Tag Archives | Business management

The Scientific Approach to Building a Successful, Innovative and Sustainable Business – The Lean Startup

The Lean Startup, by Eric Ries, is a book that leverages the scientific method to redefine entrepreneurship as the process of developing successful, innovative and sustainable businesses.

I just finished reading a book that will undoubtedly influence decisions that I make for the rest of my life. The book is called, The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, and was written by Eric Ries.

Background

Here is what I have learned about Eric Ries:

  • He graduated from Yale in 2001
  • Ries was the CTO and co-founder of IMVU, a successful startup based on the framework outlined in the book
  • He has received numerous awards and accolades from various business and tech publications
  • In 2010, Ries was selected by Harvard Business School as an Entrepreneur in Residence
  • He is equally well-versed in both the technology and business aspects of leading a successful startup

After being a part of a startup that failed in the infamous dot com boom/crash, Ries went on to achieve great success by applying the scientific method to the art and practice of entrepreneurship. Over the last several years, he has become the leader of the Lean Startup movement that has taken both new and existing businesses, inside and outside of the tech world, to sustainable models of growth. After years of speaking, training, consulting and blogging about these proven strategies, Ries published a book on the subject in September 2011.

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Do small firms need consulting to grow?

Small businesses are often lacking in certain business functions that can be outsourced to consultants – provided the pride of small business leaders can be overcome.

This is a question I have been wrestling with internally for a while. Over the past 20 years, I have worked primarily with small/solo professional service firms. As anyone who has worked for a small business can attest, everyone usually wears a lot of different hats at a small firm. That means, quite often, that certain key business functions necessary for sustainable growth are somewhat lacking.

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The Magic of Business: Imagination

Ferdinando Buscema is the “Magic Experience Designer” at Trading Factor. He is a magician and management consultant. (Just let that sink in for a moment, but try not to overthink it…)

As part of TEDxVenezia, Buscema gave a fascinating talk on the interaction between magic and management. Below are some highlights:

Three secrets of magic:

  1. “Reality is not always what it seems to be” – the role of the artist is to shape our perception of reality
  2. “Imagination creates reality”
  3. “Reality is made of words”

In his presentation, Buscema cited IBM’s 2010 Chief Executive Officer Study. 70% of those interviewed said that imagination and intuition are two of the most important skills that modern managers must possess. To be successful in business, as in art or magic, the practitioner must be able to translate noise and chaos into signal and meaning. These skills come through self-cultivation.


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The Philosophy of Business: Strategy

I was 12 years old when I decided I wanted to become a professional musician. That summer I landed my first paying gig, and the rest – as they say – is history. Around the same time, I cultivated a deep and life-long interest in philosophy.

Here is how Wikipedia defines philosophy:

Philosophy is the study of general and fundamental problems, such as those connected with existence, knowledge, values, reason, mind, and language. Philosophy is distinguished from other ways of addressing such problems by its critical, generally systematic approach and its reliance on rational argument. The word “philosophy” comes from the Greek φιλοσοφία (philosophia), which literally means “love of wisdom”.

In my opinion, the application of philosophy to business is strategy. Robert Boyden Lamb defines strategic management in the intro to his book, Competitive Strategic Management, as follows:

Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment.

What’s the Point?

Philosophy is a way of addressing problems through a “critical, generally systematic approach and… rational argument.” Effective business leaders also address problems rationally, critically and often systematically. How a business positions itself in the marketplace, how the business interacts with clients, and even how a business develops product and service offerings – these decisions demand a rational and critical approach.

The original Greek definition of philosophy, “love of wisdom,” is extremely relevant to modern business strategy. The more knowledge and information that is factored into intelligent decisions, the better the outcome is likely to be. Philosophy is about tackling the big questions, and those questions are just as applicable to business:

  • Why are we here? (Mission)
  • How do we make decisions? (Business Intelligence)
  • What is our relation to the outside world? (Marketing, Customer Service)

What is your philosophy of business?

Image via diametrik


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Two Contrasting Examples of Client Interaction

Over the last several weeks, I’ve enjoyed having family that now live out-of-state come to visit, and the holidays were enjoyable. Inevitably, the end of the year is a busy time for businesses and truths about how clients are viewed often come to light. Here are two contrasting examples:

Old Navy

We used to buy a lot of our kids clothes at Old Navy up until about five years ago when we noticed their prices were not as good as they once were. The prices increased but the quality did not. My wife decided to pick up some last minute gifts for our kids a couple weeks ago when things were fairly busy.

My wife was checking out with her purchases – a process that seems to take longer at Old Navy than at other retail establishments, for whatever reason. First, an item she thought was on sale rang up significantly higher than she was anticipating. The clerk, who was also in management, apologized and asked if she still wanted it. She decided against the purchase, so the clerk removed the item from the tally. But then, he removed several other items. She said she still wanted those other purchases, but he sort of smiled. He then put all the items in the bag, including the original item that rang up too high, before thanking her for her business. He then wished her a Merry Christmas.

She ended up with about $45 of “discounts” from the clerk. It made her night. We will definitely be returning to Old Navy – but not because we got free stuff. It is because the clerk/manager valued my wife’s business and satisfaction more than the few dollars of profit.

AT&T

For several years, our neighborhood has been undergoing some infrastructure upgrades. The original utility poles first installed in the early 1950s were taken down after new utility lines were run underground. For me, this meant one thing – Fiber!

Not the fiber that improves digestive regularity… I mean Fiberoptic communication lines which allow for very high speed internet connections. AT&T representatives began selling their U-Verse service in our neighborhood a few months ago. Around Thanksgiving, a salesman visited our home. Here is what we were assured:

  • Faster internet – way faster than that “slow cable internet”
  • Better choices of TV programming for less money
  • No need to install receivers in our bedrooms for TV
  • Overall, a reduction of our bill by about $50

On New Years Eve, our AT&T installer arrived at the house at 9:00. The first thing I learn – without paying additional money for receivers, our bedroom TVs will not have access to basic programming. (Our Cox service has always allowed for this at no extra charge.) Second, the receiver installed in the Master Bedroom would not work with my wife’s old TV. So if we want to watch TV in bed, we would have to buy a new TV. Third, the internet gateway had a built-in wireless network which meant my carefully configured existing network was not going to work anymore.

Then came the deal-breaker. After the installer had finished up and we configured the internet connection, I ran some speed tests. (I use SpeedTest by SpeakEasy.) The download speed was about 30% less than our average download speeds through Cox. The upload speed – very important for video conferencing and uploading content – was 4X slower than our Cox service. The technician called the office and confirmed that our speeds were within the acceptable range.

After the technician left, I called AT&T to cancel the service. The customer service rep was very friendly and apologetic, but understood that they could not compete with the prices and quality of service offered by Cox. Because the sales person lied to us, AT&T will be waiving any and all costs associated with our short-lived account. Unfortunately, I had to figure out how to restore our connection to Cox. I spent the rest of the day tracing cables in and under the house before finally restoring service.

Epilogue

Cox isn’t the greatest service provider in the world. But they are better than AT&T. I am quite happy with my internet connection, but after this whole fiasco, I am over paying high prices for TV. We don’t even watch that much TV!

Our next move is going to be to Roku boxes. We will cancel our cable TV (saving about $110 per month) and use Netflix, Hulu, etc., for content.

Image via joeandlindsay


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