It is the first working week of the year. It is the week before the papal visit. It is also the week of the Nazarene celebration. Across the city, preparations are under way for the masses expected to crowd the streets. Elsewhere, companies are gearing up for the new year, reviewing year-end results, reviewing plans for the year.
Planning is particularly important for smaller companies, and especially start-ups. However, as many managers know, the true challenge lies in implementing the plan. Execution is where the rubber meets the road.
Entrepreneurs
Plan implementation is particularly challenging for those running business start-ups, the entrepreneurs.
Entrepreneurs constantly trace a path of great opportunity and great risk. Maarten Michielssens, founder and chief executive of EnergyVision and a World Economic Forum technology pioneer, has this to say about managing a start-up: Hard work is not the key to success. Instead, he lists down 10 lessons gleaned from his own entrepreneurial experiences.
His first, most important lesson is about keeping a clear focus. “Make a difference – not money.” He is quick to clarify that making money is important. The focus, however, needs to be on creating impact and creating a positive difference for the customer. This, for me, is a powerful lesson. I have seen this happen with many businessmen and many businesses. In the pursuit of what seems easy money, they lose track of the essential reality of business. Businesses become successful when they offer something that the customer desires. Start-ups, especially, need to be laser-focused on the market.
Two other lessons go to keeping focused. Michielssens advises entrepreneurs to listen, especially to customers; and also to focus on sales. Sales, he says, fixes everything. I agree wholeheartedly with this. Sales are important for two reasons. First, increasing sales means that your product continues to be relevant and competitive. Second, sales means money coming in. This is the lifeblood of any start-up.
Michielssens is not remiss about paying attention to financials. He points out the usual lessons: pay attention to cash, be extremely frugal about expenses, be clear about what amount of loss is acceptable. The first two lessons are common. The last one is not often discussed. It is, however, extremely valuable advice. Setting up a business is much like entering a casino. You need to set up your limits for loss before even starting a game. When we set up Solutions, we began with enough cash for start-up expenses and about six months of operating expenses. We felt six months was enough time to check out whether there was a market for what we had to offer. Also, that was the amount of money we felt comfortable risking. As Michielssens points out, capital is not the only thing on the line when you go into business for yourself. Making a decision that you do not want to risk personal bankruptcy means you avoid providing a personal guarantee for corporate loans. Personal reputations and relationships also are on the line. Being entirely clear about business ethics and corporate culture helps to manage these less tangible risks.
Michielssens has other lessons, including focusing on people, getting enough rest, and managing investors. However, it is the matter of managing the number of founders that resonated with me the most. He calls it the Pizza experience. If you need to order more than one pizza to feed the founders, “then your start-up has too many founding members.” Of the number of founding members, he says: “Four or more often means misery, especially when it comes to making crucial decisions.”The reality of a start-up is that many important decisions need to be made. They need to be made quickly, and implemented consistently and well. While it is important to listen to many voices, decision by committee can waste both time and energy. When there is an intense desire to preserve harmony, then these participatory decisions can even result in flawed outcomes.
People
Clearly, managing a startup is mostly about focusing on the customer and husbanding resources in order to deliver to the customer while making money for the company. A startup’s most critical resources are cash, relationships and people.
Also on the site of the World Economic Forum, Dharmesh Shah, founder/CTO of HUbSpot writes about the traits he would look for in employees for a start-up. They are: a bias for action over deliberation; a distaste for office politics; not seeing money as the solution for every problem; respect for the customer; concern for peers over perks; belief in meritocracy; and an instinctive focus on the company mission.
Essentially, Shah speaks about employees who believe in the company’s mission and naturally enjoy both the work as well as the people they need to work with. They focus on the customer and the job. In psychology, these would be employees who find intrinsic motivation in being part of the firm. This means there is less need for extrinsic motivations such as money and perks.
When I speak to managers about hiring employees, I tell them this: “If the employee’s sole reason or joining your company is the salary, he will take the first job offer with a higher pay offer.” I always ask potential employees what their personal aspirations are. I have always believed that if joining our firm does not help bring them closer to their dream, then it is the wrong job for them. They need to be in the job for more than just the pay.
Country
For those running government, the situation is similar but different. Businesses exist to make money and they make money by focusing on customers, husbanding resources and engaging their people. Governments, on the other hand, exist in order to provide security, maintain order and provide services for their citizens. They do this by creating and implementing laws, building and maintaining infrastructure and managing the economy.
The macroeconomic story for the country has certainly been rosy. That, however, is not the bottom line for government. The government’s bottom line lies in the plight of its citizens. In that area, the scorecard is much less rosy. It is, in fact, one of the conundrums of our times. If the economic situation has improved, why have basic services deteriorated?
As the year begins, it would seem to be wise to look beyond the rhetoric and focus on execution.
For the original articles by Michielssens and Shah, go to agenda.weforum.org.
For more stock market information, look for Philinvestor’s Corner on facebook. You can email Maya at integrations_manila@yahoo.com. Please like the Integrations Manila Facebook page or visit her archives atmanilastandardtoday.com/author/maya-baltazar-herrera/ or integrations.tumblr.com or www.mayaherrera.aim.edu.
