Archive for August, 2007
August 14th, 2007
The goal of forecasting is not to predict the future but to tell you what you need to know to take meaningful action in the present.” Paul Saffo
Paul Saffo is speaking at a Churchill Club Breakfast on Tue Aug 28 7:30am to 9am at Fenwick ( 801 California Street, Mountain View, CA 94041) on “Forecasting the Future to Make Better Decisions in the Present.” Register here.
I blogged about Paul Saffo in January “Ready Fire Steer,” he is a firm believer in Peter Drucker’s maxim that the best way to forecast the future is to carefully look for events that have already occurred but whose full effects have not been felt. His talk appears to be based on an excellent article “Six Rules for Effective Forecasting” that ran in the July-August 2007 Harvard Business Review. To motivate you to set your alarm clock a little early in two weeks, here is a high level summary of article’s description of the rules:
- Define a Cone of Uncertainty. The art of defining the cone’s edge lies in carefully distinguishing between the highly improbable and the wildly impossible. Outliers–variously, wild cards or surprises–are what define this edge. A good boundary is one made up of elements lying on the ragged edge of plausibility. They are outcomes that might conceivably happen but make one uncomfortable even to contemplate.
- Look for the S Curve. Change rarely unfolds in a straight line. The most important developments typically follow the S-curve shape of a power law: Change starts slowly and incrementally, putters along quietly, and then suddenly explode, eventually tapering off. S curves are fractal: very large, broadly defined curves are composed of small, precisely defined and linked S curves. For a forecaster, the discovery of an emergent S curve should lead you to suspect a larger, more important curve lurking in the background.
- Embrace the Things That Don’t Fit. The early part of the S curve before it explodes with indicators that subtly hint at things to come. The best way for forecasters to spot an emerging S curve is to become attuned to things that don’t fit, things people can’t classify or will even reject. We tend to ignore indicators that don’t fit into
familiar boxes but anything that is truly new won’t fit into a category that already exists. Indicators frequently look like failures, so if you want to look for the thing that’s going to come whistling in out of nowhere in a few years and change your business, look for interesting failures–smart ideas that seem to have gone nowhere.
- Hold Strong Opinions Weakly. In forecasting a lot of weak but interlocking information is vastly more trustworthy than a point or two of strong information. Traditional research is based on collecting strong information, but once researchers have gone through the long process of developing a beautiful hypothesis, they tend to ignore any contradictory or disconfirming evidence until it becomes overwhelming, causing a paradigm shift. Thomas Kuhn documented this nonlinear process in The Structure of Scientific Revolutions. Forecast often and be the first one to prove yourself wrong by discovering new data that overturns your old forecast.
- Look Back Twice as Far as You Look Forward. Marshall McLuhan once observed that too often people steer their way into the future while staring into the rearview mirror because the past is so much more comforting than the present. McLuhan was right, but used properly, our historical rearview mirror is an extraordinarily powerful forecasting tool. The texture of past events can be used to connect the dots of present indicators and thus reliably map the future’s trajectory–provided one looks back far enough.
- Know When to Make a Forecast. It can be a liability for forecasters to confuse novelty for change. Even in periods of rapid transformation, much remains constant. Consider the 1990s dot-com bubble: underneath the many new things happening were fundamentally unchanging consumer desires and–to the sorrow of many a start-up–unchanging laws of economics. By focusing on the novelties, many forecasters overlooked that consumers were using their new broadband links to buy very traditional items like books and engage in old human activities like gossip, entertainment, and networking.
Any one of these rules deserves it’s own post (not a bad idea for a series), but I will hold off until I have had a chance to hear the talk. The Churchill breakfast events are typically more intimate (for those of us able to get up that early) than their dinners and give you a real chance to meet and assess the speaker. Register here.
August 13th, 2007
Tim O’Reilly had a great post yesterday, “Surprises on the Bookshelves of CEOs” that also included quotes he has collected over the years. A few that I hadn’t seen before that I found thought provoking were:
“Hope is definitely not the same thing as optimism. It is not the conviction that something will turn out well, but the certainty that something makes sense, regardless of how it turns out.”
Vaclav Havel
“It is well to remember that the entire universe, with one trifling exception, is composed of others.”
John Andrew Holmes
“History is a wave that moves through time slightly faster than we do.”
Kim Stanley Robinson
This last one becomes clearer as one gets older. O’Reilly has used it in an earlier piece “Levels of the Game: The Hierarchy of Web 2.0 Apps” where he also discussed James Fallow’s experiment in using only Web 2.0 apps for a week. It reminds me of a longer passage from the afterward to the tenth anniversary edition of Zen and the Art of Motorcycle Maintenance by Robert Pirsig.
This book has a lot to say about Ancient Greek perspectives and their meaning but there is one perspective it misses. That is their view of time. They saw the future as something that came upon them from behind their backs with the past receding away before their eyes.
When you think about it, that’s a more accurate metaphor than our present one. Who really can face the future? All you can do is project from the past, even when the past shows that such projections are often wrong. And who really can forget the past? What else is there to know?
Ten years after the publication of Zen and the Art of Motorcycle Maintenance the Ancient Greek perspective is certainly appropriate. What sort of future is coming up from behind I don’t really know. But the past, spread out ahead, dominates everything in sight.
August 8th, 2007
The sales process may seem like a simple exchange - you convince a prospect to accept your product or service in exchange for their money. However, there are a number of overlapping processes running to get you to that point.
A few thoughts about one of them: the process that prospects go through to decide if they are going to buy from you. Jerry Weissman has framed this as Understand, Believe, and Act.
First a prospect must understand what you have to offer. This is straightforward when your product is a better, faster, cheaper version. But this is much more difficult when it is an innovative technology. Demos and sales pitches become critical. We joke that “If you are looking for smarter prospects who will understand your offer, then maybe your demo sucks!” Sadly, this is often the case (we have even had to apply it to our pitches from time to time).
Presenting an innovative technology in a way that’s understandable to a prospect is never easy. The language, the problems, and why it is better must be grounded in the prospects world. If you give a prospect a feature list, some will be able to “get it”, but not many. To reach most prospects, you must start from a problem that they know they have, and offer a solution they can understand.
Secondly, prospects must believe that your innovative technology will actually deliver them the benefits you promise. New technology always brings risk. They may risk losing their job–or at least putting a “dent in their career”–if you don’t deliver! The first people who will trust you are folks with whom you already have a prior shared success. They know you can deliver. Usually these people are the source for your early sales. When your first clients say “I used it and it worked” to their friends they give you credibility. Eventually you must get to strangers referring other strangers to buy. Testimonials on your website are critical for prospects believing your claims. Testimonials, like your demo, must be in the language customers use and from people who are credible.
Only after they understand and believe will customers ever act. But they act on their own cycle, whether it’s a certain point in the product development process, a certain time of year, or a phase of the moon. It’s their timing! Your challenge is to make sure they remember your offering when they are looking for it. For this reason you need a method of reminding those people that you have a solution. We call this percolating. This is the function that applications like Salesforce provide: you can set up a sales campaign to remind you to contact everyone who is percolating every 6 weeks or so (or whenever they wanted to hear back from you next). Another method we have seen work well are newsletters. If you can help your prospect and send them something useful every 6 weeks, people will join the mailing list and remember you when they have a problem you can help them solve. Be there when they are ready to act.
August 7th, 2007
The following is a time capsule [Ed: more of a “tiny time pill” than a full capsule] from August 7, 2000.
I posted this as part of a personal home page on August 7, 2000 when I was working on a website for executive meeting agendas, presentations, and minutes in the Service Provider Line of Business. I was cleaning out some old files and thought most of these would actually be good advice for startup founders as well. I have added some links to earlier posts that have incorporated some of them as well as links to background on the authors.
Ten Quotes To Help You Bring Order Out of Chaos at Cisco
- “Never mistake a clear view for a short distance.” Paul Saffo
- “We must be the change that we wish to see in the world.” Mahatma Gandhi
- “Creativity is the ability to identify self-imposed constraints, remove them, and explore the consequences of their removal.” Russel Ackoff
- “Do Something Small But Useful Now.” Bob Bemer (inventor of ASCII)
- “Sometimes you just have to take the leap, and build your wings on the way down.” Kobi Yamada
- “Better Never Than Late” Ray Kurzweil
- “A complex system that works is invariably found to have evolved from a simple system that worked. A complex system designed from scratch never works and cannot be patched up to make it work. You have to start over, beginning with a working simple system.” John Gall in Systemantics
- “You can’t believe that a plan is real until you’re vaguely disappointed.” Rhett George
- “In a time of drastic change it is the learners who inherit the future. The learned usually find themselves equipped to live in a world that no longer exists.” Eric Hoffer
- “The difference between a good career and a great career is the ability to leave some things unsaid.” Keith Herrmann
And across the bottom was a tagline quote from Kristin Zhivago “Your Brand is the Promise You Keep.“
August 6th, 2007
Guy Kawasaki had a great interview with Glenn Kelman, the CEO of Redfin, last week that was a well written counterpoint to some of the “make money fast in your spare time in your underwear” blather that Guy has been generating with “No Plan, No Capital, No Model…No Problem. ” Google Video of event here. Some of Kelman’s observations that really resonated with me:
Lately I’ve been thinking how hard, not how easy, it is to build a new company. Hard has gone out of fashion. Like college students bragging about how they barely studied, start-ups today take care to project a sense of ease. Wherever I’ve worked, we’ve secretly felt just the opposite. We’re assailed by doubts, mortified by our own shortcomings, surrounded by freaks, testy over silly details.
[…]
Like the souls in Dostoevsky who are admitted to heaven because they never thought themselves worthy of it, successful entrepreneurs can’t be convinced that any other startup has their troubles, because they constantly compare the triumphant launch parties and revisionist histories of successful companies to their own daily struggles.
“Revisionist histories of successful companies” is something that’s not widely appreciated. Eric Hoffer cautioned against tihis tendency in his observation “Our achievements speak for themselves. What we have to keep track of are our failures, discouragements, and doubts. We tend to forget the past difficulties, the many false starts, and the painful groping. We see our past achievements as the end result of a clean forward thrust, and our present difficulties as signs of decline and decay.”
Most start-ups find an interesting problem to solve, then just keep working on it. At a recent awards ceremony, Microsoft CEO Steve Ballmer tried to think of the secret to Microsoft’s success and could only come up with “hard, hard, hard, hard, hard, work.” This is an obvious cliche, but most entrepreneurs remain fixated on the Eureka! moment. If you don’t believe you have any reliable competitive advantage, you’re the kind of insecure person who will work your competition into the ground, so keep working.
If you aren’t doing something worthwhile, you can’t get anyone worthwhile to work on it…You need a big mission to recruit people who care about what you’re doing.
If you can begin to enjoy the process of building a start-up rather than the outcome, you’ll be a better leader.
August 3rd, 2007
I got a call from someone who asked me “you work with a lot of startups, what should I think about before joining a startup?” I asked him to clarify if they were asking him to come on as a co-founder or an employee and he said that they had funding and were looking to hire him as an early employee. He wanted to understand what were the key questions he should be asking about “position, compensation, exit strategy, layoff chances?” It was his first startup and while he was excited by romance he wanted to know what the practical realities of the marriage might look like.
My answer was that these were the first three questions he needed to be able to answer before digging into finances etc..
- Do you like your boss and look forward to working for him?
- Do you like your team and look forward to working with them?
- Is the problem the firm is solving for it’s customers compelling for you to work on.
I advised him that these questions are no different than ones I would ask for any job. Picking who to found a company with probably changes #1 to “Have you worked with this person before and do you have confidence in his integrity and ability to deliver?” But I think two and three are the same. I told him that on a statistical basis the probability that you will get rich is very low, so make sure you are going to learn something, working with and for people you like and respect, and that the problem you are helping to solve is compelling for you.
August 2nd, 2007
August, normally a vacation month, is host this year to a number of compelling events for entreprenuers.
Guy Kawasaki is speaking at BayChi Tue Aug 14 7-9pm on “By the Numbers: How I built a Web 2.0, User-Generated Content, Citizen Journalism, Long-Tail, Social Media Site for $12,107.09″ where he will explain why and how he launched Truemors.com using open-source software, contractors, favors, and cajoling. He will also cover the current entrepreneurial and venture-capital funding conditions. Guy has blogged about the launch of Truemors.
There is an optional dinner at 5:30 in Palo Alto at Kan Zeman Restaurant on 274 University Avenue, there is no charge for the event but dinner attendees must pay cash for meal+tax+tip.
Expect a full report, Francis and I plan to attend.
August 1st, 2007
I wrote earlier in “Kierkegaard On the Art of Helping Others To Understand” about the need to understand where what Jerry Weissman calls “Point A” is for a prospect. Here is an excerpt from his book “Presenting to Win: The Art of Telling Your Story” (pages 6-7, emphasis in original) on persuasion.
Persuasion: Getting From Point A to Point B
All presentation situations have one element in common.
Whether it’s a formal presentation, speech, sales pitch, seminar, jury summation, or a pep talk, every communication has as its goal to take the audience from where they are at the start of your presentation, which is Point A, and move them to your objective, which is Point B. This dynamic shift is persuasion.
[…]
In psychological terms, Point A is the inert place where your audience starts: uninformed, knowing little about you and your business; dubious, skeptical about your business and ready to question your claims; or in the worst-case scenario, resistant, mentally committed to a position contrary to what you’re asking them to do.
What you are asking them to do is Point B. The precise nature of Point B depends upon the particular persuasive situation you face. To reach Point B, you need to move the uninformed audience to understand, the dubious audience to believe, and the resistant audience to act in a particular way. In fact, understand, believe, and act are not three separate goals, but three stages in reaching a single, cumulative, ultimate goal. After all, the audience will not act as you want them to act if they don’t first understand your story and believe the message it conveys.
Next Posts