Q: Resources For A Lean Approach to Sales, In Particular New Product Introduction

Written by Sean Murphy. Posted in 3 Early Customer Stage, 4 Finding your Niche, Sales, skmurphy, Workshop

Q: We have started selling and are looking for resources for a lean approach to sales, in particular for new product introduction.

Lean Approach To Sales at Lean Startup Conference 2012

Scott Sambucci and I presented a workshop at Lean Startup 2012 on “Engineering Your Sales Process.”
The deck is posted at http://www.slideshare.net/SalesQualia/engineering-your-sales-process

About 70% of the workshop is interaction with attendee on their specific early sales challenges so it’s not something that we video record.

Scott Sambucci has two books out that address early sales issues:

Two articles that offer useful overviews for defining a sales process:

Other books you may find helpful:

Here is a long interview I gave to Gabriel Weinberg on early stage B2B sales that many entrepreneurs have found useful: Sean Murphy on the first six to twelve enterprise customers

All of these resources talk about a systematic approach to selling for new products.  I continue to offer “Engineering Your Sales Process”® as a workshop for early stage teams. Please contact me if you would like to arrange for a workshop.

Getting More Customers Workshop on March 25, 2014

Written by Theresa Shafer. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, 4 Finding your Niche, 5 Scaling Up Stage, Events, skmurphy, Workshop

Getting More CustomersLet’s face it, finding customers can be quite a challenge. In this interactive workshop, we will cover a variety of proven marketing techniques for growing your business: attendees will select one or two that fit their style and develop a plan to implement them in their business in the next 90 days.

  • Speaking – small groups, large groups, conferences, …
  • Writing – blogging, newsletters, articles, …
  • What Other People Say About You – referrals, testimonials, case studies, …
  • Getting Found When and Where Prospects are Looking: adwords, Craigslist, trade shows, SEO/SEM, …

March 25, 2014 9am-12:30pm
Sunnyvale, CA
$90 includes lunch

Register Now

“This workshop provided great material to bounce off of. SKMurphy created a fertile space for me to think about my business and plan a concrete step forward. Thank you.” Paul Konasewich, President at Connect Leadership

Getting Unstuck

Written by Sean Murphy. Posted in 4 Finding your Niche

I had a conversation today with a good friend I had not seen in a while. Normally cheerful, he was feeling “stuck” in his startup

I have started several businesses,  tried to start quite a few more, changed direction more often than I ever planned and shut down more than a few–sometimes even before they really got off the ground. I am familiar with a sense of getting stuck, of things not working.  It’s hard to discern and harder to admit what is working and what is not. But at some point I had to acknowledge the need for change and tinker with my approach.

I gave him three suggestions that I have worked for me when I find myself stuck:

Recap Semifore MVP Clinic: Selling To A Team of Diverse Experts

Written by Sean Murphy. Posted in 4 Finding your Niche, 5 Scaling Up Stage, Audio, skmurphy


Series profile
Thinking about this using an OODA loop model – — Observe -> Orient -> Decide ->  Act

  • Orient part is sensemaking — its own kind of fast learning
  • Often takes a long time in a complex situation (e.g., all situations where learning is involved); subject to error because it’s “culture bound”
  • What we do
    • Asking what you see
    • Asking what are interactions (including between people, process, platform, and practices)
    • focused on  asking good questions / suggesting questions to research;  avoid giving advice
  • Audience: other entrepreneurs

Hosts

Presenter profiles (see extensive write up a “Semifore Execs Share Bootstrapping Lessons and 2014 Scaling Up Plans at Jan-17-2014 MVP Clinic)

  • Robert Callahan, COO Semifore, Inc.
  • Herb Winsted VP Business Development and Customer Care, Semifore, Inc.
  •  Semifore, Inc: niche software player in Electronic Design Automation founded in 2006 with a focus on tools for memory map management

Initial questions

  • How do we scale and grow the business
  • What strengths or accomplishments will you build on
  • What existing or constructed vantage-points (data-collection opportunities) have been or will be most useful?
  • What capabilities need to be developed
  • What’s the primary barrier or key challenges you need to overcome
  • talk about product and challenges –    cross functional nature
  • talk about what you have learned – making sense of current experience
  • look ahead 2014 talk about plans

Problem profile

  • complex sales environment
  • education / learning involved
  • many prospective clients have rolled their own
  • side issues = standards, interaction with purchasing
  • Usually find a pre-existing culture / product team /  team
  • more complex sales and adoption problem
    • touches hardware team (e.g. system architect, RTL developers)
    • software developers
    • documentation specialists
    • documentation consumers – e.g. verification and validation team
    • plus “team in larger team or org issues”

This is a mid-course correction conversation. We have a viable product that’s now robust

How do you scale the business?
Competitors are “in-house” solutions – first generation build out.  Semifore product replaces spreadsheets and in-house Perl scripts that represent a career path for internal tool developer

Questions from Audience 
Q: How many employees does Semifore have?
A: five direct plus some other outsource teams we draw on for specialized resources

Q: Do you monitor feature usage and see which ones are used and which ones are not? Do you remove unused features?
A: it’s on-premises software, there is no monitoring except in conversation with customer. Will be deleting some obsolete standards but have to provide a lot of legacy support and backward compatibility

John observed: consider inserting learning & feedback loops here.

Q: Do you have any services revenue?
A: We have  a hybrid license. basic level charge, tiers of users (groups of 10). we sell licenses in batches of 10 with a decreasing cost per incremental seat even as total site license fees go up. We have some project support service fees; there are also fees for “global license”

Q: Tips for growing from small groups to more users in the companies.  How to encourage spread inside customer
A: We believe the following have been key to our success:

  • spend face time with customers
  • dealing with the internal script-writers “who can do stuff.”
  • sales opportunity: when the script-writer leaves

Q: What percentage of customers did you have pre-existing relationships with (from Magma, as an ex-employee of that company, etc.)?
A: really only first customer, most of the rest were “cold starts”

Q: Also, is the tool compelling to any functional area as is, or is it compelling primarily because there’s a lack of resources for the previous internal approach?
A: a bit of both.  solutions exist in organizations that are not visible to management.

Notes from Live Session

Walking around the issues —

Rob: in the Valley back when disk drives looked like washing machines.  Finance roles, then managing channel and tech support.  EDA for last 15 years.  External advisor to Semifore, joined the firm a couple years ago.  growing the business from boutique to a real business.

Herb: business development VP — customer facing activities. started in the electronics business back in the ’70s. Projects in Europe, Japan, US, involved with Semifore since 2008. Semifore is the “right size” for connecting directly to customers.

Have both survived and added customers.  Tool crosses several different disciplines,  enabled by high level

Some standards IPXACT and System RDL but for the most part replacing either custom scripts or Excel input based techniques.
Rich Weber drew on experience at SGI, Cisco, Stratum One to create cross-compiler
selling to sw, firmware, and documentation teams proliferating from early beach heads

Respond to customers quickly. agile response.  Keeping customers.

Initial sell to a small team.  from 10 users to 100 in the same company. tool goes viral.  education challenges to begin using the tool.  Support requests are often enhancements to connect with their local requirements.

How to proliferate. Getting information early in the design / development process. Measure speed.  Perceiving the activity outside “my silo.”  It’s a blazingly fast product once it’s in place.

Q: does tool help to measure design cycle impact?
A: It’s really a technology driven company working with engineers who focus primarily on technology, but our customers live in a business environment. more recently customers are coming in and asking for automation of the creation of these architectural descriptions. Once the tool is adopted there is a shift from create the “perfect document” to ‘good enough distributed widely’.
Semifore enables a start from a terse description that can be elaborated.  EDA Process Workshop in Monterrey – need a good plan more than a good tool

Herbie: Making the transition from supporting a wide variety of design styles to a smaller subset that the industry as a whole seems to be converging on.
Sean: similar to what happened in networking where there was a convergence from “multi-protocol” to IP and Ethernet.

As an introduction strategy Semifore offers a sandbox model.

John: have you thought about a user conference where you can share lessons learned and foster “viral process”?

  • Rob: good idea, we could do it in the Valley
  • Herbie: one challenge is a lot of our customers are direct competitors and don’t allow us to talk a lot about what they are doing or even that they are using it.
  • John: breakfast at Coco’s might actually kick this off; talk about failure as much as glossy success. provides access to design ideas and source of marketing insights.
  • Sean: first Verilog user group was very low key.  It was at Denny’s.

Rob: engineer to engineer conversations have been of great benefit, but we have trouble translating that into business impact.

  • Sean: boiled frog problem- registers grow incrementally.  complexity ….  how to trigger the epiphany that “it’s getting hot”.  how describe the environmental question about increasing complexity.
  • Rob: we see people saying “we can’t manage any more. please help”
  • Sean: need to crystallize this customer’s business insight into tools for engineer customers at other firms (including prospects) into a compelling business proposition. Problem has scaled from hundreds to tens of thousands of registers

Sean: What is one thing that would change the equation:

  • Herbie: go to next level in revenues. A potential contract on the horizon would generate more human resource.
  • Rob: finalize and accurately describe tool functions, so can present / educate people at higher levels of the organization..

Q: What is your licensing model?
A:business predicated on one year licensing deals, renewals are based on internal uptake not multi-year contractual obligations. Avoids some issues where customers wait for end of quarter/year asking for large discounts

John: your great strength is your engineering view, but is this in some ways a weakness? Could you do more to see into the customer organization w/o more revenue?
Rob: A senior VP engineering has a P&L and a business view. We are a small tool in price, it’s hard to get their attention.

Take-Aways

  • Herbie: this session was out of our normal activity.  appreciate opportunity.  learned working inside orgs & managing projects: the reality of business situation, putting together the fifth team.
  • Rob: better mousetrap doesn’t always sell.  Semifore has good technology.  challenge is to refine the messaging.  describe “breakage is around the corner.”
  • Sean:  need to explain to prospects that they have gotten used to dealing with “broken”. I think Semifore’s challenge less in engineering more making business case to pragmatic buyers.

The Likely Consequences of Entrepreneurship Require Perseverance

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, 4 Finding your Niche, Rules of Thumb, skmurphy

Justin Kan (@JustinKan) wrote “Startups Don’t Die They Commit Suicide” in 2011″ (mirrored on his blog here)  reflecting on what he had observed and learned as a serial entrepreneur. It was reposted on the Philly Startup Leaders list earlier this week which led me to write the following comments mixed with excerpts from Kan’s post.

Startups die in many ways, but in the past couple of years I’ve noticed that the most common cause of death is [when] founders/management kill the company while it’s still very much breathing.

Entrepreneurship Requires Perseverance

I think this is right, two key requirements for building a business are team morale–shared vision, enjoyment of working together, hope for the future–and cash flow. And morale can get you through periods of poor cash flow  more than cash flow can compensate for poor morale and team dynamics. I think a lot of teams lose their “gumption” and give up.

Long before startups get to the point of delinquent electricity bills or serious payroll cuts, they implode. The people in them give up and move on to do other things, or they realize that startups are hard and can cause a massive amount of mental and physical exhaustion — or the founders get jobs at other companies, go back to school, or simply move out of the valley and disappear.

I think bootstrappers are in some way at less risk for this because they know it’s going to be hard, although perhaps not how hard.
A lot of times the founders don’t maintain their health and energy and cannot weather a setback or analyze their situation with enough emotional distance: debugging your startup requires peace of mind

Often the root problem can be traced back to a lack of product traction — it’s rare to find people willingly quitting companies with exploding metrics. But one thing that many entrepreneurs don’t realize is that patience and iteration are critical in achieving product market fit.

Keeping a ‘captain’s log’ or other journal can give you a place to vent your frustrations–and let them cool for later analysis–jot down your fragmentary insights for later revision and recombination, and allow you to look back at earlier crises you have managed and problems solved: record to remember, pause to reflect. We have worked with a couple of Finnish teams and they have a great word “sisu” that is the Arctic version of gumption.

Overnight successes might happen fast, but they never actually happen overnight.

I think a lot of the desire for overnight success  is driven by trade press accounts of young millionaires who clean up the real story to make it seem simple and inevitable. I have met a number of entrepreneurs who think that one deal or one relationship will be the point of departure for a rocket trip to the stars. That’s always the way the success narrative is cleaned up and presented, but the reality almost always–barring a few lottery ticket winners–involved a lot more hard work and the slow accumulation of many small insights, decisions, and advantages.

On the other hand, happy people don’t normally start new companies: as Sramana Mitra has observed, startups are founded by mavericks, iconoclasts, dropouts, and misfits.  In fact, I think Barry Moltz is right: you need to be a little crazy.

Still, I think morale at an individual and team level is a key resource, and the teams that persevere seem to be more driven by the thought of proving a new idea right than proving  former co-workers, bosses, or  relatives wrong. While 0roving folks wrong can be the start–bold action coupled with frank expression has inadvertently launched many a deeply felt entrepreneurial career–it’s rarely what sustains an individual much less a team.

“It’s only after you fail once or twice and learn to rely equally on thought, analysis, and anticipation–in addition to speed, talent, and execution–that you can really call yourself an entrepreneur. ”
Barry Moltz in “You Need to Be a Little Crazy

Semifore Execs Share Bootstrapping Lessons and 2014 Scaling Up Plans at Jan-17-2014 MVP Clinic

Written by Sean Murphy. Posted in 4 Finding your Niche, 5 Scaling Up Stage, EDA, Events, skmurphy

Semifore , Inc. was founded in 2006 by Richard Weber based on his system design experience at several startups and some larger systems firms. All of them struggled with the need for  tools and methods to keep the hardware architecture in sync with software architecture and to ensure that the development and customer documentation was up to date. He developed an application that worked from a common specification to generate high level hardware description language specifications, software source code, and human readable documentation for the memory maps and configuration/control register behavior. Semifore has bootstrapped growth since 2006 and has seen their offering adopted at a number of major semiconductor firms. and system houses.

  • What: Semifore Execs Share Bootstrapping Lessons and 2014 Scaling Plans
  • MVP Clinic Format: Webinar with shared note taking in a PrimaryPad
  • When: Fri-Jan-17-2014 10am PST
  • Cost: No Charge
  • Register: https://www3.gotomeeting.com/register/251287126
Register Now

We have two members of the Semifore executive team joining us 10AM PST on Fri-Jan-17-2014 for a discussion of what they have learned about their success so far as a niche player in the Electronic Design Automation space and their plans to scale up in 2014. You can register to take part in the conversation at

  • Rob Callaghan, COO of Semifore Inc.
    Rob was previously  Vice President of Operations for sales and technical support at Magma Design Automation. Prior to Magma, he was Group Director of Business Development as well as Director of Sales Operations at Cadence Design Systems. He has worked with other large electronics firms such as L.M. Ericsson, Amdahl Corporation, and Memorex Corporation in the functions of Product Marketing, Field Operations, Finance and Accounting. His expertise includes strategic and operational planning, operations management, market research, and financial operations for organizations such as direct sales channels, product marketing, R&D operations, corporate business development, corporate mergers and acquisitions and strategic investments. He has a BS in Finance from the Menlo School of Business and a MBA from Golden Gate University.
  • Herbie Winsted, Vice President of Business Development and Customer Care
    Herb is a veteran of over 26 years in the EDA and Semiconductor industries. He has held positions of Director Business Development and Director IC Implementation and various individual contributor assignments at Cadence Design Systems. He has also assumed management responsibilities for CAD teams and IC layout groups at National Semi, GEC Plessey, and AMD. Herbie has also lead hundreds of multi-discipline automated layout projects in different roles at Silicon Valley Research (Silvar-Lisco) working with major Semiconductor companies worldwide. He has excelled at team building and establishing both business and personal relationships at every level of the organizations he has serviced. He has wide experience in creating marketing messaging, training, and sales collateral. He has always put customer requirements as his highest priority and excels at finding practical solutions that satisfy all parties concerned.

Background for discussion

Semifore Inc. is a software startup in Palo Alto Ca. The company provides a software product platform that automates and manages the register information for the Hardware / Software interface during the definition, specification, implementation and verification phases of the ASIC and/or FPGA design process. The company is privately held and has no external investors. It was founded in 2006 by Richard Weber who is currently the CEO of the company.

Currently the company has over a dozen paying  customers which are using the platform to deliver their chip sets to customers. Logo’s such as Altera, AMCC, Microsoft, and other large firms have embraced the tool and associated design methodology to reduce their design cycle time and improve their product functionality.

Semifore’s products are used by Systems Architects and designers, Verification Engineers, Software Development Engineers, and Technical Publications teams inside of Semiconductor companies.

The company has been funded via “bootstrapping” and is operated solely from operating cash flow. This has provided sufficient funds to get through the product development and early customer engagements that allowed Semifore to market, test, and refine the technology to a state of high reliability and functionality with low post-sales support requirements. The product does what we say it does and once it’s installed the product often goes viral.

The company has relied on trade show attendance and word of mouth to secure additional sales leads to qualify and move to a product demonstration. The customers for this product, are for the most part, currently internally developing their own solutions in this space.

Market / Customer Challenges (Lessons Learned 2006-2013)

  1. Internal solutions are viewed as “free” and they get the job done today. The cost is buried across many functions within the customer and the time hits they take are part and parcel of the “design silos” in most organizations.
  2. The teams that have “created” the internal solution often have a vested interest in keeping them alive.
  3. The currently employed internal “methodology” touches many organizations that may not be the purchasing entity or the driver for the decision or have the ability to overrule and drive a central technical solution throughout the organization. Many large customers have several different of internal solutions in this design space.
  4. This design problem is very niche and eclectic and often is not highly visible to upper engineering management. It’s noise to them. Education at all levels is required for buy in on this kind of tool.
  5. Internal solutions tend to be limited to file transforms and depend on rigid input formats to produce useful results. Very little true design intelligence for detecting correct semantics and interface capability to other tools or standards.
  6. There is considerable confusion regarding the status and capabilities of the “standards” that support this particular design methodology that adds to the tendency to “wait and see “ before making buy decisions.

Key Goals for 2014

  1. Expand the adoption by existing customers who have embraced the tools and succeeded using them in production.
  2. Build on current success to add new customers, large and small.
  3. Determine level of participation in existing standards committees and explore offering our proprietary language as a standard with endorsement from existing customers.

Update Fri-Jan-17: here is the audio for the event.

Q: Customer Exit Interview Questions

Written by Sean Murphy. Posted in 4 Finding your Niche, Rules of Thumb

Q: We have a SaaS offering that has been on the market for three years now and we have several dozen paying customers. Our offering is useful for firms with more than a hundred employees up to several thousand and is licensed at a corporate level. We have only lost two customers, one was acquired by a much larger firm and the other went out of business. We now have a third customer that is leaving and I want to give them a call and get some feedback. Can you suggest some questions for the exit interview?

Here are some questions that I have found useful in uncovering issues you can act on and sometimes recover the account:

  • What were the most useful or valuable aspects of our service?
  • What were the last useful?
  • Did an event or incident or failure on our part trigger your decision to look for alternatives?
  • What new benefits or other value do you see the new vendor providing?
  • Is there a change we can make that would encourage your to revisit or alter your decision?
  • Any other comments, suggestions, or observations.

Trick is to understand reason for change and then determine if you can do anything to change the decision while being respectful of their decision. They may come back in a few months or even a year if you treat them with respect now. You should have the CEO or a founder call and email so that you communicate you are interested in understanding the situation and their needs.

Related posts:

Challenges in Analysing Market Structure and Competitive Landscape

Written by Sean Murphy. Posted in 1 Idea Stage, 3 Early Customer Stage, 4 Finding your Niche, Customer Development, skmurphy

Before you introduce a new product into an existing market you need to analyze the market structure and competitive landscape. This is a laundry list–not a prioritized list—of the set of challenges we currently wrestle with in helping clients monitor their external environment and craft strategies for new market creation and new product introduction into an existing market. I welcome any suggestions for resources or tools.

Engineering Your Sales Process Workshop Feb-8 Early Bird Closes This Weekend

Written by Sean Murphy. Posted in 2 Open for Business Stage, 3 Early Customer Stage, 4 Finding your Niche, 5 Scaling Up Stage, Events, Sales, skmurphy

Register Now Just a heads up that the early bird rates for our next “Engineering Your Sales Process®” Workshop close Sun-Jan-28.

This is the same workshop that Scott Sambucci and Sean Murphy offered at the Lean Startup Conference in December 2012 but we are limiting the attendance to 12 entrepreneurs to allow it to be even more interactive and in depth. Our focus is on entrepreneurs who are selling complex new products to businesses and face these challenges among others:

  • You can’t get potential customers to call back.
  • Prospects won’t make a decision.
  • Prospects like what they see in beta and ask for extensions but will not buy (yet).
  • Your deals stall.
  • Prospect stays with the status quo.

This interactive workshop will help you learn from these problems by using conscious planning and experimentation. Traditional sales training stresses “every no moves you closer to a yes.” Our approach to engineering your sales process says instead, “What looks like noise is often actually data.” Designing and debugging a repeatable sales process is key to a sustainable business, and we’ll address how to diagnose common problems to determine likely root causes. You will leave with a scientific approach to understanding your customers’ needs and their buying process so that you can scale your business in harmony with it.

ABOUT THE SPEAKERS:

Sean Murphy, CEO of SKMurphy, Inc. has taken an entrepreneurial approach to life since he could drive. He has served as an advisor to dozens of startups, helping them explore risk-reducing business options and build a scalable, repeatable sales process. SKMurphy, Inc. focuses on early customers and early revenue for software startups, helping engineers to understand business development. Their clients have offerings in electronic design automation, artificial intelligence, web-enabled collaboration, proteomics, text analytics, legal services automation, and medical services workflow.

Scott Sambucci is the Chief Sales Geek at SalesQualia, a company dedicated to improving sales performance. With more than 10 years in Silicon Valley and 15 years in sales, management, and entrepreneurial roles in the software and data industries, Scott merges the attributes of a successful salesperson and entrepreneur, putting his experience to work for SalesQualia clients every day. He’s lectured at numerous universities across the world, presented at TEDxHultBusinessSchool in San Francisco, and recently published  “Startup Selling: How To Sell If You Really Really Have To And Don’t Know How.”

Register Now

Impatience For Success Works Against Learning

Written by Sean Murphy. Posted in 4 Finding your Niche, 5 Scaling Up Stage, Consulting Business, skmurphy

Q:  We’ve sculpted our product in a niche that was  a subset of the larger target audience. But it is not a niche product–and our investors agree–it’s aimed at the the middle of the bell curve. We feel impatient with our progress and are considering a significant investment in a traditional PR firm; we hope this will dynamite our whole effort with a big splash.

Most successful products start out in a niche and move to a sequence of larger/adjacent niches. Impatience for success works against learning.

Dr. Atul Gawande on Managing Complexity and Uncertainty

Written by Sean Murphy. Posted in 4 Finding your Niche, skmurphy

Managing complexity and uncertainty was the focus of Dr Atul Gawande’s commencement address at Williams College on Sunday, June 3rd, 2012 (Reprinted in New Yorker as “Failure and Rescue“). The entire talk is worth reading and offers a medical case history as a compelling context for his points.

“…the critical skills of the best surgeons I saw involved the ability to handle complexity and uncertainty. They had developed judgment, mastery of teamwork, and willingness to accept responsibility for the consequences of their choices. […] We all face complexity and uncertainty no matter where our path takes us. That means we all face the risk of failure. So along the way, we all are forced to develop these critical capacities—of judgment, teamwork, and acceptance of responsibility.”

I think that the three skills Dr. Gawande mentions are also crucial for entrepreneurs to cultivate:

  • Judgment: the ability to develop a point of view and to use it to make decisions in a timely fashion as dictated by the implications of unfolding events. This may require making decisions with incomplete information, and that’s a useful distinction  to remember: if you have enough information it’s a choice based on your values, if you don’t, if there are uncertainties or ambiguities, it’s a decision.
  • Mastery of Teamwork: this requires effective two way communication, timely coordination, and establishing a level of trust that enables effective collaboration. It also requires alignment on goals, agreement on roles, negotiation of a common process, and a commitment to effective business relationships.
  • Accepting Responsibility for Consequence Of Your Choices: you can make a good decision based on all of the information you have in hand and still have a poor outcome. Sometimes a poor outcome is a possibility that can be anticipated and mitigated and sometimes it’s part of the “unknown unknowns” of a situation.

The last point, about the limits of risk mitigation, is a point of departure for Dr. Gawande’s core point: even with good judgment and teamwork, to truly accept the consequences of your decisions is to commit to resilient improvisation and rescue. It’s not enough to prepare for failures and take steps to limit their damage, you have to persevere and attempt to “retrieve success from failure.”

I thought that the best places simply did a better job at controlling and minimizing risks—that they did a better job of preventing things from going wrong. But, to my surprise, they didn’t. Their complication rates after surgery were almost the same as others. Instead, what they proved to be really great at was rescuing people when they had a complication, preventing failures from becoming a catastrophe.

Scientists have given a new name to the deaths that occur in surgery after something goes wrong—whether it is an infection or some bizarre twist of the stomach. They call them a “failure to rescue.” More than anything, this is what distinguished the great from the mediocre. They didn’t fail less. They rescued more.

He cites a study in the New England Journal of Medicine from October 2009 “Variation in Hospital Mortality Associated with Inpatient Surgery” which concludes:

In addition to efforts aimed at avoiding complications in the first place, reducing mortality associated with inpatient surgery will require greater attention to the timely recognition and management of complications once they occur.

This excerpt from “Variation in Hospital Mortality Associated with Inpatient Surgery” provides some statistics on Gawande’s observation that the better hospitals had similar complication rates but lower mortality from major complications:

Rates of death varied widely across hospital quintiles, from 3.5% in very-low-mortality hospitals to 6.9% in very-high-mortality hospitals. Hospitals with either very high mortality or very low mortality had similar rates of overall complications (24.6% and 26.9%, respectively) and of major complications (18.2% and 16.2%, respectively). Rates of individual complications did not vary significantly across hospital mortality quintiles. In contrast, mortality in patients with major complications was almost twice as high in hospitals with very high overall mortality as in those with very low overall mortality (21.4% vs. 12.5%, P<0.001). Differences in rates of death among patients with major complications were also the primary determinant of variation in overall mortality with individual operations.

Related Blog Posts

Startup Founders Announced for Working For Equity Panel at SVCC 2012

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, 4 Finding your Niche, Events, Founder Story, skmurphy

For the third year in a row I will moderate a panel of startup founders sharing lesson learned bootstrapping a technology startup at Silicon Valley Code Camp. This “Working for Equity” session will be on Sunday Oct 7 at 9:15am.

Here is the announcement

Many of us in Silicon Valley seek to found or be an early employee at a technology startup. If you aspire to create a startup come take part in a conversation with four  startup founders about what’s really involved in leaving your day job and striking out on your own or with partners. The startup founders range from serial entrepreneurs to first-time CEOs, they will share their vision, drive and passion as they discuss the nuts and bolts of following their dreams to building something that will change the world.

  • Lenny Greenberg CTO of Assityx, Inc.
    Lenny Greenberg is founder and CTO of Assistyx, leading developer of assistive communication products, including the award-winning TapToTalk app that help individuals with physical and mental challenges reach their full potential. A serial entrepreneur, Lenny has led organizations in planning and developing advanced technology-based products.
  • Ruoting Sun, co-founder of Temvi, Inc.
    Ruoting Sun is co-founder of Temvi, a Mountain View based startup focused on simplifying social discovery. Temvi enables users to easily find, share, and experience cool events that are happening around them, based on their interests and passions. Routing is a first time entrepreneur heading a team of 5 others in creating a mobile app for social discovery.
  • Sam King, CEO of ExpressMango, Inc.
    After working as a key contributor to many startups, Sam King co-founded Express Mango, a the social networking appointment system. Express Mango’s online scheduling and appointment reminders reduce no shows. The facebook virtual receptionist helps grow your business 24/7/365.
  • Giacomo Vacca, CEO of Kinetic River, Corp.
    Giacomo Vacca founded Kinetic River to focus on products and services at the intersection of laser optics, microfluidics and medical diagnostic devices. He earned his B.A. and M.A. in Physics from Harvard University, and his Ph.D. in Applied Physics from Stanford University. His most recent honors are having been elected to Senior Member of the Optical Society of America and to Research Fellow of the Volwiler Society at Abbott Laboratories.
  • Moderator: Sean Murphy, CEO of SKMurphy Inc.
    Sean Murphy has taken an entrepreneurial approach to life since he could drive. His firm specializes in early stage and emerging market technology companies who are challenged either by new product introduction or the need to diversify beyond their initial success.

Silicon Valley Code Camp is an amazing experience that has improved each of the five years that I have attended. It’s held at Foothill College (12345 El Monte Road,  Los Altos Hills, CA 94022) and this year will convent the weekend of Saturday October 6th and Sunday October 7th. There is no charge to attend.

Register your interest in attending Code Camp at http://www.siliconvalley-codecamp.com/Register.aspx

Register your interest in attending the  Sunday Oct 7 9:15am “Working for Equity” session at
http://www.siliconvalley-codecamp.com/Sessions.aspx?sessionid=942

Yanis Varoufakis: “Valve is an Enlightened Oligarchy”

Written by Sean Murphy. Posted in 4 Finding your Niche, skmurphy

Yanis Varoufakis is an economist-in-residence at Valve Software. In “Why Valve? Or, what do we need corporations for and how does Valve’s management structure fit into today’s corporate world?” makes this interesting observation.

Valve is a private company owned mostly by few individuals. In that sense, it is an enlightened oligarchy: an oligarchy in that it is owned by a few and enlightened in that those few are not using their property rights to boss people around. The question arises: what happens to the alternative spontaneous order within Valve if some or all of the owners decide to sell up? Granted that Valve’s owners do not intend to do this, the question remains, at least at the theoretical level.

One possibility is that Valve will divide and multiply into a number of different Valve-like companies, as its talented employees leave for greener pastures and, possibly, with the intend of re-creating the horizontal management structure that they grew happily familiar with. Another possibility is that the owners may actually sell their stake to Valve employees, thus combining the features of a co-op with the Valve management system.

I found this a useful postscript to my earlier post on Valve “Four Excerpts From Valve’s Employee Handbook That Belong in Yours.” There is also a comment by “Aaron on August 3, 2012 at 7:32 am” that suggests a narrower applicability for Valve’s model to other creative firms.

You seem to miss a key point about Valve, your products have essentially zero unit cost. The flip side of this is the products are only really useful with huge amounts of combined effort. I’ll pay for 20 minutes of on excellent chef’s time, that has far more value to me than 20 minutes of a valve engineers time. This differences is what separates Valve, Github, and 37 Signals from more traditional companies, however this minor point never seems to be brought up in discussions about them.

But I still find the Valve handbook a very thought provoking model for harnessing the creative energy of a team, in the same way that Hewlett and Packard developed a set of cultural practices that fostered innovation and were copied by  many other firms in Silicon Valley.

I didn’t find much of the rest of Varoufakis’ particularly useful, and George Grellas took particular exception to a number of his statements in a long comment left on Hacker News.

Here are two excerpts that agree with Varoufakis’ conclusions that it is an enlightened oligarchy but disagree that it can scale to other industries (echoing Aaron’s insightful comment)  or  even to a substantially larger size.

The author claims (a) that hierarchical managements lead to “corporate serfdom” and to “Soviet-like” dominance within the framework of the corporation itself, thereby crushing creativity and wasting resources, (b) that all this is made by possible by “toxic finance,” and (c) that it is all “co-dependent with political structures that are losing democratic legitimacy fast.”

Corporate serfdom? Toxic finance? Co-dependent on illegitimate political structures? This lumps every early-stage startup with every mega-corporation that has ever existed and, in effect, calls them all illegitimate. And that is a political assumption about “corporations” in the abstract, not an empirical analysis, because it cannot possibly be defended as an empirical analysis.

[…]

What, then, does Valve offer that makes it different? It too is a corporation. It is privately owned by a few persons who have had the luxury of screening all employees so as to hire only very bright, highly self-motivated persons to do predominantly creative forms of work. Working with such employees, Valve has been able to build a successful model by which these bright, motivated employees get to choose 100% of their projects and have complete freedom on how they manage their own time and on what results they seek to achieve. It all sounds like an amazing work environment but how many businesses get to focus in this way on creative forms of work or get to screen carefully to make sure they only hire self-motivated employees? And how many businesses have the luxury of doing this without needing to raise outside capital through their early stages? Moreover (and the author himself raises this point), to what extent can this scale? Can such a model work if the company grows a thousandfold and suddenly has 40,000 employees? Of course, the model inevitably breaks down at some point along the way because the environment in which the Valve employees currently function is highly unusual if not unique.

I agree with George’s analysis but I think that Valve still offers an interesting model for startups and small teams doing software or creating intellectual property to learn from.

Update Aug-12: Doug Withau left a comment suggesting some other resources for enlightened management:

You Tried: It’s OK To Make a Change

Written by Sean Murphy. Posted in 4 Finding your Niche, 5 Scaling Up Stage

“In restless dreams I walked alone,
Narrow streets of cobblestone.”
Simon and Garfunkel, “The Sounds of Silence”

Nothing new ever works, but doing the same thing over and over again without variation or detecting and correcting mistakes is insanity (or at least bureaucracy). So many startup overnight success stories that stress the importance of passion and persistence leave that part out.

Retry, Vary, Or Make a Change

In the early going especially you are always wrestling with whether to:

  • Retry without variation: persevere using the same methods to achieve the same near term goals.
    • This is the absence of learning.
    • Retry without variation (not wasting any time trying to learn) is an anti-pattern beyond third or fourth iteration. Unless you are playing a slot machine or are in a similar situation where you can either make one move or not play
  • Retry with variation: adjust your methods but keep aiming for the same near term results.
    • This is single loop learning. Also called Plan-Do-Check-Act or Build-Measure-Learn or “being in flow.”
    • Here the challenge is more complex: how to recognize the limits of a particular approach and try a different one. It’s easy to switch between strategies or techniques that you are comfortable with, but it cam be intensely uncomfortable to learn a new approach and incorporate it into your repertoire. Starting over as a novice can be daunting.
    • the goal is not achievable or there are better near term goals given your current resources and knowledge.
  • Play a different game: challenge your assumptions, change your goals, give up or defer one or more current objectives and abandoning some or much of your current approach.
    • This is double loop learning. Also called “lateral thinking” by Edward DeBono or associating in Innovator’s DNA.
    • Here the challenge is to determine if another technique or strategy–one that you may be unfamiliar with or have little expertise with–will allow you to reach your goal, or if you need to adjust your goals to something that’s feasible.

Chris Argyris developed the concept of single loop and double loop learning. In his “Teaching Smart People How to Learn” he outlines a set of attitudes that work well to foster single loop learning but create a “doom loop” when a change in goals (double loop learning) is required.

There seems to be a universal human tendency to design one’s actions consistently according to four basic values:

  1. To remain in unilateral control;
  2. To maximize ‘‘winning’’ and minimize ‘‘losing’’;
  3. To suppress negative feelings; and
  4. To be as ‘‘rational’’as possible—by which people mean defining clear objectives and evaluating their behavior in terms of whether or not they have achieved them.

The purpose of all these values is to avoid embarrassment or threat, feeling vulnerable or incompetent.

Four Approaches That Minimize Learning: Make a Change

If these four rules are your working default it is very difficult to engage in double loop learning.

  • unilateral control: works against getting a broader perspective from others, asking for help and advice.
  • minimize losing: you have to admit to yourself that your current approach is not working if you are going to question your assumptions and change goals and/or methods.
  • suppress negative feelings: sometimes it’s necessary to feel bad to develop the willingness to change and improve.
  • clear objectives and pass/fail thinking: innovation requires a willingness to tolerate ambiguity, allow for evolving objectives that are fuzzy, and say better or worse not pass or fail.

I don’t think it’s a matter of “getting comfortable with failure” as much as “getting comfortable at getting better” instead of holding yourself to a standard of perfection. I think it’s less about “failing fast‘ and more about “failing well” or “failing safely.” Single loop learning is being in flow, double loop often requires a period of discomfort, uncertainty, and restless dreams.

Related Blog Posts

Q: Is Building The Wrong Product A Waste Of Time?

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 4 Finding your Niche, Customer Development, skmurphy

Building the “wrong product” is not a waste of time you learn about the market and technical feasibility. Right and wrong are both gray, not black or white. Customer development and technical development typically require a sequence of prototypes that are “less wrong” over time under they become good enough.

Entrepreneurs Need a Community of Practice Not a Movement

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 4 Finding your Niche, Community of Practice, skmurphy

Entrepreneurs need a community of practice to improve their skills, not a movement they can join as a fad. I don’t consider myself a disciple or part of a movement. I consider myself a practitioner. I am a huge fan of Saras Sarasvathy, Clayton Christensen, Peter Drucker, Gary Klein, and Gerald Weinberg.

Jim Manzi: Focus on Delivering Value to Customers at a Foreseeable Profit.

Written by Sean Murphy. Posted in 3 Early Customer Stage, 4 Finding your Niche

Jim Manzi, founder of Lotus and Applied Predictive Technologies, advises entrepreneurs to “Focus on delivering value to customers at a foreseeable profit” in “How to Succeed in Business by Really, Really Trying.”

How to Succeed in Business by Really, Really Trying.

It’s a great article and also on the limits of advice to entrepreneurs, in particular autobiographies sold as “treasure maps” Here are his opening two paragraphs

First, even though every guy who has done a successful start-up somehow feels he’s therefore become the philosopher-king of business, all experience is bounded. Any observations I make apply to venture-backed enterprise software targeting scale-up. Many of the things you would do for a biotech start-up or a consumer-oriented social media business, as examples, are probably very different. Further, there are companies that exist to sell products at a profit, and companies that exist to sell equity to investors. I only know about the former. The latter tend to flourish in the later stages of a bubble, and rely on a totally different set of skills related to promotions, networking and PR.

Second, even within the universe of relevant companies, all “rules for success” are either obvious or incomplete. Each suggestion in this post will be incomplete, in that it will ignore inevitable exceptions and complications. In other words, there are no rules for success. If there were, lots more people would do successful start-ups.

Jim Manzi in “How to Succeed in Business by Really, Really Trying.”

Hard Earned Advice for Bootstrappers

He then proceeds to offer some hard earned advice very applicable to bootstrapping a startup, in particular

“Have a co-founder. Ideally, you should have high overlap in your view of the world, and only partial overlap in your skill sets.”
Jim Manzi in “How to Succeed in Business by Really, Really Trying.”

I think technology startups require so many distinct skills that it’s difficult for one person to have enough critical experience to be able to persevere. Shared values and distinct skills would be my shorter phrasing for his recipe.

“Seek blue water. Do something innovative enough that nobody else is even trying. This is the best way to get around scale advantages that others have over you. Since you don’t know what you’re doing yet, it’s better if nobody else does either.”
Jim Manzi in “How to Succeed in Business by Really, Really Trying.”

One of the best ways to do this is find two or three people with distinct knowledge or expertise where the combination is novel. I think it’s often less a matter of new inventions or discoveries and more about unique or novel combinations or applications of diverse and seeming unrelated knowledge and technology.

“Always assume an average amount of luck in the long-run, and terrible luck in the short-run.”
Jim Manzi in “How to Succeed in Business by Really, Really Trying.”

Don’t be too pessimistic or you will end up wearing a belt, suspenders, duct tape, and a wetsuit to hold your pants up. But nothing new ever works so assume it will take a few tries to get a novel combination to a basic level of usefulness. Over the long run it helps to hope for average and prepare for the worst

Focus on Delivering Value

“Focus on delivering value to customers at a foreseeable profit.”
Jim Manzi in “How to Succeed in Business by Really, Really Trying.”

I think this is probably the core piece of advice. Understand who is going to pay you, why, and how much.

“Treat revenue and (especially) profit are the best possible feedback on your ideas.”
Jim Manzi in “How to Succeed in Business by Really, Really Trying.”

Of all the forms of encouragement that an entrepreneur can take advantage of, a customer’s check is irreplaceable. It’s also proof you are delivering value.

“Cash flow break-even is the most important milestone your company will ever achieve.”
Jim Manzi in “How to Succeed in Business by Really, Really Trying.”

I think this  is the watershed event in the life of a startup, not the first order or getting an investment but getting to break-even. Once this happens you have an infinite runway for experiments to scale up, before then it’s only a matter of time until you have to reconsider. Break-even normally requires focus on a niche unless you are very fortunate.

Related Posts

 

Worry About Scaling After You Find Your Niche

Written by Sean Murphy. Posted in 4 Finding your Niche

“We tell our disruptive teams to not do volume forecasts. Do not do a spreadsheet with volume forecasts on it, because it is unforecastable.  You cannot really know. So why waste time doing bogus numbers that are unknowable.  The finance department may ask for them, so spend five minutes, do something quickly, but the leadership should not focus on those numbers. They are wrong, you just don’t know in what direction. Instead we have teams focus on how deep is the customer problem that’s unserved and how good is our solution at solving it. If  those two are strong, then we have a reasonable shot at a good business. If either of those is weak, then no matter what the spreadsheet says, no matter what the volume forecast says, there is not a business there.”

Scott Cook in a 2007 interview with Innosight (starts at the 2:30 mark but all six minutes are worth watching)

Peter Cohan‘s “Situation Slide” asks six questions to help a sales team prepare for a demo:

  1. Job Title & Industry: Name and role of each decision maker attending demo
  2. CBI (Critical Business Issue): What is the major problem he/she has?
  3. Reasons: Why is it a problem or what is the problem due to?
  4. Specific Capabilities: What capabilities are needed to address the problem?
  5. Delta: What is the value associated with making the change?
  6. Critical Date or Event: When does the change need to take place (and why)?

I have bolded CBI and Delta because these correspond to Scott Cook’s “how deep is the customer problem that’s unserved” and “how good is our solution at solving it.” These are the key questions for determining whether or not you have a niche.  Actually they are key questions to answer to secure an early customer, but when the same problems and same delta or impact recurs across customers who will reference each other’s buy decisions you have found your niche.

It’s at that point you can worry about scale. But especially for bootstrappers, a solution that doesn’t scale can still generate not only cash flow but valuable learning about real problems so that you can meet a deep customer need in a distinctively useful way. As Cook points out in the video, you can worry too much about building a $100 million or a billion dollar business when making sure you are having an impact on a problem a customer cares about can secure you  a $1M to 10M business that can lay the groundwork for a larger business. This why we put the “finding your niche stage” after “early customers” but before “scaling up” in our startup stages model.

If you want to learn how to give a “Great Demo” Peter Cohan’s next open enrollment workshop is May 23 in San Jose.

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