innovation and sets a standard and goal for innovation to take place. This includes the reward and recognition system that encourages innovation and makes heroes out of the innovators. Companies like 3M encourage people to spend 10% of their time developing new products. Think about the classic story of Art Fry innovating not only a product but a market based on glue that did not bond well i.e. post-it notes! Or think about how Google encourages self-directed teams to form to develop new products and services. They recognize that most of these new ideas will not be commercialized although there will be substantial winners along the way.

And let’s not forget how companies can set a metric for the number of new products that should be developed and the revenue obtained from those new products so they can sustain growth. Can anyone say Newell Rubbermaid a formidable product developing Fortune 1000 company whose brands such as Lenox, Sharpie, Sunbeam, Dymo, Oster and a slew of others?

Finally, let’s look at a few ways companies can execute their innovation program: Here are just a few ways that we have seen in the past and have participated in over the years.

• New product advisory boards to generate new ideas on features and products.
• New channel management advisory committees where companies can leverage their channels view of their customers and work with the channels to develop unique products and services using a common platform.
• Appointment of a new product czar or growth leader to be the focal point for new ideas. In one of my prior assignments I formed a small organization called Ideation and Feasibility (IF) with the goal of “adopting” ideas from outside the industry to our industry.
• Product/service roundtables that meet once every few weeks, but certainly on a recurring and regular timetable and that would include cross-functional members from technology, marketing, account management, IT, and perhaps other groups as needed. Each member will have specific roles and even track specific competitors. Think about using Dropbox or some other common storage area for posting what the competitor is doing. Better yet, how about a “war room” where the group can track what customers and competitors are doing?
• Participation directly or through Corporate VC or business development functions in entrepreneurial activities such as the angel investment groups like TechCoastAngels and venues such as UC Irvine’s Applied Innovation where the corporation can invest in or participate in other ways in new start ups. This might be particularly true of innovations in the life sciences and cyber security areas.

In a future blog I will cover how to evaluate such opportunities in order to drive profitable revenue growth. In the meantime, if you want to discuss this topic feel free to reach me at dfriedman@clevelpartners.net.

Six (Relatively) Easy Steps to Meet Regulatory Requirements

I get the question all the time of “how do we meet regulatory requirements” and that question comes from different industry segments. Many times, we think meeting these requirements is extremely difficult and onerous. Yet, I have a very simple approach and a checklist to share that can ease the burden of meeting these requirements.

Here are my six steps:

1.  Deliver a quality product or service. Set standards for your industry and your company but most importantly get feedback from your customers on whether they perceive the product or service is of high quality. There are many tools that can help you do this.
2. Do this reliably and repetitively
   
   • Staff must have appropriate education and/or experience
   • Staff must engage in an appropriate training process
   • An independent function must monitor the business to ensure proper operation
3.  Ensure your activities are auditable
   
   • Company must have appropriate policies and procedures in place and understood
   • Documentation should be kept up to date
   • Reports from monitoring activities must be directed to and read by senior management
4. Perform audits at an appropriate frequency, but at least annually
   
   • Results from these audits should be reported to and read by management. In fact, including the results as part of normal operational reviews would be ideal.
   • Management should use these reports to guide decision making.
     
5. Ensure the staff understands that exceptions must be reported to management promptly
   
   • When an exception occurs the correct staff can be engaged and the appropriate corrective action can be performed quickly.
   • Exceptions will occur. These present opportunities for improvement – be it better documentation, better or more frequent training, and improved monitoring among other things.
6. Disclose all relevant information to your customers
   
   • Open book management is preferred as customers appreciate being kept informed.
   • Additionally, by so doing, customers are able to make informed decisions on whether the product or service is right for them.

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Thinking about these steps leads me to believe this is simply an articulation of the best long-term business strategy. Of course, most people will agree that the goal is to produce a quality product! And to ensure that the quality is delivered consistently! Who wouldn’t follow these steps? It makes so much sense.

Ah yes, it seems obvious, but one needs to consider why companies fail to do this. Let’s look at a recent, high profile case in the news relating to Wells Fargo. Why didn’t Wells Fargo ensure that accounts being opened by some of the 5,300 staff that were terminated were in fact requested and authorized by their clients? How could over 2% of the total staff be fired and this not raise questions from senior management, in particular the Audit Committee of the Board?

Many things have been cited as contributing to this untoward outcome, in particular, unrealistic sales targets for retail bank employees that were part of the business culture. The culture of the bank was not as described in the Code of Conduct. While profits did grow and senior managers were rewarded for achieving that growth, clearly reporting of problems to senior management either was non-existent or ignored by senior managers. Neither bodes well.

But let’s think about a completely different regulatory environment – that of the FDA. These same six steps have to be part of the business model so that FDA inspections do not result in product recalls, FORM 483s or even Warning Letters. All three of these events entail reputational damage for the business. Not having these, or at worst only on a very exceptional basis, would indicate to the market that the business is indeed following an appropriate business model. In this case, the market perceives that the business produces quality products, and discloses in its labeling all relevant facts so that medical professionals and their patients can make informed decisions about their products. And this applies to the food industry as well. Consider the damage to Chipotle’s reputation and the impact this has had on their revenues.

So we again come to those few salient questions. Why wouldn’t a business deliver a quality product or service? And why would they not choose to do so consistently? The answer is really quite simple. Consistently delivering a quality product or service is not free. Doing so requires overheads such as maintaining documentation, continuing staff training, monitoring of business activities, and consistently reporting to management so their decision making is consistent with business performance. Ah yes, and those audits really are necessary to ensure there are no gaps and the business is consistently delivering quality to its customers. We believe that you inspect to get the expected!

Over the long term, a firm’s reputation strengthens as customers trust that the firm delivers quality in its current and new product offerings. This leads to more effective product introductions and quicker adoption by the target market. The net effect is that doing the right thing will, in the long term, increase the firm’s profitability which no doubt is in the interest of all stakeholders. But short term profits might suffer and that is the rub in this myopic financial world, especially for publicly traded companies.

Oh yes, those overheads mentioned above. They reduce the near-term bottom line and therefore the bonus potential, i.e. bonuses of the current management. Cutting some of those overhead expenses means current management can participate in a larger bonus pool in the short term. And as tenure in managerial roles has reduced over time, what’s to worry about if it hits the fan three or four years down the road? The probabilities are that management change will have occurred and the new managers will have to clean up the mess – likely at greater expense than the cost savings chosen by the previous management – and the firm’s reputation will be damaged. Repairing reputational damage is always expensive, if it is even possible.

What happened at Wells? The head of the retail division that was responsible for opening over 2 million unauthorized accounts to meet sales targets retired in July with a package worth $125 million. This executive was lauded by the CEO as the embodiment of the firm’s culture and a champion for customers. When asked by the Senate Banking Committee if her past bonuses would be clawed back, not to mention his own, the CEO said he couldn’t comment on that as it would be determined by the Board. Time will tell whether the CEO survives and whether any bonuses are clawed back by the Board. Needless to say the reputational damage is perceived by investors who have marked down the bank’s shares. That, in addition to the $185 million fine are the costs being born by shareholders. Arguably all for increased short-term bonuses to management.

In my practice area, Risk and Crisis Management, we help companies understand the various risks of managing a public or a private business. We can then affect the right plans and help the executives reduce their business, marketing and regulatory risks. Feel free to contact me at bnewton@clevelpartners.net and I will be glad to share some additional thoughts with you.

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