Failure is an option

One of the best-known lines in the movie Apollo 13 is, “Failure is not an option”, attributed to flight director Gene Kranz*, as played by actor Ed Harris.

You can’t, however, be in new territory, push for innovation, make a prediction of the future and hope to prevent failure. If you are creating your own future, which you are as an entrepreneur, you cannot guarantee success.

The only way to guarantee “zero failure” is if you take no risks. And if you don’t take risks, you can’t expect real gains.

You also can’t simultaneously say you care about developing your employees and then expect them to not make errors. Growth, development and innovation imply testing — testing can occur before your product is in market or when it is in market. Testing will mean some things will work, and some things will not.

We need to be OK with failure as an option –  as long as it is done fast, with purpose and with learning.

The risk balance: build to ship early

Opportunity windows can close if you ship only when you aim for the least-risky version or wait for what you think is the perfect product or service. Waiting to ship only when it is “complete” also bets your company on something that’s untested in the market, an option which has its own set of risks.

Much better to ship as soon as you have developed something that you are confident adds value to your customers. That point can be determined as when they are prepared to pay you for what you ship. Then continue to increase value, always measuring true customer interest, engagement, value and feedback. Knowing what your customer uses, how much they use, and why, is much more valuable to your future product or service development plans, and likely to be less risky than any other path.

The risk balance: preparing to learn

In the software development world, this notion of develop fast, deliver often — review, test, fail, learn and refine — is called Agile product development. Yet this approach is applicable more broadly than to just software development.

This means developing the nerve, thinking and processes to work through the obstacles that inevitably arise across any business function, especially when launching something new, or launching as a startup.

Creating a culture that allows for hypotheses, building, shipping, testing — and accepting that some things will fail — actually best balances risk against opportunity. As you move forward, you do more of what works, and stop doing what doesn’t.

In my experience it looks like this:

  • start with customers and define a problem statement that directly solves their needs
  • test the concept early, and when you have enough research to make an informed decision about scope, commit to building it (whether software, a service, or a product)
  • define and commit to the minimum viable version of what you seek to deliver — then get it to market early, in the hands of customers, managing the numbers as you gain feedback and refine
  • update, repeat and continuously deliver as you learn and scale

At Digivizer, by way of example, we have evolved an early product iteration into a fully fledged enterprise service offering. Now we are reusing this technology platform, experience and our data to work on the development of a new SaaS software solution that will allow all companies to easily measure the effectiveness of their social and search investment.

We have, in other words, continuously tested our hypotheses about what customers actually need, shipped, earned reviews, and fed back into continuous product development and product offerings.

Embrace, don’t fear, the possibility of failure: it’s a productive option to get you to your ultimate destination faster

The point about the Apollo 13 mission was not so much that failure was not an option but that the entire NASA team had to make quick decisions and act: the overall mission could not be allowed to fail because the consequences (the death of three astronauts) were simply unacceptable. They dispensed with the tried-and-trusted NASA ethos of testing and checking before executing (they had to). They assessed each task and fix on its merits, did quick assessments of risk (often in less than an hour), and (literally) pushed the button. They didn’t have the oxygen, fuel or power to wait for the perfect moment. More than once, they had to rethink their decisions on the fly.

No one wants to fail. No one plans to fail. But accepting that with progress there is also failure means that instead of waiting for that perfect moment, you are now prepared to ship and continuously innovate and deliver. And if you fail, fail fast, learn from the failure, quickly pivot or iterate, and repeat. And never forget to celebrate the wins and learnings along the way.

(*Kranz never actually said this during the mission, although after its use in the movie, he did adopt the phrase for his autobiography.)

This article is also published on LinkedIn.
(Photo source: Tantor via https://audiobookstore.com/audiobooks/failure-is-not-an-option-1.aspx)

 

5 MBA insights for startups and entrepreneurs

Last night I was privileged to be the guest speaker at a UNSW AGSM Business School Executive MBA dinner of those graduating 2017. (I graduated in 2013.)

The conversation was how having an MBA can make a difference and to talk through my personal learnings and journey. After working internationally for the previous five years, my MBA helped connect me to a local network of key decision makers, it provided the assignment discipline for me to focus my strategy and assessments on Digivizer, and gave me access to first- rate lecturers and a peer brains trust I wouldn’t otherwise have had.

In my final year, I wrote my strategy and plan for Digivizer in which I was able to secure $2 million in funding. It was definitely tough working full-time in my startup, studying for my MBA and raising my family, but it gave me amazing resilience and the conviction to pursue the opportunity I see for Digivizer (now seven years in and 50+ employees).

For those wondering how to make an MBA and a start up work, here are my top-five MBA insights for startups and entrepreneurs.

1. Do, don’t just think

Business success is about actually doing, and this is especially-true for startups. There are plenty of consultants, advisers and commentators in the Australian startup ecosystem. The ones to listen to are those who have successfully launched and grown a company, those who have delivered value to customers, and earned revenue and profits.

Many startups suffer for the lack of a plan, and they can be light on strategy. MBAs are good at helping develop both.

It is important to develop a meaningful plan with key measures of success. Then you need to translate your plan into actions and delivery. You need to measure all that you do and refine on the way. I love Eisenhower’s quote on planning and plans: ‘In preparing for battle I have always found that plans are useless, but planning is indispensable.’ This is true in preparing your business for success.

2. Define, then evolve, your strategy

When I co-founded Digivizer in 2010 we developed a clear vision: to provide value at the intersection of social media, big data and CRM. To help our customers in acquisition, retention and loyalty by knowing more about how to engage their customers. Back then this was new thinking as most focus back then in social was on volume measures of mentions and very little in connecting social to your customer base. Much of our time was spent explaining to marketing managers where the value was to be found in social media let alone linking it to actual customer acquisition and management programs.

Today that vision remains the same but we have had to evolve our strategy. We now talk to boards and C-levels about how to help to better understand the digital footprint of their customers and have this central in their customer engagement strategies and how to measure their digital investment.

Business of all sizes and at every stage in their growth now need to know exactly how their digital and social marketing budget is working, and to be able to take action on real time insights. We deliver those data and insights and have 7 years now of proof points.

We are also now working on going direct to the SMB business owner. A more simple message but largely the same vision (helping them grow their business by helping them know more about how best to engage their customers and know what is working and what isn’t).

Entrepreneurs are good at having instinctive visions, MBAs are good at building out business concepts against changing market conditions. The learnings in a MBA help form points of differentiation and bring frameworks that help you navigate the different stages of organisational growth.

3. Be flexible, ship value early

Back to doing: the value in any company is in what it ships and how that makes a difference to its customers. At Digivizer we started delivering value as soon as we could, and have built our company and technology primarily on the back of bootstrapping through our own revenue and cash flow. We received funding at a point that we wanted to accelerate building out our enterprise technology platform which allowed us to engage and serve some of the biggest technology, telco, financial, FMCG and retail clients. We are at the stage where we will be taking our technology and our learnings into the broader global SMB market in a SaaS model.

Part of shipping early is flexibility: you can’t wait for the perfect plan or the perfect product. You need to ship and learn from customer feedback. Today’s customers and users are very generous when taken on the journey with you, acting as beta testers when you’re developing a product (especially software).

MBAs can be guiding hands on these Agile environments, balancing product usage with product revenues. This helps remind the startup of the direction they should be heading in, and the ways to measure progress along that journey. Nothing validates a product more than a paying customer!

4. Develop your people and leadership teams

People are everything inside the organization. Startups have to compete against larger companies with larger budgets and established brands.

Yet startups also attract talent, often the best in the market. They offer opportunities to make a real difference from the first day at the company, and to do things never attempted or delivered before. And do so in new and more flexible ways.

To keep these people, you need to develop a team culture and develop them as individuals.

This means understanding everyone as unique individuals, having a clearly-articulated vision for the company, having well-defined opportunities to contribute, to share success, and to reward when the big prize is won (and with smaller prizes along the way). The biggest value you can offer is “the MBA every day”. Involving them in strategy, planning, pricing – all key decisions. Ensuring that everything we do is measured by impact on results, not ego or past experience.  It keeps the organisation flat, fluid and provides plenty of ideas and leadership opportunities. It certainly provides learnings.

MBAs can bring insights into structures, systems and programs that can help a start up grow through different stages. For example, at Digivizer we have introduced project management by objectives, and key results (OKRs, as espoused by Christina Wodtke). Anyone at any level can own a x-platform objective to deliver. We can connect all we do to the direction we’re heading towards (and why), and we can support our teams on the way.

5. The customer is everything

A great idea is just that without a customer. And, it must be said, an MBA is just a business degree without a customer. All businesses from start up to established are successful when they put the customer first. MBAs are most successful when they bring their knowledge to bear on the needs of the customer, working through the products and services of the companies they work for.

I’ve benefited personally from having an MBA, and Digivizer has as a company as well. Having an MBA means I can switch between structured thinking and creative development, between the growth mindset and the longer-term business mindset.

The result is that we have accelerated, evolved, and grown. We continuously check we are ready and relevant for our future.

Robert Kennedy said: “Only those who dare to fail greatly can ever achieve greatly.” If there is a difference in having an MBA in the startup world, perhaps this is it: having the business rigour and training to sit alongside your passion, vision and experience, to instil the confidence to take risks, to be prepared to try new things, to be prepared to fail, and to inspire in leadership so you can achieve great things.

This article is also published on LinkedIn.

Taking your business through growth

I was recently invited to speak at a tech entrepreneurs’ lunch.

In the audience were entrepreneurs just starting out sitting alongside those a number of years in who had successfully navigated the stages of early growth to something more sustainable. We were also lucky enough to hear research presented by Cameron Research Group on key growth inflection points for SMBs.

There were a number of insights gained through the research and the discussions that followed:

1) Focus and commitment to success

Many had chosen to do their own thing not just because they were driven to harness an opportunity and to create a new future, but also because they liked the control it offered. Entrepreneurs felt they could live the life they wanted, and the more time spent on forging their own way, the less likely they could ever work for anyone else again. The result? Total focus on making their venture successful.

2) Managing growth through key inflection points

The way someone was able to run their business in the early days could only get them so far. That point seemed to be at 20-30 employees, at which point entrepreneurs needed to think about switching from a control model to an empowerment model, from an authoritative leadership style to more democratic style of leadership. This meant hiring differently, bringing in new systems, enhancing leadership capability, and formalizing HR and marketing resources and programs.

The next growth inflection point was at 70 employees, where the audience again recognized that what had been built to get them to that size would need to be revisited again, particularly in terms of systems, leadership and culture. The main concern each entrepreneur had was on how to keep and protect their company’s culture and the way they wanted their business to run when they could no longer be personally involved with, or connected to, every decision.  An emphasis on investing in building a strong culture based on values, trust and empowerment was key to those who were successful.

3) Four main growth pain points

This seemed to be universally agreed upon. To grow their businesses from startup to success, entrepreneurs needed to:

  • focus on cash flow,
  • scale recruitment and performance management
  • scale sales and marketing,
  • control costs.

Everyone agreed that all of these were challenging, especially when gearing up for sustainable and often accelerated growth. This has certainly been our experience at Digivizer and we have put much investment in each of these areas.

What was particularly insightful for me was the number of businesses that had realized they had to switch their marketing models from doing it themselves to recognizing they needed external solutions.

And it was especially interesting to hear that once businesses grew to that 20 employee point, they needed to save time and become better at seeing and understanding what was working for them. In particular, it was time for them to invest in solutions as it was important for them to easily and quickly know the ROI of marketing expenditure. They needed to be able to easily measure what was working for them, and to focus resources there ie do more of what works and fix or stop doing what was not working. Data matters and tools could help over manual options.

This resonated with us, given that at Digivizer our focus is on helping businesses create better experiences for their customers by knowing more about them and what they care about in order to help them generate leads and sales from digital.

All of which makes me even more focused and committed to rolling out our technology and solutions in an affordable way for every business.

This article is also published on LinkedIn.