Chapter 7

The Big Picture (Continued)

People and Execution

PEOPLE

Saying “Your idea is worthless” is not to nullify the importance of great ideas, but to drill in a point. Of course turning ideas into action is what entrepreneurship is all about. But there’s another factor, as big as any idea you’ll ever have, that controls the future even more. And this is meant in the most real, hard-asset, non-touchy-feely kind of way.

More vital than any idea you’ll come up with are the people you’ll come up with to bring your idea to life. Ideas are nothing but static, dormant non-things until people make them tangible, adaptable, executable, and saleable. People are the only machines on earth that can perform this entrepreneurial alchemy by turning a concept into something concrete.

Here’s what the great entrepreneur turned investor Yossi Vardi said to us about it when we were chatting in a Tel Aviv coffee shop:

When someone comes to me with [a] big nondisclosure agreement to sign, I tell them, “I’m sorry, but you need an investor who is much cleverer than me, I wish you luck.” They sometimes can’t believe this. They look at me like I’m crazy and say, “But how could you not be interested in the world’s most amazing idea?” And I tell them, “I couldn’t care less about your idea. In fact, I don’t even want to know what it is. Because between now and your being successful enough to get customers to buy it, it may change 20 times from what it is today. The only thing I know that I am buying that won’t change, is you and your partners; what you care about and your ability to solve problems. I don’t invest in ideas.”

And then he added, “When they come in with another partner or two, it shows me they can at least get along with someone other than themselves. You can come up with an idea as a loner, but not grow a business. What’s the ideal number of founders? I’d say three, maybe four.”

So what matters most in an entrepreneurial venture is the founding talent, the quality of the people who run with the idea, no matter what it is. And it follows that if one smart, capable, hungry person (that’s you) is good, three or four are always better, so long as they have the character and craft to be true teammates.

FOUNDING TEAMS ALWAYS HAVE AN EDGE

It can’t be said enough times in this book: Teams are the ultimate multiplier for success that there is. True teams, that is—particularly in entrepreneuring.

Ask the Beatles. According to legendary guitarist Eric Clapton, “Their magic was that they were four guys who played like they were one.” Or ask the SEALs who operate in four-man teams and who will tell you, “In battle, individuals die. Teams win.” Your chances of executing your idea—adapting it, fixing it, shaping it, and selling it—go up exponentially when you do it with a small true team of founders, two to four to be precise. David Cohen of TechStars points out that about 95 percent of the start-ups that are accepted into their summer mentoring programs come in as founding teams, not individuals. It just makes sense; three brains that are as focused on the mission as you are can come up with many more ways to accomplish it. They make you smarter and more observant, save your ass when you screw up, and help save your idea’s ass when it fizzles on the launch pad the first few times. They also enhance your ability to survive the emotional ups and downs of risk, obstacles, and temporary failure, and the attendant fear that accompanies these things.

You of course are person number 1 in your own career. And on day one, you may be by yourself. Not every entrepreneur is lucky enough to have a small team of talented, trusted associates ready to embark on the journey with him. That’s okay. You may come up with that first great insight for a new business idea when you’re thinking by yourself. Many of the world’s great ideas started that way—with one person alone in the car or the shower.

But you should be seeking that founding team from moment one, asking, “What’s my idea? Who’s my team?” equally if you plan to create a successful enterprise, not just a product innovation. It’s that important.

Dan Brodsky-Chenfeld, a world-champion team skydiver and specialist in the art and science of team building, says that champions whose fortunes live and die with the success of their teammates have their radar turned on at all times to identify potential new teammates, the same way an entrepreneur might be attuned to new ideas. They mentally keep candidates on file, even if the need for a replacement team members might be years in the future. People with the right stuff simply don’t come along every day.

PEOPLE AND CULTURE, DAY ONE

Beyond you and your founders, your primary people sphere extends outward to include employees, associates, vendors, and customers. Every day, the actions these people take for or against you decide whether your business will succeed or fail. How they vote with their dollars is 100 percent their choice—not yours.

None of these people’s wants and needs are an add-on at the end of your business plan. They are the heart of it. Your idea is about them. It exists solely as a vehicle for improving their lives and to make them love you.

That’s how they see it anyway. And they hold the only votes that count. Otherwise, they have a million billion other ideas and businesses they can choose to do business with. They don’t need yours.

GIVE BEFORE YOU GET

Thus you must first and always give customers what they want before you can hope to get what you want. Likewise, you must spend your best quality time thinking about what customers want before thinking about what you want. Success will be directly proportional to how often and how consistently you do this.

And if you honestly and truly devote your time and energy to serving your customers, they will reward you in greater proportion. They will give you their trust, their repeat business, and they will tell their friends about you. Some will become partners or seek to work for you. This little gem of business insight was worth the whole price of a famous little book called The One Minute Sales Person:“I have more fun and enjoy more financial success when I stop trying to get what I want and start helping other people get what they want.”1 Spencer Johnson and Larry Wilson called this success secret the Wonderful Paradox. And over the years, I’ve never seen it fail in the real world—whether you’re selling one-to-one or marketing to a huge customer base. You’ll find over and over in your career that some version of this paradox works in almost every aspect of business that involves strategy, tactics, and human relations—from creating your product specs to your branding to customer care.

It works because it’s the law—customer law. Other people’s hearts and heads are the only place your success resides. Your product, reputation, and brand are not what you think; they are what they think. You are only as good as they deem you to be. The main thing to store in your head is this paradox.

WHAT EMPLOYEES WANT

The Wonderful Paradox applies to employees just as much. They want what everyone wants: to enjoy the chance to be respected, trusted, and honored—really, to be loved—by participating on a team that has a chance to touch greatness. When they do, they give it all back to you—plus a whole lot more. The best summary of this (repetition is good) is they want to feel like (1) valued members of (2) a winning team on (3) an inspiring mission. Keep providing this trio of benefits and your employees will give you back what money and compensation cannot buy: everything they’ve got, right through to the best entrepreneurial parts of themselves. When employees get it, they’ll want to love you back, and their primary way of showing it will be by loving your customers. And that’s huge, because once you’ve proven you can perform as promised, being loved is something customers really, really like.

Culture is the catchall word for a work environment that either delivers or doesn’t deliver the emotional benefits employees want. A company culture is nothing more than a distinct set of values made real by actions each day. The best cultures follow the universal rule of simplicity; that is, they have the smallest number of very important values, not a laundry list. All cultures start from the top down. Therefore, you should know exactly what kind of culture you stand for—and that you will make real no matter what—on the day you open for business. This super success secret is free, entirely in your hands, and entirely on your head if wasted.

WHAT CUSTOMERS WANT

At the start, customers only want one thing from you: a solution they can’t get anywhere else that’s worth the price they are willing to pay for it.

Despite what you may hear from new-age business gurus, they do not want a relationship with you—just like you don’t want a relationship with every stranger you meet on a bus or a blind date—until you show them you’re trustworthy, reliable, competent, smart, have their best interests in mind, and are fun to keep around. Then they will readily bestow a relationship on you and love you back. And that’s the gift that keeps on giving. They will talk about you, recommend you, try to protect you, even cherish you, because good relationships are, after all, what life is all about.

The shortest distance to customer love is through employees who are receiving the same thing from you. You cannot expect your people to respect, care for, and put your customers first without receiving the same from you. Sure, there are exceptions where companies who don’t love their customers get to serve them anyway; look at today’s airlines. But the reason we keep using the old legacy flyers is that they hold a near-monopoly on an essential service and we have no choice but to get in line and hope. We’d jump to any alternative the second we could. Hence the amazing rise of Southwest Airlines—the first airline to make appreciating customers the bedrock of its brand.

In short, a business model that makes your customers feel disrespected and resentful is no recipe for success.

There are myriad reasons why humans instinctively collect good relationships while scrupulously trying to avoid bad ones. It derives from the primitive instinct for belonging to the group and loving our families. And it comes from the brain’s love of shorthand and low energy output. An established relationship means my brain doesn’t have go through the whole fight-or-flight, positive-or-negative reaction every time I deal with someone. Once we can mark a relationship as familiar and safe, we can relax and function with a single click.

So, it’s fair to say that in any category where there’s a need, customers are indeed open to a potential relationship. You just have to keep your promises, perform, and prove yourself worthy first.

In other words, give before you get.

WHAT EVERYONE ELSE WANTS

Nobody ever creates a successful enterprise all alone, without some support and effort from other stakeholders along the line. Beyond employees and customers, you’ll have relationships with vendors, community members, and others who can either contribute to your success or undermine it. All will respond to the Wonderful Paradox.

A wise person once told me, “What people remember is how you made them feel.” They will give you their money in return for goods and services. But they will give you their feelings in return for the way you care and how you show it. Those feelings build brands, reputations, and success stories.

The key insight is that customer connection isn’t rocket science. People merely want to be happier, healthier, safer, richer, more attractive, and more successful—and to feel trusted, respected, and important to someone. Exactly like you.

EXECUTION

Execution refers to every tangible action you take to create and manage an enterprise, from designing and building your first prototype to selling and distribution, hiring the right people, training them well, and managing your cash flow. The skill with which you do all these things and more is the measure of your talent for execution.

Entrepreneurs will always need to dream. But put a simple Doer with a grasp of the mission in competition with a Dreamer with a PhD and a ton of research and the Doer wins every time. Execution is the “making something out of nothing” part of entrepreneurship, and without it, success doesn’t exist. The ability to execute faster, better, and cheaper is the Entrepreneur’s timeless, unshakeable advantage over Optimizers everywhere. It’s the reason there will always be a place for you, why big companies will secretly be afraid of you, and why you’ll have a chance to carve out a market, compete with the big boys, and even overtake them down the road. It will always look at the start like the big fish have all the advantages, and indeed, they have resources, respect, and reach that you can only imagine. But they’ll never have what you have: the fear turned into fire, the inspiration of the mission, the need, the yearning, and the emotional mechanics.

Bureaucracy makes Optimizers love process and research over products and results. Entrepreneurs can take more creative risks to solve problems because they have nothing to lose. They are fast and nimble because they have no cumbersome control layers holding them back. That’s why no one can conceive, adapt, and execute like a hell-bent entrepreneur.

A lot of the specifics we’ll talk about in the next section will overlap into execution. There are also whole libraries of books on specific areas of execution, from financial planning and facilities management to customer service and R&D, for when you need and want to get into strategic and technical detail. Our purpose here is to give you the rules of thumb that apply to execution of anything.

THE LAW OF THE LASER

Focus

“Don’t fear the man who has practiced 10,000 different kicks. Fear the man who has practiced one kick 10,000 times.” Legendary marketing author Al Ries uses this example in his book, Focus: The Future of Your Company Depends on It:

The sun is a powerful source of energy. Every hour the sun washes the earth with billions of kilowatts of energy. Yet with a hat and some sunscreen you can bathe in the light of the sun for hours at a time with few ill effects.

A laser is a weak source of energy. A laser takes a few watts and focuses them in a coherent stream of light. But with a laser you can drill a hole in a diamond or wipe out a cancer.

Your ability to execute is directly proportional to how well you focus your energy and your team’s energy, as narrowly as possible, on just one or a very small number of most important things. The heart of the matter is holy for all who execute: first seeing it, then sticking to it. The competitor focused on a single, simple, clear objective always wins. Always.

Successful teams can define their objective in just a few words:

• Our job is to deliver Fanatical Support.
• Our job is to fix the way the world sits.
• Our job is to get the ball to break the plane of the goal line.
• Our job is to find and kill Osama bin Laden.
• Our job is to design and manufacture the ultimate driving machine.

Remember, a single clear goal is what customers want most from you as well. They don’t want your product to offer a laundry list of features. They know instinctively that jacks of all trades are masters of none. They don’t want you to give them everything—they want you to give them one thing and to do it better than anyone else in the world. If you do, customers by the millions will choose your product, whether it’s the sharpest razor, the most durable roof shingle, the most accurate wrist watch, the most booming bass notes, or the driest martini in town.

So test yourself constantly. Your biggest job as executor-in-chief is to keep peeling away the distractions and maintain your focus on the smallest number of most important things. This is a universal law.

A Fast B+ Beats a Slow A . . .

A great entrepreneur from the Greatest Generation used to say, “Work, work, work. Think later.” What he meant was this: always default to action. Analysis and research are important, but they quickly lead to diminishing returns. Once you’re in motion, the reality of market cause and effect will always force you to make critical changes, to adjust your course, and change your plan. You learn 10 times more in the process of doing than in the process of deliberating and deciding. So err on the side of getting your idea out there, prototyping your product, publishing your paper, aiming and firing at your target, and then making adjustments for wind, elevation, and distance until you start hitting it again and again.

This explains the huge historical advantage enjoyed by Internet-based entrepreneurs. They’re able to prototype a software product fast and inexpensively with little capital investment, then float it in the marketplace and start learning. A couple of geeks with laptops are able to find out in virtually no time whether anybody wants their product, will pay for it, loves it, or hates it because prototypes expose benefits, mistakes, unknown unknowns, and unintended goofs. This concept of achieving “validated learning” as quick as you can by putting out a Minimum Viable Product (MVP) as soon as possible is probably the greatest insight you can take away from Eric Reis’s best-selling book, The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses.

Remember, since “nobody knows anything,” access to the tools for rapid prototyping in technology start-ups is a God-given gift you do not want to waste.

. . . But Not Too Fast

Now it’s time to qualify the paragraph above, and this is very important. As Einstein said, “Everything should be made as simple as possible—but not simpler.” Get into action and the market fast, but not too fast—not until your product can provide customers with its main benefit. How do you know when you’ve reached this critical point? The key words are Minimum and Viable in Minimum Viable Product, or MVP.

Think of this as the minimally floatable boat. Or the minimally stay-able hotel. Don’t ask the market to try your boat until you’ve built one that can carry a couple of passengers without taking on water and sinking. Don’t sell rooms in your hotel until you’ve got sheets on the beds and working toilets. Don’t open your restaurant until you have enough wait staff to get my cheeseburger to the table while it’s still hot.

The market starts forming its opinion of you, your brand, your promises, and your value the minute you ask for an interaction. You don’t get too many chances to blow it with them in the beginning. And word travels from one customer to another really fast. So don’t invite the town to come out and watch the first flight of your flying machine until it is an MVP—which means that it can get reliably airborne, at least for a few seconds. But don’t wait until it’s as powerful as a 747 either. Just make sure Version 1.0 minimally works.

DATA MAKES YOU DUMBER

Too much data, that is. The human brain runs on an ancient rule of thumb that says, “In an emergency, take the first right answer and go!” When your life is on the line, don’t wait to find and weigh a better route to safety because by the time you do, you’ll be the tiger’s second course.

This rule of fast and frugal applies to execution as well. The right answer is often astonishingly obvious and presented to us early. Of course, it’s always prudent to double-check your thinking to eliminate dumb and easily avoidable mistakes. But then, if indeed we are erring on the side of action, we should decide and act. This is how Entrepreneurs do it. We emphasize trial, not striving for absence of error.

Here’s a major difference between Entrepreneurs and Optimizers. Both are equally likely to stumble across the right answer to a pressing problem. But then, on principle and for the sake of process, the classic Optimizer will refuse to act on the obvious until he has conducting a mandatory sequence of data collection, research, and committee hearings designed to insure against any possibility of a mistake. Time and time and time again, we’ve watched too much data become the great Optimizer trap.

Awash in data, Optimizers eliminate any sense of expert intuition and common sense. They kill momentum, obscure the obvious, and make basic judgment mistakes in a fruitless effort to scrub every decision clean beforehand.

Timing, it turns out, is everything when it comes to too much data. The curse occurs almost always before the fact, when you rely on pretests to do what research can’t and shouldn’t do: predict the future, prescribe success or failure, or, God forbid, design your solution.

But after you’ve built and tried your prototype in the real environment—now that’s a completely different story. Now you are tweaking, adapting, and learning to improve. Now you’re free to gather all the data in the world. But do this after you launch, not before.

The data trap also bedevils the creation of business plans. All the same rules apply. Only the market can validate your plan. Work, work, work, and think later. Or put another way: if you overthink, you stink.

PRACTICE WITH LIVE ROUNDS

The Navy SEALs undergo a constant system of rotation that goes like this. At any given time, about 650 SEALs are deployed somewhere in the world. About 650 are actively training for the next mission. And about 650 are in the process of returning and regrouping from the last mission. That’s a very small force. Yet in one recent year, the SEALs expended more live rounds (bullets) in training than the entire U.S. Marine Corps!

There are two points here. One is that the SEALs are so good because they train and practice their craft relentlessly, more than anyone else. The other is that, when the SEALs practice, they do everything possible to simulate the real emotional and physical experience of being on a live, life-and-death mission. This concept is so critical, they’re willing to put themselves at risk during practice to mitigate the risk and maximize success in actual battle.

Believe it or not the SEALs use live rounds when training for close quarters combat (CQC), the kind of house-to-house fighting required to attack Osama bin Laden’s compound and conduct modern urban warfare in general. Live rounds sound different, feel different, and produce far different consequences when mistakes are made. You don’t even think about training this way unless you know your teammates are the best in the world and you can trust them not to kill you with a stupid move. When you finally step through the door in Abbottabad, Pakistan, with terrorists carrying automatic weapons inside, it’s no first-time shock when the firing starts. You’ve been there, felt that. You and your teammates know in your gut that you can execute successfully in the “kill house.”

What the SEALs are doing with this kind of practice is much more than planning, preparing, and thinking. They are prototyping. They are testing and tweaking their product in conditions as close to reality as they can get. They are building an MVP version of a successful CQC assault; then they are trying it over and over to get data on what does and doesn’t work, where the strong points and weak points are. After weeks of this kind of work, they know they are the best in the world at executing because of this relentless dedication to prototyping until they get it right. It’s their way of controlling their own destiny and mitigating risk and failure.

Getting your MVP into the real world and watching it perform in marketplace conditions is the entrepreneurial equivalent to practicing with live rounds. Seize the opportunity to prototype under the most authentic conditions you possibly can, whenever you can. And never pass up an opportunity to interact with real customers. Their feedback—good, bad, or indifferent—is your only way of knowing whether your product is likely to survive under battle conditions or instead blow up in your face.

ASK, ASK, ASK IS HOW YOU RECEIVE

Execution sounds like it’s all about finding solutions. But getting there in the first place is all about asking questions—a few, specific, obligatory questions over and over. This can be repeated to you enough.

In his book Mastering the Rockefeller Habits, author Verne Harnish summarizes three fundamental principles that business titans would agree are key to success. You ready?

Sounds rather familiar, doesn’t it? (Of course, it’s the principle of three or four and the system of heuristics, couched in slightly different language.)

The rule of repetition governs every aspect of Accelerated Proficiency as it does with every worthwhile task in nature. To execute, we follow rules. But what we repeat are not the rules themselves per se, as much as the obligatory questions the rules make us ask in order to stay on course. We take these questions from a mental checklist, just like a pilot judging his approach to the runway. We align through a constant series of mini-tests, which are simply a set of specific questions that ask where we are at that moment, relative to the guiding principles. Just as a pilot would ask, “Am I on heading? Is my speed right? Is my descent rate right? Is my power right? Is my pitch right?,” we ask the mini-test questions over and over and over again until touchdown.

This is all we do when we execute. But to make it work, it’s vital that we stay focused on asking the right questions. And that’s the subject of our next chapter.

1 Spencer Johnson, The One Minute Sales Person: The Quickest Way to Sell People on Yourself, Your Services, Products, or Ideas—at Work and in Life (New York: William Morrow, 1984).