Last week I had the opportunity to address a group of entrepreneurs and would-be-entrepreneurs at the University of Missouri in Columbia, MO (@Mizzou). Several times in my life I have come away from an event feeling that I had taken far more that I gave, this was one of those times. My presentation was to cover “Fear, Failure, and Entrepreneurship” and while I am pretty well versed in the “Fear and Failure” part I am still a novice on the entrepreneur side. Sure I have launched new business platforms and driven new concepts stores, and build strategies for new product categories for large corporations but the amount of pure entrepreneurial talent at that event far surpassed me.
Sarah Hill (@SarahMidMO) was the host for the event and the first speaker. She was the world’s first journalist to use a Google Plus Hangout on TV and she and she demonstrated the power of Human Media (living, breathing, social media) as she interview many of the other presenters via Google+ Hangout video conferencing. The interactivity with the presenter, the online community, and the in person audience was better than I have ever seen before. If you are considering using video conferencing as a startup entrepreneur or a Fortune 50 company, you must check out the power of Google+ Hangouts. I am now a believer. Check on more on this creative approach on her YouTube video.
Brynne & Bailye Stansberry (@StansberryTwins) are 22 year old twin sisters who presented their amazing entrepreneurial story (http://thetwoalitystore.com/) to the crowd. They started the idea for their company while they were still in high school where they wanted to create a “fashion forward” rain boot. They refined the idea into a clear boot with swappable fashionable liners that the buyer can change out. Since their first idea they have moved heaven and earth to bring their product to market; getting a patent, talking with designers and manufacturers, and finally narrowing in on their list of retailers. The word was that they were 8-10 weeks away from manufacturing their boot. Read their story or watch their video and I guarantee that you’ll feel like you are not pushing hard enough to get your business launched (Columbia Business Times and YouTube)!
After listening to Arel Moodie (@arelmoodie) speak, you just knew that his is one of these guys that was going to be successful no matter what life threw at him. Arel, now 29 years old, described how he had grown up on welfare in the projects of Brooklyn, NY. He had witnessed drugs everywhere around him and decided that he wanted to find another way. Seeing college as his “way out”, he took advantage of his college opportunity and started his first successful internet company. He now is part of Empact, a company that focuses on facilitating a culture of entrepreneurship in communities across the world through exposure, celebration and early stage startup support. Check out his blog or one of his many YouTube interviews to see just how contagious his energy is (http://www.arelmoodie.com/blog/).
These were just three of a day full of great innovators, innovation experts, and entrepreneurs (see other presenters below). There was so much to learn from each of them and they were all incredibly driven. I don’t hear very often of corporate “innovators” seeking inspiration from entrepreneurs and I think it is a miss. Thank you Columbia, Missouri “The Athens of Missouri” for showing me your entrepreneurial spirit – I won’t soon forget it.
Other presenters: Thom Ruhe (@ThomAtKauffman), Emily Eldridge Holdman (@emilyleldridge), Jeff Slobotski (@slobotski), Jeremy Johnson (@JeremyJ), Jim Spencer (@jamesjspencer), and Kelsey Meyer (@Kelsey_M_Meyer)
So last week the MattHunt.co Blog officially turned six months old and I wanted to offer a quick thank you to everyone for your support and encouragement along the way. It will be a busy next few weeks in January with a couple of events and a slight redesign to the blog (there will be more details coming shortly).
If you have appreciated the content over the last few months but don’t always get a chance to check the site you can always subscribe to the blog via email and get each post delivered to your email inbox. If you would like to subscribe to MattHunt.co (click here) or if you would prefer to only get my posts on failure you can subscribe to Failure Forums (click here).
2012 has been a great year and thank you again for your support!
-Matt
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Here is a recap of the most popular posts from MattHunt.co in 2012:
#1 – A Lesson In Leadership: How Circuit City Forgot the Value of Their Employees.
#2 – Silicon Valley has moved from tolerating failure to embracing it. When will the rest of us?
#3 – Veterans Day Lessons: Leadership, Learning, and Failure from a Soldier’s Perspective
#4 – After a “Failed Launch” in 2005 – P90X Fitness Program Earns Revenue of $700m
#5 (tied) – Risk vs. Reward – How Compensation, Career Path, and Employment Stability Drive Innovation
#5 (tied) – Target Misses the Mark – a Failed Holiday Partnership with Neiman Marcus
For the better part of the last decade I had focused my career on driving innovation for Best Buy, a Fortune 100 retailer, and the undeniable king in the consumer electronics category. When I joined the company I was focused on identifying innovative products and services that were specifically tailored for the needs of their newly identified customer segments. I then joined a team where we focused on creating new concept and prototype stores and lead the team responsible for the Escape concept store in Chicago. Eventually we shut down our two concept stores and I worked to reshape the team into an internal capability that could deliver new prototype stores (i.e. Best Buy Mobile), new retail models (i.e. Best Buy Express), and identify new growth product and service categories (i.e. Personal Transportation, Home Energy Management, and Health & Fitness).
Throughout all of this work and in my discussions with innovation leaders from other companies I would continually see the same problem recurring over and over again.
The Risk vs. Reward model was out of whack
for those who wanted to spend their careers driving innovation.
The risks involved for those intrapreneurs who were willing to go beyond Incremental Innovation and attempt Exponential Innovation would include: 1) compensation shortcomings, 2) career path challenges, and 3) employment uncertainty.
Compensation: In most mature organizations base compensation is determined by years of service with a comparison of the role across companies in the industry. Bonuses are usually calculated by how far a group is able to exceed their budgets but is based on how much revenue or profit they drive. Neither of these measures creates an easy comparison between core business roles and innovation roles. When working on early innovation initiatives it is almost impossible for leaders to determine “accurate” growth targets and thus it is equally difficult for the team to exceed those projections with any accuracy.
Career Path: In most mature organizations there is a logical career path for core business roles. Not everyone follows the same path but there in a natural progression through the company. What most organizations have not figured out is how to recognize an individual’s service within the innovation space. For many companies it is almost like taking a “leave of absence” from the organization and does not count toward an individual’s measure for career advancement. If you add in the higher probability of “failure” with this innovation work, it might be worse than standing still. It might equate to moving backwards from a career perspective.
Employment Stability: One of the things that I learned early on with innovation work was that it was truly considered R&D. On multiple occasions I have seen a part, or all, of the “innovation” team blown up with team members scrambling to figure out if they were going to have a position within the company going forward. Like any type of R&D, everything done within the innovation space is classified as a sunk cost and the organization may or may not see any productive gains out of that work. There may be success stories yet to be discovered in this work but will require more capital and more time. But if a company needs to make a quick cut to their expenses the R&D budget is usually an easy target and it does not impact immediate operations.
Until leaders can address these issues the Risk vs. Reward model will remain out of whack and will prevent employees from fully engaging in driving high potential innovation within their organizations.
I was recently asked to write an article for the Society for Human Resource Management (SHRM.com) on what can organizations do to create an environment that inspires innovation and a higher degree of employee risk taking. In the article I note how many companies today are risk adverse and rely on compensation models and incentives that only support the status quo, instead of encouraging employees to step out of their box and step up to achieve ambitious goals. I encourage companies of all shapes and sizes to make a thorough analysis of their organization’s tolerance of risk through their compensation, career path, and employment models. I finish by providing a simple framework with suggestions that leaders can use to rebalance the Risk vs. Reward equation in their organizations.
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Here is a reprint of the entire article from SHRM.com:
Use Compensation to Inspire Innovation – 12/26/2012
Innovation drives business and productivity. Those organizations that consistently challenge themselves and their employees become market leaders. However, many companies are risk adverse, relying on compensation models and incentive programs that support the status quo instead of encouraging employees to achieve ambitious goals.
Incremental Innovation
One reason companies may shy away from propelling creativity is the lack of a balance sheet that’s strong enough to support innovation—and withstand the risk that some new initiatives might not succeed. This does not mean those companies need to discourage all risk. They can benefit by focusing on “incremental innovation.”
When a company focuses on incremental innovation, the need to change the entire structure of the organization is minimized. For instance, the company can:
Exponential Innovation
If an organization has the resources and corporate culture to support organization-transforming “exponential innovation,” greater short-term risk is involved—with the prospect of greater success in the future. The structure and compensation models for such risk need to be aligned. Possible issues with this restructuring include:
Creating a Compensation Model for Innovation
A compensation model that encourages innovation should strike a balance between the risks and rewards associated with the work. Entrepreneurs and initial investors who launch a new company take on the risk of losing their wealth. If the venture succeeds, they are rewarded for that risk handsomely. In a mature organization, employees might not be taking a risk with their own savings, but they are risking future compensation and, possibly, career stability. Effective strategies to reduce this risk include:
With a thorough analysis of an organization’s tolerance for risk, current compensation models and, ultimately, desire for innovation, a new framework can be established that provides appropriate incentives to fuel new ideas.
Mentors aren’t supposed to be Sherpas carrying your heavy pack for you up the mountain but they are meant to help guide you, provide context, and offer their advice. Too often I see organizations trying to shirk their responsibility in developing future leaders by suggesting that personal development is the responsibility of the employees. Certainly the employee is responsible for taking “ownership” of their own development but that is a far cry from organizations not having any responsibility. When this gap exists it will be at the organizations own peril – they will struggle to replace departing leaders with qualified candidates and eventually they will battle with the Peter Principle.
“How am I doing as a leader? The answer is how the people you lead are doing. Do they learn? Do they visit customers? Do they manage conflict? Do they initiate change? Are they growing and getting promoted? You won’t remember when you retire what you did in the first quarter of 1994 or the third. What you’ll remember is how many people you developed. How many people you helped have a better career because of your interest and your dedication to their development…. When confused as to how you’re doing as a leader, find out how the people you lead are doing. You’ll know the answer.”
– Larry Bossidy, Former CEO Allied Signal / Honeywell
Last month I had the opportunity to interview Shawn Mintz, the founder and President of Canadian startup MentorCity (MentorCity.com). I had stumbled across his company’s site as I was doing some research for an article and thought it had an interesting angle on mentorship. Personally, I have been passionate about the role of mentorship, both within and outside the workplace, and had been meaning to write a post on the topic for some time. Shawn had launched MentorCity in October 2011 as a free online mentor matching service and so far the public site has achieved over 600 active users. During a demonstration, Shawn showed how the site makes it easy to sign up by using your LinkedIn account to pre-populate most of your profile information and then asking you a series of questions about your expectations for a mentor relationship. The tool suggests a 15 minute interaction between the mentee and mentor to determine if there is a good fit. If there is a good fit then both parties agree on if they want it to be a formal, with regular meetings, or informal mentoring relationship. And once you become a mentee then you will also be presented with invitations to become a mentor to others – completing the circle.
According the Shawn the public site has been growing as expected and he is currently busy creating “private label” versions for several clients in Canada. These organizations utilize the tool to help create and measure mentoring relationships within their organization. The reporting provided by the tool helps to create easy transparency for measuring the program’s effectiveness. Currently Shawn is working to secure angel investor funding for a second round of development that will ensure the site is capable of supporting mentoring relationships globally. (Note: currently the “Meeting Location” field is optional – for users outside of Canada you can just leave the field blank). What I particularly like about MentorCity is that they are not just in the business of providing mentoring tools to organizations; they are providing a mentoring opportunity for free to anyone who wants to participate!
Having changed organizations several times in my career, among the first things that I would notice with the new organization were those areas that are dramatically different from my previous employer. In one of my transitions, an area of dramatic difference was in how the two organizations addressed employee development. I see mentorship as a critical piece to employee development, giving employees, especially new employees, the assistance to learn and grow outside of their direct reporting relationships. Workplace mentors have helped me to navigate within the organization to solve work problems, to understand some of the political landmines within the organization, and to discover potential new roles within the organization.
Let me quickly compare the differences these two organizations had when it came to mentorship. At one company I had a mentor assigned almost immediately after starting my role. I didn’t have to fill out a form, I didn’t have to figure out who ran the “mentor program” within the company, and I didn’t have to seek out on my own mentor. This mentor might not have been a perfect fit but they were “someone” who was there to help me navigate this new organization. Compare that with another company that didn’t even have a mentor program when I started, or if they did no one knew about it. In my tenure at this organization they tried launching two or three different mentor programs – all of which failed.
Why did they fail? In my observation they failed for two reasons. First, helping to build the company’s future leaders was never a priority with most of the executives and so no one was ever held accountable for participating in these programs. Many of these company leaders had risen through the ranks of the organization so the difficulty of navigating the organization or learning the necessary tribal knowledge may have never occurred to them. Second, in my opinion many of the senior managers within the organization were not strong people leaders to begin with so being asked to give advice to junior employees was a somewhat scary proposition for them. For those leaders who may have been afraid of training the future competition, it was far easier to just ignore the problem.
As I was finishing this post, I noticed that Fast Company had published an article yesterday titled “The Future of Mentorship in an Age of Entrepreneurs.” In the article, the author Maynard Webb quotes Jim Billington from 1997 with “the traditional mentor-protégé relationship has gone the way of the mainframe computer.” Webb suggests that in 2012, both of these ideas are dead. While it may be a bit of hyperbole to catch the reader’s attention I struggle with paradox that he creates. In one sentence he is suggesting that “the onus of personal and professional development is on the individual” and a little later his is giving advice to companies that “If you don’t have formal mentoring practices in place, implement them.” Is it on the individual or the employee? Maybe both? Where I have a problem is when we let companies off of the hook for not developing their employees insisting that it is the individuals who should figure out where they need development and support. I feel this is incredibly short cited by the organization for two reasons. First, those leaders who are talented enough to figure it out on their own will move on someday and if they haven’t developed their replacement who will fill their shoes? Second, some employees may be able to figure out “what good looks like” and driving towards that goal for today’s organization but are they as confident with their answer of what the organization will need in the future? If we are not continuing to develop our people we will eventually hit the Peter Principle – the idea that each of us will rise to our level of incompetence.
Food for thought:
Everyone credits Steve Jobs for the success of Apple but where would Apple be without their “failed” former CEO John Sculley who had to oust Steve Jobs from the company he founded? Not to say that their contributions were both equal but they were both instrumental in shaping Apple for its incredible success. It is well understood that organizations need different types of leaders at different times. Sometimes organizations need a good failure to create the drive that will propel them toward success. And sometimes leaders find their passion within the boiling animosity of working relationships. All of these situations were found with the Steve Jobs vs. John Sculley saga at Apple. So how can we learn from them?
Added 9/10/2013: Interview with Sculley at Forbes Global CEO Conference in Bali, Indonesia. From an audience member’s question, Sculley gives his longest so far on why he fired Steve Jobs and what he learned from it.
How did we get here? It is important to remember that John Sculley was brought in to run Apple because then CEO Mike Markkula desperately wanted to retire and he thought that Jobs lacked the “discipline and temperament” to run Apple. Sculley wasn’t the first choice, primarily because he lacked “technical” experience, but he was recognized as one of the hottest product marketers in the country. Steve was impressed with what John had been able to accomplish at Pepsi with the Pepsi Challenge and he anxiously wanted him to join Apple. After a six month courtship, Sculley eventually joined Apple as CEO in May 1983.
Not the right timing. Jobs might have been a visionary but his demanding, and frequently unpredictable, expectations were continually taking projects off track. His delays with the development of Apple Lisa computer eventually got him shifted to Macintosh development team where it was more of the same. All of these delays were costing the company a considerable amount and putting their future at risk. The Macintosh eventually saw a successful launch but there was rising concern amongst Apple’s Board of Directors. Sculley was told by the board to “contain” Jobs which he tried to do but it only infuriated Steve to the point where he tried to have Sculley ousted as CEO. Eventually, it was Sculley who had Jobs driven from the company, lighting the long fuse inside of Steve to seek his revenge.
Stoking the fire. In kicking Steve out of his own company, Sculley had motivated Jobs like no one else could. In Walt Isaacson’s biography of Jobs he described how even twenty-five years later Steve still “seethed” when recalling his ouster from Apple. At the time Jobs was quoted as saying that “Don’t worry, I am not going to let him get away with it!” This kind of animosity can toxic but it can also be extremely motivating. It reminds me of the story the German brothers Rudolf and Adolf Dassler who started making sports shoes in their mother’s laundry room in the 1920s. The bothers were partners in the sports shoe business but a rift had formed between them and in 1948, forcing them to go their separate ways as Adidas and Ruda (eventually to be renamed as Puma). For the last 60 years these two companies have battled as bitter rivals in sports equipment and clothing business. It is this intense rivalry that many analysts cite as a major factor in driving their ultimate success. Their passions fueled their competition and their competition fueled their companies.
Looking back. The reality in the Jobs vs. Sculley feud had created a dynamic that previously didn’t exist. By leaving the company that he founded and loved, Jobs got a chance to fail with NeXT Computer in ways that might have ended up destroying his beloved Apple. He was able to come back to Apple with the lessons that he had learned from NeXT and Pixar.
Sculley mentioned (in an interview posted on Cult of Mac) that “it was a big mistake that I was ever hired as CEO.” He knew that he wasn’t the first choice – Steve was the first choice but the board didn’t think he was ready. Since Steve was still Chairman, the largest shareholder, and the head of the Macintosh division he both oversaw Sculley and was overseen by Sculley. Through hindsight, it is clear that there was little chance for that relationship to have been sustainable. Sculley would have preferred a structure that would have allowed for both of them to focus on what they best brought to the company. Later in the same interview Sculley mentions, “It’s so obvious looking back now … that would have been the right thing to do. We didn’t do it, so I blame myself for that one. It would have saved Apple this near-death experience they had.” But without this “near death” experience Apple wouldn’t be the same company.
In the now infamous commencement address that Jobs gave to Stanford University graduates in 2005 he said that getting fired from Apple was one of the best things that could have happened to him. He noted, “The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.” Jobs had come to understand the connectedness in what had happened to both him and to Apple. Jobs went on to say that, “I’m pretty sure none of this would have happened if I hadn’t been fired from Apple. It was awful-tasting medicine, but I guess the patient needed it.”
A successful return. In 1996, Jobs eventually returned to Apple as it was struggling to remake the Apple OS as multitasking operating system. The solution would be for Apple to acquire Jobs’ NeXT Company which had already given up on the hardware side of the business to focus on their multitasking NeXTSTEP operating system. In 1997, a year later, Apple CEO Gil Amelio was ousted and Steve Jobs was named interim CEO. In 2000, Jobs announced that he was dropping the “interim” from the title and the rest is history: iPods, iTunes, iPhones, iPads, and of course the numerous desktop and laptop Mac computers that were part of Apple’s humble beginning. As of October 25, 2012, Apple has the highest market capitalization in the world and is valued at $573 billion.
Food for thought:
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Business2Community just published my article “A Look In The Mirror: Learning From Failure” yesterday. In the article I describe how organizations need to address their failures instead of running from them if they are truly going to learn. I suggested that an organization’s HR function can act as a catalyst in addressing failures by creating an opportunity to share the lessons learned with the entire organization. One way that an organization can start building in a tolerance for failure is by having their own Failure Forums where they address each failure with three questions: 1) What did the team accomplish?, 2) What did the team learn?, and 3) What would they have done differently? If every organization would embrace failure in this way I guarantee that we would see a significant improvement in innovation by reducing our fear of failure.
I have copied the first part of the post below and linked to the complete article here: Full Article: A Look In The Mirror: Learning From Failure
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Businesses, or any organizations, for that matter, are part of a system of actions and reactions. Sometimes action leads to failure, and sometimes action yields success.
No matter the outcome, there are teachable moments that can ensure one failed action doesn’t end with defeat. Implemented strategically, these failures can lead to new knowledge and, ultimately, future success.
Learn How to Learn
Every organizational leader intuitively knows the importance of learning at both an individual level and an organizational level. The biggest challenge is showing employees how crucial it is to learn from every action — whether it was a success or failure. Individuals inherently know that reflecting on a failure and learning from it can be beneficial, but how do you stress the importance of reflection for the company’s overall good?
Enter the human resources (HR) department. A good HR department ensures that learning from successes or failures is part of the employee development plan. We participate in shared learning sessions and make them part of employee compensation and benefits programs. Just having an HR department that puts an emphasis on this kind of reflection shows the importance of transparency and accountability to employees.
Admitting failures and allowing yourself to be vulnerable is never easy, especially in front of peers. But, if everyone — from executives to rank-and-file employees — participates, it helps remove the negative stigma associated with discussing failures. In highly competitive organizations, it’s imperative that every executive is aligned so politics don’t hinder participation.
If this process is new to your company, I’d recommend making your leaders the guinea pigs. Having them share past failures should make the rest of the employees more comfortable and willing to approach superiors in the future about problems. Share stories about those who have failed, but refused to let failure slow them down. Thomas Edison patented more than 1,000 inventions, but we only know him for a few. Had he quit before the light bulb, would technology be as advanced as it is today?
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Most business professionals who rise to the senior ranks of an organization do so because they are extremely driven and frequently very bright. And while personal drive and intelligence are what got them to this point in their career it is often times not sufficient to succeed at this level. One area that I have witnessed many leaders stumble is when their expectations don’t match the realities of their organization and their striving for excellence outpaces their team’s ability to delivery satisfactory.
Over the last few weeks I have spoken with several friends who were all struggling with the sheer volume of work that they have had to do. With the economic downturn, most employers have thinned their ranks and have been slow to grow their hiring. With a few exceptions, the only hiring has been the necessary backfill hires for people who have left the company on their own. With uncertainty around the timing of an economic recovery most companies continue to defer any plans for growing their full-time workforce.
The struggle with this strategy comes when there are fewer people to do the work with the same amount of work. The truth is that most companies are terrible at stopping unnecessary work. The rational goes that if it was determined to be important at one time then it must still be important. Or perhaps everyone is too busy working to take the time necessary to determine what work is still important so the work just goes on. Thus, if there is the same amount of work, fewer people to do that work, and a finite hours in the day – what else changes? The quality of the work?
In one of my previous roles I had the opportunity to work for an extremely bright boss. Between her intelligence and effort she had an absolute mastery of the business. You could see it in exchanges with executives or in our weekly staff meetings where she would ask probing questions that were one or two moves ahead on the chessboard. While her mental feats were quite impressive they also became problematic.
The challenge was that her quest for perfection ignored the reality of the satisfactory. When she asked why something wasn’t done a certain way she had a very valid question. Of course that would have been the “perfect” answer, but with the pace of the work the team didn’t have the time to sort out the perfect answer. In fact, they frequently barely had time to sort out the satisfactory answer.
I have witnessed this behavior create a toxic work environment where few things are ever good enough, team moral plummets, and high performers who are accustomed to winning quickly burn out. What would have made a difference? Maybe a little more of the “Thanksgiving spirit” would have helped:
As we prepare for our Thanksgiving meal with family and friends, maybe we can all be a little more accepting of satisfactory and a little less expecting of perfection?
Update (11/26): I was thinking about this post over the holiday weekend and remembered someone who had influenced my thinking on this topic of expectations: Benjamin Zander. Mr. Zander is the boy whose family escaped Nazi Germany in 1937 and went on to become the acclaimed conductor of the Boston Philharmonic. He is a wonderful public speaker with a great message of “Give everyone an A” which is not about academic “grade-flation” but instead a perspective on how we approach other people. Take five minutes and see how he describes this approach.
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