| The ready, Fire AIM concept - your business is at war every day It's ready Fire AIM, not ready, aim fire! Today's fast-paced high technology, and networked world requires successful start ups to operate under the rules of- ready, Fire, AIM, or more appropriately ready, Fire, AIM AIM AIM!!
And ready, Fire, AIM is not undisciplined at all as many might think. It's just the opposite, very disciplined! It's smart teams, smart money, smart adjustments to hit the right MOVING targets every minute that you're in business!
Most of us, even the 20-plus year old dot.com millionaires, are old enough to remember the 1st Gulf war (and now Afghanistan and Iraq). What we saw nightly on TV. We all watched the war unfold in near real time as "smart weapons" were fired, and THEN aimed in on their targets, with amazing accuracy. What's been ingrained in our thinking over the years is the term "ready, aim, fire" from the days where military warfare was once was ready, fire, aim. Those days are long gone. But why is ready, aim, fire still the mode of operation of so many companies today?
What business, large or small is not at war every day? It's no longer planning and studying galore (the ready phase), then hiring a perfect team and raising tons of money with a perfect 60 page business plan (the aiming phase), followed by development and launch on a perfect target with millions of dollars spent on marketing and PR (the fire phase) and then just sitting back and watch success happen.
Notice that I do not capitalize the word "ready". Fire gets one letter capitalized and AIM is all caps. Why? Because that's the level of importance you should give in time and energy to each of these phases. Once you Fire, and you have to fire fast, then it's AIM AIM AIM. And AIMING never stops. What this means is that your company needs smart teams aiming at the right moving targets. Your company needs the right smart intelligence infrastructure to know that to aim for and when and not to hit those moving targets. Gone forever are the ready, aim, fire days of business and warfare.
Smart Teams = Smart Weapons
Now, it's a SMART small team with a hot idea followed by a well thought out war plan (often a convincing PowerPoint presentation and executive summary of the market opportunity and how that SMART team will EXECUTE FAST - the ready phase. Then, it's Fire and AIM AIM AIM.
This issue talks about smart teams as your smart weapons. You're at war every day, every minute that you're in business. Your company needs a fast command and control system that can constantly fire and AIM smart weapons at moving targets.
We all watched again recently the nightly news as smart weapons were fired and then aimed in on moving targets. What business objective today is not a moving target, whether it's a market that you're trying to capture or a partnership or strategic alliance that you're trying to close?
Yet, how many start ups today still operate in ready, aim, fire mode, once they identify the market (ready), get the VC funding (aim), it's off to firing oftentimes not paying attention to what's going on the business battlefield every day!
There is a concept called the OODA loop. OODA stands for observe, orient, decide and act. Military researchers studied why some fighter pilots got shot down and others didn't in the Vietnam War. Their conclusion: those pilots with the fastest OODA loops didn't get shot down.
Look at your company's OODA loop. How many can observe and orient and than can't decide or act fast enough. Sound like a lot of dot-com companies we know of today? Watch those with the fast OODA loops survive and thrive. Watch those who are operating like "dumb weapons" miss their targets and blow up.
Your best smart weapons are your SMART teams. If you have not spent a LOT of time hiring the best people AND empowering them to act, then all you have is a company with a lot of dumb weapons. And a company full of dumb teams is a dumb company.
What's the CEO's job? Your job is to empower your smart teams with the smart command and control systems, the guidance. And oftentimes this means having AT LEAST one person on the team who knows what's going on!!
This DOES NOT mean micromanaging your teams, just the opposite. It means the CEO needs to be in touch with what's going on in the industry. It means knowing what moving targets are worth firing your smart teams at. It means constantly adjusting and sometimes letting a smart weapon go before getting shot down yourself trying to hone it onto a moving target that you'll never hit. It means incredible focus on what's important at the moment. It DOES NOT mean firing at ten or twenty moving targets. It might just mean firing at ONE moving target.
Let's talk about your corporate culture. And I'll talk more about that in the next newsletter. Your whole corporate culture has to be one of ready, Fire, AIM AIM AIM. Think about it. You can build your whole control system (i.e. corporate culture) around the concept. Why not use the ready, Fire, AIM concept for your staff meetings. Ask your team questions like, "What are the important moving targets we should be firing at? Or "Are we ready to Fire yet?" or "How's the aiming going?"
No one will ever admit that they're a dumb company. But who does not want to be a smarter company?
Smart Money and Board = Smart Weapons
This is a continuing series on the ready, Fire AIM or "smart weapons" way that businesses, large or small, have to operate if you're in business to succeed.
The last newsletter talked about smart teams as your smart weapons and we talked about the OODA loop - observe, orient, decide and ACT and how those companies having the fastest OODA loop succeed.
What about ready, Fire, AIM and your investors and your Board?
Do Venture Capitalists operate by the ready, Fire AIM AIM AIM method? Sure they do! It's all about risk investing and managing that risk-AIMING. We saw a lot of ready, and firing going on with dot-coms having no revenue plans when the market supported that frenzy. But look at those who still succeeding despite the market bust post April 2001. Many companies who were aiming with smart teams and smart investors before that time are still in business
But, not all VCs or investors are alike. While there's still plenty of money available to entrepreneurs, even after the post-April market correction, all money is not the same. There is smart money and dumb money. What would you rather have?
Remember, you're not raising money, you're selling a piece of your company. Who do you want to target to sell a piece of your company to? From day one, even when you're courting Angel investors go for the smart money. The smart money adds value. The smart money backers will be there to help you with the aiming. The smart money that just bought a part of your company will be right there inside your OODA loop helping you aim aim aim. The dumb money investors wont be there when the chips are down.
Incredibly smart and experienced teams can succeed despite dumb money, but why take that risk? You're at war every day and dumb money equals more dumb weapons that you do not need in your arsenal.
A few words about board members - board members (and investors) should bring three things to the table - wealth, wisdom, and work. The best investor or board member brings all three.
In summary, you need smart weapons to win and smart weapons are:
- Smart money
- Smart board members
- Smart executives
- Smart teams
Passion = Ammo
I'm going to divert from ready, Fire, AIM to talk about something closely related- PASSION! Someone once said that the purpose of life is: "to love, to work and to play." Life is about putting passion into all three! But, let's focus on work. On priorities, your priorities for work should be-
1. Have fun!
2. Make a difference
3. Make money
And these priorities should be in this order. Never get them reversed. If you're having fun, you'll make a difference and if you're making a difference, you'll make money and get promoted, etc.
Have you ever seen the warning signs on every hot tub in California, probably every one in the U.S.? Rule number 4 says...
" Hot water immersion while under the influence of alcohol, narcotics, drugs or medicines may lead to serious consequences and is not recommended."
Now, apply this hot tub rule to business-
"Hot business immersion while under the influence of textbook teaching, no real life experiences, long meetings and boring people can lead to serious consequences and is not recommended"
Reverse these priorities and see how long you last and how happy you are. Try taking a job where you make a lot of money but you're not making a difference or having fun. Where's the passion?
What's this all have to do with startups? Answer: A lot! Just ask any VC how many companies they might have funded had they seen the right passion in the team.
Try to be successful without passion. I dare you! And while you're at it, what's wrong with having a little fun?
Your enemy - competition
I've talked about how to run your company in the ready, Fire, AIM AIM AIM mode of disciplined leadership. But what about your competition, how do you deal with competitors who are experts at practicing ready, Fire, AIM AIM AIM?
Whether you like it or not, business is about being at war - every hour of every day. The most famous writings in this area come from the ancient Chinese strategic manuals "Sun Tzu's Art of War, by Sun Wu. Many translations exist today and "The Art of War" is mandatory training in business schools and boardrooms around the world.
Let's talk about a few of Sun Tzu's principles from Sun Tsu and the Art of War:
- Psychological defense: The way to draw an enemy out of a secure position by attacking a place of strategic value, somewhere the opponent is sure to go to the defense. This is a perceived exercise of tact as well as an apparent lack of tact.
- Appearing to be small and confused: This is exercising the principle of deceit for strategic advantage in hostile situations. In other words, intentionally giving the appearance of being in a state of confusion and lacking skills, the purpose to make your enemy complacent and fearless of you.
How does this apply to start ups today? Well, you can argue that "stealth" start ups that spend a lot of time and energy creating an aura of mystery, intrigue, and PR practice these principles well -- NOT! Appearing smaller and more unorganized than you are can be very good. Appearing bigger and hotter than you are often works to your disadvantage. When you finally pull those covers off your stealth company, either to the VCs you're courting or to the world, you better really have something. You decide here!
Do not be predictable to your enemy! Predictability means vulnerability. Your competitor knows how you will react thus being able to react against you. Sure, you can play this game in the marketplace for months or years, while ignoring your business and focusing solely on outmaneuvering your competition's every move. But in the end, you'll probably be the looser. Also remember - the best battle won is one that you never have to fight.
On predictability, practicing this art on your competitors can be powerful, but practicing it inside your company with your own people is dangerous. Trust among your team is both a glue and a lubricant. Trust is the glue that holds a team together and trust is the lubricant that allows a team to act fast and attack the right targets.
Finally, what one three letter word destroys more companies on the face of this earth, both large and small than any other? Ego! We've sure seen a lot of that in the pre-April dot-com heyday and the post-April dot-com shakeout. On a scale of 1 to 10, high ego is good. But an ego of 12 - watch out!!!
Speed and who is in charge?
Who is in charge? No matter whether you're a startup that's two days old or a multi-billion dollar corporation, someone has to be in charge! Any organization of people put together to accomplish an objective needs a leader, someone who is responsible for setting up the "smart weapons" aiming system - the heart and soul of execution.
There is a big difference between leading and managing. Managers do things right. Leaders do THE RIGHT THINGS! Sure, every leader has to be a manager, but every manager is not a leader. Doing the right things inside a company with no aiming system in place or within a company aiming at the wrong targets is a formula for disaster. ONE person has to be in charge and doing the right things, and doing the right things means setting the direction of the company.
Ok, so you say "We're a brand new startup with a killer idea and a killer team, but none of us is smart enough to be in charge, we can operate as a team and agree on all key issues before we act." This won't work, it's all about trust and speed! What happens the first time that the team cannot all agree on an important issue/action? Even if you know that you need to find a President or CEO in the longer term, appoint someone to be in charge now. And that someone might not be the Founder or the person having the most equity.
On boards and investors - it is not their job is to lead the company. They provide the funding and help set the direction, but they are not responsible for execution. It's that one leader who is responsible for company execution, no one else! Sure, that leader's job is one of the loneliest in the world, and it's known that "the higher up the flagpole you go, the more your behind hangs out." Smart teams can hit the right targets, but even the smartest team cannot run a company, some ONE person has to be in charge, not even two-- one! Period.
And if the person leading yourcompany right now isn't the right one - get a new one fast!
Size matters when you are raising money
Size does matter! When it comes to raising money for your startup, size definitely matters. Whether it's your first check from an angel investor or your $30 million Series C round, size matters. In the ready, Fire AIM AIM AIM world your funding is your ammunition to execute at hitting key targets. Raise too little money and you stand a good chance of loosing the battle early. Raise too much money and you might very well be worse off than had you raised too little. It's all in the AIMING!
First, remember, you're not raising money - you're selling a part of your company in return for ammunition to meet key business milestones. And when you sell a part of your company, be it to angel investors, VCs, or corporate investors, make darn sure well that you have smart money - smart money equals smart ammo equals smart weapons.
Second, on raising money, don't just say to yourself, "I need to raise enough money to last a year." What does this mean? You might very well sell a substantial part of your company to get a year's worth of burn only to discover at the end of that year that you did not hit the right targets. Then what? Answer -- a high probability of a "down round" or a round of much lower valuation than you expected. If you're a very early stage startup looking for angel money stake out key milestones that you need to achieve to be ready for a Series A VC round and then set out to raise that amount from angels, plus a little more for breathing room. Likewise, if you're ready for your Series A round, raise enough money to MEET KEY BUSINESS MILESTONES that will assure a significant bump up in valuation for a next round. I know, this all sounds so simple. It's HARD work, you're always raising money and there's never a guarantee that you'll meet the key milestones with the money that you raise.
Third, raising too much money can be worse than not raising enough. Show me a company with less than $50,000.00 left in the bank and delivering on key business milestones versus one with millions in the bank and hitting the wrong targets and squandering their money. Which one would you rather invest in for the next round?
You be the judge, size does matter when you're raising money!
This should be FUN!
Where's the fun? A few newsletters ago, I talked about passion as an important element of corporate culture. I talked about personal work priorities being, in order:
1. Have fun!
2. Make a difference
3. Make money
Why do many companies put fun last? Startups are enough high stress every minute of every day. The ready, Fire, AIM, AIM way of doing business is stress - the constant stress of being at war every day. And having fun doesn't mean partying all the time. It means knowing when to relax. It means knowing when to be intensely SERIOUS, even serious about fun and relaxation! It means knowing when that key software developer is stressing out on a high priority project and taking her to lunch. It means knowing when the team needs an afternoon off to socialize, build teamwork, know what each other does. It means all should be able to handle criticism, even the CEO and in the right spirit.
Of course, partying when the company is missing all key milestones and loosing the business war accomplishes just the opposite. Having a big party the day before a major layoff is not smart.
Know when to relax, know when to celebrate, and know when to work. On second thought, your team is always working - what's wrong with work interspersed with the right dose of daily fun? Is your corporate culture one where people can't wait to get to work each morning? If not - worry! One can spot a healthy happy corporate culture, all it takes is a short ride up the elevator with a few employees of a startup, try it sometime.
As we watch dot-coms continue to blow up every day, we have to ask ourselves how many might still be in business today if they had a corporate culture that supported fast change and adaptation. A little fun energy within a company goes a long way -- the fun translates to positive action -- COMMUNICATION and a corporate culture that adapts fast to win the war!
Of over 250,000 new startups a year, less than 650 make it to IPO. The odds are against you with the wrong corporate culture. A fun culture is an open culture and an open culture has a much better change to survive to win!
Situational Awareness and the War of Business
As we all reflect back and many try to rewrite history on the great dot-com boom and bust I can't help but think of that term used to assess what actions are the right ones to take in war and the war of business every day - situational awareness!
We're all tired of hearing the post-April assessment of what went wrong by all the experts and we have yet to see the full impact of the fallout. Many might argue that it was a kind of "herd mentality" that got one company after another funded and riding the IPO roller coaster. At this point, it doesn't't much matter. It's over, but what can we really learn and especially what should entrepreneurs today take as a lesson in situational awareness or market awareness. Have we learned anything?
Back in the early '90s I listened to Ira Brodsky, President of Datacom Research Company, give his emphatic speeches that ALL technology adoption follows three distinct paths to adoption in order:
1. Business vertical
2. Business Horizontal
3. Consumer
Name one new technology that did not follow this path to adoption. With the rate of technology adoption increasing it's easy to forget history. Let's just look at three technologies that have impacted our lives most in recent history - E-mail, PCs, and cellular phones.
Email: The Department of Defense research invented and developed E-mail in the 1960s, it was not until the mid-late 80s, probably closer to 1990, when E-mail adoption reached the business horizontal stage. And when did E-mail reach mass with the consumers? HotMail and AOL mail were in the right place at the right time to take advantage of E-mail consumer adoption.
PCs: It was the early '80s when the PC came onto the scene. Who used the PC first? Not the consumer. It was those early adopters in business who started using the PC for selected vertical applications from spreadsheets to desktop publishing. Then it was mass PC adoption for business horizontal use, and finally, sometime in the '90s mass PC adoption in the home.
Cellular phones (and pagers): Again, both of these technologies followed the same three-phased paths to adoption. The cell phone was around for over 10 years before it started becoming a consumer item.
Look at the false starts with PDAs and pen computing all led by people who believed that technology would go from the labs directly to mass consumer adoption. Even the successful Palm Pilot followed these three phases and is only now graduating to the early phase of consumer adoption.
So, what happened that made us all think that B2C e-commerce would deviate from this path? Suddenly the worldwide web came to be and we seemed to forget that the WWW is really only a visual communications infrastructure.
But then what happened. Somehow massive "groupthink" took over and many thought that the consumer world would practically overnight go from bricks and mortar to clicks and mortar. And of course, throw the TV advertising model that we all were used to on top of that and we had more feeding frenzy. Then overnight, almost as fast as it all happened-poof!
Where are we today? We're probably half way through the first phase of business vertical adoption for e-commerce. We're just starting to learn and adopt in the business horizontal phase. So where is B2C? It's there now, and finally reality, but first we all had to experience and survive the last dot-com boom-bust cycle.
If you're an entrepreneur working on your business plan, pay attention to the technology and market adoption phases. Don't always trust the analysts and the VCs to know what's right. The future isn't that easy.
Building company value is your ammunition to win!
What makes a great company? Good question and many answers. But it all comes down to one word-value! Value = ammunition.
Yes, when it comes to success, more is better, but ammunition does not just equal a lot of money in the bank. Ammunition means value, not just money. In fact, more is not always better when it comes to value, especially for startups, and it all starts with the CEO.
What do I mean by this? The simple answer is that every minute of every day do those things that add value to your company FIRST, everything else second and third. The best corporate culture exists when every person in the company asks themselves that question every time they look at their to do list, answer an email, return a phone call, or even decide who, where to go do lunch with.
Yes, adding value oftentimes having the guts to say NO. The discipline of saying no to add value is not easy. It means saying no to a business partnership that might add a lot of perceived value in a press release and get some quick PR next week, but you know in your heart (and everyone knows in the company) that most probably that business deal will go nowhere. Oftentimes, the business deal/alliance that gernerates little PR delivers the best value in the long run. It means saying no to that trade show that your marketing people want to spend $20,000 on because they think will get your little unknown startup great attention and a big deal with Microsoft or the like. I could go on and on here, but I'm sure that you get the message.
Building a corporate culture where everyone asks; "how am I going to add value to our company in the next minute or hour?" is not easy. It's probably the hardest thing you have to do and it starts with what the CEO and top execs do every minute of every day.
On starting to add value every day, here's a way to start.. Ok, you just got funded by a VC and you have $5 million in the bank. Now, you have to make decisions on how to spend, who to hire and everything else. The natural reaction is to think; "hey, this $500 expenditure is nothing, approve it" - and on and on. STOP! Think of your money as a salami. Everyone in the company is slicing off a little piece at a time, no big deal. Then all of the sudden all the little slices add up and all the money is gone, and with what value to show for it?
Building a corporate culture that constantly adds value to your company, does not mean that you don't have fun and relax a little, or at times even a lot. Knowing when to play and do nothing at times might be just what your company needs for the value proposition. Drinking a few beers or just playing with the troops might add more value than you think. You never know what you might discover by the frustrated employee trying to keep all the customers happy on the front lines, or the software developer who just had a major breakthrough.
Finally, nothing is more rewarding than seeing the value your company generated when the next VC round doubles or triples your pre-money valuation on that next round of funding.
What are you going to do this week to add value to your company? If the answer is "take a vacation" so my troops can add value, you better do it. If your answer is "nothing" -worry!
Information Responsibility: Knowledge = Power!
What's always amazed me is how companies, large and small, spend a lot of time and energy drawing organizational charts and defining job descriptions, yet they spend practically no time defining something rather intangible - information responsibility.
What exactly do we mean by information responsibility? Peter Drucker, noted leadership and management expert, coined the term information responsibility in the late 80s. We hear so little about information responsibility probably because it is EVERYONE's responsibility, yet no one can define the term exactly or easily in a job description or on paper.
Put quite simply, information responsibility is the answer to the question; "Who needs to know what and when?".
The simplest example of info responsibility follows. You're sitting in your office and you notice that the building is burning down. Hopefully, you know what to do -- quickly notify everyone to GET OUT of the building fast!
But exercising your info responsibilities every day, whether you're the receptionist answering all calls and greeting visitors to CEO or Board member is not always quite as obvious.
The Central Intelligence Agency and other government intelligence organizations use the term "need to know" when deciding to form special security compartments etc., and usually only those with the "need to know" are clued into the operation. While business is clearly at war every day, there are few areas where only a few people are in the "need to know" to make your business successful fast. In fact, it's probably just the opposite - knowing when and how to share vital information can mean the difference between success and failure, especially in today's start-up environment.
There is a concept called the OODA loop. OODA stands for observe, orient, decide and act. After the Viet Nam war, military researchers studied why some fighter pilots got shot down and others didn't in the Vietnam War. Their conclusion: Those pilots with the fastest OODA loops didn't get shot down.
Look at your company's OODA loop. Can your company observe and orient and then decide or act fast enough to win? The answer is NO - not without everyone practicing information responsibility!
Or, another way to put it:
Power = the ability to act, and
Information = power, thus-
Shared information = the ability to act fast!
From Board member or CEO to the company receptionist, the something we all live off of every day is email, yet how many of us practice information responsibility with all emails we send and receive in a given day? Every email you receive, ask yourself; "who in the company needs to know this?". Every email that you send, ask the same question. AND, take the time to add in the correct TO's or CC's to the message. Yes, information responsibility takes work and it takes time as does any other responsibility.
And of course, the reverse often applies, ask yourself; "Does forwarding via email this stupid joke or irrelevant information add any value to our company's bottom line?". |
