Outsourcing your future

Innovation

There’s a growing trend in organisations to outsource their future through innovation labs and innovation competitions.

I like to question the rationale behind these decisions and look at the host company more closely. After all, what is behind its decision to handle innovation from outside-in, rather than inside-out?

Reasons

Innovation Ideas
Innovation Ideas

So let’s explore. Why would an organisation decide to innovate from outside?

  1. Because directors/senior management do not believe the company holds the skills for innovation within itself
  2. Because it doesn’t actually hold the skills for innovation within itself
  3. Because it doesn’t have a culture that nurtures innovation
  4. Because it doesn’t have a financial model that permits innovation
  5. Because it wants to perform innovation theatre

Let’s look at each of those in turn and see if the innovation competition is the best approach

1. Because directors/senior management do not believe the company holds the skills for innovation within itself

This is an issue of perception and/or distance. Perception in that the skills exist but are not exposed in a way that directors know that the skills are there. Maybe those skills are hidden performing other tasks. Distance in that the directors are too remote from the sources of innovation in the company. In this case, outsourcing innovation is likely to be met with resistance internally, by those who have ideas, have an appropriate approach and behaviour but are not recognised.

2. Because it doesn’t hold the skills for innovation within itself

In this scenario, the host is attempting to outsource the provision of innovation skills. However it’s only sourcing them for the life of the innovation programme, typically an accelerator. It may have a desire to borrow innovation skills from the startups it works with, however the issues are often more fundamental than that. Leading to requiring a change in culture rather than just skills. And a change in culture may require fresh blood.

3. Because it doesn’t have a culture that nurtures innovation

By mixing its own employees with that of startups, the host organisation hopes to have some of the culture rub off on its own employees. This culture-transference is fine in principle, but only works for those that are directly engaged. The effect dissipates quickly as those that were engaged then re-encounter the culture of the host organisation, especially if that host organisation has severe governance procedures.

4. Because it doesn’t have a financial model that permits innovation

Spending money on an innovation programme is a known cost within standard parameters. The host organisation can commission the accelerator or competition under its in-house business rule policies. Whereas if the same business case authors had presented individual and separate innovations to the same approval board, they may have been rejected due to the differences between innovation accounting and more traditional financial accounting.

5. Because it wants to perform innovation theatre

I’d like to think that innovation theatre is a product of accident. In that I’d hope that no organisation sets out with the express wish, whether in terms of vision or other goal, of performing innovation theatre.

Assuming it occurs by accident, we find examples of idea generation, possibly in terms of a internal staff panel competition (think Dragon’s Den/Shark Tank), running a 12 week incubator, hosting a hackathon. How many of those innovation events result in real, lasting change of the same magnitude as predicted during the innovation session? Or do they fizzle when they encounter the host organisation?

Next

I’ve addressed this from a few different angle in a following article.

The Value Affix – Xtech and Why I’m Fed Up with Tech part 2

ecommerce

I wrote in the previous article that we don’t need a separate xtech for any given sector x.

Abstracting further, the focus should be on the customer, not the technology.

We see healthtech, fintech and insuretech which indicate the use of new technologies to improve existing or introduce new business models. But technology is just one factor that could be changed.

Historic changes to business models

Instead we could be changing other elements of the business model.

We’ve already seen the changes introduced during the shift from bricks-and-mortar to online. We stuck an “e-” at the beginning of everything. If it’s Apple-related, maybe an “i”.

We saw segmentation and stuck a CRM at the end of it. And I still chuckle from hearing a supplier introduce “farmerCRM” at the time. In that room, we had all misheard PharmaCRM which made more sense consider the state of the market, although nowadays farmerCRM or more formally agriCRM has enough market presence.

Sometimes we did both and added an “e” and a “CRM”, e.g. ePharmaCRM. Although that was more a proposition from one company than an industry concept.

Then organisations started to realise that not every customer type was the same, so we removed the ‘C’ out of CRM and replaced it with ‘P’ for Partner, ‘E’ for Employee, “G” for Government, etc. Fortunately that died out and we are left with CRM for any type of customer.

We looked at how the channels were being managed and ended up with B2B, B2C, P2P, G2C and so on.

Moreover, some brand names have become synonymous with the elements of the business model they’ve changed.

Think cheap, put an “easy” at the front

Think everything related in one place, put an “rUs” at the end (although at the time of writing, maybe that should be Chapter11RUs?)

And we can continue with the other elements of business models looking for the affixes that denote what’s being changed. Unfortunately, we can also use those affixes to misdirect prospects by indicating that we’ve changed but we haven’t, instead we’ve just stuck an “e” at the front because everyone else does.

Focus on the Customer

Whatever element we’re changing, the focus should always be the customer, or rather, how to deliver more value to the customer.

Based on that concept, should we also see healthvalue, finvalue, insurevalue, etc? However similar to the tech suffix mentioned in the previous article and how techtech is absurb, adding value as a suffix also sounds absurd, but for different reasons.

1) The word “value” is being hijacked

The word “value” has become a euphemism for cheap and a synonym for budget, e.g. “you’ll want our value model” meaning “cheap model” or “budget model”. The word has been hijacked by brands not wanting to admit to customers that it’s a cheaper, inferior product to what they could have bought. I remember returning a drill a few years ago because my house broke it. The clutch on the drill had not coped well with the dense bricks and so the drill had stopped working. I returned the drill to be asked “what did you expect? That’s a value drill.”

On one hand, when viewed as value=cheap. That’s just on the edge of being an acceptable response, but should be followed up with how they can help me.

On the other hand, when viewed as value=worth of good received for total cost (money, time, effort) of transaction, then it implies that every other model of drill in that shop doesn’t provide value to the customer. We can then infer, from using the word as commonly defined in the dictionary, that I had obviously bought the right one for me as it was the only one that provided value.

However, in the parlance of that brand, and many other brands, I’d bought a cheap, inferior product. So we’d have to question whether value is the most appropriate term.

2) It’s all just improvement

By affixing a suffix, we lose sight of what we’re trying to achieve. We allow ourselves to abstract from the domain and the problem at hand, and immediately focus on our solution to resolve that problem. That’s definitely the case for the “-tech” suffix or the ‘e’ prefix. By adding -tech, we’re implying that our solution is tech and it will resolve the issues in that sector or allow us to expand into that market. However there may be more appropriate solutions than tech, so we shouldn’t be constrained by that.  Interestingly, the “-value” suffix doesn’t constrain us in that way, so maybe it is suitable after all.

But we still must be aware that what we’re trying to do with every initiative is to improve. It’s either improve our marketshare (and investor returns), improve our efficiency (and hence profits), improve the life of our customers or some combination thereof. Even if we’re innovating or inventing to get to that point, it’s still an aim to improve the position.

Conclusion

So instead of creating yet more hyped portmanteaus, can we simply stick with the original sectors?

Instead of saying you’re in Fintech, say you’re in Finance and you’re increasing the value you provide to customers everyday. You may do that through technology or you may do that by improving the partnership relations. Or probably both. But it’s still Finance.

 

Since I started writing this article, I began to formulate a 3rd article in the series.

xTech – Part 1 – Why I’m fed up with tech

server

xtech for Sector x

  • Fintech is challenging the Finance sector
  • Insurtech is challenging the Insurance sector
  • Healthtech is challenging the Health sector
  • Will we see Techtech challenging the Tech sector?

And since new technology is developed every month and every year, would we be looking at a Techtechtech sector in a decade?

It’s seems ludicrous to think of it that way and it is indeed ludicrous. The reason it sounds so odd to have a Techtech sector is that we’re allowing ourselves to be focussed on the technology that’s enabling us to replace the older business models.

Analysis

If you get a nice interface to your banking account and that bank account has a different charging model to the older high street banks, does that make it fintech? According to the hyped world, then yes. But it’s stilll banking. It’s still finance. In reality, the newer entrants are just doing what the incumbents should have been investing in more heavily a few years ago.

In some cases, newer entrants who are smaller are working out how to make a profit without the expectations of having to pay the large salaries of traditional banking, without having to pay large, multiyear leases for high street premises, etc. The main lever they’re using is initially technology, but sometimes it’s other elements of the business model that are being altered. That’s a critical point to realise; it’s not always the technology that is being used as a lever for change.

Customer Channels

Let’s take the example of First Direct, the HSBC bank that had no high street branches and regularly received excellent customer satisfactions scores compared to its high-street cousins. Mint, Smile and Egg all followed with variants of similar business models. They had changed one element of the business model. They had focussed on the channel of interaction, forcing a channel shift from face-to-face to telephone (at the time) and online (later when the technology caught up). Everything else (apart from perhaps some of the branding/marketing) was the same as the high-street.

Business Models

What we’re seeing now is other entrants prepared to look at other components of the business model, such as where the revenue is generated (e.g. subscription versus visible transaction vs bundled transaction cost vs bundled products and so on).

Here’s a simple concept: Take the Business Model Canvas and apply SCAMPER to each section. It’s that easy to generate new ideas and that’s what seems to be happening in every sector.

But this isn’t really fintech. Yes, tech is opening up opportunities and provides the ability to change different elements of the business model that would have been more awkward or at least not cost-effective to change before. But, again, it’s still banking. So let’s just call it finance. The big question for incumbent banks is, rather than relying on their current business working in the future, they’ll have to accept that different models will emerge. And it’s their choice if they want to be delivering those models, enabling others to deliver them on their behalf, or simply be swept away as their market share is eroded by competitors.

Conclusion

Let’s get this straight. I’m not against the concept of Fintech. I’m against the fact that the concept exists separate to the Finance sector (or rather a subset of it). I believe that every sector has a duty to innovate, improve and invent. For sector x, we don’t need xtech.

  • There’s an additional angle to this which I’ll cover in the next article.

Where Do I Learn? – Part 2 – Books

Books

If I’m driving, I’m listening to podcasts. If I’m travelling by train, then I’m reading.

I typically read books that don’t directly relate to my profession, but those that I hope will change my approach to how I work with clients.

For every client I go to, I end up mentoring business analysts, business architects, programme manager, project managers and other change programme staff. So I’ve kept a list of references (not just books) on Evernote and I tailor it to the person I’m mentoring at that time.

Here’s the list of books that I recommend:

1. Lean

Production Line
Production Line

1.1. Womack and Jones: Lean Thinking: Banish Waste and Create Wealth in Your Corporation

This is the book I recommend to anyone trying to understand lean for changing services and organisations. However, once you understand, you’ll start applying it to other areas of your life. There’s a lot of argument in the field about whether this is really Lean, TPS or some other methodology. At this stage, if it’s your first introduction to field, this is a great book to start with. You won’t be an expert by the end of it, but at least you’ll understand more and be able to understand some of the differences in the arguments.

1.2. Womack and Jones: Lean Solutions: How Companies and Customers Can Create Value and Wealth Together

The 3rd book in the series by Womack and Jones. Most useful for service industries and how to value the time of the customer more. Sometimes this is the book that makes the reader sit up and go “I get it now”, especially if they’re working in health or social care.

1.3. Womack, Jones and Roos: The Machine That Changed the World

The first book in the series. It’s the book that introduced the term Lean to the world (although the term had been in minor use before that). It’s useful if you’re interested in the history and how automobile manufacture has changed. If reading, get a later edition due the updates. The world has moved on since it was written, so usually I’d say it’s only worth reading if you’re interested in the subject and want to read about the case studies. But there’s an element of learning about some of the issues faced by companies as they implement lean for the first time.

2. Lean – More Advanced

Production
Production

2.1. David Mann: Creating a Lean Culture: Tools to Sustain Lean Conversion

This book is useful since it covers a lot of ground that is missing from the Womack and Jones books; mainly that there has to be a culture to make it happen and foster the long-term improvement. So David focusses on the role of the manager and what they need to do.

2.2. The Lean Toolbox for Service Systems

Probably the driest book in this list, it’s worth persevering with. There are some gems of ideas in there. I tend to offer it more as a reference to analysts to pick and choose from, rather than read the whole book. Note that I don’t pay that much attention to the process part of the book; but the principles are still sound in that we should choose different methods and tools at different levels of granularity and purpose.

2.3 Michael L. George: The Lean Six Sigma Pocket Toolbook

Nicely summed up by it’s streamline: “A Quick Reference Guide to 70 Tools for Improving Quality and Speed”. It’s a small book with each tool described, how to use and when to use it. Useful to have at arms-length when checking which calculations should be used, especially if you’re not conducting them every day.

2.4. Toyota Kata – Mike Rother

https://www.amazon.co.uk/Toyota-Kata-Managing-Improvement-Adaptiveness/dp/0071635238/

One of my favourite books in this list. This includes tales and case studies highlighting the real root of TPS, in terms of how mentoring and problem solving are achieved and how they are intertwined. This is a necessary complement if you’ve started out with Womack and Jones.

2.5. Lean Enterprise – Jez Humble, Joanne Molesky & Barry O’Reilly

https://www.amazon.co.uk/Lean-Enterprise-Performance-Organizations-Innovate/dp/1449368425

An interesting book that takes learning from Toyota Kata + Cost of Delay + agile and continual improvement on an enterprise scale. It provides a way for structuring your business from a prioritisation, problem solving and personal development perspective. I’d suggest starting with Toyota Kata first and then reading this one.

3. Influence and Sales

3.1 Robert Cialdini: Influence: The Psychology of Persuasion

Out of all the books I recommend to anyone I’m mentoring, this is usually at the top of the list. Partly so that we can talk about the same concepts and understand how we’re being influenced (and how we can influence others). It doesn’t matter if you don’t use it at work, you’ll find a use for it when buying your next car, watching how supermarket designers manipulate your thinking, etc. Even in the RNLI station/shop in Blackpool, I noticed 3 of the principles being used on one display stand.

3.2. Robert Jolles – Customer Centered Selling

This is easily the best book on selling that I’ve ever read. He describes a process, and while we’re all human and don’t follow always follow processes, it’s really useful to know what’s expected at what stage and what’s missing if you’ve jumped straight in.
There are a few editions of this; all out of print, but some are more available than others. And check eBay and Amazon used.

3.3. Chris Voss – Never Split the Difference

Chris’ book is close to the top of my list for books to recommend to business architects and business analysts. There’s little point doing a great job from your professional domain if you can’t influence others to accept your way of thinking. That’s not to say that you should manipulate others, instead it’s to give your work a fair chance of being heard and an opportunity to be adopted.

3.4. Roger Fisher: Getting to Yes: Negotiating an agreement without giving in

Based on the Harvard model of negotiation, including Best Alternative to Negotiated Agreement. It concentrates on creating the framework first before discussing points. So agree how you’re going to agree before you start talking the specifics of the deals.

3.5. Dan Roam: Back of the Napkin: Solving problems and selling ideas with pictures

Can’t draw, have difficulty communicating ideas? Then have a look at this book for understanding the simplest type of diagram to draw for any situation. It’s here on this list because many of the pivotal moments when you’re describing your ideas can be accelerated by use of the appropriate diagram. Pay particular attention to the SQVID.

3.5. Joe Navarro – What Every BODY is Saying: An Ex-FBI Agent’s Guide to Speed-Reading People

The best book I’ve read on non-verbal communication and body language. There’s a simple theme running throughout the book; you can’t tell what someone is thinking, but you can tell if there’s a disconnect between their non-verbal communication and their communication.

4. Education

4.1. Josh Kaufman: The Personal MBA: A World-Class Business Education in a Single Volume

I’m often mentoring change professionals who, while they may be great at their chosen profession, don’t understand accounting practices or how decisions are made. So I direct them to these two books. This is the shorter one; quicker to read and digest.

4.2. Steven Silbiger: The 10-day MBA: A step-by-step guide to mastering the skills taught in top business schools

The second of the two general business books I recommend. This has more detail than the Personal MBA but also may require guidance due to the complexity.

5. Entrepreneurship/Innovation

innovation
innovation

5.1. Eric Ries: The Lean Startup: How constant innovation creates radically successful business

I find that this book can change the reader’s approach to large-scale programmes. It makes them think more about incremental change based experiments. I also find that I still have to remind mentees about the purpose of experiments, i.e. to validate learning. But if they’ve read the book, it’s absorbed easier with that gentle nudge.

5.2. The Startup Owner’s Manual: The Step-by-Step Guide for Building a Great Company – Steve Blank and Bob Dorf

Kindle is usually significantly cheaper than the paperback/hardback.
The Startup Owner’s Manual deserves more fame than it has. It’s unfortunate that it’s been somewhat eclipsed by the Lean Startup, since it has significantly more usable material in it. That hightlights the differences; the Lean Startup is a book that promotes the culture and activities, whereas the Startup Owner’s Manual is a guide to the activities that you have to follow. Admittedly, it can be a bit daunting to read at first, since it comes across more as a reference guide that you can dip in and out of. This is the book to read to understand the concept of Customer Development.

5.3. The Lean Entrepreneur: How Visionaries Create Products, Innovate with New Ventures, and Disrupt Markets

If I know you’re an entrepreneur or a startup founder, then I recommend this book above all else. It takes the learnings from a lot of other sources and puts them into one practical book. So expect to see references to the Lean Startup, Customer Development and Business Model Canvas as well as tables that you use to record and plan your own progress.
Pay attention to the reverse planning process; it’s important to know where you want to get to and then work back from there.

5.4. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers

Alex Osterwalder has started a movement and initiated a number of more domain-specific spinoffs. If you have a problem you can probably find a canvas for it now. This is the book that brought canvases to us, taking a simplistic view of business architecture and making it accessible to all.

5.5. The Mom Test – Rob Fitzpatrick

A short book, but it doesn’t miss anything out. If you’re conducting user/customer interviews, you should read this book first. Ideal for users researchers in service design/design thinking and for startup founders. Don’t be fooled into believing what your customers say; they have other motives, so it takes a different approach to obtain the information you require.

6. Business Strategy

Chess
Chess

6.1. Richard Rumelt – Good Strategy/Bad Strategy: The difference and why it matters

This includes so many case studies regarding how to set strategy. It’s a fascinating read. Main point to take away is that a good strategy includes 3 parts:
  1. An analysis of the current situation
  2. A vision of the future
  3. A plan to achieve that vision

6.2. Michael E. Gerber: E-myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It

At the other end of the scale from Good Strategy/Bad Strategy, Michael discusses small business strategy by using a small bakery as a example throughout the book. It does focus on franchising as a solution in the second half. It’s a useful book for small business owners, helping them think about the processes and systems they need to have in place.

7. Change

Butterfly
Butterfly

7.1. Richard Wiseman – 59 Seconds: Think a little, change a lot

Change yourself in less than a minute. That’s the main concept behind the book. Richard takes us through a journey, referencing many studies across the last few decades and how we can learn from them to influence our own lives.

7.2. Richard Wiseman – Rip It Up: Forget positive thinking, it’s time for positive action

The follow-up to 59 seconds. It’s actually the more practical book out of the two, but it makes sense to read 59 seconds first.

8. Facilitation

Session
Session

8.1.Understanding Facilitation – Christine Hogan

https://www.amazon.co.uk/Understanding-Facilitation-Theory-Principles-Principle/dp/0749438266

Christine covers a lot of ground in this book. She educates about the history of facilitation, different forms of it and how it has progressed. This is a must-read for facilitators.

8.2. Practical Facilitation – Christine Hogan

https://www.amazon.co.uk/Practical-Facilitation-Techniques-Christine-HOGAN/dp/0749438274

In the second book I recommend from Christine Hogan, she introduces tools and techniques for facilitating. This is a good read and worth keeping to hand as a reference guide when you’re starting out in your facilitation experience.

8.3. Sue Knight : NLP At Work

I wondered whether to include this since I don’t actually believe in NLP. There just wasn’t enough scientific evidence at the time I looked into it to prove it worked. However there have been times with facilitators who have had difficulties with some of their customers that I’ve recommended certain parts of this book. Critically, the concept of reframing has helped numerous analysts continue working with customers rather than going home stressed at the end of the day. It’s helped them realise where the problem could lie and, more importantly, that it doesn’t lie with any of the people.

Be a Startup, not a Zombie

Zombie Hands
Zombie Hands
Zombie Hands

I’m just catching up on an episode of The Salesman Podcast hosted by Will Barron. The episode is about being the first sales person in a new company.

While I agree with everything Vinnie has said, one thing came to mind. If you’re the first salesperson and you’re conducting product-market fit conversations, then you’re working for a zombie, not a startup; it’s dead, but doesn’t know it.

I can’t think of a more suitable activity for the founders before hiring anyone than to conduct those conversations themselves. The only exception I can think of is where the founders have zero business sense (think of the traditional, out-dated view of scientists) and need to hire to make a business.

Think back to Steve Blank’s Customer Development concepts and subsequently, Eric Ries’ Lean Startup, checking whether the market wants your concept and whether the product you have in mind fits that market need are two fundamental tasks to complete before you build the product or first iteration of the product.

 

 

 

 

 

Considerations for the platform of a new startup

Background

I’m seriously considering building my new startup on Microsoft’s Azure platform with the BizSpark programme and that’s a departure for me.

I’m going to use the term “startup” loosely but at least 1 of the 3 conformed to Steve Blank’s definition, proving the business model worked. I’ll cover three of the ideas; 2 built and 1 about to be built.

First Startup

I’ve built my first startup on Amazon’s AWS. The 3rd party documentation on how to configure a linux instance to accommodate Ruby on Rails was a key driver in that decision. Incidentally, I was also new to Rails, so I had a double learning curve. The documentation was thorough enough and up-to-date enough that I was able to follow the instructions and maintain the instance for a year.

I didn’t like the charging mechanics of AWS for startups, not boot-strapped startups. My idea at that time was large and could only start large. There was no concept of building it small and growing. It had to start large and grow from there. So the small instances offered in AWS startup package weren’t sufficient. So that meant projecting costs forward 12 months and deciding on reserved versus on-demand usage, etc.

That led me to rethink my next startup

Second Startup

My next one was much smaller. More an attempt to keep my knowledge current, in terms of startups and development. I’m not a developer by profession (or haven’t been for many years), so the same as playing guitar, if I want to be able to perform, I have to practice. I chose Heroku. Partly because I wanted to build at no cost and partly because I wanted to explore the limits of Heroku (I found them). In the first startup, I had Apache/Lucerne Solr and found that I’d need to licence this separately as a service on Heroku. There were a few options, all by 3rd party developers.

That made me consider Digital Ocean, etc. Not for a full-live release, but while the startup is proving its business model.

Towards the end of the first startup, I encountered Google Cloud Platform. That had some real advantages that I liked the look of. I really like the pricing mechanics in that the cost you pay was calculated based on your usage. The more you used it, the lower the unit price. So you could end up with a similar cost to AWS’ reserved leasing, but with the on-demand commitment. I liked that idea. Plus I began to understand that Google Cloud Platform offered similar server instances to AWS rather than just the app engine (which had the reputation of only allowed certain languages); something that I hadn’t realised before. So from my perspective, GCP became my first option for a new startup.

Now

So what changed my opinion towards Azure? I’ve been thinking about Azure for a while. In terms of whether it would make connecting to business applications easier than with the other platforms. I’m sure the others would work, but I’ve been considering reducing friction to change. Whereas my previous startup concepts were B2C (although the first had a significant B2B element in it), this current idea would be B2B so I want it co-exist with the ecosystems of clients. And most of them will have Windows operating systems and applications. The Gartner Magic Quadrants, including that on Cloud IAAS positioned Microsoft as a Leader in the quadrants.

Add to Azure, the support from BizSpark and it begins to look an attractive proposition. At least one, I’ll be happy exploring for this next project.

What value do you place on your support networks?

Introduction

BestenoLogo
BestenoLogo

I gave a short presentation at GreatPreneurs’ conference (#GPConf2014) in Manchester this weekend on the subject of “What does your support network do for you?”

I wasn’t talking about friends or family, but rather the startup events and meetings that occur in your city.

Value

I’m pretty convinced you could eat for a month without having to buy any food by attending an event in the morning, a different one in the afternoon and one or two in the evening. Every day. In Manchester, UK, there are enough events to do this. But if you were to do so, that’s all you’d manage to accomplish. Well, that plus swapping business cards and talking to people. You wouldn’t actually get any work done.

When you’re pre-startup, bouncing around ideas and wondering what you’re business is going to be, these events can be ideal. They allow you to learn from others, get a feel for what your city provides and understand how others have succeeded or failed.

Shift of Focus

At the point that you commit to having a startup, then the focus changes. You’re no longer going to these events just for yourself, you’re going as a founder of your startup. The question of value also changes. My rule is “has my company progress further by me attending this event than if I’d focussed on growing the company instead”. That could mean developing new features, ringing up a customer, creating some marketing collateral, etc.

This shift of focus vastly reduces the number of events that are worth attending. In fact, it highlights gaps in the current support network. You may find, as we did, that there weren’t events focussed on what you wanted. So we created our own. The good thing is that nowadays, with tools such as eventbrite and meet up, you can create an event really easily. I’d recommend treating the event as a mini startup in itself, so think about the customer development very early on before you scale.

Pay It Forward

However, events shouldn’t just be about receiving. For equitable events with everyone sharing, rather than those where you pay to attend, the events only work if you give. You may be giving information, advice, consultancy, some information about yourself, friendship. That all needs to be provided for someone else to receive. Sometimes, it will be you receiving and that’s good. I’d ask everyone to give before they receive and to give more while they have the time, because when they near the end of the runway, they’ll really require some help. Think of it as investing in your future.

Slides and Comments

I’ve embedded the slides here and I’d be happy to hear comments. You can find me @alanward.

The first three months of a startup at Besteno

Besteno logo

Besteno logo
Besteno

Time has been passing quickly at Besteno, so I thought I’d take stock and describe what can happen in the first three months of a startup, specifically my startup, Besteno. What have I done, where am I headed?

Background

October 26th 2013 was the first day of LeanConf 2013 (the link now relates to the 2014 conference) and I was due to present the following day about my experiences of using Lean Startup concepts in existing organisations, specifically social care in the public sector. Up to that point, I’d been talking to friends about setting up a company together. However, most had families, couldn’t commit or were in a different place to make it too awkward to co-found. During that conference I just decided to start on my own and then look for a team later on.

As a web startup, that meant I had code, test, maintain and design. Before any of that, I had to understand if the business was worth getting involved in. So that meant business model canvas for one year and one for 3 years. I had a long-term vision and still want to achieve that so every short-term objective is evaluated against the long-term aim. That’s been a consistent strategy. From the business model canvas, I created a couple of sketchy business plans and then projected user growth. While this may not have been accurate, it’s a useful guide and I change it when I discover accurate data. Conducted some market research, which combined with user growth, enabled me to create cash-flow forecasts for every month for 5 years. Monthly may seem excessive, but I’m quick with spreadsheets and once you done figures and calculations for two months, you just copy for the rest of it. This wasn’t onerous for me. It’s not a route I’d recommend for everyone, but suited me with the skills I already use.

All of that preparatory work proved to me that this was an idea to at least get to the MVP (Minimum Viable Product) stage.

Then development started.

Technology

I had to teach myself Rails. Fortunately, I had a business idea earlier in the year and played with Rails to get my head around how it worked. However, I was still a novice. I used to code 15 years ago, but hardly ever do it, up until now. Best thing I did was ditch SQLite and go straight for MySQL, even for dev. It was actually quicker. It also makes the transition from dev to production a lot easier. PostgreSQL is good as well, if not better, but I had my reasons for MySQL.

I opted for Rails 4 and Ruby 2.0 as they seemed stable and the increased remaining lifetime compared to Rails 3 was attractive. That then gave me some other problems. I knew I wanted a scalable host/cloud and very few advertised that they handled Rails 4 back then. I opted for AWS having found a good couple of articles on how to set up the servers. Before that though, I had to understand web service architecture. Having been a business transformation consultant for the last decade or so, I didn’t have the nuts-and-bolts knowledge of how web architectures worked. Fortunately, I knew what most of the components were, just not how you’d use them. So that filled a couple of evenings.

Other odd technical things I’ve had to pick up along the way:

  • how to run a process without it stopping when your session stops – use nohup or run as a daemon – depending on the process. And find out how to stop them (kill -15 was the lowest level kill I found that worked for one stubborn process)
  • how to monitor the above processes – tail -f is very useful
  • setting up memcached and how to see if it’s working – use the port.
  • wishing every shell had nano instead of vi. I prefer nano and I’m sure I could replace vi with nano, but then it crops up again when creating batch jobs with crontab. There are enough things to learn in life, cryptic applications like vi aren’t on my list.
  • Learning CSS, html and bootstrap. Understand the effect that the order of commands has.
  • Firewall configuration, scaling options, pricing options with AWS
  • Understanding how to retain data when your really big server that you hired for a very cheap spot rate on AWS kicks you out of the session – it happens so think about what you’ll do with the process if it stops midway. Some of my processes were taking 2 days to complete. I didn’t want to waste my time or money.
  • Understanding solr and its rails integration through sunspot. There are some odd anomalies.
  • I didn’t do TDD. Sorry to Rails devs out there. I just couldn’t get tests to execute, usually because of the software stack on my MBP including several OS X upgrades. In fact I even had to install RVM in an odd way on the MBP just to get it to work. My view with TDD was that it was going to take me a few days to get it working; resintalling, etc. I figured it was more important to start coding, then retrospectively write test scripts for the more important features once I had breathing space. That’s the technical debt I took on.
  • Integration with other providers is painful. Overall, I found lack of current documentation to be the biggest issue here. Add to that documentation that doesn’t reflect the behaviour of the API itself and manuals that weren’t well written (probably just rushed).
  • I left ETL processes until after I’d built and launched. As much as they are needed, they weren’t part of the MVP. Do it manually on a command line if needed to start with.
  • Coding is a different exercise now compared to when I used to do it. Back then, I used to develop with a few reference manuals to hand (K&R anyone?) and using man, apropos and a few other useful commands. Now, just go to stack overflow or official guides online.
  • Finding where mysql logs are stored on AWS
  • Trying to identify the active memcached configuration file is a bit of trial and error. I imagine you could deduce it logically, but that’d mean access to information I hadn’t thought of.

Finances

Part-way through planning I realised I’d need funding so I started talking to Access to Finance. Separately, I applied for funding through TSB SMART. I found out about it late and submitted around midnight of the last day (with about 12 hours to spare). The exercise itself was useful to me; it made me think more about what I wanted money for. So instead of thinking I need a couple of developers and a designer to improve the product, I started thinking in terms of work packages and deliverables. Fortunately, that’s something that comes naturally to me from my previous business transformation background. Unfortunately, it doesn’t align well with sprints including as-of-yet unknown requirements. This made obtaining funding a bit uncomfortable process, especially as Manchester seems relatively financially risk averse. Which is at odds with the culture of the Madchester music scene during which I arrived in Manchester a couple of decades ago.

Premises and support

SBIC have been great. I get a day per week out of the house in their business lounge. They’ve been a very useful sounding board. Being in a environment where I know I have to work is ideal. There are few distractions for me and I just get on with what I need to do. They’ve also managed to find a few subjects about business that I know I’ve been deficient in (or at least, I wasn’t sure what I didn’t know).

Free wifi access in Manchester is a bit poor. Shame. It’s a major city, but bars and coffee shops seem to think of wifi as an extra that you have to ask for. All too often, it just doesn’t work. Whereas it should be considered about as important as chairs or heating nowadays. It is changing for the better. The implication of this is that it’s not as easy as you may think to find places to work.

I’ve attended numerous events at various sites around the city, predominantly Thoughtworks’ offices, The Hive, Techhub and I run Founders’ Assembly, currently hosted by Matt at The Assembly.

Founders of other startups have been supportive. Like most groups of people, there are some who are just generally open and share everything and then others who don’t share as much, whether for potentially misguided commercial reasons, lack of community focus or just not their personality. I have an overall feeling that other founders are quicker to give advice than to listen. That may be the typical age and experience or just the way that we founders are.

Business Growth Hub are a major contributor to business support in Manchester. As well as one-to-one advice, they host a number of events for startup businesses. I haven’t attended as many of these as I could have, mainly because I’ve already accumulated a lot of experience in running my previous company and as a consultant on client sites. I can imagine that, if you were new to business, then their events would be much more suitable.

Project Management

I use a combination of Trello (for business activities) and Excel (for tech activities). Trello works well for business. I like the finality of dragging a card to Done (even though I know I can undo it). However I couldn’t get on with Trello for development, partly because I was offline a lot of the time. So I built my own two worksheet spreadsheet. I’ll describe that in more detail in another post. The important point for me was that I could put it on Dropbox and it’d be with me wherever I was, regardless of how good the wifi connection was.

Results

It was interesting to see the first few queries that arrived via Google search. Truly the long-tail in operation:

  • belizean cheesecake recipes
  • grendad best drumer [sic]
  • prembroke mass nunnery
  • ukraine electric bass

There were some more common queries as well which was a nice balance.

Any Hints

  1. If you’re calculating any forecasts, keep a separate worksheet in your spreadsheet for assumptions. Use this for growth ratios from month-to-month, revenue per customer, staffing ratios required. Anything that you’re assuming or deciding. Choose 3 colours – one for assumptions, one for calculated values, one for known facts. Hopefully by the end of planning, you have none left of the first (never works that way). The reason I do this is so that I can change my forecasts very quickly by changing the assumption. Very useful if I’ve assumed a figure (e.g. number of people in the UK), then find out from ONS or somewhere an actual figure. First I change the figure, then change the colour. Then I can see the effect that change has had across the forecast.
  2. Business Model Canvas first. Even if you only spend an hour or two on this. Do it. Then revisit it after a few days. Then revisit on a regular weekly or monthly basis depending on your rate of change
  3. Manage your motivation. Keep positive but be realistic. Every evening, I write a list of my tasks for the following day. Means I get up knowing what I have to do. Usually that list comes from a quick look through the feature list, business list and bug list. I choose depending on where I’ll be, network connectivity and any sequence that needs to be adhered to.
  4. Manage your energy levels. Know when you work best, under what conditions, in which environment, how much do you need, when can you work late and realistically catch-up on sleep, what’s your performance like the day after working late (is it worth it?)
  5. Manage your time spent on product development versus time spent attending meetings versus time spent developing your business. It’s amazing how many meetings arise. How many are useful to you? Alternatively, how many would your presence be useful to?
  6. Running a startup isn’t just product development, you have to develop your business and yourself as well.
  7. Maintain focus. When you’ve decided on your MVP, make sure you do everything you can to release it. If you keep adding features to it and delaying the release, you’ll learn nothing about your market or your customers.

By the way, I’m four months in now, but I ended up sitting on this unfinished article while I launched the MVP. That’s prioritisation for you. So I’ve tidied it up and published. I’ll write the rest of the story another day.

I’d love you to answer some questions over at Besteno. Answering or sharing a few questions there would help me out.

The Cupcake Strategy – Business Strategy for a Startup Business

Cupcake by zigazou75 CC-by-2.0

Introduction

Cupcake by zigazou75 CC-by-2.0
Cupcake by zigazou75 CC-by-2.0

I’m often talking business strategy and how it can apply to any business no matter how new or how small. Strategy should be applied to every business but it’s a shame that the closest many business owners get to it is a business plan for a bank loan. This is even worse when they may have need a lesser amount or even avoided the loan completely had they planned differently.

What I’ll Cover about Business Strategy

I can think of a few TV series where one of the characters set up a restaurant or a cupcake business. There’s something about that concept that must correlate with our desires. I see many new cake businesses, I know several people who have all separately and independently started into cake-making businesses. So based on that comes the new series of articles.

I’m going to review the current state of business strategy thinking and apply it to a hypothetical cupcake-making business. It’s a free series of articles and the majority of the lessons should be applicable to other industries. I’ve chosen cupcake-making because of its popularity and the ease of understanding.

Whether we want the job or not, it’s easy to put ourselves in the position of cupcake business owner. In its simplest form, we all know that you have to buy baking products, mix them according to a recipe, put them in an oven, remove them when cooked and sell the cakes. Over the series of articles, we’ll see how that simple concept could translate into a cupcake-making business.

What You’ll Learn about Business Strategy

  • How business strategy can be applied to small businesses, especially new and start-up small businesses.
  • What tools you can use to evaluate and validate your business ideas
  • What tools can help you to steer your business in a different direction
  • Some insight into how this can be applied to larger organisations and companies

Most importantly, you’ll be in a position to learn:

  • How to think analytically about your business idea and be more informed about the decisions you’ll make

Questions

Do you have a strategic idea that you’d like to see considered in this series, let me know. Either sign-up to the newsletter and ask there or contact me.