Michael Fern, Edith Harbaugh, Steve Hogan, and Sean Murphy discuss the Innovator’s DNA experimenting skill.
Tristan Kromer joins Steve Hogan and Sean Murphy to discuss networking as a key skill to develop to foster innovation.
Sarah Gray, Ethan Thorman, and Mark Cook join Steve Hogan and Sean Murphy to discuss lessons learned asking questions to foster innovation.
Panel sessions Feb 22, 2012 on Innovator’s DNA Skill #1 Associating. Terry Frazier of Cogovis, Steve Hogan of Tech-Rx, and Sean Murphy of SKMurphy.
Steve Hogan and Sean Murphy walk through a five part webinar series on “The Innovator’s DNA” by Jeff Dyer, Hal Gregersen,and Clayton Christensen. Sean thinks it’s the best book on innovation and entrepreneurship for 2011 and useful for any team that is trying to innovate. Each webinar will be in a roundtable format and include first time entrepreneurs and experienced innovators discussing lessons learned applying the five key discovery skills described in the book.
Q: Can you please take a look at this pitch. I have created it as a promo for investors and potential users.
Selling your offering to customers and selling your business to investors requires two different presentations They have fundamentally different questions they need answered before they “buy.”
Customers want to understand how your product will meet their needs. Investors want to know how much their investment will return and why: they may want to understand your customer presentation but only if you cannot offer strong evidence of traction: revenue, signups, etc…They are always interested in what you have learned and what you plan to learn: what hypothesis you need to test using their money.
In B2B markets early business customers may be interested in your investment pitch if they believe you will need investment to be viable but that is rarely the case in a consumer market.
The major components of an elevator pitch are traction, product, team, and social proof. And investors care about traction over everything else. A story without traction is a work of fiction.
Traction is a measure of your product’s engagement with its market, a.k.a. product/market fit. In order of importance, it is demonstrated through:
- pilot customers
- non-paying users
- verified hypotheses about customer problems.
And their rates of change.
Pitching Hacks is a slim 83 page book that packs a lot of insight. Many longer books have a good 4-5 page magazine article trapped inside, this book has already been boiled to the essentials. Definitely worth $20 if you are wiling to follow at least one of the many pieces of advice in the book.
You can follow @skmurphy to get these hot off the mojo wire or wait until these quotes for entrepreneurs are collected in a blog post at the end of each month. Enter your E-mail address if you would like have new blog posts sent to you.
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“There is no distance on this Earth as far away as yesterday.”
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“Talent hits a target no one else can hit; genius hits a target no one else can see.”
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“The shrewd guess, the fertile hypothesis, the courageous leap to a tentative conclusion–these are the most valuable coin of the thinker at work. But in most schools guessing is heavily penalized and is associated somehow with laziness.”
Jerome S. Bruner
I used this as the closing quote for “Early Markets Offer Fluid Opportunities”
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“Good design successfully manages the tensions between user needs, technology feasibility, and business viability.”
From an interview in “Imagine Design Create”
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“The secret to success is constancy of purpose”
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“The right way to build a company is to experiment in lots of small ways, so that you have plenty of room to make mistakes and change strategies.”
Vinod Khosla quoted in “What Does Vinod Khosla Know About Web 2.0 That Others Don’t?” (2005)
Used as closing quote in “Making Our Business More Credible in 2006”
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“A reputation for good judgment, for fair dealing, for truth, and for rectitude, is itself a fortune.”
Henry Ward Beecher
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“Don’t save the canary. Fix the coal mine.”
Seth Godin in “Canaries and Coal Mines“
This is not the best line in the blog post, it’s “My own little Potemkin Village” which highlights Godin’s insight into the perils of celebrity.
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“Innovation is fostered by information gathered from new connections; from insights gained by journeys into other disciplines or places; from active, collegial networks and fluid, open boundaries. Innovation arises from ongoing circles of exchange, where information is not just accumulated or stored, but created. Knowledge is generated anew from connections that weren’t there before.”
Margaret J. Wheatley
h/t Valeria Maltoni
Used as closing quote in “Byron Wien’s Lessons Learned in 80 Years: Seven for Entrepreneurs.”
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“Before you can score you must have a goal.”
Used as the title for “Before you can score you must have a goal.”
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The days you work are the best days.
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“Nothing happens to you that has not happened to someone else.”
I really liked William Feather’s 1949 book, “The Business of Life.” It’s a collection of short notes, letters, newspaper columns magazine articles. Very insightful, and something like reading a blog from the 1930?s and 40?s. I used it as the basis for four blog posts:
- “William Feather’s ‘The Business of Life’“
- “More from William Feather’s ‘The Business of Life’“
- “William Feather on Perseverance Rewarded“
- “William Feather on ‘Dead Business’“
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“I like breakfast-time better than any other moment in the day,” said Mr. Irwine. “No dust has settled on one’s mind then, and it presents a clear mirror to the rays of things”.
George Eliot in Adam Bede (1859)
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“When you struggle to reach for something you don’t know, that’s where most of the interesting stuff is.”
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“Expect nothing. Live frugally on surprise.”
Added as part of a July 2013 postscript to “Good Fortune.”
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“Look around. Find the stories that are the ones that one day, you’re going to wish somebody had told sooner. Tell them.”
Scott Rosenberg (@scottros) in Missed stories: About that Horace Mann School article in the Times
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Used as the closing quote for “Christopher Moore’s Coyote Blue.”
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“Sometimes when you start losing detail, whether it’s in music or in life, something as small as failing to be polite, you start to lose substance.”
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“To select well among old things is almost equal to inventing new ones.”
Nicolas Charles Joseph Trublet
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“What is the quality of your intent? Certain people have a way of saying things that shake us to the core. Even when the words do not seem harsh or offensive, the impact is shattering. What we could be experiencing is the intent behind the words.”
Used as the opening quote for “Advising Entrepreneurs”
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“It is too late now for earlier ways;
now there are only some other ways,
and only one way to find them–fail.”
William Stafford excerpt from “Level Light”
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“The point of a notebook is to jumpstart the mind.”
John Gregory Dunne
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“One startup’s earlyvangelist is another enterprise’s intrapreneur.”
It’s taken me a while to recognize this duality. I think “change agent” is an equally useful term for intrapreneur.
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“There is a difference between knowing a thing and understanding it.
You can know a lot about something and not really understand it.”
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“I try to do the right thing at the right time. They may be just little things, but they usually make the difference between winning and losing.”
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Great advice. I used this quote in “Christopher Moore’s Coyote Blue.”
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“True deception goes unnoticed.”
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“‘Fortune favors the bold,’ but only if they are playing a game they thoroughly know.”
I think Grafe adds a useful qualification to Virgil‘s “Fortune favors the bold.” (line 284 of Book 10 of the Aeneid: “Audentes fortuna juvat.”)
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The need to be right all the time is the biggest bar to new ideas.”
Edward de Bono
h/t Jabe Bloom (@cyetain)
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“Try to be one on whom nothing is lost.”
From his essay “The Art of Fiction” James advises:
The power to guess the unseen from the seen, to trace the implication of things, to judge the whole piece by the pattern, the condition of feeling life in general so completely that you are well on your way to knowing any particular corner of it–this cluster of gifts may almost be said to constitute experience. […]I should certainly say to a novice, “Write from experience and experience only” […] and “Try to be one of those people on whom nothing is lost.”
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In his author’s note he writes:
Do you ever get the feeling that forces unseen are messing with your life? Yeah, me too. And there is little doubt that those forces are driven by the greatest force in the universe — irony, right? Right?
So imagine my surprise when, some years ago, while I was researching a book on demons, I kept running across references to tricksters, and one trickster in particular, the trickster god Coyote. I thought, Heres a god whose main function seems to be acting as an agent of irony — the special prosecutor of Murphy’s Law, if you will. And, I figured, if ever there was a time during which the god of irony seemed to be testing his powers that time would be now.
What entrepreneur has not been at least indicted by the “special prosecutor for Murphy’s Law?”
Here are a few excerpts
“When everything is right with you, but you are so worried that something might go wrong that it ruins your balance, then you are Coyote Blue.”
Those of us with a firm grasp of contingencies are familiar with the uneasy feeling that “things are going too well, I must have overlooked something.” Startups are often well served by having at least one member of the team with this attitude, although–like cayenne pepper or wasabe–a pinch or two is often enough to season an elephant’s worth of stew.
“There are those who, deprived of physical beauty, develop a sincerity and beauty of spirit that seems to eclipse their appearance. They marry for love, stay married, and raise happy children who are quick to laugh and slow to judge.”
Good advice for many technical entrepreneurs and–in hindsight–my plan of record as well.
“Before the television arrived Samson did not know he was poor. Now he spent every evening piled in the front room with his family watching people he did not know do things he did not understand in places he could not fathom, while the commercials told him he could be just like those people.”
I gave up my television a few years ago and was surprised at how much more time that I had. Last month I spent two days in bed in a room with a television and after I finished the book I had brought with me, “No Way In” by Richard Fernandez, I spent an hour or two getting re-acquainted with how Samson feels in this passage. Many firms appear to be hard at work to port this same experience to the web. More’s the pity.
“The ostentation of the casinos did not create a desire for money; it made money meaningless. There were no mortgages in a casino, no children needing food, no car needing repairs, no work, no time, no day, no night; those things–the context of money–were someplace else. A place where people returned before they realized that a turd rolled in rhinestones is a turd nonetheless.”
Other web firms are hard at work to bring this experience to the web. Please apply your talents to another problem.
“He followed the signs down the surface streets lined with pawnshops, convenience stores, and low-slung cinder-block buildings under neon signs that proclaimed, CASH FOR YOUR CAR, CHECKS CASHED HERE, MARRIAGES AND DIVORCES–TWENTY-FOUR-HOUR DRIVE-THRU WINDOW.
Coyote said, “What are these places?”
Sam tried to think of a quick explanation, but was too weary from lack of sleep to tackle the concept of Las Vegas in twenty-five words or less. Finally he said, “These are places where you go if you want to fuck up your life and you don’t have a lot of time to do it in.”
“Are we going to stop?”
“No, I seem to be fucking up at a fine rate of speed, thank you.”
Bootstrappers often feel this conflicted when they think about reaching out to a venture capital firm.
“That’s the scary thing about hope, if you let it go too long it turns into faith.”
In the end making the leap to an entrepreneurial venture is hope that persists into a leap to faith.
- The Wide Lens by Ron Adner is insightful, practical, and offers recent examples
- The End of Competition by James F. Moore provides a good theoretical framework but now two decades old; he clearly saw it coming. His HBR article provides 80% of the insights and is worth reading first: Predator and Prey a New Ecology of Competition
- Bionomics: Economy as Ecosystem by Michael Rothschild is from 1990 but still very much worth reading. Combines information theory, energy models, and biological metaphors to offer real insights.
Q: Speaking of good design, how do you define it?
A: Good design, I think, is the best compromise—and it’s always a compromise—between what’s currently available and the need to which it’s being applied. To me, that’s part of what’s exciting: trying to achieve that balance between all those variables of what’s available, affordable, reliable, functional.
Q: How does design begin for you?
A: It starts with looking at a need or a problem and seeing a way to approach it that nobody else is doing. It may be a challenge everybody else has looked at before, perhaps for decades–but you look at it and maybe you see an opportunity at the intersection between a newly available technology and this old problem.
And suddenly you say: “Hey, maybe we can do this differently.” [..]
If we can convince ourselves that we can design a twenty-first-century solution to a problem that is currently being addressed with a nineteenth- or twentieth-century perspective—well, we’ll give it a shot.
He does not say “twentieth-century technology” but “twentieth-century perspective” and I think it’s a very interesting choice of words. Obviously technology informs perspective, but more subtly perspective can limit technology choices.
Look for outmoded perspectives constraining technology this is “available, affordable, reliable, functional” is also good advice for entrepreneurs.
One peculiarity of this age is the sudden acquisition of much physical knowledge. There is scarcely a department of science or art which is the same, or at all the same, as it was fifty years ago. A new world of inventions—of railways and of telegraphs—has grown up around us which we cannot help seeing; a new world of ideas is in the air and affects us, though we do not see it.
Writing in 1872 Bagehot sees a rapid transformation of the arts and sciences by new transport and communications technologies. I think too often we think of the Internet, or the integrated circuit as the kickoff for accelerating progress. But writing 140 years ago Bagehot witnessed the changes that the telegraph (e.g. first telegram had sent by transatlantic cable in 1858) and the steam engine had wrought.
From the last paragraph of the second chapter “The Use of Conflict”
The military habit makes man think far too much of definite action, and far too little of brooding meditation. Life is not a set campaign, but an irregular work, and the main forces in it are not overt resolutions, but latent and half-involuntary promptings. The mistake of military ethics is to exaggerate the conception of discipline, and so to present the moral force of the will in a barer form than it ever ought to take. Military morals can direct the axe to cut down the tree, but it knows nothing of the quiet force by which the forest grows.
As entrepreneurs we value self-discipline (if only in the ability to chart our own course), fast decision making, and bold action. But, as Bagehot argues, there is also value in thoughtful reflection, quiet exploration and experimentation, and slower but more deliberate decision making.
It’s an interesting book that traces the need for a robust military to enable any society–especially an early or primitive society–to survive against the depredations of neighboring societies. But Bagehot is clear on the need for cooperation and collaboration for any one individual to survive much less thrive. An excerpt from the final chapter “Verifiable Progress Politically Considered”
The progress of MAN requires the co—operation of MEN for its development. That which any one man or any one family could invent for themselves is obviously exceedingly limited. And even if this were not true, isolated progress could never be traced. The rudest sort of cooperative society, the lowest tribe and the feeblest government, is so much stronger than isolated man, that isolated man (if he ever existed in any shape which could be called man), might very easily have ceased to exist. The first principle of the subject is that man can only progress in ‘co-operative groups;’ I might say tribes and nations, but I use the less common word because few people would at once see that tribes and nations ARE co-operative groups, and that it is their being so which makes their value; that unless you can make a strong co-operative bond, your society will be conquered and killed out by some other society which has such a bond; and the second principle is that the members of such a group should be similar enough to one another to co-operate easily and readily together.
“Entrepreneurs who undertake uncertain initiatives face a wide spread between desirable and undesirable outcomes, but they cannot quantify the odds they face or even fully anticipate the possible results. The uncertainty is irreducible to the degree it cannot be resolved without actually undertaking the initiative by prior testing and research.”
Testing and research can reduce the ambiguity and uncertainty associated with the entering new markets but they cannot eliminate it. A few hours on Google can save you a few months pursuing an opportunity that a little more research might have indicated was a non-starter but even there I think you are still well served by a dozen conversations with people who have direct knowledge of the problem: there is an important category of information that has not been written down (yet) and cannot be found in Mr. Google’s basement.
If you attack a large and well established market there is much less uncertainty but there will be established competitors.
“Serving niche markets not only allows entrepreneurs to start a business with limited funds, it also limits the competition they face from well capitalized entities. Established corporations and professional venture capital funds expend considerable resources on evaluating and monitoring their investments. They tend to avoid investments in niche opportunities whose profit potential isn’t large enough to cover their fixed evaluation and monitoring costs. Therefore, the bootstrapped entrepreneur in a niche market faces direct competition mainly from other undercapitalized businesses.”
But larger well capitalized firms normally avoid ambiguous markets because they can earn more certain returns in established markets and they are less deterred by the idea of competing with other large firms.
Ambiguity is known to be missing information or not knowing relevant information that could be known.
The key ambiguity to resolve is to develop a model for the impact of your product on your prospect’s business–the costs you are imposing and the value of the benefits that you are delivering–as a way of fine tuning your feature set, messaging, and business model. You may need a slightly different one for each niche or customer segment you are considering. This gets updated the more you learn in exploring the market. This approach is “outside in” where customer reality drives your decisions.
One way to choose a new market is to pick a space that has not changed in a while. It’s more likely that you can learn something that the incumbents have either ignored or decided not to pursue because it would conflict with a currently successful business model.
Promising startups cluster in market niches characterized by high uncertainty generated by technological, regulatory, or other such exogenous changes or by the amorphous nature of customer wants. High uncertainty and low capital and opportunity costs create a “heads-I-win-tails-I-don’t-lost-much” proposition for entrepreneurs.
This is a second approach, to look for markets likely to be impacted by new technology, new regulation, or changes in the zeitgeist. By making small bets you can risk little but potentially find a significant opportunity.
I came across a great essay on insight, “Behavior and development as a function of the total situation (1946)”, written by Kurt Lewin in a collection of his papers published as “Resolving Social Conflict & Field Theory in Social Science.” Here are some excerpts and commentary:
Insight can always be viewed as a change in the cognitive structure of the situation. It frequently include differentiating and restructuring in the sense of separating certain regions which have been connected and connecting regions that have been connected.
Entrepreneurs rely on insights for new products, new markets, new customers, and new business models because insights re-arrange our understanding of how things work and enable them to see new possibilities and previously unappreciated connections. Insights obsolete some old understandings and enable new ones. Because they are often sudden and preceded by a feeling of being trapped, stuck, or confused their arrival is hard to predict.
I think the net effect of an insight is to lengthen your time horizon and improve your morale. Sometimes insights show a shorter path, but often they show a path where you couldn’t see one before, even it’s a long way around. Insights can be acted upon immediately but this new course of action may take some time to have an effect.
Becoming emotional frequently leads to a narrowing-down of the psychologically existing area. A state of strong emotionality should, therefore, be detrimental to finding solutions. A distance sufficient to permit a survey of the larger situation helps in the solution of intellectual problems.
When you are feeling stuck, forcing yourself to zoom out, to breathe deeply and relax, to drift a little, can help to lower the psychological and emotional stress you may be placing yourself under. For the most part entrepreneurs don’t have to manage physical stress (e.g. submerging yourself in an bathtub full of ice water) but do need to manage psychological stress, which is the bodies’ involuntary reaction to the way that a situation is perceived. If you can reframe your perception, you indirectly impact reactions that are not under conscious control.
Being in an unknown surrounding is equivalent to being in a region which is unstructured in the double sense that neither the quality nor the subparts of the present region, nor the immediately neighboring regions, are determined.
I think this can also be experience as the sensation of being lost, or in the dark, or trapped.
Orientation is the structurization of the unstructured region.
Although John Boyd does not reference Kurt Lewin in his description of the Orientation process of the OODA Loop, I think Lewin’s description neatly summarizes what happens between observation and decision.
An unstructured region usually has the same effect as an impassable obstacle. Being in unstructured surroundings leads to uncertainty of behavior because it is not clear whether a certain action will lead to or away from the goal. It is undetermined whether the neighboring regions are dangerous or friendly.
I think an unstructured region is equivalent to what Snowden is referring to when he talks about chaotic regions in his cynefin model. The only way to proceed is to explore and experiment, where exploration may take the form of careful observation, talking with other people who may have relevant experience, being explicit about the questions that you need to answer to frame the “known unknowns”, and to take the time reflect periodically on what you have learned.
In another essay in the book “Action Research and Minority Problems” he defines action research as “a spiral of steps, each of which is composed of a circle of planning, action and fact-finding about the result of action.” This is also a good model for how to proceed when you don’t have a good mental model for your current situation.
These three books contain a wealth of useful suggestions for generating innovative business ideas from observing, questioning, and networking with customers and others:
- “The Innovator’s DNA” by Christensen, Dyer, and Gregerson outlines a set of five skills that innovator’s use to develop entrepreneurial ideas: questioning, observing, networking, experimenting, and associating. They offer a number of suggestions for how to cultivate these skills. But even their formulation assumes a fair amount of iteration as candidate ideas are developed, tested, recombined to create novel value.
- “Customer Visits” by Edward McQuarrie goes into extensive detail about techniques and strategies for interviewing business customers not only to refine existing offerings but to identify new product opportunities.
- “Innovation and Entrepreneurship” by Peter Drucker suggests that you develop innovative business ideas by searching for changes that have already occurred but where the full effects have not been felt. In particular in “Innovation and Entrepreneurship” he lists seven sources for innovative ideas in decreasing order of importance:
- The Unexpected (e.g. unexpected success or failure of an existing product or service)
- The Incongruous
- Weak Link In Existing Process
- Industry Or Market Structure Change
- Demographics: Size, Age Structure
- New Zeitgeist: Perception, Mood, Meaning
- New Knowledge
Related Posts on Developing Innovative Business Ideas
The book draws it title from the need for entrepreneurs to broaden their planning beyond a narrow focus on execution (“what does it take to deliver the right innovation on time, to spec, and beat the competition”) to include an understanding of
- Co-innovation: Who else need to innovate for your innovation to matter.
- Adoption Chain: Who else needs to adopt your innovation before the end customer sees the full value proposition.
Adner outlines three broad phases for the development and delivery of innovative products:
- Seeing the Ecosystem: which requires you to identify both co-innovation and adoption chain risks.
- Mapping the Ecosystem: which requires that you map the value blueprint (the activities that must take place outside of your firm for value to be created for your customer) and understand if you would have first mover advantage.
- Reconfiguring the Ecosystem: consider what existing elements can separated, combined, relocated, or subtracted and what new element can be added. Develop a plan for the evolution of your new ecosystem that comprehends:
- Minimum Viable Footprint (MVF): the smallest configuration of elements that can be brought together to create unique commercial value. Note that this differs from an MVP in that it includes co-innovation and adoption chain needs.
- Staged Expansion: the order to add elements to the MVF so that each new element benefits from the system already in place and increases the value creation potential for the next element planned.
- Ecosystem Carryover: can you leverage elements from a current ecosystem to enable the construction of a new ecosystem.
Excerpts from Alexis De Tocqueville‘s “Democracy in America” Volume 2, Section 2, Chapter 8 “How the Americans Combat Individualism by the Principle of Self-Interest Rightly Understood.”
“In the United States hardly anybody talks of the beauty of virtue, but they maintain that virtue is useful and prove it every day. The American moralists do not profess that men ought to sacrifice themselves for their fellow creatures because it is noble to make such sacrifices, but they boldly aver that such sacrifices are as necessary to him who imposes them upon himself as to him for whose sake they are made.”
We exist in a web of relationships with membership in overlapping but distinct communities. As entrepreneurs we can be seen as agents of chaos by the status quo but our aim is innovation that leaves society on balance better off.
“They have found out that, in their country and their age, man is brought home to himself by an irresistible force; and, losing all hope of stopping that force, they turn all their thoughts to the direction of it. They therefore do not deny that every man may follow his own interest, but they endeavor to prove that it is the interest of every man to be virtuous. I shall not here enter into the reasons they allege, which would divert me from my subject; suffice it to say that they have convinced their fellow countrymen.”
Of course we have to make a profit for our businesses to continue, but there are other gains that come from entrepreneurship beyond the financial that lead us to invest in our employees education, to invest in our communities and to “leave a little money on the table” when dealing with partners and suppliers in the interest of good will and future relationships.
Montaigne said long ago: “Were I not to follow the straight road for its straightness, I should follow it for having found by experience that in the end it is commonly the happiest and most useful track.” The doctrine of interest rightly understood is not then new, but among the Americans of our time it finds universal acceptance; it has become popular there; you may trace it at the bottom of all their actions, you will remark it in all they say. It is as often asserted by the poor man as by the rich.
Business is situated in community and a social context: a good reputation as fair dealer committed to the values of the community, as evidenced by actual kindness and charity will create more value in the long run than treating every transaction as the last one you will ever do with the other party.
The principle of self-interest rightly understood produces no great acts of self-sacrifice, but it suggests daily small acts of self-denial. By itself it cannot suffice to make a man virtuous; but it disciplines a number of persons in habits of regularity, temperance, moderation, foresight, self- command; and if it does not lead men straight to virtue by the will, it gradually draws them in that direction by their habits. If the principle of interest rightly understood were to sway the whole moral world, extraordinary virtues would doubtless be more rare; but I think that gross depravity would then also be less common. The principle of interest rightly understood perhaps prevents men from rising far above the level of mankind, but a great number of other men, who were falling far below it, are caught and restrained by it. Observe some few individuals, they are lowered by it; survey mankind, they are raised.
You meet people who have a clear understanding of their own needs and seem to spend no time on anything else. But the deals that they make seem to based only on fear and threat. To create real opportunities in your own business requires that you explore and understand the needs and aspirations of your current and potential customers. To bring them ideas that will improve their lives and businesses requires that they trust you have their interests at heart when they talk about current problems that may expose their weaknesses and shortcomings.
I do not think, on the whole, that there is more selfishness among us than in America; the only difference is that there it is enlightened, here it is not. Each American knows when to sacrifice some of his private interests to save the rest; we want to save everything, and often we lose it all. Everybody I see about me seems bent on teaching his contemporaries, by precept and example, that what is useful is never wrong Will nobody undertake to make them understand how what is right may be useful?
I want to live in communities where people help one another. Where kindness is the norm. Not a kindness based on weakness or supplication, but one where people are strong and have the foresight to be kind. Communities of those who understand when it is more valuable to forego an advantage instead of pressing it (to paraphrase Disraeli).
“…it remains to be seen how each man will understand his personal interest. […] I do not think that the system of self-interest as it is professed in America is in all its parts self- evident, but it contains a great number of truths so evident that men, if they are only educated, cannot fail to see them.
I worry there is too much focus in Silicon Valley on making a killing and “moving to another lifetime” But this is a teenager’s fantasy of getting away from home. Marriage and child rearing are not easy, much harder in many ways than doing a startup. But creating a decent workplace that provides a good living for your employees and value for your customers is easier when you are situated in a long term relationship and a family.
All “Democracy in America” quotes are from translation available at “American Studies at University of Virginia”
Related blog posts
- Exits vs. Enduring Companies
- The Future, Arriving Yesterday, Remains In Constant Motion
- Self-Mastery, Expertise, Connections, and Perseverance
- Hugh MacLeod’s Thoughts on Being an Entrepreneur
“Next to knowing when to seize an opportunity, the most important thing in life is to know when to forego an advantage.”
We offered a Book Club for Business Impact webinar on Sep-4-2012 that addressed “Lessons Learned Implementing The Great Demo! Methodology” based on the Great Demo! book by Peter Cohan. We had two change agents join us on the panel: Barry Nelson and Jolie Rollins and our intent, consistent with the Book Club’s promise, elicit actionable insights from the panel informed by the book’s content.
Here is the audio track
Or download directly from Implementing Great Demo! Methodology 9-4-12 (MP3)
Here is all of the relevant text from the slides with the addition of questions asked by the audience as they were posed to the panel.
- Barry Nelson, CEO, FactorLab, Inc.
- CEO, FactorLab, Inc. FactorLab helps teams engage in the good practices that give them a competitive advantage. Helped over 100 organizations- bridge the gap between good processes, good people and good execution
- Jolie Rollins,, Consultant Healthcare Information Technology (HIT) and Change Management Leader.
- Prior management roles at gloStream, Allscripts, Misys, and Medic; BA Accounting, North Carolina State University
- Organizer: Sean Murphy, SKMurphy, Inc.
- CEO SKMurphy, Inc. Consults on technology market creation and new technology product introduction. Earlier at Cisco, 3Com, AMD has BS Mathematical Sciences, MS Engineering-Economic Systems, Stanford University
- Moderator: Peter Cohan, The Second Derivative
- Founder, The Second Derivative. Provides sales training with a focus on “Great Demo!” method. Prior executive roles at Symyx Discovery Tools, Elsevier, and MDL Information Systems. BS Chemistry University of California at San Diego
Overview of Great Demo! Method
- A Great Demo: Do the Last Thing First!
- 2 Types of Demos
- Technical Proof
- Vision Generation
- Key Steps in Great Demo
- Introduce – Summarize Situation
- Do It – Do The Last Thing First
- Q&A: Peel Back the Layers
- Preparing For a Demo: Agree on Customer Situation (“Situation Slide”)
- Job Title and Industry
- Critical Business Issue
- Specific Capabilities Sought
- Delta over Status Quo
- Time Frame / Impending Event
Questions that panel addressed:
- Q: You mention win, loss, and “no decision.” What is your definition of “no decision” and why is the “no decision” rate important?
- Q: What is a critical business issue?
- Q: What are good questions that uncover specific capabilities sought and time frame for decision?
- Q: What was a key challenge you had to overcome to implement the Great Demo! methodology at your company?
- Q: Is it easier for startups before they have customers?
- Q: How do you convince startup engineers to discuss only a few cool new features?
- Q: How do you get entrepreneurs to focus on the customer in a demo and not the product?
- Q: What bad demo habits are the hardest to get rid off?
- Q: What good demo habits are the most important to develop?
- Q: How do you handle it when someone says “I’ve been selling/doing demos for a decade, you can’t tell ME how to do them!” ?
- Q: What’s the best way to respond to “I already know this, I don’t need training!” ?
- Q: How do you change someone’s mind when they say ““This demo is too critical to try out something new…” ?
- Q: Final take away from each panel member
- Q: We see other startups creating short 60-90s animations to explain their product, any thoughts on this?
- Q: How do you use this method at a trade show when many demos are blind dates? You have to be assessing prospect’s situation in parallel with giving the demo?
- Great Demo! offers a lean approach to sales and presentations
- “Worry About Scaling After You Find Your Niche” covers the “Situation Slide” formulation to guide pre-demo discovery of customer needs.
Peter Cohan’s next Great Demo Workshop in Silicon Valley is October 10-11, 2012.
I had an epiphany recently about the congruence between Peter Cohan‘s Great Demo! methodology and a lean approach to sales and presentation practices. I use the following simple definition for lean practices from Wikipedia:
[Lean] considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes a product or service, “value” is defined as any action or process that a customer would be willing to pay for.
The simplest definition of the Great Demo! is “Do the Last thing First”
Which means that you should focus a demo on the critical element of your offering that your customer is interested in. This normally means that you have a plan for covering the following in about six to eight minutes.
- Introduce – Summarize Situation
- Offer an illustration or example of the result or outcome the customer wants
- Do The Last Thing First – show how to achieve this result as directly and in as few steps as possible.
- Answer questions, this may include peeling back the layers on other features or needs.
- Summarize the key take-aways and next steps.
Your hope is that step 3 turns step 4 into a much longer conversation but you are prepared to pack up and leave if they are not interested in the key results you can offer them.
But why is this lean? There are normally two good reasons why a startup wants to demo their offering to a customer:
- To offer a vision of a solution to trigger a conversation about a problem that the customer is interested in solving and to gain a deeper understanding of their needs and objectives.
- To offer technical proof that your offering can solve their problem and trigger a conversation about how they can implement and roll out the solution in their business.
In both cases you are focused on understanding what the customer needs and is willing pay for: your vehicle for this is the conversation that occurs after you have illustrated your solution with a key example that communicates your understanding of their needs. The summarize step is a critical part of that communication. By summarizing what you have heard you allow them to correct any mistaken impressions you may have gathered, and by summarizing your message again briefly at the end, you have an opportunity to focus more specifically on their needs with what you have learned.
All too often however, startups offer one of these demos instead:
- An IQ test: that asks the prospect “can you figure out how you might use this product to create value in your business.?” Here the focus is not on a vision of a solution that will create value for your customer but an explanation of your technology.
- A smorgasbord of features: that asks for a lot of time to explore your product and offers a “proof by exhaustion” that there must be something in the product that they will find useful. These can degenerate into training sessions that make the assumption the customer has seen the value already instead of offering technical proof of a result you know that they will value.
- Their funding presentation: the investors liked it so the customers should as well, never mind that they are two distinct audiences with very distinct needs and objectives for doing business with your firm.
There is quite a bit more to the Great Demo! methodology than I have outlined here, but at root it encourages you to save your customer’s time by getting to the point quickly with an example of a solution you believe that the customer will find valuable. The real goal of a demo is a serious conversation: either about a customer’s needs or how they can they implement your offering in their business.
Learn More Tue-Sep-4 at Noon PDT when we have Book Club for Business Impact on “Lessons Learned implementing the Great Demo! methodology“, join us live to take part in a roundtable conversation. Update Sept 6: “Recap and Audio from “Lessons Learned Implementing Great Demo! Methodology”
Learn More Wed Oct-10: Peter Cohan’s next Great Demo Workshop in Silicon Valley is October 10-11, 2012.
Note on “Customer” vs. Prospect: I use customer throughout this post when most of the time they are actually prospective customers or prospects, I normally reserve customer to mean someone who has paid you but felt customer provided a better linkage with the lean definition.
Update Sep 3: I was reminded that I also blogged about the “Situation Slide” formulation used by Great Demo! to guide pre-demo discovery of customer needs. See “Worry About Scaling After You Find Your Niche”
|Live roundtable on lessons learned implementing the “Great Demo!” methodology Tue-Sep-4-2012
Great Demo!: How To Create And Execute Stunning Software Demonstrations
by Peter Cohan
Great Demo! provides sales and pre-sales staff with a method to dramatically increase their success in closing business through substantially improved software demonstrations. It draws upon the experiences of thousands of demonstrations, both delivered and received from vendors and customers. The distinctive “Do the Last Thing First” concept generates a “Wow!” response from customers.
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Additional Book Reviews
Scott Sambucci of Sales Qualia recently self-published a great book on selling entitled “Startup Selling: How to Sell If You Really, Really Have to and Don’t Know How…” It’s a slim volume chock full of practical advice for entrepreneurs new to selling to businesses. Unlike many business books that have 20 pages of useful content puffed to 240 or 480 pages this is packed with useful rules of thumb, actionable insights, and tips for recognizing and diagnosing a host of early stage sales challenges. If you are an entrepreneur who wants to get up to speed quickly on selling to business, in particular selling software, this book belongs on your short list of “must reads.”
Here are his first seven rules that are often violated but easy to fix in ways that will immediately improve your sales effectiveness; I have added some commentary after :
1. For inbound calls and leads find out why the prospect is inquiring about your products and services
The why has two branches:
- What is the problem they are trying to solve or goal they hope to reach with your product. Their view of their need is the most important aspect of you should frame your offering.
- What led them to contact you in particular. Too often we are tempted to jump into a sales pitch without understanding what led to a call, was it a website, a recommendation from a friend, seeing an on-line video, hearing a talk, reading an article, etc..
2. Jumping right into a sales demo on the first call is the kiss of death.
In my first job as a post-sale application engineer I was asked to help a developer introduce a new product to an existing account. We called on one of my accounts that was happy with our products and when invited to “tell us what you have for us” he excitedly jumped into a 15 minute high speed monologue explaining all of benefits of being able to simulate certain constructs in a design. They were silent: they couldn’t tell if they could use it. Because we hadn’t asked them questions about their use of the constructs that we could now enable them to simulate, we spent another 15 minutes painfully backtracking and attempting to do some discovery of whether or not they had a compelling need for the product.
When we debriefed afterward we realized that we didn’t have a map of the target so we didn’t know where to focus our discussion. Before I took him to my next account I asked the contact some questions in advance to determine if and where they were in pain over the inability to simulate these constructs. We were able to focus on problems that they knew they had.
About a month later, after we had debugged our engagement process and had some interest from other accounts, I was able to bring him back for a second visit to the first account, that session was much more conversational and they decided to evaluate and ultimately purchase the product.
You have to elicit symptoms and offer a diagnosis before you offer your prescription
3. Use the telephone as the default mode of communication.
At first I thought Scott overstated this one but I think he is correct, to build rapport and advance the sale you have to have conversations. These can be face or face or over the phone/skype/VoiP but the need to be synchronous to get into the easy back and forth.
4. Speak human.
This one is hard because it means that you get rejected as a person. But if you don’t act like a real person and treat your prospects as people, you can rarely build the rapport necessary to closing a deal.
5. A lead is only a person of interest. A prospect is qualified individual for whom your product or service is a clear match.
A lead can satisfy some objective criteria – e.g a person with a particular title (or possible set of titles) in an industry and perhaps a particular location or geographical region. But to be a prospect you have to have some idea of the value your offering will deliver that value within their time frame and in excess of the total cost of your solution to them
6. A prospect’s decision criteria is a formative process. It will always take more than a single call to determine.
I would add buying process to decision criteria because it’s as important to determine not only their criteria but what will be required to actually close the deal.
7. It’s never about the money. It’s about the cost.
Scott makes some great points about calculating the impact of your features, packaging, delivery, and support process on their total cost of acquisition and ownership. I think two other factors startups neglect hoping that they can cut price to compensate are the risks involved in the decision and the business, technical, and support aspects of the ongoing relationship. For software in particular, a sale to a business is the start of an ongoing relationship. And that relationship is not evaluated purely on price.
At $7 and 130 pages, “Startup Selling: How to Sell If You Really, Really Have to and Don’t Know How…” is not only a quick read but a useful reference (also available as an e-book) that belongs in your library if you are a startup founder new to selling.
I blogged about Scott Sambucci’s August 2008 blog post on “An Entrepreneur’s Lessons Learned” in November of 2008 “Scott Sambucci on An Entrepreneur’s Lessons Learned“