Enterprise startups who don't build a professional services business making a mistake

Mark Suster on his Both Sides of the Table blog writes this: "Many young startups are being advised not to have a professional services business and in my opinion this is a big mistake."

This is a good lesson for anyone starting up a company selling to the business market. Ignore VC calls to go lean and not invest in professional services - rather, invest wisely to ensure you have successful product implementations and the resulting referenceable customers. Wise advice. Here's a brief excerpt:

The most important way to sell a product for an early-stage business (or frankly any stage) is to have strong referenceable customers. These are the lifeblood of your sales organization. Referenceable means they are willing to be part of your sales collateral, willing to take calls from key leads, willing to speak at your conferences, etc.

How do you get referenceable customers? You build a great product and make sure it is used in such a way as to deliver real benefit to your customers versus just the promise of a benefit outlined in your marketing materials.

As much as many non-experienced investors might like to believe, even great products don’t just roll themselves out. You need to implement them. This often means getting the product to talk with other existing products, implementing the product to match the specific needs of a customer’s internal processes, training, monitoring usage and encouraging adoption

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It also reminded me of this advice from Scott Weiss; his company decided to invest in customer-facing resources to give them big-company customer service, so the large enterprises they were targeting would not be afraid to buy from them.

Former Campbell CEO Conant learns lessons from his long-ago firing

Douglas Conant, the recently-retired CEO of the Campbell Soup Company, posted on the HBR Blog Network last week about his early-career firing and what he learned from it. He describes in devastating language the feelings of that moment:

I was greeted by the Acting Vice President of Marketing and asked to step into his office. Our company had recently changed ownership and things had been a little chaotic, but I still felt good about my ability to contribute. But once I was in the Vice President's office, I learned that my position had been eliminated — and that I needed to pack up my belongings and leave the building immediately. In other words, I was fired. Ten years of my career was over in a snap. I was devastated and I was bitter. I went home to my wife, my two very small children, and my one very large mortgage... feeling every bit the victim.

But like us all, Conant possesses the ability to bounce back. Now, decades after the event, he sees how that process was a turning point, and he points to one reason - the outplacement counselor he worked with after his firing became an important mentor and teacher:

Neil was a wonderful, crusty New Englander who didn't tolerate a "victim" mentality for a minute. With Neil's guidance, losing my job became a valuable learning experience about what leadership should be. For some, these thoughts may constitute a "blinding glimpse of the obvious." But I have found them extraordinarily powerful in their simplicity.

First, I learned the power of connecting with people by being fully present — in every moment. Neil's first words to me were "How can I help?" During every one of our meetings, he listened so intently and earnestly. He wasn't trying to guide the conversation and he was not at all judgmental. His interest clearly came from a genuine desire to understand and to help. Neil was fully present in every moment, in a sincere and earnest way....

[Second,] before I was fired, I had kept my head down and on my work. As a result, I was sadly disconnected to the business world beyond the company. I felt remarkably alone.

Neil told me to build a network of people to solicit ideas and advice for my job search. Then I was to cultivate that network with the hope of identifying some job opportunities and using some of these people as my references. The time to build a network is always before you need one. It took me an extra six months to find a job because I had to build a network from scratch before I could really ramp up my search for a job.

These are powerful lessons that I've had to learn myself (much like Conant, the hard way). I wish I had read this ten years ago!

Sneak Peek of "The Mistake Bank" Chapter 1 - Bouncing Back

I've attached a pdf document that represents Chapter 1 of the Mistake Bank book as it will be laid out. Note that the illustrations are not yet the final scans, but this gives you a sense of what the whole book will look like. Please leave your comments!

The Mistake Bank Chapter 1 - Bouncing Back

The final chapter lineup looks like this:

Introduction: "Sorry I'm Late"
Chapter 1: Bouncing Back
Chapter 2: How To Learn From Mistakes
Chapter 3: Where Mistakes Come From - Recognizing Patterns
Chapter 4: Creating The Culture
Chapter 5: Mistakes As Opportunities
Chapter 6: Time
Conclusion: "Failure Is Not The Opposite Of Success"

And the book should be ready before the end of spring. Stay tuned!

Mistakes anchor you to the past until you own them"

A neat post from Dan Rockwell on Leadership Freak. Here's the money quote, for me:

Futures emerge after mistakes are owned, not until. Mistakes anchor life in the past until you say, “I screwed up.”

See more on owning mistakes here.

A cool and candid post-mortem from the founder of Gowalla

This piece by Gowalla founder Josh Williams in Medium.com is a great recapitulation of the "check-in wars" from 2008-2011, when location based services like Gowalls and Foursquare emerged (to be joined by Facebook) and fought to establish this new turf in the online world. Gowalla was a casualty of this war, and Williams' candid recounting of the story is a service to other tech entrepreneurs. While he doesn't directly deal with mistakes that contributed to Gowalla's downfall, the story helpfully lays out the extreme uncertainty that comes with any new venture (especially online ventures). Here's a taste:

In one of the many highlights of Gowalla, we crafted an amazing tie-in with Disney that was loved by both our community and theirs. Each of these endeavors cost us time and money. Unfortunately the relative payoff for us was simply less due to network effect.

While Gowalla continued to grow, the trajectory was not what it needed to be. At least not in terms of winning the game we had chosen to play.

We were the younger, prettier, but less popular sister of Foursquare. And even that had changed. In time, Foursquare had dramatically improved the design and experience of its service. This was no longer a defensible platform for us as a company.

Around this time we knew that our path was in trouble.

Key to successful game studio: the four games they didn't release

From The Wall Street Journal, a profile of a successful Finnish mobile game company named Supercell, maker of Hay Day and Clash of Clans:

Supercell executives say the company has so far avoided flops because it kills projects with bad prospects early on.

"It's not like Supercell made two strikes and that both of them were home runs," said Ilkka Paananen, Supercell's 34-year old co-founder and CEO. "The truth is that we are very good at failing.

"Last year we released our two first games on the App Store, and they were both big hits," Mr. Paananen said. "But what really made us successful were the four games we killed before release."

Hat tip Tuuti Piippo.

A successful ex-con discusses success

From an address by Anthony Cardenales, ex-con turned Manager of Operations at WeRecycle, to the Bard College Prison Program class:

We each define our ambitions and approach and what we consider our goals differently, but we all share that drive to succeed. What we consider success will differ, but we can all be successful in our own way.... Everyone has the same drive.

The Bard program was featured on the PBS Newshour in 2011. The title is great: "How Not To Let Mistakes Define You." Here's the entire PBS video:



A background piece on Cardenales can be found here.

Guy Kawasaki's Top 10 Entrepreneur Mistakes

A great talk from tech guru Guy Kawasaki. This talk is full of humor, bold language, and good insight. Kawasaki has been in the startup business a long time and, as he says, has seen just about everything. It's worth an hour of your time to check it out.



Hat tip Garr Reynolds at Presentation Zen.

Eagles' Don Henley: "Success can be just as frightening as failure"

From the great documentary "History of the Eagles," from the mouth of introspective drummer/vocalist Don Henley:

Success can be just as frightening and disconcerting as failure.


Related post: "Eagles Reunion Concert Set Right By a Mistake"

Merlin Mann: Resilience means focusing on the work more than success or failure

From the Systematic podcast featuring Merlin Mann of Inbox Zero and 43 Folders. The topic is "failing gracefully," and in this excerpt (about 12 minutes from the start of the interview) he discusses that perhaps "doing the work" again and again is more important than tallying individual successes and failures. This is a reminiscent of the Arthur Ashe quote we posted recently:

When you're troubleshooting why your failures are not moving you further along.... you can take it too far.... it can be self-defeating. You can go too far, and try to learn too much from your failures.

Sometimes things just don't work out.... But, if you care a lot about what it is that you're doing, then you have to be open to the idea that it's going to go in all kinds of directions that you didn't expect, and that's the bigger pattern to me. Success and failure, you can look at as a post-mortem on something, after you've succeeded or abandoned it or had it taken away from you.

The people who push out a lot of stuff over time are resilient in a much higher-level way. Which means: they just believe in doing the work, and moving forward. Sometimes it works out and sometimes it doesn't. Woody Allen puts out a movie every year. I haven't seen all of them, but that's his job.

His job is that he makes movies and that's the thing that he does.

Hat tip Tuuti Piippo.

Arthur Ashe: "You've got to get to the stage in life where going for it is more important than winning or losing"

You've got to get to the stage in life where going for it is more important than winning or losing.

Arthur Ashe, US Open & Wimbledon Tennis champion.

Seeing this quoted on Twitter resonated based on my recent reading of "Whoever Makes the Most Mistakes Wins: The Paradox of Innovation" by Ralph Farson and Ralph Keyes. Farson and Keyes discuss the idea that the highest levels of engagement in a project trump the idea of specific success or failure, and Ashe says pretty much the same thing. For me, I needed to get to my forties, and absorb a fair amount of both success and failure, to appreciate what Ashe is saying.

There are many references to this quote, but I can't find its origin - whether in one of Ashe's books, or in an interview. If you know, leave us a comment. Thanks!

Mistake Bank Bookshelf: "The China Twist"

"The China Twist: An entrepreneur's cautious tales on franchising in China" is a first-person account of the launch and eventual failure of pretzel outlet franchiser Auntie Anne's in China.

The book takes into account the role cultural differences, bureaucratic red tape, language issues, and an unfamiliar food (pretzels are alien to Chinese palates) played in the difficulties encountered by Auntie Anne's first franchisees in the world's biggest market.

NPR has a profile on the author here, and Knowledge@Wharton has a review.

Golfer McIlroy admits mistake and apologizes

World #1 pro golfer Rory McIlroy started a firestorm of controversy by withdrawing midway through his round last Friday in Palm Beach, Florida. He blamed discomfort from an impacted wisdom tooth, but golf writers instead pointed to his poor performance since switching to Nike golf clubs.

Today, McIlroy apologized for his withdrawal and said he had made a mistake, in part saying this:

I should have stayed out there and tried to shoot the best score possible.... Some people have the pleasure of making mistakes in private. Most of my mistakes are in the public eye. It is what it is and I regret what I did.

The wisdom tooth excuse crept into the statement somewhat, as well as a discussion of his relationship with tennis pro Caroline Wozniacki. But, all in all, not a bad performance from a 23-year-old who is not used to failing. The entire apology is here:

Anita Tucker nurse study #2 - speaking up about problems, but not to improve the system

Anita Tucker from Harvard Business School has just published the initial results of a fascinating experiment testing how nurses handle problems they encounter while executing a process ("Fostering Organizational Learning: The Impact of Work Design on Workarounds, Errors, and Speaking Up about Internal Supply Chain Problems" link - PDF). We previously posted on this paper here.

Tucker created a simulation of a nurse's tasks in administering medication to a number of patients. Certain errors were embedded in the experiment - such as missing medication for one patient - as well as opportunities to work around the errors - medication for a patient that wasn't on the nurse's list (i.e., "extra" medication) or extra equipment that could be used for the task, but may be considered inappropriate (e.g., a syringe with different unit markings). This is an example of a complex operational process.

The second finding from Tucker's pilot test was that many nurses spoke up about the problems they encountered - 92%, in fact - but only about a third of those spoke up with the purpose of improving the process going forward. The remainder spoke up to solve their individual issue or to explain why they didn't successfully complete their task.

This seems like a small finding, but to me it has profound implications. It says that nurses (or any workers) are under pressure to get their jobs done, and this pressure has an adverse effect on sharing knowledge and improving processes. People are asked to improve their own productivity and throughput, with a result that errors that signal process failures (which may have huge impacts on productivity and quality) are worked around and complained about but not addressed.

There's more to come on this topic. Tucker and her team continued their project, studying ways that they could improve the nurses' willingness to share improvement suggestions.

Anita Tucker of Harvard Business School tests how nurses handle mistakes in business processes

Anita Tucker from Harvard Business School has just published the initial results of a fascinating experiment testing how nurses handle problems they encounter while executing a process ("Fostering Organizational Learning: The Impact of Work Design on Workarounds, Errors, and Speaking Up about Internal Supply Chain Problems" link - PDF). Do they speak up about issues, or do they “quiet fix”? And what actions can management take to try to increase people’s willingness to speak up about problems?

Tucker created a simulation of a nurse's tasks in administering medication to a number of patients. Certain errors were embedded in the experiment - such as missing medication for one patient - as well as opportunities to work around the errors - medication for a patient that wasn't on the nurse's list (i.e., "extra" medication) or extra equipment that could be used for the task, but may be considered inappropriate (e.g., a syringe with different unit markings). This is an example of a complex operational process.

As folks such as Amy Edmondson (a frequent collaborator of Tucker’s) and Deborah Ancona have written, working around problems without reporting them obscures larger process issues, reduces the learning of other employees, and can even contribute to much larger disasters.

While we’ve written often about people’s unwillingness to report problems due to their self-protective instincts to avoid criticism and blame, Tucker adroitly focuses in another important issue: that management’s drive for high productivity is in direct conflict with the value of reporting problems quickly.

Tucker's paper is loaded with insights and observations about how humans deal with process issues that come up during the work day, and it'll take us several posts to cover the bases.

Here's the first insight: in her pilot test, Tucker found that the problems she had engineered into the process had a major impact on patient treatment. Only 36% of the participants (all professional nurses) successfully worked around the problems. The remainder refused to work around the issue, or did the workaround improperly.

The workarounds were in one case nontrivial (requiring the nurses to convert from one unit to another) and in the other created downstream problems (borrowing medication from another patient who didn't need it right away).

Nonetheless, these results are striking. Nearly 2/3 of the "patients" did not get their medication or got an improper dose (in certain cases 10x the intended dose). One can imagine how, in a busy hospital setting with nurses responsible for large numbers of patients, and much transfer of responsibility across this supply chain, these errors can happen and not be noticed as part of the bigger picture.

The next question is, how did the nurses do in reporting these issues so that the root causes could be investigated and fixed? That's the subject for our next post on the topic.

Timing and circumstances turn a failure into a success

This week, I met with some colleagues and we discussed our customers' increasing demand for Spanish-language services from us. An exec at our company said, "Yes, we absolutely need to grow this capability. Let's list a set of partners to evaluate in Mexico, so we can provide these services. Can we meet about that next week?"

After the meeting, one colleague was a bit frustrated. "Can I say something?" he said to me. "I proposed we do this a year ago and the suggestion was ignored. What's different this time?"

I said, "The idea was good then, and it is still good now. The only difference is the timing. A year ago, we weren't ready to commit to this, and our customers weren't either. Now we both are."

The lesson: don't give up on a good idea. Put it in a place where you can retrieve it if the circumstances change. If it's a good idea, they very well may, sooner or later.

Mistake Bank Bookshelf: "Whoever Makes the Most Mistakes Wins"

"Whoever Makes the Most Mistakes Wins: The Paradox of Innovation" by Ralph Farson and Ralph Keyes is our first entry in our "Mistake Bank Bookshelf" series. We'll write a short post on each book that falls into the category of must reads if you are interested in this topic. We'll post this every Friday. Most of the books have been covered in the past, but we will include them here in a simple summary post. You can find them all by clicking on the label "Mistake Bank Bookshelf."


"Whoever Makes the Most Mistakes Wins" is not one we've written about before. It's a slim book, just over 100 pages, and the size made me think of the upcoming Mistake Bank book, which will be about the same size. It's a straightforward business book, focusing both on the psychology of success and failure and its impact on innovation. Women readers alert: there are LOTS of sports analogies, including shout-outs to Vince Lombardi, Bill Russell, Phil Jackson, Michael Jordan, etc., etc.

The book was released in 2002, and I wonder if it didn't do so well in its first release, because it's was rereleased a year later as "The Innovation Paradox: The Success of Failure, the Failure of Success." [Note to self: I hope it wasn't the word Mistake that hurt the book's sales prospects!]

Farson and Keyes do a good job of exploring how success and failure intertwine - how failures enable successes and successes set you up for future failure. I particularly love a brief autobiography they include for a "management consultant" who seems a lot like Farson himself:

Because I didn't receive a single "A" in college, I couldn't get into medical school. Instead, I worked as a lifeguard, but got fired at the end of the summer. My next job, selling advertising in the Yellow Pages, was interrupted by breaking my leg badly while skiing. This gave me three months to think about what to do with my life. Since I'd enjoyed my psychology courses in college, I thought I might try to become a school psychologist. So, I enrolled at UCLA to pick up psychology and education courses, but got kicked out of student teaching because I couldn't get along with my supervisor. Back to lifeguarding. Then I noticed that a prominent psychologist was giving a summer seminar at my alma mater, so I quit my job and enrolled. This experience was electrifying. The psychologist invited me to study with him at the University of Chicago. I was so intimidated by that most serious academic institution, however, that I put off going there for a year. Just before receiving my Ph.D. from Chicago, I was given a one-year fellowship on the Harvard Business School faculty. I left there at the end of the year with almost everyone mad at me.

My other favorite part of the book is the final chapter, entitled, "Samurai Success," in which the authors revisit a paradox of competition. In the greatest, most intense competition, winning and losing loses importance to the exhilaration of performing in the moment. And Japanese samurai, adopting Zen principles, "strived to achieve victory by becoming fully absorbed in a process that would lead them there, not by setting their sights on victory itself."

The lessons are that success has a significant component of subjectivity; that there are reversals along the way, and that the process and daily work is where satisfaction rests.