Archive for the 'Social Enterprise' Category
Aug 11, 2008, post by Randall
As an investor, the most important lesson I’ve learned over the years is that great companies are built by great teams. Furthermore, great teams rarely are one superhuman “A” player surrounded by a supporting cast of “B” players. And unlike the Borg Collective which seeks to “… add your biological and technological distinctiveness to our own”, great management teams need to have a set of complementary, yet overlapping, skill sets.
Most of us know the example of how Steve Wozniak the brilliant hardware designer teamed up with the uber-persuasive Steve Jobs to create Apple, an iconic Silicon Valley startup success story. While that partnership didn’t last forever, it’s pretty clear that the fusing of the talents of these two brilliant individuals directly led to Apple’s early success. I encourage you to read more in a “must read” book I’ve recommended earlier, Founders at Work.
Jim Balsillie
Mike Lazaridis
Here in Waterloo, Research in Motion (RIM) would not be today’s superstar company unless Jim Balsillie joined engineer, founder, Mike Lazaridis. Until Jim joined Mike in the early 1990’s, RIM had long remained a typical engineering oriented company doing about $500 000 annual revenues from 20-odd products. Although Jim could never have built the products, his introduction to the management brought the marketing and financial drive and focus that ultimately led to the Blackberry led success story we know today. Rather than the cult of the individual, once again it is the power of this amazing duo that built RIM.
What is unusual about this case is that both Mike and Jim share the title CEO, billing themselves as co-CEOs. Perhaps more companies should consider this approach?
Reed Hastings
Back in 1995, as MKS was starting to look to the capital markets, one of my personal inspirations, Reed Hastings CEO of Pure Software (and now Netflix), observed that “Pure Software has built a team where any of the senior management team could be CEO”. I certainly took that approach to heart when building MKS’s great team and it has been an important insight ever since.
For example, Chuck Bay, who was Pure’s CFO at the time has subsequently gone on to be CEO Broadbase Software (acquired by KANA) and President and CFO of Spatial Technology. Rob Dickerson, who was VP & GM of Developer Tools for Pure, a key operationally focused executive, subsequently became CEO of Faves and President, CEO of Pacific Edge Software (acuired by Serena Software) and EIR at Ignition Partners. These are just two data points illustrating the calibre of the team Reed built at Pure Software.
At MKS, we managed to build an amazing team, especially in the mid-late 1990’s with superstars like Ruth Songhurst, Eric Palmer, Tobi Moriarty, Michael Day, Frank Pfeiffer and Paul Laufert. It was a great mix, with stars from Canada, US and Germany. As well, almost uniquely, we had a balance of the genders. It is a big disappointment to me that I continue to see how rare that is.
To round out our discussions, anyone wanting a deeper grounding in this important topic should read the book Co-Leaders: The Power of Great Partnerships by David A. Heenan and Warren Bennis, John Wiley & Sons, 1999. With the thesis that great organizations need “more than a visionary CEO”, the bookoutlines the rare, but critical, role building a strong management team takes in building exceptional companies.
To summarize this book, in the authors’ words, “Co-leadership . . . is a tough-minded strategy that will unleash the hidden talent in any enterprise. Above all, co-leadership is inclusive, not exclusive. It celebrates those who do the real work, not just a few charismatic, often isolated, leaders who are regally compensated for articulating the oranizations’ vision”. Although, like many it has taken me years to learn this valuable lesson, I couldn’t say it better myself.
There are lots of detailed case studies, from companies in many industries, with a few key lessons for co-leaders, including:
- Know thyself
- Know thy leader (check your ego at the door)
- Avoid titanic clashes (!)
- Find out what the enterprise needs and deliver it superbly
- Lead as well as follow
- Know when to stay put (control the temptation to star)
- Know when to walk away (learn when to say no)
- Define success on your own terms
To reiterate, great companies are almost always built by great teams. As organizations and markets get more complex, I believe co-leadership will become increasingly the norm. For smart and successful people to control their egos takes a lot of maturity. Furthermore, the ideal team depends, in large part, on the stage and growth of the company. As I’ve learned, great teams take a lot of work to build, but can also dissipate over time. Indeed, they are a rare and fragile flower, to be cultivated constantly.
Nonetheless, it is definitely worth any entrepreneur’s full time and attention to unleash the power of the team - whether a gestalt of two, three or even more remarkable individuals.
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Jul 30, 2008, post by Randall
A little over 4 months ago we first wrote about an astonishing social enterprise, Jonathan Howard (see photo) and his Run The Dream (RTD).
Jonathan and Terry with Michael Chong, MP
To refresh your memory, take a look at our 22 March, 2008 post by clicking here: With amazing youthful enthusiasm, having Just turned 25 today, Jonathan Howard ran into Elora to a welcome by a Michael Chong, MP, Mayor Joanne Ross-Zuj, a number of parents who live daily with Autism Spectrum Disorders (ASD) and a good contingent of local supporters. It goes without saying people were inspired and he was very warmly greeted.
It’s really interesting how things that start slowly eventually snowball. There are always challenges and false starts in any truly entrepreneurial enterprise. The snowballing of viral propagation is famous in the world of web startups. Jonathan has witnessed a similar effect with Run The Dream. One shining example of that is Terry Robinson (see photo). Terry, a co-worker at Ontario Public Service and an accomplished two-time Para-Olympian (Seoul and Barcelona), was so inspired by Jonathan’s social vision to commit to a leave of absence from his job to accompany Jonathan by wheelchair from Ottawa to Winnipeg. That’s a 3 month and 3000 kms of dedicated trek. What a team they make as they average a marathon a day, day in, day out.
Jonathan and Terry should be an inspiration to us all. RTD is managed by a core team of about a dozen (effectively full time) volunteers, augmented by literally hundreds of local grassroots volunteers, with Jonathan being the notional CEO (or should I say, Chief Running Officer?). As a startup social enterprise, RTD has an impressive year one business plan. The two main CSFs:
- to raise awareness of ASD, and
- to raise $2.5 million in donations
are ambitious goals for any startup. How many technology startups come close to that in year one?
When we filter investment prospects at Verdexus, we like to think that 80% of the investment decision is centred around the team. As a result, we spend much time getting the measure of founding team entrepreneurs. For a social enterprise, the same is true, in spades. With a vision and an execution track record that Jonathan and Run The Dream has so far, have you any doubt that investors will back Jonathan and his team?
And, guess what? You can to. Help Jonathan and his team meet their goal by donating online at the Run The Dream website.
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Jul 10, 2008, post by Randall
New York Times on Sunday contained an article which immediately caught my attention, as it appears to provide the missing piece pulling together all of my recent postings outlining an “Entrepreneurial Toolkit”, so far consisting of these five core skill sets:
- “Fearless Passion”
- “Don’t Drink Your Own Bathwater”
- “Embrace Change”
- “Taste the Cash Burn”
- “The Power of Two (or Three)” (coming soon)
The article, “If You’re Open to Growth, You Tend to Grow”, New York Times, 6 July, 2008, in extolling an individual’s openness to change and personal growth, really provides a common thread, weaving together the above skills.
To quote Carol Dweck of Stanford University,
“People who believe in the power of talent tend not to fulfill their potential because they’re so concerned with looking smart and not making mistakes. But people who believe that talent can be developed are the ones who really push, stretch, confront their own mistakes and learn from them.”
The notion that nurture trumps talent, is an interesting one. It underscores why defining some great attributes for an entrepreneur in my Entrepreneurial Toolkit is such a good idea. For the right people, if they strive for personal growth, each and every one of these attributes is in reach.
I’ve always held an innate belief that hiring is about way more than the credentials from the best schools and relevant job experience. By finding people who value “stretching themselves”, companies are adding those who can navigate today’s complex and every-changing environment to their team mix.
It’s also a very positive and empowering message.
Good mentoring and management, like good parenting, works.
Think about it.
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Jul 08, 2008, post by Randall
Whether you run a startup (pre-revenue and running on fumes), a larger, later stage company (with actual revenues and earnings) or even a public technology company, the topic of cash should never be far from your consciousness. And, it goes without saying that keeping tabs on cash is generally even more germane in social enterprises.
For many early stage entrepreneurs, skilled in technology, marketing and strategy, the notion of vigilance around cash burn might seem mundane, something to be avoided or delegated. There is no question that companies endowed with more cash on their balance sheets can act more strategically. Conversely, It is the rare company indeed that isn’t significantly cash constrained at some part of its life cycle. As a result, you need to be on top of cash burn and not let cash crises catch you off guard.
Of course your need, or even better should virtualize, solid financial and accounting management skills. Notwithstanding this, as CEO, cash needs to figure as a constant item in your personal mental checklist. In the New Venture 2.0 Playbook, discussed in much more detail in an earlier blog post here, Grover Righter has aptly dubbed the level of importance of cash as “The CEO’s Mistress” (pictured at right).
Yet, many entrepreneurial CEOs can’t answer simple, but fundamental, questions, such as:
- what is your monthly burn?
- what is the life of existing (and committed) cash in the business?
- Which expenses could be cut, should I wish to extend this cash life by lessening burn?
- What was that cheque really for?
While the Venture 2.0 Playbook outlines a complete methodology to build certain entrepeneurial technology startups, from beginning to exit for much less money, the key point of today’s post is that every entrepreneurial CEO must internalize the whole issue of cash burn. Remember, it’s not enough to sleep peacefully at night, comfortable in the notion that your CFO is handling all of that cash stuff.
And, ironically, this need doesn’t disappear even in a larger firm. When I ran a public company, portfolio manager expectation was that the CEO knew the business model, budget and forecast to a reasonable level of detail for up to 2 years into the future and also with longer term strategic thinking. Because public CEOs (and CFOs) are expected to give “street guidance” of future quarters, it feels like trying to drive a car where the steering column is very long — in this case say 18 months long. Keeping all of this in your head can be challenging. And, furthermore as you discussing product, market and strategic questions, all may well have financial implications. In other words, even minor adjustments in one area of the business can significantly alter the “18 month steering” problem of future financial guidance.
To summarize, for the entrepreneur without formal financial training, seriously consider upgrading your financial skills (by formal training, finding a good mentor or via your own research). And, even more important, take them to heart - particularly in the area of cash management.
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Jun 11, 2008, post by Randall
In the tech heyday of the mid-1990’s, my favourite US investment banker, Mark Slater (formerly of Hambrecht & Quist) had a strategy to avoid CEOs that, as he so eloquently put it, “Drank their own bathwater”. Mark had identified the tendency amongst CEOs, even entire executive teams, to become so satiated with the power and glitz of riding the waves of technology/media hype, that the corporate adulation goes straight to their head.
Ego and ambition, never faults in themselves, taken to extremes tend to cloud better judgment. Anyone who has visited their capital city, like Washington, London or Ottawa, has witnessed the same effect that all that marble and walnut lining the corridors of power have on newly elected Members of Parliament or Congress.
I’m sure all of us entrepreneurs have been seduced by the siren call of their own PR. I know I have. But long ago I learned that, no matter how big the entrepreneur’s ego, it is critical to be self analytical and have enough inner humility and judgement to resist the corrupting force of power and spin. Every company has faults, challenges and issues to deal with. In truth, no matter how great the press or the wave being ridden, no company can entirely escape the buffeting of real world forces and the ups and downs of a cruel world. Navigating such turbulent waters is simply another challenge entrepreneurs need to face every day.
