How To Negotiate Non Compete and Non Solicit Agreements

Thanks to Joyce and Rob at Colson Quinn in Boulder!  Visit their blog: Lawyers you can Love.
 
As business competition heats up and the economy (not to mention Colorado weather) cools down, we are being asked to review non compete and non solicit provisions for executives and companies.

Companies don’t want valuable information walking out the door and business professionals want to know they can earn a living elsewhere.

Whether it is a non compete (you may not go to work for a competitor for a specified period of time) or a non-solicit (you may not solicit customers, clients and employees from your former company or client) or both, you should be wary of such provisions.

Top 10 Non Compete Non Solicit Tips

Here are our tips should you be asked to sign such restrictive provisions whether it is in a customer contract or an employment agreement.


1.    If you sign an agreement with a non compete or non solicit provision, be prepared to live with it as written.  You are likely unable to afford the costs of challenging the clause. And, even if you can, judges vary widely on how they apply them because they are so fact dependent.

2.    Try to avoid signing the contract with such provisions. If the employer wants you badly enough, they may back down. Or they may agree to just a trade secret provision.

3.    If you must sign a contract with a non compete, narrow the scope. The amount of time, the scope of the business and the geographic limitation are usually broad in these provisions.

4.    Make sure that the non compete or non solicit contained in the contract is linked to a business interest, i.e. protection of trade secrets, confidential information and/or investment in training and education for employees. If you are not exposed to such information or don’t get the training, the non compete may not be enforceable. The employer has to protect more than general job knowledge in order for the non compete to be enforceable.

5.    If you must sign a non compete, try to get extra compensation for it if possible, e.g. a sign on bonus or a severance package. If the employer balks, tell that them that such compensation or “consideration” makes this covenant enforceable. You should note that in most state, the signing of a covenant not to compete at the beginning of employment is sufficient.

6.    Do not agree to pay for attorneys fees for the employer should you want to challenge the non compete. The thought of having to pay your own attorneys fees plus the employers fees is enough to keep most employees from challenging a non compete. It is also an effective deterrent to settlement. Why? The employer has leverage knowing you will balk because of attorney fees.

7.    Non Solicit clauses--make sure the contract distinguishes between customers your new employer has vs. your old employer. Agree only not to “solicit” customers. Do not agree to not solicit where your former employer’s customers seek you out or the customers are already customers of the new employer.

8.    You can often change such provisions despite employer’s claim that they have to have the same provisions against all employees.  However, executives often have very different provisions than intermediate or lower level employees. You can often limit the length and the scope of the non compete. You can also have different start dates and exclude from the non compete specified customers and industries.

9.    Keep track of the covenant you signed, including paperwork and emails, and whether your employer is enforcing covenants uniformly. If not, the company may not be able to enforce the non compete against you.  Most employers want to know if you are subject to such provisions—you may not get hired if you have signed one. Good to know if you did and what it says.

10.   You are better off with a non solicit than a non compete. You want to be able to work for future employers. Tell your prospective employer if you are subject to a non compete. Your new employer does not want to get a demand letter threatening a lawsuit.

Steve Jobs' Great Lessons: Permission to Make Mistakes & be an Individual

I was sad to hear of Steve Jobs death.  Truth be told, I'm not a card-carrying member of the Apple fan club.  I still walk around with a Blackberry and use PCs.  For all of Apple's innovation and simplification of technology I have never considered their products to be the holy grail that many avid followers do.  They're great, but not the end-all be-all.

What I love the most about Steve Jobs' impact on the world goes far beyond Apple.  He triggered a paradigm shift in how companies create and revise their products.  He advocated tirelessly for a precious understanding:  that technology should enhance our lives and not complicate them - that design should give us what we need and nothing more.  

I went back to a text version of a speech given at Stanford University a few years ago in which Steve Jobs addressed the touchy subject of death.  I believe that his own words give a great deal of meaning, and perhaps poignancy, to his own passing:

"No one wants to die. Even people who want to go to heaven don't want to die to get there.  And yet death is the destination we all share.  No one has ever escaped it.  And that is as it should be, because Death is very likely the single best invention of Life.  It is Life's change agent.  It clears out the old to make way for the new.  Right now the new is you, but someday not too long from now, you will gradually become the old and be cleared away."

Though provoking, huh?

I don't care to use this post to recap Jobs' career, his health problems, or his flaws.  Plenty of other journalists, bloggers and pundits will do that.  

Two things really jumped to mind that I personally learned from watching Steve Jobs' meteoric passage through life.  

1.  His personal trajectory included failure and gave me permission to make mistakes.

2.  He proved that being yourself was always the best solution.

To illustrate lesson one, Job's had this to say about his painful and abrupt termination from the company he founded:

“I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me.  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,”

I'm also grateful that it gave him a window in which to turn Pixar into a Hollywood powerhouse that changed forever the face of animation.  Wouldn't the world be a bit poorer without Woody, Buzz, Nemo, and many more iconic characters?

Who was Steve Jobs?  A visionary?  A brilliant inventor?  A perfectionist?  Also a college dropout, a failed executive and a risk-taker.  Like all of us, his life can't be elegantly encapsulated in talking points.

Thank you Steve Jobs for packing a powerful punch in a single button, revolutionizing the technology industry.  Thank you for sticking to your guns when it came to your dreams and passions.  Thank you for proving that although we are all flawed, we are perfect in our own way and should be true to ourselves.

Jobs' once gave some great advice to the next generation about being authentic and following their hearts...

"Sometimes life hits you in the head with a brick.  Don't lose faith.   I'm convinced that the only thing that kept me going was that I loved what I did.  You've got to find what you love.   And that is as true for your work as it is for your lovers.  Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work.  And the only way to do great work is to love what you do.  If you haven't found it yet, keep looking.  Don't settle...

Your time is limited, so don't waste it living someone else's life.  Don't be trapped by dogma - which is living with the results of other people's thinking.  Don't let the noise of others' opinions drown out your own inner voice.  And most important, have the courage to follow your heart and intuition.  They somehow already know what you truly want to become."

Beautiful.

For Growth, New Ideas Aren't Enough

There it was again in the Wall Street Journal on August 29: a beloved and uplifting, but unfortunately not effective, approach to driving growth through innovation. The idea is that companies need to encourage innovation from everyone and at every level in the organization. Ironically, the article cites Apple and Procter & Gamble, two companies that have most emphatically learned that generating lots of ideas is the least of their problems when it comes to growth. The "let a thousand flowers bloom" approach to innovation often leads to frustration at best, cynicism at worst, and is the underpinning of the on-again, off-again approach that most firms take to growth through corporate venturing and innovation.

Consider what happens in a typical, well-intentioned corporate effort of this kind. It begins with lots of enthusiastic cheerleading at the executive ranks. People are told to dedicate a portion of their time to pursuits that interest them but are not part of their day jobs. Trainers are brought in to teach everyone to be an innovator. There are "innovation boot camps." Ideas come pouring forth from every nook and cranny. Many of them are half-baked and impractical. Others are a poor strategic fit. Others will only tick off supply chain partners or important vendors. Many simply don't have enough upside. And so it goes.

In my experience, most companies have far more innovation ideas than they can ever implement. Most of these won't work out — one study found that a company needed to generate, on average, 3,000 raw ideas to find one that could be a commercial success. The real trouble is that, after all those ideas are generated, the innovation process runs smack into the organization. When I ask participants in my executive programs what gets in the way of growth in their companies, the list goes on and on: lack of incentives, power of the existing business, management desire for near-term success, too many silos, fear of failure, "it's no one's job," and so on. That's the stuff that kills innovation-fueled growth, not a lack of interesting ideas.

So what do companies like Apple and P&G really do? Rather than rely on more-or-less random idea generation, they have made innovation into a systematic process, with dedicated, trained professionals to do it. No company would put a mission-critical function in the hands of people with no experience at making it work, yet it happens all the time with respect to innovation. So encourage your people to bubble away. Just don't be surprised when the bubbles burst upon first contact with your own organizational reality.

Rita McGrath:Columbia Business School professor Rita McGrath studies innovation, corporate venturing, and entrepreneurship. Her latest book is Discovery-Driven Growth (2009).

It's Time to Fire Some of Your Customers

As we move into volatile times (again), business leaders more than ever need to maniacally focus on the few customers that matter most to them — and spend much less time on the rest. The customer may always be right, but not every customer is right for you.

Some years ago, when our venture firm was starting one of its first retail ventures, I met with a highly successful CEO in the retail services industry to better understand how he did so well across all of his stores (he had some mind-blowing numbers). It was abundantly clear when you walked into any of his stores that his customers were genuinely delighted. I asked him for his secret. His response surprised me and has therefore stuck with me: "When we open a new location we quickly grow to a database of 8,000 customer names — and then work hard to get it down to 1,500 names."

At first I was taken aback, as it seems counter-intuitive to shrink rather than build your customer base. Upon a little reflection, however, it made absolute sense: ultimately, business is not about growing revenue, but about growing profitable revenue with the right target customer. To get that right customer, you sometimes need to start by casting a wider net, figuring out which customers are the most attractive, and then temporarily shrinking the business before you grow it again. With each iteration, you get smarter and more targeted towards the ideal customer profile.

By focusing on customers with the highest potential in terms of repeat purchases and larger average transactions, one is able to create a more successful business because marketing and customer service efforts (and costs) can be allocated where they matter most. But for many CEOs and founders, the mandate for growth creates a bias for quantity of revenue over quality of revenue. At our venture firm, when we evaluate a business model we think very differently about a dollar of revenue with a high probability of recurrence (i.e. a customer who will buy again, making it high quality revenue) versus dollars of revenue that need to be constantly be replaced with new customers. We believe the threshold for a high-quality-of-revenue business is a revenue recurrence rate of over 85%, meaning losing no more than 15% of a customer base each year.

Such businesses have higher predictability in their business model and greater leverage in their sales, marketing, and customer service. A higher quality of revenue means a better long-term business.

If you look hard at who is buying your wares, you can quickly get a sense of where the money is coming from and where your money is being spent. Some businesses exhibit the classic 80/20 rule, with their top 20 percent of customers making up 80 percent of the revenue. We have also seen a good number of firms with even more skewed revenue distributions that are closer to 90/10. Yet organizational efforts and resources are often poorly mapped to, or unaligned with, that revenue distribution pattern. In fact, it is often the opposite. That is, the bottom customer quartiles take disproportionately from a company's sales, marketing, and customer service resources. Some of the most challenging customers are those who in the "low-middle" bucket, buying relatively little, but needing very high touch and maintenance.

Why do so many of us fall into the trap of spreading our efforts evenly across our customer base, or even skewing them towards the lowest-potential customers? It is tempting to embrace every customer equally — and we naturally want to understand why the lower customer deciles are not behaving like the higher deciles.

We want to believe that we can nurture and develop all customers to reach high potential levels over time. However, in the companies in which we have been involved, the data do not support that thesis. It is always tougher to change customer behavior than to find new customers similar to your existing top-buyer profiles.

The top priority for a business that wants high quality of revenues starts with understanding everything possible about the top customers. Drill deep to understand their demographics, psychographic, and purchase behavior preferences of your "super loyalists." Where do they come from? What is their attitudinal profile and what bundles of goods do they like best and at what price? Getting an intimate clustering of your top customer base is the foundation for a high-quality-of-revenue business.

By directing more customer acquisition and loyalty costs towards that top cohort, you will be implicitly de-focusing or "firing in advance" the less valuable customer segments. Yes, the term "fire" is a little melodramatic, but it is a clear reminder that limited resources need to be carefully allocated — and that just because you sell something to someone it does not necessarily mean it is a good thing.

Firing your customer does not mean to literally bar the door, but to set conditions whereby lower- priority customers self-select out and higher-potential ones self-select in. For example, for many businesses, first purchase order size is a good leading indicator of future purchases. If you knew that $50 was the average of your top loyalists and $30 was the average of lower tiers, you could simply raise minimum price on an opening order, or only offer free shipping on orders of $50 or above. As another example, for current customers who spend little but cost dearly in terms of customer support or other costs, consider a new pricing structure where higher support services are only free for accounts of a certain size. In effect, you can offer customers the choice to become profitable cohorts or to leave.

Your top-cohort customers are super fans who have voted with their wallets. They are the ones who will recommend you more often than other customers and would miss you most if you no longer existed. Find more people like them, and spend less time trying to turn others into people like them. Thank your best customers to death for their great patronage and worry less about — or simple "fire" — the others.

Anthony Tjan is CEO, Managing Partner and Founder of the venture capital firm Cue Ball. An entrepreneur, investor, and senior advisor, Tjan has become a recognized business builder.

Flexing Your "No Thanks" Muscle

(Thanks to Peter Bregman for reminding me to focus today on the things that matter!  I was going to waste some time shopping online for car insurance rates to try and save $10/month.  I now can mark through that task and move on to the real work that will earn me $10/month a hundred times over.)

"Would you like to save 10% on your purchase by signing up for a Bloomingdales' credit card?" asked the sales person who had helped me pick out several new suits. "It will only take a few minutes."

"Why not?" I thought to myself; the savings would amount to more than a hundred dollars.

Well, here's why not: an hour later, after speaking with the Bloomingdales credit department twice, we still hadn't finished. When, finally, I was approved, they hadn't extended enough credit for the entire purchase, so I had to split the cost between my new Bloomingdales' card and my regular credit card, which gave me more accounting to do as well as an additional bill to pay at the end of the month. Total cost to me? At least two hours of my time and a whole lot of aggravation and stress.

When you catch yourself thinking "why not?" consider it a warning sign. "Why not?" means it's probably not that important to you, but there's a reward and the cost seems small so, well, why not?

But if you say "why not?" to the Bloomingdales' card, you'll also say "why not?" when CVS offers you a free $10 gas gift card when you purchase $30 worth of select products. And when you realize that you need to be an ExtraRewards member to get the savings, you figure, well, "I've gone this far, I might as well sign up for that too," which, of course, takes more time and ushers in more offers, promotions, and distractions.

Then where do you stop? Every deal seems like a good deal. And any one of them probably won't take that much time. But if you take one deal, you'll probably take the others (why not?) and all together the time and attention it steals becomes a costly distraction from your one, most valuable possession — your focus.

The most important skill we possess in this world of infinite distractions is focus. Anything that distracts us — even saving a hundred dollars — is just mind clutter.

We need to clear out our mind clutter and place our attention where it matters most, which requires three steps:

1. Know your focus. This is critical and rarely done well. Knowing exactly where to place your attention is a challenge, especially given the barrage of nonstop offers, opportunities, requests, and needs that compete against each other.

2. Sustain your focus. Knowing where you want to place your attention is one thing. Actually placing and keeping it there day after day is another.

3. Protect your focus. Defending yourself from being distracted by mind clutter is a moment-by-moment discipline. You need to become a master at choosing when to say, "no thanks," even when it seems like there's no downside to saying, "why not?" Because there's almost always a downside.

In my upcoming book, 18 Minutes: Find Your Focus, Master Distraction, and Get the Right Things Done, I explore ways to know, sustain, and protect our focus as we cut through the noise to get our most important priorities accomplished.

One thing we can do is recognize that we have a limited amount of space in our minds and each time we say "why not?" to something — or even consider saying "why not?" to something — it takes up room. If we learn to automatically say, "no thanks," to things that seem like a good deal, but don't fit into our main areas of focus, we'll simplify our lives and free our minds to focus.

How do we do that? By exercising our, "no thanks," muscle in the face of temptation. No thanks, I'll skip your rewards program. No thanks, I won't take that savings. No thanks, I'm not going to increase my order size in order to get free shipping.

Then we can practice with the bigger things. No thanks, I'm not going to join that committee. No thanks, I won't be able to make that dinner. No thanks, I won't take on that project.

Of course, the reason we're saying, "no thanks," is so that we can say, "yes please," to the right things. The reason I didn't join the committee is so I can focus on my book. The reason I passed on the dinner is so I can focus on my family. The reason I didn't take on that project is so I can focus on this other one instead.

"No thanks," paves the road for "yes please," and it simplifies your decisions and your life. It helps you do fewer unimportant things.

Over dinner with friends one night, we developed a No Thanks List, consisting of 27 examples when, in our opinion "no thanks" was the best response to eliminate distraction and help us maintain our focus. Feel free to add to the list on my website.

Recently, Bloomingdales sent me an additional 15% off coupon to use with my new Bloomingdales' credit card within a specified time frame. I was tempted. I actually thought, "Why not?"

But I know better. I threw out the coupon and called to cancel the card. When I spoke with the representative, she offered me an additional $25 coupon to keep the card. This time, I wasn't even tempted.

"No thanks," I said, and got back to my writing.

Peter Bregman is a strategic advisor to CEOs and their leadership teams. His latest book, 18 Minutes: Find Your Focus, Master Distraction, and Get the Right Things Done, is available for pre-order and will be published in September.

Why Some People Have All the Luck

Anthony Tjan

Anthony Tjan is CEO, Managing Partner and Founder of the venture capital firm Cue Ball. An entrepreneur, investor, and senior advisor, Tjan has become a recognized business builder.


Some business builders just seem to have more luck than others. In fact, many of the entrepreneurs and business builders I know say luck is a driving factor in their success.

But luck in business isn't entirely, well, luck. There's a popular saying that "you make your own luck." This "make your own luck" principle has become a central chapter of a book I am co-authoring for Harvard Business Review Press. Luck, alongside Heart, Smarts, and Guts — turns out to be a critical factor in entrepreneurial DNA and successful business-building.

Over the course of now hundreds of interviews, collaborations and interactions with entrepreneurs, my co-authors Richard Harrington and Tsun-yan Hsieh and I found that, while there are certain types of luck which you cannot affect (deterministic or probabilistic or elements such as where you were born, or which card you draw from a deck of 52), there is absolutely a lot of luck that you can meaningfully influence.

Arguably, most of "business luck" can be influenced — i.e. you can increase your propensity to be lucky in business if you understand how.

How? Being "luckier" in business is fundamentally about having the right LUCKY ATTITUDE. As it turns out, luck is as much about attitude as it is about probability.

We have found in our research that people who self-describe themselves as lucky in their entrepreneurial profile with us tend to be luckier because they have the right attitude. Their secret towards a lucky attitude — whether consciously or unconsciously- stems from three traits:

1. At the foundation of a lucky attitude is humility. Jim Collins, author of Good to Great, helped identify humility as one of the key traits of the high performing leader. Having a lucky attitude begins with humility and open vulnerability towards your own limitations. You need enough self-confidence to command the respect of others, but that needs to be counter-balanced with knowing that there is much you simply don't know. Humility is the path towards earning respect while self-confidence is the path towards commanding it. But it is humility that humanizes leaders and allows them to be luckier. It is at the root of self-awareness, and creates the openness for one to take on our next lucky attitude trait — intellectual curiosity.

2. Intellectual curiosity is an active response to humility. Humility gives people the capacity to be intellectually curious. Conversely, people who are fully confident or arrogant are less likely to question their personal assumptions and outlook of the world. Business builders who are intellectually curious hold a voracious appetite to learn more about just about anything. They devour reading, listen to suggestions, and explore new ideas at a much higher rate than others. They are more frequently asking questions than trying to answer them. Ultimately they become luckier because they are more willing to meet new people, ask new questions, and go to new places.

3. Optimism is the energy source to allow for positive change. If humility is the foundation for intellectual curiosity, then an optimistic disposition gives one the belief and energy that more, better, faster is always possible. It is a self-fulfilling prophecy: more luck tends to come to those who believe in possibility — to those who see the good in something before they see the bad. Optimists are givers of energy rather than takers of it. By having a positive disposition, such individuals are more likely to have a greater number of seemingly "surprise" encounters with good fortune. They are also more likely to act on what they find through their intellectually curious pursuits because they believe — always believe — in the potential for better.

The basic equation of developing the right lucky attitude therefore is quite simple. It starts with having the humility to be self- aware, followed by the intellectual curiosity to ask the right questions, and concluding with the belief and courage that something better is always possible (optimism). The luckiest people in the business world are those who hold all three elements of this lucky attitude equation of humility, intellectual curiosity, and optimism. They are the people who say to themselves: I am humble enough to say I don't know how to make better/perfect happen on my own; I am curious and courageous enough to ask questions that might help make something closer to perfect; and finally I embrace the "glass half-full" optimism that the end result can always be improved, so let me act towards that objective. That is the mindset of the lucky business builder. It is one that most people can have if they are just willing to believe.

Except from "Declaring Independence in the Workplace"

Thanks to Teresa Amabile and Steve Kramer for this sage insight into management boundaries and balance!

To be truly intrinsically motivated and to gain a sense of achievement when they do make progress, people need to have some say in their own work. What's more, when employees have freedom in how to do the work, they are more creative. Two key aspects of autonomy are having the ability to make meaningful decisions in work and then feeling confident that — barring serious errors or dramatic shifts in conditions — those decisions will hold. If they often get overridden by management, people quickly lose the motivation to make any decision, which severely inhibits progress. Work gets delayed because people feel like they have to wait and "check in" before they can begin or change anything.

In our research across industries as diverse as consumer products, chemicals, and high tech, we found many knowledge workers whose extensive expertise went untapped and whose initial excitement about tackling challenging projects got deflated. Too often, the culprits were managers who believed that to do a good job, they had to direct the work — tell people exactly what to do and how to do it, making changes as they alone saw fit. These managers failed to realize three things:

1. Managers themselves almost never have the specific knowledge that well-trained, experienced professionals have about the work they are doing. Failing to draw on that knowledge is a lamentable waste of resources.
2. Professionals become demoralized, disgusted, and apathetic if they lack the autonomy to at least co-direct the work they are doing.
3. Organizations lose out in a big way if their professionals become disengaged. Even if those professionals don't decamp for greener pastures, they're not doing their best work.

The Challenge of Change

Watching client companies fight their way out of the recession recently has made me think about the difficulties associated with inventing and reinventing ourselves. Whether it's a personal reinvention, a corporate overhaul, or a professional transformation, change can be very tough. Adding to the complexity is the fact that you can never roll the clock backwards and revert to a 'pre-change' state once the evolution has begun.

My clients are companies in the start-up, growth or turnaround phases, and they face the challenges of change everyday. Although the industries, products, services and faces vary with each case, most of my clients struggle with the same core issues. Last week I spoke with a potential client who asked me if I see the same problems recur over and over again. My response was that, yes, 8 out of 10 clients were usually coping with a handful of issues that seem to crop up in almost every transformation situation. That conversation prompted me to take a moment and delineate exactly what those few key hangups are, and how I advise clients who are working through them. It's a short list of tips that we can all use.

Embrace change and uncertainty. Most of us naturally live our lives trying to eliminate uncertainty, but when you are in the midst of a mandatory shift - you can't do that. During periods of change and transformation, uncertainty is your friend and it offers you an open window into a bright future that you can design consciously today.

Live an examined life. We're on autopilot 90% of the time. Evolutionary times present an opportunity to reassess every area of your life and your business - and change long-held habits. When change is thrust upon you, take the time to do a double take on the cards in your hand. If you can get past your initial knee-jerk reaction, you will probably see opportunities you never knew existed.

Commit yourself to operating in the present moment. 'Now' is a very loaded word. For most of us, how we view 'now' is all wrapped up in the past we've experienced and the future we expect. That understanding of 'now' doesn't work so well during periods of uncertainty and change, so commit yourself to living each day to it's fullest capacity.... no strings attached. Sometimes when people stop resisting change they discover their true path for the first time in their life.

Set your intentions on a positive outcome. Just because you have no clear vision of what's ahead - of how you or your company will end up - doesn't mean you can't control your personal intentions. Change doesn't happen to you. It happens with you, and you are a key part of the equation. Even if the path is unclear, focus your mind on the particular outcome you seek. Visualize the feelings of accomplishment, success and peace when the change is done.

Let go of what you are losing. We all have baggage: emotional baggage, professional baggage, relational baggage... it doesn't really matter. External things that aren't as important as we think they are. Change can't be all about acquisition. There is a strong element of letting go as well. You can free yourself to live your best life by surrendering what's going away and aligning yourself with the new state of affairs that is coming into focus before you.

Never give up! This is the secret to mastering the art of transformation and the psychology of uncertainty: do not underestimate the power of your spirit. Everyday, all around the world, people are tested. And it is in these moments that they discover their fortitude, courage, raw strength, kindness and heroism. Whether you are revamping your business model, changing locations, dumping a bad partner or reinventing yourself - your ability to believe in yourself and restore your faith will determine how your future unfolds.

So my advice all of you out there who are facing big changes, is to make a commitment to stay positive, be proactive, let go of the past and embrace the future. We live in an ever-evolving world. Remaining the same is not an option.

Good luck as you discover the next iteration of your life and build a new world!

The Scoop on Angel Investors

Lots of businesses think that angel investors may be a good way to get money (doesn't 'angel' sound sweet?).  Sometimes they are, but... (the old BUT!)  Working with angels and VCs has its challenges, and hopefully this article will give you some insight into whether or not that fund raising route is right for you.

Angel investors are individuals who invest in businesses looking for a higher return than they would see from more traditional investments. Many are successful entrepreneurs who want to help other entrepreneurs get their business off the ground or to the next level. Usually they are the bridge from the self-funded stage of the business to the point that the business needs the level of funding that a venture capitalist would offer. Funding estimates for angels vary, but usually range from $10,000 to $1 million.

The term 'angel' comes from the practice in the early 1900's of wealthy businessmen investing in Broadway productions. Today "angels" typically offer expertise, experience and contacts in addition to money. Less is known about angel investing than venture capital because of the individuality and privacy of the investments, but the Small Business Administration estimates that there are at least 250,000 angels active in the country, funding about 30,000 small companies a year. The total investment from angels is estimated to be far higher than the $3 to $5 billion per year that the formal venture capital community invests. In fact, the potential pool of angel investors is substantially larger. There are about two million people in the United States with the discretionary net worth to make angel investments.

The Center for Venture Research at the University of New Hampshire, which does research on angel investments, has developed the following profile of angel investors:

• The "average" private investor is 47 years old with an annual income of $90,000, a net worth of $750,000, is college educated, has been self employed and invests $37,000 per venture.
• Most angels invest close to home and rarely put in more than a few hundred thousand dollars.
• Informal investment appears to be the largest source of external equity capital for small businesses. Nine out of 10 investments are devoted to small, mostly start-up firms with fewer than 20 employees.
• Nine out of 10 investors provide personal loans or loan guarantees to the firms they invest in. On average, this increases the available capital by 57%.
• Informal investors are older, have higher incomes, and are better educated than the average citizen, yet they are not often millionaires. They are a diverse group, displaying a wide range of personal characteristics and investment behavior.
• Seven out of 10 investments are made within 50 miles of the investor's home or office.
• Investors expect an average 26% annual return at the time they invest, and they believe that about one-third of their investments are likely to result in a substantial capital loss.
• Investors accept an average of 3 deals for every 10 considered. The most common reasons given for rejecting a deal are insufficient growth potential, overpriced equity, lack of sufficient talent of the management, or lack of information about the entrepreneur or key personnel.
• Investors included in the study would have invested almost 35% more than they did if acceptable opportunities had been available.

For the business seeking funding, the right angel investor can be the perfect first step in formal funding. It usually takes less time to meet with an angel and to receive funds, due diligence is less involved and angels usually expect a lower rate of return than a venture capitalist. The downside is finding the right balance of expert help without the angel totally taking charge of the business. Structuring the relationship carefully is an important step in the process.

What Does an Angel Investor Expect?

There are almost as many answers to what angels expect as there are angels. Each has their own criteria and foibles because they are individuals. Almost all want a board position and possibly a consulting role. All want good communication although for some that means quarterly reports, while for others that means weekly updates. Return objectives range from a projected internal rate of return of 30% over five years to sales projections of $20 million in the first five years to the potential return of five times investment in the first five years. Most are looking for anything from a five to 25 percent stake in the business. Some want securities - either common stock or preferred stock with certain rights and liquidation preferences over common stock. Some even ask for convertible debt, or redeemable preferred stock, which provides a clearer exit strategy for the investor, but also places the company at the risk of repaying the investment plus interest. Additionally, the repayment may imperil future financing since those sources will not likely want to use their investment to bail out prior investors.

Some angels ask for the right of first refusal to participate in the next round of financing. While this sounds eminently reasonable, some venture capitalists will want their own players only or certain investment minimums so this strategy may limit who future participants might be.

Future representation of the board of directors also needs to be clarified. When a new round of financing occurs, do they lose their board right? Or should that could be based on a percentage ownership - when their ownership level drops below a certain level, they no longer have board representation.

In order to protect their investment, angels often ask the business to agree to not take certain actions without the angel investors approval. These include selling all or substantially all of the company's assets, issuing additional stock to existing management, selling stock below prices paid by the investors or creating classes of stock with liquidation preferences or other rights senior to the angel's class of security. Angels also ask for price protection, that is anti-dilution provisions that will result in their receiving more stock should the business issue stock at a lower price than that paid by the angels.

To prepare to solicit an angel, several critical factors will aid in making the approach successful. First, assemble an advisory board that includes a securities accountant and an attorney. Two important functions of the board are to recommend angels to contact and to work with the management team to develop a business plan to present to the angel. The business plan itself should define the reason for financing, how the capital will be spent and the timetable for going public or seeking venture capital funding. It should include: an executive summary (description of the business, opportunity and strategy, target market, projections and competitive advantages); the industry, the company and its products and services (including entry and growth strategies); market research and analysis (customers, market size and trends, competition, estimated market share and sales); the economics of the business (including gross and operating margins and break-even analysis); marketing plan (overall strategy, pricing, advertising, promotion, and distribution); design and development plans (product/service improvement and new products/services); manufacturing and operations plans (geographic location, facilities and capacity improvements); management team (organization overview, biographies and compensation plans for key employees); financial plan (tax returns, profit and loss forecasts, pro forma cash flow analysis and balance sheets, 5-year projections); and proposed company offering (desired financing, securities offering, capitalization, timetable).

Most of all, take your time in forming a relationship with an angel. You are going to be spending a number of years together at a critical time in your business' life. Take the time to assure yourself that this is a person who you are comfortable with through both the ups and downs the future will bring.

Money is NOT the Problem

Many thanks to Richard Male and Associates for this insightful take on the ever-pervasive nonprofit poverty mentality!

Our nonprofit consulting work often involves a snapshot assessment of an organization's current status. How are the board, staff, and programs functioning? What sorts of fundraising strategy and tactics are in place? Do internal operations and external communications seem appropriate and healthy? In addition to conducting personal interviews, reviewing documents, and observing meetings, we frequently use electronic surveys to gather peoples' opinions on what is--and is not--working.

Not surprisingly, when we ask about an organization's weaknesses, popular answers from board and staff include "We need money," "Lack of funds," "Not enough money," and so on.

You know the old saying, "There are no wrong answers"? Well, this is the exception.

Nonprofit leaders often think that their lack of funds is their primary challenge.

They're wrong.

A lack of money is not the problem. It is a symptom. The problem is always something else.

Without exception, we have seen over and over that "the problem" is actually one or a disastrous combination of the following:

1. The board is too small. This invariably means that the board does not contain the range of skills and perspectives needed for sustainable success.

2. The board governance is weak. Attendance, participation, understanding, trust, accountability, engagement: entire books are written on this subject. If this were an easy issue, we'd all be wealthy. Sadly, too many well-meaning people have never experienced a nonprofit board functioning properly, so they don't even know what they're missing.

3. The mission is unclear or poorly defined. There must be a vision of why you exist and where you are trying to go. This statement of purpose needs to be concise, clear, repeatable, and memorable.

4. There is no road map, i.e., how that mission will actually be accomplished. Nonprofits that are struggling are often trying to do too much on too many projects.

5. Leaders, both paid and unpaid, fail to recognize the critical distinction between leadership and management. You need both on your team, and these people need to know when to demonstrate each as situations dictate.

6. Planning is unrealistic or nonexistent. Operating by crisis and hand-to-mouth feels like the way the game is played, as if being frantic and operating on the thinnest shoestring keeps you credible and authentic.

7. There is no strategy to fundraising. There is a rich tapestry of ways that nonprofits can tell their story to those who would be inclined to support them, but weak organizations get stuck trying the same ineffective tactic over and over.

8. Relationships have not been cultivated with the "other two" sectors (private and public). Yes, these things take time. Start before you're broke. You won't have a harvest of food for tomorrow if you don't plant something today.

9. Media or community relations are weak. See explanation for #8.

10. The impact of the organization is not being measured or evaluated properly. The funding world, from individual donors to international foundations, doesn't essentially care how small you are or how lean your budget is. They want to see that you make a demonstrated, credible difference.

Every one of these factors contributes directly to whether dollars are coming in. The next time you find yourself thinking or saying, "We just need more money," consider that your energy is better spent on something besides staring wishfully at your balance sheet. Remember that nonprofits do not close their doors because they "...have no money." They end up closing their doors because they failed in some other respect - which ultimately resulted in no money.

The Five Stages of Innovation

1. People deny that the innovation is required.
2. People deny that the innovation is effective.
3. People deny that the innovation is important.
4. People deny that the innovation will justify the effort required to adopt it.
5. People accept and adopt the innovation, enjoy its benefits, attribute it to people other than the innovator, and deny the existence of stages 1 to 4.

©AC 2005. Inspired by Alexander von Humboldt's 'Three Stages Of Scientific Discovery', as referenced by Bill Bryson in his book, 'A Short History Of Nearly Everything'.

* Not applicable (of course) to courageous early adopters of innovation everywhere.

The Scoop on Focus Groups

I held a focus group for a client researching a new business model recently. The experience reminded me just how much misinformation exists about this handy market research tool. So, I thought it would be worth a quick blog post to share more balanced information with the world.

Focus groups are one of the most misused market research methods. First and foremost, many people have strong fears that the respondents will lie or subconsciously share false views. It can happen, but it's not a huge issue. Most clients want focus groups to yield hard data, but that's not what they are designed for. A lot of people don't even consider a focus group because they assume it will cost ten thousand dollars. Again, it's possible to host a very productive focus group without breaking the bank.

So, what are focus groups?

Focus groups are a type of qualitative research. Qualitative research gathers in-depth responses from a few people as opposed to quantitative research which gathers large amounts of projectable data from many respondents.

Qualitative research lets an interviewer interact with a few people at length, which is great for asking questions and then probing the answers. For example, a focus group can gather far more detailed and complex information on a new package design than a survey. The survey will only tell you that X% of people like the new design, X% of people hate it, and X% are neutral. Good to know... but if lots of respondents hate the new package how do you know what to fix?

That's where focus groups are fantastic. In a focus group you can discover exactly why package A is liked more than package B? Which features are eye-catching, and why? Which colors or design elements are important, and why? And so on. By asking these types of probing questions you can get a clear sense of the opinions of your target consumer. It's not statistical and you can't lay it out neatly on a graph, but it allows you to define objections and refine specific features and concepts.

Focus groups can help you avoid huge market blunders. We all remember certain key stories of a company responding to a huge blind survey by changing their name or logo only to be greeted with outcries of 'foul' by their core customers. Hosting a few focus groups could have helped those companies truly understand where there was push back and what elements of their brand they should have left alone. Rather than guessing or basing decisions solely on gut instinct, focus groups let you see into the mind of your audience and leverage their knowledge.

WHEN ARE FOCUS GROUPS HELPFUL?

Focus groups can give you guidance and information on a wide range of business concepts, product and/or service issues and brand criteria, including:

• Reactions to ideas for new businesses, products and services - and reactions to prototypes or mock-ups of ideas in development.
• Perceptions of a particular brand or product. Focus groups let you measure overall feelings about problems or benefits, and understand views about reliability, pricing, quality, cool-factor, etc. You can also get a sense of how your brand is perceived compared to its key competitors.
• Reactions to advertisements and promotions. Using focus groups to assess responses to television ads, radio spots, direct mail offerings, print ads, etc.
• Reactions to point-of-purchase experiences and merchandising.

WHEN ARE FOCUS GROUPS NOT HELPFUL?

Focus groups cannot yield specific data (i.e. percentages of consumers who like a perfume, or who consider long-term durability important in a weed-eater). You simply can’t project the views of ten people onto a massive target audience. However, the results of focus groups can be excellent help in crafting surveys or identifying important issues to look at more closely.

SETTING UP A FOCUS GROUP

A typical focus group has 6 - 10 people in it.

1. Meet with a moderator and agree on objectives for the focus group(s), and on exactly what results you want and how will you use them.  Understanding the actions you will take based on the results is key. Those objectives will shape the methods used, issues explored, and types of participants interviewed.
2. Next, create specifications for the people you wish to include in the group(s), and for the locations to conduct your group(s). For instance, you may want to find users of a specific product or category, or users of a particular brand, or fans of a particular activity in a specific metro area.  It all depends on the results you want to discover and what you will do with that information.
3. Work with the moderator to map out a discussion guide which they will use during the group(s) containing all the key issues you want discussed. Also discuss how certain responses might need to be probed to gather more in-depth feedback on critical points.
4. Find a focus group facility.  There are many good ones that will recruit respondents that meet your specifications, and will host the groups on the dates and times chosen. Groups are audio taped or video taped, and you can typically watch from behind a mirrored wall to observe the session.  You can certainly host your own group, but it's best to meet at a neutral location and allow the moderator to control the interactions with you out of the picture.

LEARNING BEYOND LISTENING

It's great to hear what consumers say, but it's just as important to read between the lines.  Real insight is not easy, but here are some suggestions to help you make wise observations at focus groups:

• Observe facial expressions, hand movements and body language.  Respondents don't typically intend to lead you astray in a focus group, but they have the same tendency we all do to make promises and get caught up in the moment.  Look to see if respondents look bored, if they show true emotion behind comments, if they frown in confusion or twitch their hands with uncertainty.  The body and face can count for more than actual spoken words.  Watch respondents all the way through the session and even as they leave the room.  After the videotape stops running you can learn a lot by people's body language and small talk as they walk away.
• Push respondents to get at the truth.  Humans are herd animals and we tend to follow in a group situation.  If all of the participants in a group say they want to buy what you're selling, someone might be going with the flow, but not experience true excitement about the product. Near-unanimous consensus is extremely rare.  Make certain your moderator challenges both positive and negative reactions and does what they can to uncover the reasons behind those reactions. 
• Trust your instinct.  Even though the entire point of a focus group is to listen to consumers, you also have to weigh what they say on the scales of your own instinct.  If what the focus group reveals is blatantly counter to everything else you've experienced in the marketplace, you may need to reassess.  Here's a good example... if everyone in the US changed their oil at exactly 3,000 miles (which everyone would WANT to claim when pressed) the size of the oil change category would be double in size.  Intentions are good, but are often counter to reality.  By challenging assertions you'll get closer to the truth.

HOW MUCH WILL IT COST?

Everyone wants to know exactly what a focus group will cost (and many marketing experts will try to throw figures out) but it truly varies from group to group.  Experienced moderators cost money.  Fancy facilities that organize everything for you cost money.  I've seen focus groups cost over $7,000, but I've also helped clients host a focus group for less than $1,000.  If you have to pay respondents, that adds to the costs...  If you have to pay extra for documentation and taping of the sessions, that adds to the cost...  Urban locations will generally have higher costs than rural areas...  There are so many factors at play that I can only tell you the areas to examine to tally your total expense.

Drive: The Surprising Truth About What Motivates Us

This is a fantastic video from RSAnimate, adapted from Dan Pink's talk at the RSA, illustrating the hidden truths behind what really motivates us at home and in the workplace.

What Can We Learn From the World’s Most Admired Companies?

By Jeff Shiraki, Vice President at Hay Group. 

FORTUNE magazine recently released its annual list of the World’s Most Admired Companies and as we do every year, my colleagues and I at Hay Group took a deep look at the companies that made the list to determine what makes them “tick,” how they earn the admiration of their peers, and what organizations and leaders can learn from the practices of the “Most Admired” companies.

This year, three key leadership principles emerged that can be learned from these first in class organizations:

- Executing the ‘basics’ is critical – but today, the ‘basics’ include identifying and addressing problems before they occur and fixing things that aren’t yet broken
- Efficiency is important, but in order to increase productivity over the long-term, you must involve your employees in the effort
- Investing in employee development isn’t a “one and done” process. Organizations must focus on the growth of their employees as an ongoing process

Executing the ‘basics’ is still critical

When I talk to leaders from the Most Admired, what I often hear is that great leadership is not about doing extraordinary things. Instead, great leadership is about executing the ‘basics’ very well. This is backed up by the practices of the Most Admired: Apple, Google, Southwest Airlines, FedEx, McDonald’s – different companies in different industries, ‘old economy’ businesses and ‘new economy’ businesses that all have learned to focus their attention on executing some core business practices very well.

Our research found that the World’s Most Admired Companies do a better job than their peers of ‘addressing problems before they occur’ and ‘fixing things that aren’t broken.’ While you may think all companies should have learned that the best way to solve a problem is to prevent it in the first place, this is apparently still easier said than done. Most leaders I talk to say that great leadership isn’t about discovering ‘the next big thing’ – it is about executing the ‘small things’ consistently every day.

Increasing efficiency is important, but you must involve your employees in the effort

Surprisingly, the Most Admired actually rate simplifying work processes to increase efficiency as a slightly lower priority than their peers. However, there is a lesson to be learned from ‘how’ the Most Admired companies go about squeezing more productivity out of their operations. For example, the Most Admired are more likely to solicit ideas from their employees than their peers. When I talk to leaders in the Most Admired, they really do see people as their most important asset, and they leverage their human capital to get the most from their fixed capital.

One of the biggest differences identified in the research is that the Most Admired companies report that they are more likely than their peers to encourage managers and employees to take reasonable risks to increase effectiveness. That is not to say that companies are ignoring safety, security, quality, and other important risk management activities. Rather, as one executive said it, “My primary goal is to teach my employees to understand what a ‘reasonable risk’ is and to empower them to act in the best interests of their customers, fellow employees, and the company.”

Investing in the development of your people should be an ongoing process

It looks like people still do matter – and not only to the Most Admired. Almost all companies believe they are doing a good job hiring and placing employees. However, there is a big difference when it comes to ongoing training and development. The Most Admired place more emphasis on ensuring employee skills keep up with changing job demands. That’s because the Most Admired see their workers as assets worth investing in, and are paying more attention to the continuous improvement in the skills and capabilities of their employees. As one executive I know says, “We weathered the downturn not by slashing and burning our workforce, but by figuring out what skill sets we needed for the long term and continued to invest in building the skills of our employees to position us for greater strength as we exited the recession.”

So what did we learn?

Well, you can be encouraged to know that what it takes to make a company a Most Admired one is not ‘rocket science.’ Executing the basics, involving your employees in improving the efficiency of their work, and investing in training and development are concepts that have been around for a long, long time.

You don’t have to be a large, global company to implement these practices – the principles are equally applicable to small, family-owned businesses, non-profits and government agencies. However, what might be discouraging is that so many companies still struggle with getting these practices right. That said, we should be encouraged that many leaders have figured this out, are willing to share the secrets of their success, and continue to put competitive pressure on other companies to catch up.

To learn more about the Most Admired companies and how they stand out from their peers, you can visit Hay Group’s microsite on the study at http://bit.ly/hFy2d0.

To Do or Not To Do... That is the Question

Task lists are interesting animals, aren't they?  Almost organic in nature, they seem to grow overnight, evolve, mock us and elicit guilt just as easily as a living, breathing creature.

One of the most definitive indicators of whether a week will be productive and positive or frustrating and negative is how sure a grip I have on my To Do List.  Most of us struggle to track and manage the myriad of small activities we need to accomplish.  Here are a few tricks that help me - I hope they help you too!

Put tasks on your calendar.  I've become religious about doing this, and it is a great tool for time management.  You see, your to do list isn't just about remembering all the tasks... it's about making time to complete those tasks.  Simply listing things on a sheet of paper doesn't give you any idea of how much time will be required to accomplish them, or help you organize your schedule to find that time.  A calendar (unlike paper lists) is finite.  There are only so many hours in a day.  And when you think through how each pending job fits into the big picture of your day, you are forced to get realistic about what will get done and when.  When you make a conscious decision about when and where you are going to do something, the chances of you accomplishing that task increase dramatically.

Do it now!  There is no time like the present.  When I update my To Do List there are inevitably a ton of minor tasks that make the list seem more daunting than it really is.  Look through your To Do List every day and find the phone calls to return or the documents to mail.  It never fails to amaze me how many things have been languishing on my list for weeks that, once I decide to do them, take only a few minutes.  I've learned that those things should be done immediately.  The sense of accomplishment and relief you feel in seeing your To Do List drop dramatically in 30 minutes is priceless.

Schedule tasks according to when they are due.  I don't view every task with the same urgency.  Some items on your To Do List probably need to be done today.  But many of them don't.  Don't make the mistake of listing activities with no order, dates or rank.  A random list of tasks ranging from personal chores to phone calls to pressing project deadlines isn't very helpful for prioritization.  Whether you use an A/B/C system (with A being urgent and C being eventually), or you cluster tasks by date, make sure you go into each day with certainty about what must be accomplished and what might be accomplished.

Don't do it.  I know, this is a funny suggestion, but there truly are things on your To Do List that don't matter.  It's OK to delete tasks and move on.  Let's say there's a book someone mentioned that you want to purchase or a thank you note you've intended to write for two months - is the earth going to explode if you don't do it?  No.  The task only exists because you've created it, and no one else will even know if you don't accomplish it.  Be willing to let some of these jobs go when you're feeling overwhelmed.  If actually deleting the task from your list completely goes against your nature, another option is to create a 'Someday List'.  This is a great place to house those little things that you'd like to get to one day, but which don't matter in the present.  A URL to look at, a book to buy, an old friend from high school to reconnect with... the Someday List is the place!

That's my system.  By staying on top of your To Do List, you'll avoid the horrible feeling of trying to outrun your To Dos, the shame of missing an important deadline, or the guilt of ignoring things that really matter.

Building Loyalty in Younger Customers

Something interesting is happening the customer relations game... historically winning strategies and services are not working on the youngest customers in the marketplace. Companies that have maintained a positive public image and strong consumer loyalty for decades are faltering in their ability to connect with the thirty and under crowd.

Why? There are typically a few key factors contributing to the lack of appeal to young customers:

The dominant sales model is oriented toward the company and not the consumer. Take, for example, buying automobile insurance the traditional way. You have to deal with an agent in person. This individual holds all the cards. They take your information, assess your situation, and make recommendations. You never see all your options, competitors rates, outside reviews, or anything else to reinforce the validity of the deal you're offered. You're expected to trust.

The younger generation isn't so big on blind trust. Wise beyond their years, they want to see the complete picture, take an active role in determining what is best for them and drive the decision to buy. The traditional sales model is not set up for that dynamic. In fact, many companies consciously try to hide negative reviews, competitors pricing and lower cost alternatives from their customers. This attitude will not fly with twenty-somethings!  If they perceive the sales process to be focused on maximizing corporate sales and not acting in their best interest they will view it as untrustworthy and shop elsewhere.

You have to communicate in the manner your customers prefer.  Twenty-somethings don't connect very often in person - especially for business.  They don't like to talk on the phone.  They live in a world of text messages, Facebook, Twitter, chat rooms and YouTube.  Forcing them to engage in meetings, endure multiple phone calls, read reams of impenetrable documents in small print or navigate a clunky website is sure to make them hate you.  My daughter recently informed me that email is 'old-school' and she doesn't check hers very often anymore. 

For most large organizations human interactions are based on a model from the 50's and even their online tools and resources are more in tune with 90's technology than 2011.  In order to build real relationships with younger customers you have to join the 21st century!  Otherwise they will do business with you only grudgingly and run to a competitor the first chance they get.  Going back to our auto insurance example, Progressive is stealing young customers left and right from players dominant in the industry for decades.  They show competitors rates side-by-side with their own, allow customers to easily shop online, never force interaction with an agent,  share testimonials, and offer a plethora of policy options.

Alignment of quality and care claims has to match your customers' reality.  Every company says they care about meeting their customers unique needs... every company claims to have an appealing and intuitive website... every company says the sale will be quick and simple.  We've all heard the claims, but they seldom match what happens in real life.  Baby boomers and middle-age professionals are likely to sigh and buy from you anyway.  Twenty-somethings are disgusted and they leave.

Rethink your website.  Openly share information and elicit feedback.  Make as many transactions as possible online.  Introduce apps.  Provide multiple signals of quality.  Use email, text and social media to offer updates, discounts and reminders.  And when someone does have to deal with a human being - you had better make it an efficient and positive experience.  If you don't, eventually a competitor will come along who realizes that it is 2011 and they will decimate your market share.

View Video of Client, Wendy Booker, on the Late, Late Show with Craig Ferguson

Click below to view PR client Wendy Booker’s guest appearance on the Late, Late Show with Craig Ferguson that aired on Friday, March 4th! She and Craig discuss, MS, marathons, mountains and her upcoming expedition to the North Pole via dog sled.

Got Gear? Got Cheer?

Oh yes, Boulder... it's time for Gear & Cheer - one of Boulder’s best parties of the year, benefiting The Women’s Wilderness Institute!

In its ninth year, the Arts themed event will be the best yet!

Brush off your dancing skills, don your most colorful attire and join us, March 16th, 2011 at The Dairy Center for the Arts in Boulder, as we host over 500 local outdoor enthusiasts for an evening of live entertainment, a fashion show, local beverage and food tasting as well as an amazing auction of high performance outdoor gear, great local services, and exciting trip packages.

Your evening of merriment will directly fund another brilliant season of outstanding wilderness courses and community programs for girls and women of all ages and backgrounds. Because of your annual generous support and dedication for the Gear and Cheer fund raising event, The Women’s Wilderness Institute is able to continue to provide the gifts of courage, confidence and leadership to a multitude of outstanding girls and women each year.

Register now at http://www.regonline.com/Register/Checkin.aspx?EventID=932754.

Testing an Innovative Idea Before you Act

Innovators create something different that makes an impact. But how do you rapidly assess whether an idea is "innovative" or a dud? Nine ways an innovator can increase their confidence in making the right decision, each of which takes no more than an hour to do.

1. Talk to a prospective customer to get their perspective. Remember, that is likely to be different from your perspective. And friends and family members can be prospective customers. Talking to a single potential customer might feel a bit random, but, hey... it's more than you have now.

2. Go to where prospective customers might hang out and watch them for an hour. Write down things that you didn't expect to see. Think about how that might influence your idea.

3. Research an analogy. Who did something similar? What can you find out about how well that worked from public sources? Remember, a failure doesn't mean you shouldn't do it, it just means you need to understand why the failure happened.

4. Talk to someone who you think has good innovation instincts but isn't involved in the day-to-day grind of your operations. Ask what that person would do. Think about people outside your industry who have proven to be successful innovators and share your idea.

5. Begin to network toward an expert. If you could talk to three people in the world about your concept, who would they be? Who in your network might be in their networks? People love to talk about their areas of expertise, so if you can get to them they typically offer a wealth of information.

6. Visualize it. What would the thing look like? Create a sketch or mockup to bring the idea to life. Consider a six-panel storyboard (like a cartoon) that describes how people find out about, obtain, and then use your product or service. Visualization sometimes helps you understand your idea more concretely. Even more importantly, it gives you something you can share with people to get their feedback.

7. Do a simply financial calculation. Not a super-complicated one. Just one with three or four variables that help you understand what conceivably would have to be true for the idea to make sense. This exercise can help you understand the economic potential and risk of the idea.

8. Conduct a broader assumption identification exercise. This is really nothing more than asking yourself "what would need to be true" for this idea to be viable. Which of those assumptions makes you worried? Can you address those concerns using any of the techniques here?

9. Spend an hour conducting a past pattern exercise. That is, look back at things you have done that have worked, and things that haven't worked. What separates them? For example, factors could be things like "every time I am skeptical it doesn't work" or "things that person X says are crazy are in fact crazy." Once you have the list, how the current idea stacks up?

These kinds of straightforward activities can provide deeper insight into opportunities, help you formulate more compelling ideas, and help make sure that an idea moves from the notepad to the market.

Artist Damián Ortega... I Really Like this Guy

I don't often feature something artistic or 'touchy feely' on my business blog, but Damián Ortega blurs the line between business and aesthetics so I'm going for it.

Ortega’s work explores specific economic, aesthetic and cultural situations and in particular how regional culture affects commodity consumption. As a former political cartoonist, his work has an intellectualism to it that I like, but it's also beautiful and playful.

I love the way he explores how pieces come together to make a whole. I look at a company very much the same way - lots of individual ideas, people, systems, products, etc coming together to create something larger than the sum of the parts. Take a look at a few of his pieces and you'll see what I mean:

Cosmic Thing (2002) Ortega disassembled a Volkswagen Beetle car and re-composed it piece by piece, suspended from wire in mid-air, in the manner of a mechanic’s instruction manual. The result was both a diagram and a fragmented object that offered a new way of seeing.

Controller of the Universe (2007) Ortega assembled found tools and wire in a visually stunning way - who new old rakes and picks could be so sexy!

Here's a selection of other works by Ortega that caught my eye:

As Sebastian Smee said, "For Damián Ortega, ideas and things, far from being connected by logic, have a deeper, unaccountable relationship, amounting to a kind of magic act. It’s a relationship that’s destructive one minute and creative the next, but it’s never less than funny."

Five Lessons from 2010 Worth Repeating — Without Repeating 2010

January 3, 2011
By: Rosabeth Moss Kanter (Harvard Business Review Blogs)

Before 2010 is dumped into the dustbin of history — and it was a year when cleaning up after disasters was not just a metaphor — it's worth finding the gems among the trash.

Apple, Facebook, Twitter, IBM, PepsiCo, P&G, Stonyfield Farm, entrepreneurs, philanthropists, and former British politicians provided me with occasions for pointing to business strategy and leadership lessons, good and bad, that shouldn't be forgotten. Here are my top five lessons from last year's blogs that can be carried confidently into the new year.

1. Surprises are the new normal. Resilience is the new skill. Back-up plans are strategic assets. Volcanic ash, generally not on any company's worst case scenario list, disrupted air traffic for several weeks. ("Surprise!) As BP proved, minimizing crisis doesn't cut it, and failure to communicate honestly is the biggest mistake. Kanter's Law still holds — that everything can look like a failure in the middle. The number of things that can hold things up has burgeoned, especially when politics are involved; Chinese regulators are the latest deal-delayers, this time for the NSN-Motorola deal. It helps to have leaders who are Energizers, a favorite idea from 2009, because their positive spirit can keep things moving.

2. Innovation takes courage and the willingness to be out in front rather than following the herd. Speaking of herds, while sacred cows can hold companies back if there is no courage to challenge orthodoxy, cows proved to be a better set of celebrity endorsers than Tiger Woods for Stonyfield Farms and their yogurt marketing. The creativity to produce innovation can involve a great deal of improvisation rather than sticking to a fixed script. It also takes dedication. Perhaps some entrepreneurs have a passionate desire to prove something.

3. Straight-line careers are over-rated. Zig-zags might better serve companies and leaders. When change is ubiquitous, stepping outside of familiar territories — whether fields, geographies, or industries — can provide important new insights and perspectives, particularly for emerging opportunities. Veer, soar, and return to the home base triumphant, as Apple CEO Steve Jobs showed. But that doesn't mean that leaders can parachute in from one setting to another and expect to be effective. Jobs took a pause and learned a few new consumer entertainment tricks. It is a good idea to take learning pauses to prepare for next steps.

4. Openness and inclusion should be the new standards. As the movie Inside Job argues about the banking crisis, closed circles of elites can reinforce dysfunctional behavior when there are interlocking financial interests and self-dealing relationships. Including people from formerly excluded groups might add perspectives that surface problems earlier or discourage throwing caution to the wind. Power goes to the connectors, a 2009 lesson. Connectors bring new ideas and information across groups, a very important role when the best new opportunities lie in emerging markets unfamiliar to those. Thus, the leadership ranks must be globally diverse. But though women are proving themselves as CEOs, challenges of inclusion remain.

5. Forget privacy, especially if you're a leader. Leaders are always on. Microphones and video cameras are always on, too, as former British prime minister Gordon Brown found to his peril. Xerox CEO Ursula Burns received better coaching her predecessor, Anne Mulcahy, and provides a positive model. But other CEOs weren't so fortunate. As former HP CEO Mark Hurd learned, small lapses can trip up leaders, even smart ones producing financial results, if they do not have a base of support. In the digital age, the spotlight is always, and the erosion of privacy affects everyone, a 2009 lesson that looms larger every day.

2010 will soon seem like ancient history, but these lessons will endure. Especially because 2011 is certain to bring surprises that will require still more innovation and even more open leadership.

Women in Leadership: Did We See Progress in 2010?

I wish I could tell you YES - women made huge strides in the workplace in 2010! But, in reality, while things have improved incrementally, we still have a long way to go. Here are some fairly up-to-date statistics on comparative performance and compensation:

• Women hold over 50% of total job positions, but only 18% of top-level leadership positions.
• Women earn 78 cents for every dollar earned by a male counterpart.
• Women comprise only 3% of Fortune 500 CEOs.
• 57% of college students are women, but only 26% of college professors are female.
• Women hold less than 6% of the top-paying positions in Fortune 500 companies.

Sobering, huh?

I've been thinking a lot lately about my experiences in working with women - as clients, as employees in companies, as partners - and I've asked myself, "What are the barriers I see to progress?"  Here is a quick digest of observations about the factors hold women back in the workplace and how we might be able to step up our collective performance as a gender in 2011:

Women don't bounce back from a hard punch like men do.
I know, we put on a tough face sometimes or play the ice queen, but the reality is that men know how to take a hit, shrug it off, and continue on their merry way.  Women stew over conflicts, lose self-confidence, wallow in guilt, and generally need approval from others to believe in themselves.  A key barrier to women's success in high-earning, high-profile leadership positions is the fact that they allow a regret, a missed opportunity, a mistake, or a criticism derail their ability to achieve.  They can't recover from a punch, and so allow a single hit to stop them from ardently pursuing their dreams.  While it's important to reflect on our character, nurture relationships with others, and learn from mistakes, dwelling endlessly on our shortcomings is not the path to equality.

Women tear each other down in the workplace.
This is a bizarre tendency, but I've really noticed that women attack each other at work more than they attack their male peers.  I don't know if going after a guy is too intimidating, or if we just tend to be 'bitchy' with each other, but girlfriends... stop going after each other and find some solidarity!  If you have a gripe with someone at work, try to productively solve the problem rather than tearing down other people to get ahead.  You never elevate yourself by diminishing others.  And taking an attack stance against other women starts a cycle of discontent, gossip and backstabbing that makes everyone in your work environment look bad and prevents anyone from getting ahead.

Women believe that to succeed in leadership they can't be compassionate and balanced.
Men can be very direct in their critiques and candid in their verbal feedback, but they tend to naturally avoid being blatantly destructive and overly judgmental.  They can sense when searing comments are reaching a level that will be counter-productive and they pull back.  Women are especially judgmental - and on a much more personal and detailed level - than are males.  We really need to guard against judgmentalism taking away our ability to be loving and compassionate and supportive of others.  Succeeding in business isn't about turning into men (or, heaven forbid, being even meaner than men!).  It's about leveraging all the uniquely female gifts that we have at our disposal to lead in our way. 

Women don't mentor each other and pass the torch.
Most men who have achieved great things in the corporate arena will tell you that they have a few profound mentor relationships that have gotten them where they are.  Men have learned the value in dropping a ladder down to individuals below them with potential - and they have also learned to look for the men in positions they covet and ask for help.  Women tend to work really hard in isolation and hope that their performance alone will earn them a promotion or raise.  It doesn't usually work that way.  People above you in power positions offer immense leverage that can take you up a few levels overnight.  And don't just look for your own mentors!  Be willing to help the women around you and below you step up their performance and get noticed.

Women often view the workplace as a popularity contest.
Come on ladies... we're not in junior high anymore.  Leadership isn't about everyone liking you all the time.  While it's important to be smart and fair and respected, you have to learn to deal with people who disagree with you, resent you, or ostracize you.  The few who reach the top have to make unpopular decisions at times, and you will definitely have moments when you feel very alone.  Women tend to shut down when they find themselves in an exclusionary group, but that is just the time to take up the courage of your convictions and earn respect.  Superior performance only emerges when you meet the challenges put to you in spite of your gender.  The world certainly won't adapt itself to suit you, so if you can't make tough calls and defend your ideas you'll find that primer opportunities flow right on by.

Have you noticed a broad tendency in the workplace that is holding women back?  Comment below or email me at trish@trishthomas.com and I'll include it in a future post.