Oct 9, 2011 (yesterday) Building A Company vs Building A Business from A VC by Fred

Matt Blumberg, CEO of our portfolio company Return Path, wrote an interesting post last week about the differences between building a company and building a business.

I've been an investor and board member of Return Path for over a decade and I've witnessed the company fail with its first product/business and then through a series of acquisitions build a very strong business and company. Matt and his team built the company first then the business, which is backwards, but it worked.

Matt is right that most of our portfolio companies build the product first, then the business, then the company. And building a company is often difficult for founders because they are so focused on the product.

Roelof Botha, a leading VC with Sequoia, once gave me a great piece of advice in helping founders start to focus on company building. He said founders should think of their company as a product and build it and shape it with the same passion and care. I've taken that to heart and passed it on a few times.

No matter how or when you do it, building a company is a required step to sustainability. Positive cash flow is not enough to keep the company independent and solvent. You need a culture, systems, and processes to keep everyone happy and functioning well. That is company building and Matt and his team are among the best I've seen at it.

The rules for building a cloud commerce community

September 29, 2011 | Kent Parker

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Amazon.com. eBay. Facebook. LinkedIn. Many of us rely on these online communities to manage our personal commerce, relationships and finances. Now, with increasing frequency, companies are demanding similar tools to manage their business.

A decade ago, the Internet was viewed primarily as a consumer application, with limited viability for critical business processes. Today, nearly every company is using it to help run their business in some significant way.

What brought about the shift?

Certainly, the Internet has evolved — it’s faster, more secure and proven. But the business world is also a much different place today. As business has become more global, the traditional enterprise as we know it has morphed into something new called the extraprise.

In the extraprise, it’s not just about executing a process within a company, but also across the entire value chain — especially outside the four walls of the enterprise. It’s not just about the intelligence within an organization, but also the extended intelligence networks that are developed through communities.

This new approach to business commerce won’t be driven by enterprise applications. Companies have invested billions in such technologies to simplify tasks like developing proposals or taking orders. Why? Because commerce happens between companies. And the closed systems and processes that have long been the domain of installed enterprise applications aren’t designed to accommodate this fluid company-to-company, extraprise activity.

How do you build the cloud community?

So what does it take to build these networks and communities to drive and support collaborative commerce? A whole new way of thinking and operating. Performing as a cloud commerce community requires a whole new set of rules:

Break down application silos: Participants in business commerce networks want to acquire capabilities – not purchase tools or application models as they did in the legacy software era. To enable this, vendors must break down product-oriented boundaries among applications and make development a more intertwined process.

Make innovation a constant: Innovation and capabilities are now expected as part of business commerce networks, not as a product tool to be purchased and installed. The concept of innovation extends to reporting, hosting, monitoring and security and must be frequently streamed.

Focus on quality: While innovation is key, quality trumps all other considerations when it comes to business networks. Remember the Golden Rule: “Thou shall not break anything.” And when it comes to business commerce, buyers and sellers demand greater integrity. They expect to be able to conduct complete transactions without disruption or any compromise of their data. This also means scrapping traditional notions of software availability in favor of a more comprehensive definition of business commerce availability.

Stay agile: Constantly evolving needs and shifting priorities, dictated by a more connected, globally engaged business environment, have made speed the new market requirement for success. And this means organizing to operate in a more nimble and flexible manner than ever before.

Overhaul customer support: Participants in business commerce communities have outsourced much of what used to be the function of their internal IT departments to the network provider. As a result, assistance with software and non-software challenges as well as process enablement to drive more efficient and effective business commerce is not only expected, but required. And in an always-on community, customers demand immediate, proactive responses.

Redefine customer relationships: In the legacy software product world, customer relationships were episodic. Upon “go-live,” the relationship was essentially considered complete. In a network-driven cloud community, customers and other participants require more continuous, ongoing assistance.

Lots of companies are reaching for the cloud. It’s a more scalable, efficient way to do business on a global basis. It requires no software, hardware or resources to deploy. Time to value is near immediate, and results can be astounding.

But to reap these rewards, organizations must transform in ways that enable them to deliver products and services that meet a completely new set of business challenges and customer needs. Otherwise, the benefit of the cloud will remain nothing more than a dream.

Kent Parker is chief operating officer of Ariba. He submitted this story to VentureBeat.

[Image via Jozsef Bagota/Shutterstock]

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Finding Your Focus: Self-Discipline vs. Passion

Finding Your Focus: Self-Discipline vs. Passion

(Thomas Jefferson)
“The end of democracy and the defeat of the American
Revolution will occur when government falls into the hands of
lending institutions and moneyed corporations."

Raising trillion dollars by taxing the rich is the solution? Think about which one is sustainable - increase money inflow or decrease governments operational inefficiency? I wonder what Mr President's advisers are thinking.

Who is ahead of the game? - Chinese War for No. 1 Spot

I read an article recently that claimed that that USA is more than No. 1 economy in this world and there is no comparison between China and USA. He cited China's medical system, which is at a stage today that USA passed 30 years back. I agree with his hypothesis and I not only think that US did it 30 years back, but USA is still moving in a big way. Recent disruption in Japan raised questions on USA's capabilities for evacuation in the advent of a similar event. Well, look at China. They have only 11 reactors operating and they are constructing an additional 10 each year. Who is overseeing that?

As you can testify using gazillion trivial examples, that USA has taught innovation and governance lessons to this world. Its core strength is the constant infusion of super-brains from all over the world. USA encourages that brain to think and act ahead of time and build innovative systems when the rest of the world is adopting 10 year old technologies and criticizing most technology evangelists.

This should be noted that total no. of nuclear plants in most Asian countries are less than what USA has in one state. USA has adopted nuclear power years back and controlled it well so far in a much broader geography. We should audit those countries first that have almost no experience and trying to do it in one shot. These countries need to first build the credibility that they "care" for human beings more than their reputation by  relaying correct information and asking for help when needed.

Seven steps to better brainstorming

A. Plan

1. Know your organization’s decision-making criteria

Likewise, what constitutes an acceptable idea? At a different, smarter bank, workshop planners collaborated with senior managers on a highly specific (and therefore highly valuable) definition tailored to meet immediate needs. Good ideas would require no more than $5,000 per branch in investment and would generate incremental profits quickly. Further, while three categories of ideas—new products, new sales approaches, and pricing changes—were welcome, senior management would balk at ideas that required new regulatory approvals.  

2. Ask the right questions

Decades of academic research shows that traditional, loosely structured brainstorming techniques (“Go for quantity—the greater the number of ideas, the greater the likelihood of winners!”) are inferior to approaches that provide more structure.¹ The best way we’ve found to provide it is to use questions as the platform for idea generation.

It’s easier to show such questions in practice than to describe them in theory. A consumer electronics company looking to develop new products might start with questions such as “What’s the biggest avoidable hassle our customers endure?” and “Who uses our product in ways we never expected?” By contrast, a health insurance provider looking to cut costs might ask, “What complexity do we plan for daily that, if eliminated, would change the way we operate?” and “In which areas is the efficiency of a given department ‘trapped’ by outdated restrictions placed on it by company policies?”²

3. Choose the right people

choose participants with firsthand, “in the trenches” knowledge.

B. Execute 

1. Divide and conquer - The real action

To ensure fruitful discussions like the one the catalog retailer generated, don’t have your participants hold one continuous, rambling discussion among the entire group for several hours. Instead, have them conduct multiple, discrete, highly focused idea generation sessions among subgroups of three to five people—no fewer, no more. Each subgroup should focus on a single question for a full 30 minutes. Why three to five people? The social norm in groups of this size is to speak up, whereas the norm in a larger group is to stay quiet.

When you assign people to subgroups, it’s important to isolate “idea crushers” in their own subgroup. These people are otherwise suitable for the workshop but, intentionally or not, prevent others from suggesting good ideas. They come in three varieties: bosses, “big mouths,” and subject matter experts.

The boss’s presence, which often makes people hesitant to express unproven ideas, is particularly damaging if participants span multiple organizational levels. (“Speak up in front of my boss’s boss? No, thanks!”) Big mouths take up air time, intimidate the less confident, and give everyone else an excuse to be lazy. Subject matter experts can squelch new ideas because everyone defers to their presumed superior wisdom, even if they are biased or have incomplete knowledge of the issue at hand.

By quarantining the idea crushers—and violating the old brainstorming adage that a melting pot of personalities is ideal—you’ll free the other subgroups to think more creatively. Your idea crushers will still be productive; after all, they won’t stop each other from speaking up.

Finally, take the 15 to 20 questions you prepared earlier and divide them among the subgroups—about 5 questions each, since it’s unproductive and too time consuming to have all subgroups answer every question. Whenever possible, assign a specific question to the subgroup you consider best equipped to handle it.

2. On your mark, get set, go!

After your participants arrive, but before the division into subgroups, orient them so that your expectations about what they will—and won’t—accomplish are clear. Remember, your team is accustomed to traditional brainstorming, where the flow of ideas is fast, furious, and ultimately shallow.

Today, however, each subgroup will thoughtfully consider and discuss a single question for a half hour. No other idea from any source—no matter how good—should be mentioned during a subgroup’s individual session. Tell participants that if anyone thinks of a “silver bullet” solution that’s outside the scope of discussion, they should write it down and share it later.

Prepare your participants for the likelihood that when a subgroup attacks a question, it might generate only two or three worthy ideas. Knowing that probability in advance will prevent participants from becoming discouraged as they build up the creative muscles necessary to think in this new way. The going can feel slow at first, so reassure participants that by the end of the day, after all the subgroups have met several times, there will be no shortage of good ideas.

Also, whenever possible, share “signpost examples” before the start of each session—real questions previous groups used, along with success stories, to motivate participants and show them how a question-based approach can help.

One last warning: no matter how clever your participants, no matter how insightful your questions, the first five minutes of any subgroup’s brainsteering session may feel like typical brainstorming as people test their pet ideas or rattle off superficial new ones. But participants should persevere. Better thinking soon emerges as the subgroups try to improve shallow ideas while sticking to the assigned questions.

3. Wrap it up

By day’s end, a typical subgroup has produced perhaps 15 interesting ideas for further exploration. You’ve been running multiple subgroups simultaneously, so your 20-person team has collectively generated up to 60 ideas. What now?

One thing not to do is have the full group choose the best ideas from the pile, as is common in traditional brainstorming. In our experience, your attendees won’t always have an executive-level understanding of the criteria and considerations that must go into prioritizing ideas for actual investment. The experience of picking winners can also be demotivating, particularly if the real decision makers overrule the group’s favorite choices later.

Instead, have each subgroup privately narrow its own list of ideas to a top few and then share all the leading ideas with the full group to motivate and inspire participants. But the full group shouldn’t pick a winner. Rather, close the workshop on a high note that participants won’t expect if they’re veterans of traditional brainstorming: describe to them exactly what steps will be taken to choose the winning ideas and how they will learn about the final decisions.

C. Close

1. Follow up quickly

Decisions and other follow-up activities should be quick and thorough. But the odds that concrete action will result from an idea generation exercise tend to decline quickly as time passes and momentum fades. communicate the results of the decisions quickly to everyone involved, even when an idea was rejected. While it might seem demoralizing to share bad news with a team, we find that doing so actually has the opposite effect. Participants are often desperate for feedback and eager for indications that they have at least been heard. By respectfully explaining why certain ideas were rejected, you can help team members produce better ideas next time. In our experience, they will participate next time, often more eagerly than ever.

 

Courtesy McKinsey & Company:. Read full article here:

https://www.mckinseyquarterly.com/Strategy/Strategy_in_Practice/Seven_steps_to_better_brainstorming_2767