347-878-3837

entrepreneurship

Here are articles on entrepreneurship

Linking Leadership and Management with Powerful Strategic Planning

,

Linking Leadership and Management with Powerful Strategic Planning

from It Takes a Lot More than Attitude…to Lead a Stellar Organization by Stever Robbins

Click here to download this article in PDF format.

Leaders set direction, decide acceptable behavior (values), and get people moving towards a common dream. Managers design systems, set goals, track progress, and generally make sure things get done. You need both to create a high-performing organization: knowing where to go, and knowing how to get there.

A lot can go wrong. Weak leadership and the organization can stagger in circles, incoherent and directionless. Weak management and an organization wastes time and money, duplicates effort, and produces far too much (or too little) paperwork. But even strong management and strong leadership can dissolve into chaos without a tight connection translating the leadership direction into management systems. A good strategic plan creates that connection and gives your business traction.

Leadership sets the destination

One company’s vision statement lays out the company’s purpose, vision, and values:

“Our Business is the design and manufacture of impenetrable widgets for renewable energy source control plans. We aspire to become a leading worldwide player where customers love our products and service, and that these are provided at consistently good quality and a fair price.”

Sounds like a great vision. It gives direction to new product development, displays values of customer-orientation and quality, and even lets us know the company’s intended markets. And like most leadership documents, it’s timeless. The company could be living this vision right now, or it could be hopelessly mired, years away from making the vision real. Or the vision might be just nice-sounding words on a boardroom wall, with no link to the business whatsoever.

Ideally, the vision drives strategy. Most business goals serve a higher-level goal. The sales goal “land 10 new clients” is part of the higher goal, “increase market share by 5%.” Strategy sets the highest level management goal.Its guidance comes straight from the vision and mission of the company—which is where leadership resides.

Strategy is a map for achieving the vision, but creating a realistic timetable and action plan requires a map and a route. To choose a route, you need both a destination and a starting point. Leadership sets the destination, and strategic assessment lets you know where you’re starting.

Assessment tells where you are

The better you know your starting point, the better you’re able to create an effective route to your destination. An assessment encompasses what you believe is important in navigating to your vision. Sure, market share and profit goals are common metrics, but aligning an organization must include internal and external assessments:

  • what organizational capabilities exist?
  • what’s your competitive positioning?
  • are partnerships in place? the right ones?
  • do you attract and retain the right employees?
  • does your culture support those employees?
  • do your profitable customers stay with you?
  • does your financial strategy deliver funding when it’s needed?
  • are operational systems delivering product and service properly?

Organizational learning boosts impact

A destination and starting point are enough to chart a course, but they aren’t enough to form the most effective plans. As the highest-leverage activity in a company, strategic planning is where organizational learning has the greatest impact.

When Intuit launched the Quicken visa card, the software-only company learned a lot about what it takes to run an operational service business. The business’s infrastructure was revamped multiple times to make use of lessons learned about reliability, security, and customer service.

No one wants to repeat past mistakes and everyone likes to repeat successes. Most organizations learn a lot, but the learning gets lost. If your strategic planning group spends time sharing lessons of prior years, you’ll end up with goals and plans that bring learning forward.

Well-scoped goals drive success

Set yourself up for success in your goals. If people feel chronically overworked, “stretch” goals may be stretching people too far. Be realistic about what’s possible in a year. Get productivity from ruthless focus on goals that make the most difference, not from ruthless overwork on low-value initiatives.

Productivity goes down under too much stress or too little sleep. If 283 initiatives are essential to reaching goals, change the goals, because you can be sure they’re hopeless. People will be too stressed to do a good job, and consider 283 status meetings each week … it’s simply too horrible to think about.

Underpromise and overdeliver—even when promising yourself.

Plans transition you into management

When it’s finally time to make plans, the transition to management is in full swing. It’s time for management to take the ball and run with it. All the standard planning rules apply:

  • have lots of measurable milestones
  • schedule regular re-planning sessions
  • know your critical paths
  • communicate success criteria clearly
  • coordinate between different groups
  • monitor your plan and adjust as necessary

Leadership remains important

Once the strategic plan is in action, the leadership direction is well on its way to becoming reality. But leadership isn’t over by any stretch of imagination. The leadership job becomes keeping a powerful presence, reminding people of the company’s ultimate destination, values, and reason for existing.

People will get demotivated; the leader re-inspires them. Plans will drift or the world will change; the leader calls for re-examining whether the organization is still on course. The leaders provide the stability of direction and values that free everyone else to make it happen.

Even if the world is wildly different than expected, sound strategic planning will provide the map that aligns your organization behind the leaders’ vision. An aligned, energized organization is more likely to reach the vision, and it will be more fun and more motivating along the way. And at the end of the day, aren’t our lives and work are as much about the journey as the destination?

Putting it into action

  • Do the people in your company share a common idea of the business’s direction? If not, choose a direction and start going for it!
  • Look around at the initiatives and projects that are under way. Do all have a clear link to your company’s vision/mission? If not, fix it.
  • Do people seem overworked? Do the research to discover whether goals are poorly scoped, whether the plans to reach those goals are simply bad plans, and whether productivity is suffering from plain old overload. Incorporate that learning into your next planning session.
  • The next time you start planning, ask yourself whether you know your goals and your current situation, measured along all relevant external and internal dimensions.
  • Above all, think, then jump. Planning is important, and so is execution. Most of us prefer one or the other, and we get mired in endless plans or senseless execution. Really think about yourself and your organization and make sure you’re striking the right balance. A week of planning is more valuable than a year of action in the wrong direction.

Take Responsibility as a Leader Before It Takes You!

,

Click here to download this article in PDF format

We all love to take credit when things go right, and shift the blame when things go wrong. It’s especially tempting as a leader. The leader is perfectly positioned to blame just about anyone and anything when things go wrong. “The market is down.” “That clerk in accounting in incompetent.” “We didn’t count on competition.” “Regulation is unfair.” “The legal department reviewed it before I said it.” Such quotes avoid responsibility, and whether from fear or insecurity, they herald the beginning of the fall from leader to pretender…

This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

Balance Rights with Responsibilities

,

Creating Your Bill of Responsibility

From my April, 2001 newsletter

Do you have a personal Bill of Responsibility, as a business leader? It’s an intriguing concept. Allow me to explain…

In America, we businesspeople happily ask a lot from our employees. Everyone I know accepts the need for unpaid "crunch time" before a deadline, even though "crunch time" means a project management failure. And does "crunch time" become less common over time? Rarely. And we as business leaders are responsible for the failure to learn. But we expect employees to give from their personal lives to compensate for a company’s poor management.

But we rarely hold ourselves to as high a standard…

This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

Don't Make the Same Old Mistakes—Make New Ones

,

Failure doesn’t guarantee learning, just the chance to learn!

As the dot-com death spiral continues, a friend said, “it was painful, but I learned a lot.’ Eager to learn without suffering the pain myself, I ask, “What did you learn?” He lists five lessons, all pretty obvious—for just $100 million (none of it his) and four years. There’s gotta be a cheaper way. We say we learn from our mistakes, but few of us really extract quality learning from our experience. If you’re going to make mistakes, make them thoroughly, and learn well from them.

Schedule time for learning. Don’t assume it happens automatically; it usually doesn’t…

This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

Management Skill vs. Leadership Skill

,

A growing business needs both Leadership and Management to thrive

The best companies have managers with strong leadership skill and superb management skill. But when chaos strikes, you can’t always concentrate on both. (It might even be a luxury to concentrate on either for more than an hour at a time!) But what are you losing when you neglect one or the other? Both are essential for keeping a solid foundation during rapid change. But how?

Processes Must Adapt as Business Grows

Management helps the business grow.

This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!" Click here to purchase.

How Junior Programmers May be Setting Your Strategy

,

Companies spend megabucks on beautiful, well-designed web sites that end up losing customers, thanks to technical decisions made by the designers and programmers. Is some consulting firm’s junior programmer really the one you want making your strategic customer acquisition and retention decisions? With a little understanding of the interplay between technology and customer experience, you can start engaging your web developers in supporting your business with smart technical decisions.

The problem is that the world is diverse.

The web has developed dozens of technologies to help build bigger, more beautiful web sites. You will recognize some of the terms: "layers," "cookies," "javascript," "java," "style sheets," "flash," "shockwave."

Unfortunately, these technologies just don’t work on all versions of all browsers. I use Netscape for Windows and IE on the Mac. Two or three times a day, one of them reports a Javascript error and asks "Do you want to keep running scripts on this page?" C’mon, get real. How in the world does any user know whether to answer YES or NO to that, or what the implications are for my purchase?

Furthermore, some users disable cookies, Javascript or Java. I’ve heard companies pooh-pooh those users and say, "Well, I’ll just require you to enable cookies/Javascript to view my site." Uh, huh. When was the last time you were willing to reconfigure your browser on demand? Hard-core customers will do it. But those sites will lose customers who don’t know how, don’t want to be bothered, or aren’t allowed to change their system. Befuddled users don’t hang around to complete their purchase, they just leave. At best, the site loses one sale but the customer returns. At worst, the customer leaves forever.

So why do these technologies end up in web pages?

Flash sells. Look at any television commercial. When a designer is pitching a site laden with cool stuff, the management reviewers like it. It’s jazzy. It’s cool. It’s like a high-end ad. And that’s the wrong criteria to be using to design your web site.

Customers don’t care much about cool looking sites. They care about sites that get them the information or products they want. Yahoo is the most popular site on the web. It uses no fancy features, and it’s downright ugly. But it gets people what they came for. And that’s a much harder outcome for a graphic designer to pitch.

The programmers push the leading-edge technology, too. Take it from an ex-programmer: web site—even large database driven sites—require very, very basic programming, if any at all. The latest version of Quicken is about 10,000 times more sophisticated than 99% of the commerce sites in existence.

So most competent programmers find web sites kinda, well, mind-numbingly boring. But add in layers and flash, javascript and Java and Lingo, and suddenly the complexity is back to the point where it makes the job fun. Besides, all the advanced technology really *does* make certain things easier to program, and trying to use basic HTML to accomplish those same things just isn’t nearly as engaging.

Specific Problems

Here are some places in your site to dig to find out if you’re using these technologies:

1. Disable Javascript in your browser. This is the biggie. If your site isn’t usable with Javascript turned off, that could be a problem. Especially click on [SUBMIT] and [OK] buttons. Many sites have buttons that, for incomprehensible reasons, only work if Javascript is enabled.

2. Do you have Javascript running that makes sure the user types the right things into fields? If so, you just paid your programmers to do the same thing twice, because the data is almost certainly validated once it gets to your server, as well. You now have the maintenance expense of maintaining both the Javascript checks and the server-side checks. Yowza!

3. If you use Java, you’ll lose everyone who keeps Java disabled for security reasons.

4. Do you use layers or style sheets? Many sites do. They make some aspects of site creation much easier. They also tend to break in various browsers and look awful. Modern tools like Dreamweaver give a designer everything they need to create a consistent look and feel in basic HTML that works in all browsers. If your designers simply must use style sheets or layers, test the site in a wide range of browsers to make sure it looks decent across the board.

(And note that your designers will point out how convenient style sheets are, since you can revamp the whole look of the site by changing just the style sheet. But balance that against the increased testing and QA costs of making sure the style sheet solution works everywhere your customers are.)

The business question to be asking

The decision to include these technologies in a site is simple, when approached in business terms:

Is the expected increase in business from the Javascript/Flash/etc. more than the cost of losing even 1% of your visitors due to incompatibility or security concerns?

For most sites I’ve visited that use these technologies, the site would be equally useful without the technologies. So there’s no incremental gain from using them, while there is a risk of losing a customer. In a dramatic example of this, a site (let’s call them "GenericSTORE.COM") recently lost my $400 purchase when their Javascript consistently crashed in both Netscape and IE browsers. Their order desk was closed, and my special coupon expired the next day. I’ll now buy from a competitor, and if that competitor does a good job, they will probably have a new customer for years.

How much did that flashy bit of Javascript cost GenericSTORE.COM? Quite a lot.

There are certainly times when the extra technology helps. A highly-technical web-delivered product probably requires advanced technology by virtue of the kind of product it is. But most sites simply don’t.

As a businessperson, make sure your programmers understand the business case behind the technology. They’ll fight tooth and nail. They’ll say things like, "But Javascript is so basic, 99% of the browsers are compatible…" Yet if it’s that basic, why did GenericSTORE.COM’s scripts fail? And why do people continue to experience incompatibilities? And can we really expect customers to turn Javascript on, if their system manager requires that they keep it disabled? And more to the point: what is the lifetime value of the customers who have the 1% incompatible browsers, and is the extra Javascript functionality really worth losing that much money?

What’s the solution?

One solution is to test your site in as many browsers and environments as possible. Test in Netscape, all versions 4 and above. Test in AOL. Test in Internet Explorer (4,0, 5, 5,5, 6). Test in Opera. Test in Omniweb. Test test test. Test with Javascript turned on. Test with it off. Ditto for Java. Test.

Another solution is to have a site that uses very minimal technology. The HTML on my site works on every browser in use today. Only Netscape 1 and 2 would have trouble with the pages. The site uses Javascript to highlight menu items, but it still works fine with Javascript disabled. Yes, achieving this degree of accessibility has meant sacrificing some of the neato-cool features I could have added to the site. But look at it this way: no matter what browser you’re reading this on, you made it. It works. And you’re here.

So make your site simple and accessible. If you’re tempted to use technology that might lose even a single customer, ask yourself how much you’re losing with that customer, and whether it’s worth the extra bell and whistle. Amazon.com manages to do a hundred million dollars’ worth of business with a site that uses no Javascript and can almost survive with cookies disabled. When your site is rock-solid, your customers will love it, and at the end of the day, they’re the ones who keep you in business.

Don't let bad IT decisions hold your company hostage

,

Click here to download this article in PDF format.

Business leadership isn’t just about people. It’s also about process and systems. Your computers are part of your processes, and these days, they’re too critical to be treated as casually as you’d treat a screwdriver. Yet few business leaders know anything about them, and they happily delegate strategic, life-or-death technology decisions to IT folks who haven’t a clue about business.

A few weeks ago saw one of the largest email virus outbreaks ever. Fortunately, it didn’t do nearly the damage it could have done. But ladies and gentlemen, we are all at risk. You may be a non-techie, but if you’re reading this, your organization isn’t. You use computers and they are part of your critical infrastructure.

Bad decisions cost more than you think

If an avoidable virus or IT glitch stalls your company for a day, how much does that cost? Simple. It costs the entire cost of your company for a day. Not just the salaries of the IT folks who have to clean up the mess, but the salaries of everyone who can’t work because their computers are screwed, plus the utility bills, etc. Add on salaries for the time it takes people to get back to where they were before the virus attack. And if your IT infrastructure halted commerce, add on the value of all the lost orders. Now you have the cost of a bad IT decision.

IT costs are rarely allocated wisely

If you’re a senior executive and you make a bad call, you live with the results. In fact, if life throws you a curve ball, you live with the results. Your new distribution channel didn’t reach the market you wanted? Oops. That’s time and money down the drain, it shows up in your bottom line, and it gets factored into your evaluation.

But not true of most IT departments. They get to make lousy decisions at bargain basement rates. You see, few companies charge back the cost of IT failures to the IT department. Let’s think about a virus outbreak. IT folks must run virus removal software over your network and clean up the servers that got screwed. Fine, that gets charged back to IT. But the salaries of the non-IT employees during their downtime, and the cost of the rework they have to do all gets allocated back to their departments. So what incentive does IT have to really take the time to understand the security issues? Very little. Most likely, they’re evaluated and paid for the projects they have to build, but aren’t charged for the business impact of what they don’t build that they should. As a result, the emphasis is on rolling out new stuff, not protecting the business.

To be fair, this isn’t IT’s fault. Most IT organizations are chartered as development organizations, with no emphasis on security or preventing problems. Few engineers have the training or big picture to make good security decisions. But guess what–it’s our fault, too. We who build the organization must make sure IT has enough staff with the security skills and judgment to build a solid IT infrastructure. If computer security isn’t on your hiring radar screen, put it there, or be prepared to pay the costs.

(Speaking of which… A misconfigured web server can expose all kinds of great company documents to the web. See: http://www.securityfocus.com/columnists/224 for a column describing exactly how to get really juicy internal information almost instantly using only Google.)

IT decisions ignore the cost of failure

"If I buy this lottery ticket, I’ll win a million dollars!!!" — Anonymous

We make lots of our decisions because we think they’ll get us what we want. We set our goals that way: "Go build a system that can style my hair, read my email, and coordinate meetings over the internet while singing Broadway showtunes." But every decision is a double-edged sword (even the decision not to decide). We rarely consider the downside of a decision beforehand, unless it’s blindingly obvious and catastrophically unpleasant.

When your IT team is choosing solutions, chances are, they’re asking, "Which solution meets our needs?" Also have them ask, "What is the cost of this solution failing?" Microsoft products have a huge advantage: they’re standard, they allow interoperability, they’re pretty, and, as they used to say about IBM , "nobody ever got fired for buying Microsoft" (though they should have). The downside, however, is products like Outlook are buggy and contain huge security holes. Several of the most destructive viruses have exploited holes in Outlook and Internet Explorer1.

Upgrading can kill your company

Microsoft has certainly endorsed a dangerous trend: software that requires activation to install and run it. More and more, it’s not enough that you purchase software and install it with a serial number they give you; you must also be connected to the internet or call their telephone activation center to activate the software when you run it.

The reason for this is simple: the software publishers basically don’t trust their users, and want to monitor every installation of the software closely. It makes sense from their point of view, as long as you assume your users are out to screw you. But from our point of view, this trend is dangerous.

The first of these activation schemes was Adobe Corporation’s "Type on Call." They would sell you a CD full of fonts, and you would call Adobe to "unlock" fonts you had purchased.

Over the years, I purchased over $2,000 worth of fonts from Adobe. That really isn’t as many as it seems, as some of the nicer faces cost upwards of $500 to purchase all the different weights and styles. My corporate identity was built using the Adobe fonts.

Then a couple of years ago, I bought a new computer. I went to install my Type-on-Call fonts and discovered that the activation servers had been shut down. Adobe had decided to discontinue the service, and suddenly I was no longer able to access fonts I’d paid dearly for. No one at Adobe was able to help, until bombarding the upper management with letters led one marketing manager sent me a CD-ROM of the fonts in question.

Herein lies the danger: in the interests of their fraud protection, you are integrating the business fortunes and decisions of the software vendor into your infrastructure. If they go out of business, get acquired, or just decide to stop supporting their service, the next time you need to install their software, you can’t do it. If that software is critical to your business, you’re just plain out of luck2.

And even if they’re still in business, it’s still a business burden for you. You won’t always have a net connection when setting up a new machine. Sometimes–for security reasons or otherwise–you might want to install your software with your new machine disconnected from the network. Whatever the case, you’ll now have to jump through activation hoops2. Windows already takes way too long to reinstall, thanks to its convoluted architecture. If you have to make activation phone calls and convince the $3.95 /hour clerk on the other end that you own the software you’ve already bought and paid for, you’re spending more of your time and money just to satisfy their paranoia.

Of course, no company would ever use this as a technique for forcing you to upgrade. Microsoft, for example, would never abuse their activation system by dropping activation of old products, forcing you to upgrade to a new version. But if a Microsoft doobie reads this article, watch out, they just may change their mind.

Avoid Outlook like the plague

Most of the windows vulnerabilities and worms have spread through Outlook and its address book. I don’t know why Outlook is so remarkably poorly written, but it really doesn’t matter. Every security-conscious technologists I know uses Eudora or a text-only mail reader of some sort. Most won’t even allow Outlook to be installed on their machine. I’m sure Microsoft is working to resolve all problems in Outlook, but if the development team couldn’t avoid the problems in the first place, I don’t have much faith in their ability to catch all the potential problems in retrospect.

Back up regularly, off-site

It’s amazing how many companies have no regular backup regime in place. Back up regularly to write-once media (e.g. CD-R), so even if a virus invades, it can’t destroy your backups. Make sure to keep an off-site copy of your backups, just in case. I’ve seen companies lose man-months of work because they didn’t do regular backups. IT isn’t pretty.

I used to back up to CD-R until my drive self-destructed a couple of months ago. Now, I back up every night over the Internet, using an encrypted connection to a secure data center that can be accessed from anywhere in the world. It’s a great service that costs about the same as doing my own physical backups. I liked it so much I became a distributor. Check out:

http://www.ezbackup.com/leadership
if you’d like to download a 30-day free trial.

Teach people: don’t open attachments

Yes, the software designers could have made viruses harder to spread, but this week’s attack was an email attachment that requires people click on it to open it. When someone succeeds in getting people to violate their own security, it’s called "social engineering." The latest virus was a masterpiece of social engineering.

It was also a testimony to how little we’ve educated people about computers over the last five years. The rule is simple: never open an attachment you didn’t expect beforehand, even if it’s from someone you know. Period. Never. If the message appears to be an error message, don’t click. Is it a "cool screen saver?" Resist the impulse. How about "The latest version of that document you requested."? Punt. On the other hand, if you asked for a Monday status report from Sue Jenkins, and the attachment is "Sue Jenkins’s Monday status report.doc", you’re probably safe.

Don’t let IT set strategy by default

There have been a number of business failures due to strategic inflexibility caused by inflexible software and/or hardware systems. For further reading, see my essay "Are Your Junior Programmers Determining Corporate Strategy."

Learn how to use IT well

Like it or not, we’re living in a world pervaded by information technology. I’ve outlined a few major gotchas, from business to technical, that you should have some awareness of if you’re leading an organization. But the time is past when we could afford to ignore technology. It’s changing industries, it’s changing businesses, and it’s making us powerful and vulnerable in ways we must master if we’re to succeed in our organizations.

A postscript for the techie reader

Yes, I know perfect security is impossible purely through software. In fact, good security usually has to be built into a system’s design from day one. But most of the viruses we’ve seen over the last four year could have been prevented through better design. Microsoft could have created a sandbox mechanism and launched attachments in a sandbox. They could have created a security model that required downloaded code to request privileges before being able to do anything malicious. They could stop embedding full programming languages in all their products, with security turned off by default. And they could certainly use a separate stack and data space so stack overflows aren’t an invitation to run arbitrary code. They could even code in a post-1980 language that detects attempts to overflow the stack and doesn’t let it happen! They could even have created a firewall that blocks unexpected outgoing connections.

By the way, these aren’t fanciful ideas. All of them have existed in past systems or exist today. Tiny Personal Firewall gives you the sandbox. Zonealarm, the firewall. Java gives you buffer overflow protection. And disabling active scripting, ActiveX, and deinstalling VBScript at least helps with the programming language problem.

1. Microsoft likes to claim, "because we’re ubiquitous, hackers target us especially." That’s true. But I’m an ex-techie. I’ve looked at a lot of the failures. They’re due to bad programming practices and poor design. I would like to think that if they know they’re target #1, that would make them extra vigilant about such practices. back

2. Volume purchasers can often get non-activation-required versions, but smaller businesses are out of luck. back

Creating Your Identity as a Leader

,

Becoming a Leader is a matter of identity, not position.

Eric was about to scream. His latest plan somehow wasn’t moving forward. Once again, his employees left the planning meeting and went right back to what they were doing, as if his presentation hadn’t even happened. Eric didn’t realize that being “the boss” didn’t make him a leader. You can be a good CEO by mastering the job requirements. Leading people is not so clear cut. Leadership isn’t a job; it’s relationship. Without followers, you can’t lead. Cultivate the relationship beginning with yourself; create an identity of leadership.

Leave Your Follower Mentality Behind

The first step is deceptively simple: choose. You probably said “Yes” to your job as a conscious decision. Now decide you will begin leading…

This article is continued in “It Takes a Lot More than Attitude … to Lead a Stellar Organization!” Click here to purchase.

Building an Internet Business

Roles, processes, and concepts to know if you’re going to be starting your own Internet business.

Internet businesses are the hottest startups around in late 1999. What makes them unusual is that they’re technologically based business, yet the founders come from marketing, strategy, or other non-technical fields. The technology is simply an infrastructure issue, but it’s a big one.

This paper outlines some of the basic concepts for aspiring web entrepreneurs: How does the web site design process work? What are the design and technology roles that need to be filled in a company? And how does the type of your business affect your technology needs? There’s also a resource or two for web design.

How does the web site design process work?

Five skill sets are needed to construct a web site. Sometimes you will have different people for each skill. Less common is finding one person with multiple skills. It’s almost impossible to find a single person who can do all phases of development. (Which is why a site designed by a one-man shop usually looks as if it were designed by a one-man shop.)

Graphic design: the look and feel.

The most visible part of the site design is the graphical look and feel. This includes the color choices, the graphics, logos, and shapes that appear on the screen, and the positioning of the design elements on the screen.

Graphic design is best done by someone trained in graphic design (or has a naturally good eye). Web sites designed by non-designers look that way. And they don’t look professional.

Graphic design is enough for producing great looking print media, but graphic design is not enough when you are building a web site.

User Interface design: the sequence of screens and controls.

Web sites, unlike print media, are interactive. A graphic designer can make the page look pretty, but they may be clueless when it comes to interface design. An interface is the set of controls, links, and buttons that a visitor to the site will use to navigate around the site.

Interface design is all about cuing the visitor how to use the site. Where on the screen will controls be? Where will menus go? How does your visitor know to click somewhere? For example, it would be an interface design question to decide that main menu choices are always visible along the left edge of the screen. And subchoices appear along the bottom. Interface design also includes deciding when to use buttons vs. checkboxes vs. type-in boxes, etc. to interact with the user.

Good UI design involves usability testing, as well. Usability testing tries to make sure that a site really is easy to use, often by having real customers experiment with the site while being watched by the team designing the site.

As a general rule, the only authority on a site’s usability is the your target population. The team that works on the site is far too close to it to know how intuitive it will be to a new visitor.

Information architecture: the path through the site.

While the interface design dictates navigation within a page, information architecture decides how a visitor will navigate around the site. Information architecture chooses the main menu choices—how many, and what they are. Information architecture design uses the business goals of the company along with usability considerations to decide how to divide content across the web site.

During an information architecture discussion, decisions would be made such as whether a site should be organized around constituents or functionality. For example, an information architect could propose the following different ways to organize a travel agency‘s web site. In each case, the site has the same functionality, but getting to the functionality would be a very different experience for the user:

  Organization 1 Organization 2
Business goals
  • Reduce staff phone time.
  • Encourage people to think about vacation packages.
  • Provide immediate, quick information.
  • Establish personal relationships with clients.
Main menu
  • Vacation packages
  • Business trips
  • Personal trips
  • Make reservations
  • Search for a flight
  • Contact an agent
How visitors contact agents

Three menu clicks:
1. vacation package
2. custom vacation
3. contact agent

One menu click:
1. contact an agent

HTML and programming: the clockworks inside

Once the site has been mapped out and the design finalized, the images and text that make up the design have to be created and put together into HTML (the computer markup language used to create web pages).

If the site is more than unchanging pages of text (“static pages”), then the programming and HTML writing is the site is made “active“ and able to do something more than be a color brochure.

System integration: connecting elsewhere

Often a web site may have to connect to other computers. System integration is the process of establishing the links between your web site and other systems, and making sure that the right data gets sent between the systems at the right time. For example, a web site that does catalog sales may take orders from the internet and enter those into the catalog‘s manual order entry and financial systems.

What are the roles that need to be filled?

The different web site design phases described above are typically done by different people. You can have one person perform more than one of the tasks, however. Or, you can skip tasks to bring your site to market more quickly.

Most one-person or very small web design houses provide mainly graphic design or programming expertise. If you use such a shop, make sure you think about the information architecture, usability, and interface design yourself. With very few exceptions, programmers make lousy interface designers—they aren’t very good at understanding how the rest of us think(1). And graphic designers, while they can create beautiful things, don’t always have a good sense for how a user will move through a site interactively.

You can hire a high-end web design shop such as Zefer, Viant, or Scient. These firms will do a business case analysis and create a site whole information architecture, user interface, and graphic design combine to support your business case. They will also charge as much for your twelve week web design project as it cost to launch the entire company. Of course, they‘ll have it done in twelve weeks, while bringing the expertise in-house will take much longer.

If you do choose in-house development, you will need the following roles filled. One person may fill multiple roles:

Artistic director
The artistic director controls the ultimate graphic design, “look and feel” of the site. An artistic director usually has a background in graphic design.
 
 
Graphic designer
The graphic designer actually creates the design for your pages. It‘s a good idea to make sure you use a graphic designer who is familiar with the constraints of the web. Online design has different requirements than paper design, thanks to considerations like download times and restricted color choice. (See the book The Non-Designer’s Web Book by Robin Williams for more details.)
 
User interface designer
A user interface designer may come from a training or design background. Make sure they understand what makes things easy to use, especially on the web. Ask them what they think of Jakob Nielsen and his AlertBox usability column. If they say “Jakob who?” be skeptical.
 
Information architect
User interface designers will often give a lot of thought to information architecture, as well. A background in writing or editing can be helpful for an information architect, since writing involves organizing information over several pages into a logical presentation sequence.
 
Programmer (Java, JavaScript, C++, etc.)
Whether you need a real “heavy-hitting” programming staff depends on the complexity of your project. If your site interfaces with many outside systems and requires a lot of customer programming, it will pay off to hire some really top notch programmers (and be prepared to pay top dollar for them; every web site builder in the world wants these people right now).
 
If your system has many links to outside databases and systems, look for someone with prior experience in systems integration. If the system will be largely self-contained, you probably want someone with database and programming expertise.
 
Database programmer
I’m not sure this is a separate position. But if you are doing heavy database work (millions of transactions a day), you will be using specialized, high-end databases. These databases often require specialized knowledge to set up and use. While most good programmers can eventually pick up the knowledge, having someone who has mastered them before can be helpful.
HTML coder
HTML coding is a junior job. The trick with HTML however is that it’s tough to get things to look right on all browsers. A layout that looks great on Netscape 4.6 might look horrible on Internet Explorer 5.0. Ask prospective HTML coders about what they do to make their layouts look good on all platforms. If you want to be really tricky, ask them why it’s a good idea to have no line breaks inside a <td> tag in Netscape. If they have an answer, it’s a good sign.
 
System administrator
A system administrator keeps your machines and internal network up and running. They do things like install software, help you when your machine mysteriously crashes, and set up your email system. By the time you have 15 people in your company, you will probably need a full-time system administrator.
 
A common mistake Internet startups make is to have their programmers serve as system administrators. In fact, the two have overlapping but distinct skill sets. And system administration is rather generic, while the building of your web site is unique to you. Get a separate system administrator. You will be glad you did.
System architect
This is the person who has the overarching technical vision for how all the pieces go together, programming wise. It is typically a single person, and usually a senior software engineer. It is rare in a startup to have a system architect who is not also writing code (though it certainly happens).
 
Project manager
Probably the least appreciated technical position is project manager. Hire someone who has run technology projects before, and can also understand the business goals and objectives. Hire someone who has the strength of will to say “Not until our next release cycle” to you when you rush in with a “must-have” feature at the last minute.
 
High tech projects are utterly notorious for being over budget and very late. Several books have been written about the subject and still no one listens, because managers generally don‘t want to accept that something as ephemeral as programming can take that much time. A good project manager will help you balance your optimistic goals with the reality needed to make sure you have a product to ship.
 
A good project manager will be able to tell you about “QA” (quality assurance), release management, where common pitfalls are in technology projects, and how to schedule a tech project.
(You may wish to read the Inc. Technology article on hiring technical people for your business.)

How does the type of your web site affect your technology needs?

The more complicated your web site, the more you will need sophisticated technical people. In increasing order of complexity, here are the kinds of site you might create.

Brochures. An online brochure is the simplest site to create. You will need good design talent, but the only technical talent you will need is an HTML coder.

Off the shelf shopping carts. A simple ordering system created with off-the-shelf software will require a programmer, but probably a junior programmer will suffice.

Your own application. If you’re doing something that involves custom development, you will almost certainly need a project manager and at least one good programmer. Even if you are outsourcing your development, don’t underestimate the need for a full-time person whose job it is to manage the project.

An application that integrates with legacy systems, or systems owned by other companies (your clients’ or partners’ systems). Applications with a high system integration component often require a full complement of technical talent: project manager, system architect, senior programmer, junior programmer, and HTML coder.

What are resources for web projects?

For web site usability, the best site on the Internet may well be Jakob Nielsen’s AlertBox site. It has more research-supported information about how to make your site usable than any other site around. Nielsen also has an article describing how you can do usability testing quickly and cheaply.

For graphic design, check out A List Apart, a site devoted to understanding graphic design on the web.

For usability testing, check out the company User Interface Engineering at www.uie.com.

For HTML tricks and tips, Dave Siegel’s web design page is a good one (though somewhat dated).

Good Luck!




(1) If you’re a programmer, please don’t take offense. I was a programmer for 14 years, myself. I’ve met a couple good programmers / UI designers, but most of us are just too close to the programming to understand what truly is and isn’t easy for other people to use. return to text

A Venture Capital panel discussion Q&A, by Stever Robbins

Answers to some questions about venture capital

This page contains several different Question & Answer sessions with Venture Capitalists.

Panel discussion of women Venture Capitalists

Venture Capital is one of the sexiest forms of financing a business. It’s also one of the most expensive. I attended a wonderful presentation last night where a panel of VCs answered questions about their business. Many of the questions were things that people ask me when considering whether and how to pursue venture money. The answers to these questions come from Karin Kissane of TTC Ventures, Marcia Hooper of Advent International, and Vernon Lobo from Mosaic Venture Partners. I am extremely grateful to them for their excellent presentation.

What do VCs look for in a business plan?

VCs are searching for a business opportunity. Your plan has to convince
them that you have what it takes to turn an idea into a breathing,
viable enterprise:

  • Management Talent
  • A good market
  • A product
  • Support networks (e.g. other VCs, professional contacts, employees, etc.)

    • Deal Structure

The biggest convincers for a business plan reader are demonstrations of your competence. If you have a management team with real experience who have successfully launched a company in the same industry, you’ll be credible. If you have customers who have paid money for your product, you’ll be credible. If you have a clear presentation of your opportunity that shows you have a deep understanding of what it will take to make the business succeed (strategically and tactically), you’ll be credible.

If all you have is a good idea, no paying customers (or just letters of intent with no money behind them), no prior experience as an entrepreneur, and a shallow plan, you aren’t likely to make it past the first cut.

But I don’t know how to put together financials. Who knows how much I’ll sell?

Your business plan isn’t a crystal ball. You aren’t expected to predict the future. You’re expected to understand the size of the opportunity. If your product is useful at most to 1,000,000 people, they will pay 10 cents for it, and they only ever buy one, the total the company can ever make is $100,000 with 100% market penetration. Not a terribly attractive opportunity.

That said, decent financials show that you understand how the opportunity will unfold and what it takes to make it happen. By all means, bring in professionals to help you do the financials if you aren’t comfortable doing them yourself.

Should I have someone write my business plan for me?

VCs understand that not everyone is good at everything. When it comes to putting together detailed financials, or polishing the actual writing, bring in help. But when it comes to understanding your business-the market, the customers, and the product-you need to demonstrate that you understand the opportunity. Look for comparables.

I’m a visionary. I don’t have time for all that business plan and market research stuff. I just have a great idea. What should I do?

Team up with someone who has the skill to do all that thinking. VCs won’t invest in a team that doesn’t have time to scope out their opportunity. You don’t need to be the research arm of an investment bank, but you do need to show that you know who your market is, how it is segmented, the size of your opportunity, who your competitors are, and why you will succeed in that environment.

I don’t know who my competitors are.

Then find out. Buy competing products and investigate the manufacturers. Do web searches. Call reference librarians. And think broadly about who your competition is. Rolex doesn’t compete with Timex. Rolex competes with Mercedes Benz. Because Rolex isn’t in the watch business, they’re in the luxury status symbol business.

But we only need 10% of the market to be profitable…why won’t they fund me?

The other 50 funded companies who are developing competing ideas also need just 10% of the market apiece. Unfortunately, that adds up to 500% of the market. Is this a market you want to enter? If so, you need a persuasive case that you have a real advantage over those other companies. Otherwise, you’re just another generic gamble.

How long a time horizon do VCs have for their investments?

It used to be 7-10 years. Then it shortened to 3-5. In recent years, it’s become 1-5. It varies dramatically. One thing is sure, though: as internet time has begun to pervade the economy, VCs are expecting a quicker and quicker harvest.

In part, it is a function of where in the fund cycle the investment is being made. If it is at the beginning, there is obviously a lot more time than if it is the last investment in the fund. Although investors are always impatient, my [Vernon Lobo’s] personal bias is not to have funds come back as quickly as you have described. If I believe additional shareholder value, (in excess of a hurdle rate) can be created by continuing operations, I’d rather wait

How big an investment do VCs make?

Bigger all the time. More people have been investing in VC funds, and they have made huge sums which they are reinvesting. With such large funds, they opportunities to invest $3-$5 million at a time, in order to keep all that money productive. If you need less money, Angel Investors may be the way to go.

In addition, it may be better if the $3-$5 million is is staged in. I find that some entrepreneurs decide to ask for $5 million because they think that is what they have to ask for to get the VC’s attention, when all they really need to get going is $1 million. In the end, it is probably better for the entrepreneur (from a dilution standpoint), to take less up front, and stage in the capital, (as long as they meet their plan).

How big an opportunity do they need?

Many VC’s now are looking for a company that can grow to become at least $100 million (if not several hundred million) in revenue, and hopefully many multiples of that in value! If it doesn’t have that kind of potential it is not that exciting.

What kind of return do VCs need?

VCs need a high rate of return. Remember their business-they have investors that they are responsible to. With NASDAQ producing 50% returns, to be competitive, VCs need to offer their investors 70-80% returns.

But the situation is even worse. VCs have their share of failed investments. Their successful investments have to pay for the failed investments too, driving the returns they need on any single venture even higher.

On the other hand, one VC takes issues with the whole ideas of “target return.“ He writes, “We don’t have a “target” return. We don’t target a return any more than the entreprenuer does. When she/he starts a business, they usually don’t lay out a target return. Our philosophy is to become partners with the entrepreneur, so our objectives are the same…. We hope to make a lot of money!”

What do VCs want in a CEO?

Sales skills, the ability to attract the right team, an understanding of customer and markets, and flexibility. The business plan will change as the business and markets develop, and a CEO needs to be able to spot opportunity and steer the business to a successful (though perhaps unexpected) conclusion.

What’s the competiton for VC funding?

Advent International receives 10,000 business plans each year. They fund 30. You do the math.

What’s the best way to submit a plan to a VC?

Personal connections. One panelist couldn’t think of any unsolicited plans that her firm had funded. Another said some unsolicited plans had been funded, but she couldn’t remember who.

In short, work your network. The impression they gave is that unsolicited plans are virtually a waste of paper. But VCs do talk to each other. If you get your plan in one door, even if it doesn’t fly there, it may get passed around to other firms who will want to invest.

Do I have to tell VCs which other funding sources I’m talking to?

Nope. Keep ’em guessing. Late in the process, they will have to know so they know who their co-investors are. But there’s no need to be too specific in the early discussions.

What if a VC is already funding a competing venture? Will they sign a nondisclosure before looking at my plan?

Nope. You have to trust them. They have incentive to Do The Right Thing; their reputation is all they have. But legally, you’re on your own. They may sign an NDA (non-disclosure agreement) if you have a compelling trade secret, or late in the due diligence process.

An executive summary is a good way to summarize your opportunity without giving away proprietary details. Since a VC isn’t likely to read a plan in great detail if the executive summary doesn’t grab them, spend enough time on the summary and if you can pique their interest without revealing trade secrets, the NDA may be possible later.

How many VCs should I bring into the deal?

More VCs mean more connections and more resources for you to draw on. Two or three is a good number to have on board.

What should I look for in a VC?

Look for personality and fit with the partners who will be on your board. Personality clashes have destroyed companies; it’s better to wait for a good fit than to accept quick money with someone you can’t work with.

It is also perfectly acceptable to ask your venture capitalists for references. Ask for:

  • a current portfolio entrepreneur
  • a past entrepreneur whose company failed
  • a past entrepreneur whose company succeeded
  • a past entrepreneur who got booted from their company by the VC

Good Luck!

*****

Red Herring Interviews

Red Herring has published some excellent interviews with Venture Capitalists about what VCs look for in a plan. In addition to VentureCoach VC Q&A, check out:

Benchmark Capital’s Andy Rachleff interview parts 1&2:
http://www.redherring.com/insider/1999/1124/vc-vcps.html
http://www.redherring.com/insider/1999/1201/vc-vcps.html

Divine Interventures’s Mike Santer interview 1 & 2:
http://www.redherring.com/insider/1999/1117/vc-vcps.html
http://www.redherring.com/insider/1999/1120/vc-vcps.html