Category: Entrepreneurs

BE THE BEST/”COMMODITY” IS A STATE OF MIND

"Be the best. It's the only market that's not crowded."

—George Whalin, Retail Superstars: The 25 Best Independent Stores in America

Tom's Credo: "Commodity" is a state of mind—a loser's state of mind. A-n-y-t-h-i-n-g can be significantly (dramatically?) differentiated.

Some time back I met a senior IBM sales exec. She said her breakthrough had come years before when she was a rookie salesperson for Moore Business Forms. Her product was about a third more expensive than that of their primary competitor. "Our bosses told us," she said, "that it was up to us to dig into the client's operations, be helpful, and find a way to merit the price premium." That is, she and her colleagues were effectively told to de-commoditize a rather ordinary product. "The lesson has stayed with me and paid off throughout my career," she concluded.

The local plumber or electrician does not provide a "commodity service" ...

if he/she knows the job
if he/she is learning new tricks all the time
if he/she has a good disposition
if he/she shows up on time
if he/she is neatly dressed
if he/she has s spiffy truck
if he/she fixes the problem in an elegant and timely fashion—and clearly explains
what was done and why it was done this way or that
if he/she cleans up so that after the fact the client could "eat off the jobsite floor"
if he/she volunteers to do a few tiny tasks outside the one at hand—gratis
if he/she calls 24 hours later to make sure all is well
if, perhaps, he/she even goes so far as to create a blog with occasional posts
featuring practical tips for his clientele—a tiny Virginia swimming pool company became a literal "best-in-world" following this social-media strategy

He/she ain't a commodity!!
(I call such personal de-commoditization ... DWPF/Distinction Worth Paying For.)

My mind returned to that hypothetical plumber/electrician a few days ago as I write. I was on my way to pick up plans from a local engineering firm for a septic system repair. I was driving through a moderately populated suburban area about 50 miles south of Boston. I passed a modest-sized quadrangle with shops and offices. The roadside sign included:

• Quilt shop
• Wedding-cake provider
• Swimming pool sales, service, and installation company
• Tailor offering alterations
• Medical billing service
• Solo lawyer
• "Be Fit"/Fitness center
• Etc.

There are thousands upon thousands of such setups around the country—fact is, they employ the majority of us. And another fact is that each and every one has the opportunity to be no less than a local ... Superstar. No, not a jillion-dollar "unicorn," but to be like that hypothetical plumber/electrician cited above. To be special. Very special. To "be the best." To be an "employer of choice," too—not hiring dozens, but with sustained stellar performance and growing reputation, increasing staff size from, say, three, to five or six or nine. And the "jobs added" would be damn good jobs. Probably not high-paying jobs, but moderate+ paying jobs at a "great company"—the three or five or six or nine employees of this little "be the best" outfit would learn a bushel of good habits and pick up precious hard and soft skills that would increase their "employability quotient" and, thus, serve them well in the years, even decades, to come.

Despite at first blush what appear ordinary-sounding services, none of these operations has to be a "commodity." "Special"/"Excellent"/"Wow!" is not an opportunity open to a chosen few! These differentiating attributes are available to anyone with a vivid imagination, a sterling work ethic, a passion for improvement, and a caring attitude.

Oddly enough, after picking up my septic plans, I went on to get a much-needed haircut. I was a bit early, and sat down to wait. As fate would have it, there was a small framed motto on the magazine table next to me: "When you support small business, you support a dream." What a fitting end to my wee local journey.

Dream on!
Excellence or bust!
Be the Best!
Become an employer-of-choice!

(DREAM BIG/BE THE BEST/PROGRAM ONE MILLION [GOOD!] NEW JOBS: ONE MILLION SMALL BUSINESSES [<10 EMPLOYEES] COMMIT IN 2017 TO PROVIDING THEIR CUSTOMERS WITH A LEVEL OF EXCELLENCE AND "WOW" SUCH THAT EACH OF SAID BUSINESSES WILL PROSPER TO THE POINT OF HAVING TO HIRE ONE NEW EMPLOYEE—WHOM IN TURN THEY WILL TRAIN IN EXCELLENCE/"WOW" TO THE EXTENT THAT THE NEW EMPLOYEE'S LIFETIME JOB PROSPECTS ARE EXPONENTIALLY IMPROVED. BOTTOM LINE: F-R-O-M-I-N-D-I-V-I-D-U-A-L-TO-C-O-M-M-U-N-I-N-I-T-Y-T-O-N-A-T-I-O-N-E-V-E-R-Y-O-N-E-W-I-N-S- B-I-G-T-I-M-E.)

Surprising Oldie Stats

These few snippets are from my slide deck. (Post occasioned by tweetstream on the topic, 06.23-24.14.):

USA 1996-2007, Entrepreneurial Activity (firms founded): 
Highest rate: Ages 55-64 
Lowest rate: Ages 20-34 
(Source: Dane Stangler, Kauffman Foundation, reported in the Economist.)

"The average age of a start-up founder is 40. And high-growth start-ups are nearly twice as likely to be launched by people over 55 as by people 20-34."
(Source: Vivek Wadhwa, Kauffman foundation, reported in Time/0325.13.)

Forrester Research: "[Age 55-plus] are more active in online finance, shopping, and entertainment than those under 55." (Sorry, no date available.)

Forbes on Social Entrepreneurs

Acumen Fund founder Jacqueline Novogratz is on the 19 December Forbes cover. The lead article, which I highly recommend, is titled "Innovation Saves the World: The Social Entrepreneurs Making an Impact."

As usual, the magazine offers as its last page a collection of "Thoughts," in this instance "Thoughts on Philanthropy."

I was utterly taken by the pair below:

"Too few millionaires who aspire to win fame as philanthropists begin at home, among their own workers. To grind employees and then donate a million dollars to perpetuate his name is not a particularly laudable record for any man to live or to leave behind him."—B.C. Forbes/1917

"Many people ... give extensively of their time and talents to help others. Gifts of this kind often prove to be far more valuable than money. A struggling child, befriended and nurtured by a caring mentor, receives a gift whose value far exceeds what can be bestowed by a check."—Warren Buffett

Why It's Time To Compete on What You're Thinking

[Our guest blogger is Ian Sanders. He runs an ideas consultancy where he creates and delivers ideas to solve challenges, facilitate growth, and help businesses stand out from the crowd. His new book Zoom! The Faster Way To Make Your Business Idea Happen is due out in November 2011.]

It's the holy grail for every business, whether you're a freelancer, a start-up, or an established brand. How the heck do you stand out in a crowded market? Awesome product functionality or a niche specialty may only get you so far as a differentiator. So instead of marketing your product benefits, try communicating what you're thinking: your personality, your ideas, your attitude. Communicating your thinking—thought leadership marketing—can be really effective in resonating and engaging with your target audience.

Of course this is nothing new. We've always made brand choices based on what businesses think. That's why we fly Virgin, drink Starbucks, ride a Harley. We get what a brand stands for and we either line up behind it, or we run a mile.

Here's the opportunity. There's a long tail of small businesses right down to the one-person work-at-home enterprises that spring up by the hundreds every waking hour. This is where the marketplace is at its most abundant: similarly qualified, similarly positioned, similarly priced, smart boutique businesses. Creative agencies, digital companies, copywriters, web developers. Who do you pick if there's only a cigarette paper between their offerings? You pick the woman who demonstrates her expertise via her weekly blog; the business that provides a monthly video update of industry news; even the business owner who posts a daily picture of her products on Instagram. In sharing their expertise they're also giving an insight into their personality. So let's redefine the genre here: "thought leadership marketing" doesn't just have to be about publishing academic papers or writing posts for the Harvard Business Review. It's whatever content works for you, your business, and your audience. A blog post, a tweet, a newsletter, a video sharing your business tips, even a blackboard out on the street communicating your "Thought For The Day."

Back in 2008, Tom told the audience at the Inc. 5000 conference "If you're not blogging, you're an idiot". He was right. And he'd probably say the same today about Twitter. Because together with LinkedIn, Google+, (and whatever next month's hot new platform is) we have a bunch of tools available that provide a free platform for thought leadership.

The good news is that communicating your thinking does not discriminate on size: instead of s/he with the biggest budget wins, it's who can demonstrate the original ideas or the fresh thinking. So if you're a freelancer or small business, why aren't you blogging? Why don't you put your thoughts out there, why aren't you shining a spotlight on your DNA? Don't assume it doesn't matter—customers want to deal with experts and they need to see evidence of that. There's no point making claims about how innovative your business is if you can't back it up, if you can't prove you're living and breathing it.

King Of Shaves is a shaving brand that's become a success in the UK and is now entering the US market. Founder Will King may not have Gillette's ad spend but he plays out a David vs Goliath tale, competing with the big guys via Twitter and social media. Will is doing more than selling razors and shaving foam; he's engaging with his audience 1-to-1 through storytelling and giving advice to the entrepreneurial community. That's how he—and his business—stand out.

Don't miss out on the thought leadership marketing opportunity. Remember, you don't have to be the biggest or the best to stand out; you just need to have something interesting to say.

Tom's in the Top 5

Tom's tweets were recommended by OpenForum as one of the Top 5 Twitter feeds on Entrepreneurship. He joined Chris Brogan, Pam Slim, Becky McRay's SB Survival, and Anita Campbell's Small Biz Trends. We all know that using social media can be a powerful tool, no matter your industry, yet it's challenging to do it well on a consistent basis. Tom's been working hard to not only find the right balance of conversation and offering bits of wisdom at Twitter, but also tweet on a daily basis, so this was welcome praise.

The Global Detective

Tom's good friend Alan Webber has a new ebook out called The Global Detective: My search for clues, cues, and views in the lands of tall blonde people. Alan went on quite a journey to discover what's happening with entrepreneurs the world over, and this is the first in a series. As the cofounder of Fast Company, he has a particularly unique perspective. (And we believe he wore a fedora.)

Swashbuckling: Bo vs Zorro

In a blog post titled "Business Book(s) of the Year," Tom named George Whalin's Retail Superstars as his #1 for 2009. Why? Tom says, "I think Whalin's message is perfect for 2009. We will, over the long haul, rebound from our colossal economic and unemployment mess on the backs of our entrepreneurs. The big guys may re-stock their payrolls a bit, but the generals, GE and GM, ain't the answer. And among the entrepreneurs, only a few, statistically, will be from Silicon Valley. To be sure, the best of the sexy entrepreneurs spawn whole new industries, but the blocking and tackling when it comes to jobs and productivity will come from Sevierville TN and Fairfield and Hartville OH and Frankenmuth MI and a hundred hundred other towns and small cities whose names, mostly, you haven't heard of."
Tom goes on to mention that a great companion book to Whalin's is Small Giants: Companies that Choose to be Great Instead of Big by Bo Burlingham.

In response, one of our frequent commenters, who goes by the name of Zorro, posted:

Tom seems determined to have the US become a second rate power. The companies covered in Small Giants include a deli, a record company, a beer company, and a company that makes those things that go "beep-beep" when a truck backs up. The Retail Superstars covers nothing but retail stores. Somehow this is going to transform our economy—if it does, it will make it look exactly like it did from 2001–2008. Meanwhile, China has just turned on the world's fastest train route. We make great sandwiches, beer, and back up alarms—the Chinese put in place the world's fastest commuter train.

Bo Burlingham then weighed in:

Well, Zorro, I have to wonder if you actually read Retail Superstars, or Small Giants, for that matter. George Whalin made absolutely no claim that the companies he was writing about were going to "transform the economy," nor did I make any such claim about the Small Giants. That wasn't the point of either book, and that mentality has nothing to do with why Tom liked them. My point was that bigness and greatness have nothing to do with one another. George's point was that the greatest retailers (judged by the standards of their industry, which are the only ones that matter) are actually the independents. You may think that such companies are unimportant, but the U.S. economy would collapse without them. Are you aware, for example, that 50% of the US workforce works in companies with 20 to 500 employees? That's where all the innovation is coming from as well. Why? Because big companies are bad at it. That's why they buy small innovative businesses. That segment of the economy is essentially America's R&D lab. Among other things, they are coming up with the innovations that are going to utterly transform the world of manufacturing in the next 10 years and deprive China of its cheap labor advantage—because the labor component will become far less important than the ability to develop effective business systems and management, which is an area in which the Chinese stink. And where do you think the major manufacturing industries of today—the innovations that have created our world—have come from? Did you miss the 1980s and 1990s? I do worry about the future of that kind of entrepreneurship in this country, but the big threat comes not from China and India, but from our own protectionists, big unions, and government over-regulation. (See Sarbanes-Oxley, and then ask yourself why there were no IPOs in 2008, and how that stymied the development of the manufacturing powerhouses you apparently believe are important to our future.) As for the Retail Superstars and the Small Giants, they have a different role to play that is every bit as important as "making things." (And BTW, the back-up alarm/emergency light company you deride makes a lot of things, and it's the world leader in what it makes.) Those companies are the heart and soul, not just of our economy, but of our society. They are community leaders in thousands of cities and towns around the United States. Their practices shape the communities we live in, the values we live by, and the quality of the lives we lead. Yes, they are anathema to big labor, because they aren't unionized. That's why big labor is pushing card checks. Then again, their working standards and efficiency far exceed that of the unionized giants, whose lunches they regularly eat.

The Mess Will Save Us.
Eventually.

We tend to think of the jobs economy in terms of jobs lost at the likes of GM and jobs added at the likes of Google. And thinking in such a manner is misleading, and downright dangerous.

The fact is that the American economy in particular is an economy of churn—always adding and subtracting jobs at an incredible rate. Forbes (16 November) presents some stunning statistics:

Between September 2008 and September 2009 we lost about 6 million jobs. That's a crushing blow no matter how you look at it. But if you think that the likes of propping up staggering giants such as GM is the answer, think again.

Question: How do you (we!) arrive at a loss of 6 million jobs?

We added—yes, I said ADDED—51 million jobs.
And we lost 57 million jobs.

That is, bizarre as it may seem, in the space of a year there was a churn of over ONE HUNDRED MILLION jobs. (Micro-tizing the math, we didn't "lose a job"—on average, we created 8 jobs and lost 9 jobs for a net of minus 1—and repeated that musical chairs drill enough times to end up 6 million in the hole.)

And this is how it always goes, though typically, thank God, the pluses exceed the minuses.

While the above offers not a smidgeon of relief to jobless Jane or Joe next door, there is long-term good news imbedded in these stats. We are not in fact dependent on a jobs recovery at GM or Chrysler to get us back on our feet. We are dependent, over the long haul, on an out-of-work employee starting a Web-based business and through valiant effort creating three new jobs in the next 18 months. We are dependent on a nervy local electronics dealer stealing a page from Best Buy, and adding his own 3-person "Geek Squad." Etc. Etc.

The message of long-term relative American economic effectiveness is churn, or the "gales of creative destruction" as the economist Joseph Schumpeter put it. Put simply, we "do" churn, painful though the constant dislocations may be, better than anybody else—i.e., our labor markets are the least sticky outside the likes of India or China. I lived with astoundingly productive mega-churn for over three decades in Silicon Valley. It isn't pretty—but over the long haul it works, and works a helluva lot better than government-based bets on particular big companies.

There is a four-letter word for depending on big companies and incentives aimed at big companies to pull our irons out of the fire. Namely ... dumb.

(NB: I apparently coined the term "Brand You." And my pal and our Cool Friend Dan Pink gave us "Free Agent Nation." Never have these ideas been of such profound importance. The issue of Forbes cited above refers to a 2006 Government Accountability Office study that estimates that, hold onto your hat, 30 percent of all U.S. workers are free-lancers or part-timers who are not pocketed into any of the Bureau of Labor Statistics worker stats categories. Unreported annual income from the "informal" economy may be as high as $2.3 TRILLION.)

My Heart (and Body) Are in San Francisco, God's Gift to City-hood!

I spoke at an Inc. magazine event last night in San Francisco, commemorating the winner of an entrepreneur-to-be contest with a hearty financial prize. Incidentally, in the name of Chinese ubiquity, much on our minds these days, the event is sponsored by the powerhouse Chinese B2B outfit—Alibaba.

In preparing, I put together a list of ten key factors that I believe characterize entrepreneurial excellence ...

Entrepreneurial Excellence TEN

  1. "Insane" Passion for and commitment to the idea.
  2. Can explain the idea in Simple English and Excite others about its Uniqueness in ONE MINUTE (or less).
  3. Good Accountant/"Wise-man (-woman)"/50-50 Partner.
  4. Devotee of the Experimental Method ("Try it. Now.")/Master of "Plan B"/Relentless/Resilient.
  5. Patience in Hiring/"Great Place to Work" from the get-go.
  6. "d"iversity/M-F balance.
  7. Exude Decency-Character-Integrity.
  8. Playfulness/Fun.
  9. Sweat the details (Execution = Strategy).
  10. EXCELLENCE. Period.

[For the PPT slides, you can use this link.]

"Entrepreneurial Society"

That's what Adrian Wooldridge and the Economist call our emergent global economy, current madness notwithstanding. The Americans are still the undisputed leaders, and they're likely to hold the top slot for quite a while, but both the Chinese and the Indians understand the game almost as well as we do. And the Europeans and Japanese border on hopeless.

I heartily commend to your attention "Global Heroes: A Special Report on Entrepreneurship"—in the 14 March Economist.