Did You Know The Shocking Truth Of Successful Entrepreneurs?

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Successful Entrepreneurs don’t take risks.

Yes, you read correctly. They infact go to lengths to reduce risks.

I was shocked too when I read this article by Malcolm Gladwell (Best Selling Author of Outliers, Tipping Point, David vs Goliath) -> http://bit.ly/XHVvNO

Gladwell makes a persuasive case through couple of high profile examples like Ted Turner and John Paulson (Big Short Fame) of how they intentionally keep the risks lower so that they increase the chances of their success. He goes on to overturn commonly held beliefs around risk and their downsides.

The article persuaded me. I realized there are four more points for consideration:

A) Keeping the Risk small = Increasing the potential of the Upside

I could relate to this from my Trading experience. The best of traders in the world e.g. Paul Tudor Jones, Bruce Kovner and even Warren Buffet seek to lower their risk first. They don’t look at reward first. They actively reduce risk first. Warren Buffet is famous for saying “Rule No.1 : Never Lose Money. Rule No.2: Never forget rule no.1”

By always looking for low risk ideas, they buy really cheap (ideally when everyone is selling) and then wait for the trade to reverse and shoot for the Stars.

By keeping the risk low i.e. in business, it means keeping your costs low or driving a hard bargain when it comes to acquisitions, you reduce the capital outlay. The subsequent increase pays for itself in multiple times.
Also by keeping the risk small, even if the bet fails, you have lost very small portion of your capital but you learn a lot from the experience. Fast Fail is possible only when the risks are kept small

Keeping the Risk small = Increasing the potential of the Upside Click To Tweet

B) Generating cash from one business to fund another business

The article talks about how Ted Turner used the excess cash from the Billboard business to fund his news station.

This is the classic Warren Buffet tactic. He used the Insurance float generated by Berkshire Hathaway to fund his acquisitions. This not only kept his cost of capital low but also make sure he was not borrowing at high cost and then wondering how to pay for it.

This is the classical approach in the business. Build a Cash cow in the business first. Make the business and the team to be cost conscious, use the pay as you go model. Build, sustain, reinforce and then repeat the cycle. Create a Cash strong business.

Then, once you have a sizable kitty, use it to fund acquisitions or new product launches. Care has to be taken that the new product launches or acquisitions don’t wipe out all the cash

C) “I skate to where the puck is going to be, not where it has been”

One of the greatest Ice hockey players ever Wayne Gretzky once said this.

In sports, then and even now, everyone races to where the ball is or puck as it is called in Ice hockey.

Gretzky used to setup the game in such a way that he would know where the puck would be a few steps ahead of everyone and position himself in the court accordingly. This devastating technique made sure that he was always well positioned so that once the pass happened he was uncontested and score from an unguarded place.

Warren Buffet also popularized the notion by his statement “Buy when there is blood on the streets” i.e. Buy when everyone is selling. It takes guts to be contrarian but a well-positioned strategic move plays off in a big cash pile.

How does this apply to business? Understand what the customer truly wants and not what everyone is doing. I remember once I was National Sales Manager for Acrylics and our lead product was a “Commodity”. Or atleast that is what everyone thought,. Because I had no background to the industry when I came in, I decided to focus on the largest customer (No.1 Paints manufacturer) and what their needs were? While everyone was competing on price, my team worked to understand the total system cost and needs of the customer. This focus helped us in making them our largest customer with ability to increase prices and thus make it one of our most profitable customers.

I skate to where the puck is going to be, not where it has been - Wayne Gretzky Click To Tweet

D) Be a predator – stalking increases the chances of success

Related to the idea of low risk is that you get into the habit of stalking the idea (not any person please). You wait for the right circumstances to present itself and then you act. You are not in a hurry. You have worked out the details and made all your risk assessment. You negotiate, you thrust, you parry and only when the financials work in your favor, you close the deal.

This does not mean you procrastinate, this does not mean you lose the plot while you sweat the pennies. It means that the opportunity has to have the best risk return profile for you to act.

All predators in the jungle stalk the cattle or the herd and pick the weakest or best target before racing towards the target.

What does this mean for business? If you are planning to enter new markets or looking for acquisitions, look for the place where you can do the swiftest entry. Remember it is in the interests of the acquired to delay so that they can ask for an increase in the price,. It is in your interest to takeover something whose value is more than the price. Value in a tangible way. So no goodwill valuation or brand image buffers. Cash positive business with low debt in the books is the ideal.

Be a predator - stalk opportunities for success Click To Tweet

How would you apply this to your business?

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8 Warning Signs That Your Boss Will Fire You

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Nobody likes to be fired.

But the new millennium has shown that the chances of being fired from a job have increased.

So what are the signs that you could be the next?

  1. Your boss tells you that you are distracted and not focused

Once in a while, your boss comes over to your cubicle and while chatting tells you that “John, nowadays I find you very distracted, not focused on your job”. While you are busy trying to turn over the monitor so that he can’t see your Facebook comments, he was actually laying down the ground for the further discussion which is going to come up.

  1. Every time you talk with your Boss he tells you how unhappy he is with your performance

You are doing a review of a recent assignment or have gone to him with a proposal. He gives his assessment but follows up with “Off late, I am unhappy with your performance. We had agreed on some clear deliverables and you are behind. John, you need to pull up your socks”. He stresses on the words “unhappy” and “performance”. He is making sure that you register that your performance is being evaluated.

  1. Your HR person has started talking to you

Generally your HR knows you as “employee code A321” but now, over the past one month, someone from HR has started talking to you and asking probing questions on “how do you find your work?” “How do you handle criticisms?” “How are you improving your performance?” “How do you keep on top of your assignments?” If this is done with everyone, then, it is different matter. But, if you find you are the only one or only one among a very few, then it is a sign that the HR department is making its own assessment.

  1. Key projects and assignments are going to someone else

In the past, Key projects were given out democratically or you were one of the few who were considered. Now none are coming your way. Even when you are best qualified or best experienced. This happens multiple number of times. When asked you are told “You were considered but looking at all factors we decided to give to Debra”. The organization is preparing itself and training other people so that when time comes, they will handle your exit.

  1. You are getting a mid-year appraisal when that is not the norm

Your boss calls you over or schedules a mid-year review when that is not the norm. There could even be a HR person in the room “for quality monitoring purposes” Both of them look very keenly at your answers. In fact, your boss was never so attentive in your appraisals before. You are carefully asked to explain what actions you took and why you did it. You are asked leading questions like “Did you consider collaborating with ….?” “What policy rules did you apply …?” “How did you make sure your performance was to the desired standards as prescribed in …?”  They are building a case so that when the termination case is made, they can cite the “self-confession” you made.

  1. A senior executive in the organization who cares for you tells you to “Look Out”

There is always someone in senior leadership or in Exec Team who must like you. (If not, get yourself noticed). He would have a wind of what is coming. In an informal place probably in office party or an event, he strikes a casual conversation with you and says “John, nothing in this world is permanent. It is ever changing. You must keep your options open. Gone are the days when people used to retire in their companies. So, look out. Nothing to be done in haste. I am not asking you to leave the company, quite the contrary. But you know, keep options open”. What he is actually telling you is “I have been in a meeting where it has been decided to fire you. I can’t rat on the organization but I like you, so I am giving you a hint. Hope you are smart enough to get it”

  1. Your boss reminds you of an opportunity in the past you did not take up

In your journey of one year or ten years, you must have passed up a career move which the organization wanted you to take. The more the number of years, the more such opportunities. Off late your boss brings this up in the middle of an unconnected conversation “We need to close this sales number soon and it requires you to really step up your game. Get Marketing to give you a campaign soon. John, if only you had taken that stint in designing Performance standards seriously, you would not be in such a situation” The case is being prepared that the organization had given you all the opportunities to improve your game but you did not take them.

  1. Your discussion on your career path does not happen

You have been pressing for this discussion for past one year or six months on what are the next steps for you in the organization but nothing is moving. Your boss is stonewalling it by saying “We will discuss when the time is appropriate”. When you have approached the HR they have said “Talk to your boss” The situation is: the organization has no plans for you.

All of the above taken together is pointing to one door. Your Exit.

Take action. Engage with your boss and step up if you want to remain in the organization. Or start writing your resume, if you want to exit too.

Why you need to hire the Hare now and not the tortoise?

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Do you know the famous tortoise and the hare story? How did that turn out? We all know the Tortoise won. So why should you hire a hare?

Hare, tortoise! What is the relevance to your business?

Speed is the essence in the millennium. What we need are people who think agile, act agile.

Between a thinker and a person with bias for action, I will choose bias for action.

Why so? Disruption is everywhere. There is technological disruption. There is business model disruption: somewhere out there is a young guy writing an App which will substantially speed up the business, cut traditional layers and remove the cost of discovering solutions for the customers. Then there is the demographic disruption: Millennials move fast, act fast.

Whether you like it or not, you need to hire people who have agility. People who are willing to speed up your product or service delivery. Your customers will absolutely love it if you deliver faster than last month and last year. Your business will love it if profits come faster than last month and last year. Your employees will love it if business grows faster than last month and last year.

If you hire a tortoise, chances of his becoming a hare is rather low. There will be enough tortoises in the organization who will balance the need for speed with making sure that the hare is running in the right direction.

So, hire the Hare.

Would you agree?

 

Do you behave like an owner of your business?

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You are the leader of the business and the team and hence, you obviously own the results. And everything which happens between now and the results. But does your team own the business?

Why does this matter?

Are your employees coming to the office just to collect the paycheck? Then there is a serious problem. If the job, for them, means a vehicle to get a “bigger” or “better paying” job somewhere else, then, there is a problem. When someone says “I just follow instructions. If something goes wrong, it’s my boss’ problem” there is a serious problem.

When you own the business as if it is your own, you don’t wait for instructions. You are always on the lookout for opportunities. You will always want to be one step ahead of the competition.

You will be the first one to knock on the customers doors. You will be out where it is required to see how your consumers taste and preferences are changing.

You will be the “brand ambassador” of your company even if you may be the janitor in the office.

Ownership mindset is the rocket fuel in your business’ success.

This ownership mindset will make them see every decision as something which either adds value to the business or not.

Then whether it is giving this discount to the customer or not or

whether to make the production run for this product or the other or

whether to run the campaign for this product or not,

the ownership mindset will show them the right direction.

Would you like your employees to behave as owners?

Read this second part on how to bring this ownership mindset

How to dominate the competition?

Reading Time: 2 minutes

Speed is the number one competitive advantage you need to have for a successful business.

If you don’t have it, develop it or perish.

We all have heard the story of hare and the tortoise. What is needed in today’s times is the persistence of the tortoise and the speed of the hare. Grant Cordone in his book 10X Rule calls it “Smokey”

Speed is the number one competitive advantage you need to have for a successful business Click To Tweet

In today’s connected and hyperactive world, you have to be one step ahead of the competition. The only way to do that is Speed.

How fast do you adapt to the customer’s needs? Do you throw the contract or company procedure when your customer wants a modification? Or do you take it as an opportunity to build a better stronger relationship?

Are you the first in the door when the customer starts his operations? If you are servicing a retailer, are your trucks the first to enter their warehouse? Are your counter salesmen the first when the shutters are opened?

I recently saw a retailer apply last month’s promo code on a purchase because the display person had not removed the last month’s promo even at 3pm in the afternoon when the store opened at 10am!

At every step of your relationship ask how can your service be faster and better?

At every step of your customer relationship, ask, how can my service be faster and better? Click To Tweet

Do you send your customer weekly updates on the industry? Can you switch to twice a week? Are you visiting your top 20 customers thrice a week? Can you make it every day or four times a week?

Are you present on weekends when the customers’ own sales are maximum eg for a retailer?

Do you have a servicing or technical person posted in your Top 10 customers? This makes sure they don’t have to call you if something breaks down.

Whatever the competition is offering, make it faster and better.

How are you beating the competition?

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How do you develop a testing mindset?

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testing mindset team meetingIn my last post, I talked about developing a testing mindset.

The idea is to approach a new idea as a testing ground.

Whether it is a new distribution strategy or a new pilot production line or a new campaign, you want your team to approach it as a test or hypothesis.

Why? This helps them focus on the process goals rather than outcome goal.

The first step is the concept of a meeting itself. What is a successful meeting? What is a failed meeting?

We all know what a failed meeting feels like: energies are down, tempers are up, it seems like a waste of time.

What does a successful meeting feel like? Everyone is energized and looking forward to getting out there and making it happen. Everyone feels that they were heard and recognized for their contribution. Opinions were expressed fully; they were given due respect, and while not every opinion was agreed to, the conclusion felt like a collaboration which can inspire and energize everyone. Everyone was well fed (well maybe not!)

Do you see the difference?

It is almost always emotions. And it often very much in our control of how we emote and what emotions we emote.

As a business leader, you need to lead through personal example of building a testing mindset.

You could say “Let’s test what a successful meeting feels like?”

“My thoughts are

1. We listen to everyone

2. We always see the scope of doing it first before we say why it cannot be done

3. We have the highest interest of the customer and business first

4. We observe, create, collaborate, doubt, conclude in that sequence. What are yours?”

Get a shared understanding of how a successful meeting should feel like. Then check every 15 minutes or periodically whether it is happening. Check at the end of the meeting whether you have delivered what you have promised. If yes, what worked? If not, what did not work?

Before you end, Ask “what should the next meeting feel like based on what you learned today?”

Do this at least 4-5 times, and you will entrench successful behaviors.

You will also train your senior staff in testing and in drawing out assumptions and process goals. This will build collaboration in the team which is very important for a testing and learning mindset.

Now, How will you develop it in your workspace?

Why you need a testing mindset?

Reading Time: 1 minutes

We all know the storyTesting mindset of Thomas Edison and how he made 1000 trials before he got it right and made the light bulb. Once a journalist asked him “what do you have to say about the 999 times you failed? Edison answered, “I learnt 999 ways Not to make a lightbulb.”

We know that Edison was a very shrewd businessman too.

What does this example mean to you?

For me, it shows the importance of a testing mindset. It shows the need to accept failures as a learning ground.

What happens if we don’t? A board room turns into a contest of blames rather than a hotbed of ideas.

What is a testing mindset?

It is a mindset, which looks at process, as something to test, with performance goals rather than outcome goals. Dr. Jim Loehr in his book New Toughness Training for Sports brings this out vividly. e.g. A golfer focuses on his swing and drive rather than his final score.

This has a couple of advantages: By developing performance goals, you will bring all the assumptions of the team on the table. The workflow and critical sub-steps become very clear. When the process is finally done, the focus shifts FROM who should take the credit or the blame TO which assumptions worked and which did not? Which work flow did well and which did not?

Do you get the difference?

This helps in shifting the mindset of your employees from internal competition to internal collaboration.

Your team is supposed to compete in the marketplace not within. Click To Tweet

It also helps in entrenching what works and removing what does not. Every project becomes a lightbulb which either shines (and you know exactly why) or does not (and you know exactly why).

How would you build this testing mindset in your business?

 

Do One Thing

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“If a thing is worth doing, then it is worth doing well.”

If a thing is worth doing, then it is worth doing well. Click To Tweet

We often hear this. Then, why is it that, when it comes to our business we tend to get scattered?

Have you walked out of a meeting where a ton of initiatives have been thrown, all exciting, project maps worked out and you are all fired up? 6 months later, you find you are nowhere and all the initiatives are only taking time and not making any money?

I have been in a major initiative where there were 42 initiatives running at the same time. Yes 42! I still remember the painful meeting reviews where nothing was progressing and everyone’s nerves were frayed. Only pet projects were moving and the impact of those on business was still debatable.

I was high strung, as so much time was invested and very little was achieved.

Against this, I remember we were in the midst of transition of a Free to Air Television to a subscription channel. It was a mammoth project involving satellites, people on the ground, advertisers, the works. But, since the objective was only one, all the moving parts were clearly aligned to one objective. And if they were not, they were ruthlessly weeded out.

The Lesson is very clear: Do one thing but do it very well.

Having one initiative at a time, makes sure that all the parts in the organization are focused on delivering it. Remember for a lot of people this itself is extra work. For the production or service delivery guy or sales guy on the ground, this is one more item he needs to finish every day. All this within the same time available and with no respite on the daily deliverables.

Having one project makes sure that to each and every person, you are delivering only one message. This helps every one know what is most important to you and to the business.

It brings in speed and ruthless efficiency. It acts as a building block to the organization on which future success is built.

Do one thing but do it really well Click To Tweet

What action do you need to take to bring this focus? What would stop you to bring this focus?

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