How did your business strategy come about? Was it planned out in advance in the boardroom, or was it done by some type of trial and error? Did you start out knowing exactly what you were going to become? We started with a plan, but it has evolved into one that has taken time and been filled with trial and error.

Efficience came about as a company because we had an opportunity to come together and complete a big ERP system for companies that sell copiers to businesses. My partner, April Cox Abboud, was consulting in this space, came upon this opportunity and we started the company around this project. Our intentions were to build it and sell it, over and over, to other dealers and have a winning formula for success.

For many reasons, this didn’t happen and we went on to work on Software as a Service (SaaS) products. We have been working on a handful of ideas to get out there, and we have had limited success with one, and not much at all with the others. As I continued to see and read what was happening in the world, we decided to turn into a mobile app development company and help individuals take their ideas to the market, along with helping companies do the same.

We didn’t have a certain vertical to go after in the mobile space when we started, but knew that we wanted to have one. As we have worked to build-out mobile apps for some clients, we have now come about an opportunity with one particular client in the industrial cleaning arena. That client wants to partner with us to build mobile apps for their network of other companies. This is a great opportunity to push a success story out to these other companies and fill a need that isn’t currently being filled.

I have shared with you all for a while that we have been looking for a vertical in the SaaS, and now in the mobile space, to go after. As trial and error would have it, we have stumbled upon this opportunity. Our friend Rasmus Ankersen, whom I talked about in last week’s blog, discussed this in his own blog post back in March, which focused around strategy. When Pfizer was testing a drug to treat high blood pressure in the 1980s, they found it not to be that effective, but the men in the trails didn’t want to let go of their samples. Why? Because they were having a better sexual experience and soon the drug Viagra was born.

Jim Collins, in his book Great by Choice, discusses how empirical creativity was used by the companies that excelled over their competitors by 10 times. This basically means that when we talk about strategy, what you start with gives you data that you can work with, and create from there using real world feedback. Through trial and error, it comes about and sometimes ends up being nothing close to what you started out to accomplish.

I work hard to be open, adjust strategy and apply some creativity to the real world feedback that comes in as we go. How about you?

As someone with lots of entrepreneurial DNA in my blood, what gets me excited are the opportunities that rise to their potential with lots of upside. We are working on a project right now that has lots of potential, and I feel situations like this help to bring a team together to work on something that could have an upside beyond existing expectations.

Near the end of last year, a couple of guys came to me and wanted to talk to Efficience about an idea they had to build a mobile app. They wanted to provide a cool way to look at what people are doing out there and share their thoughts. After some discussion, they proposed that we build the app for equity in the company. This is a tough thing to do, because if you build something and don’t get paid, you had better make sure that you have enough income from other projects to keep paying the bills or you will soon be out of business.

We had experienced investing our resources in a few different projects and getting them out there. However, seeing them not being accepted in the marketplace, in any way, was frustrating. Lots of our profitability was eaten up in R&D around the next idea – hoping for something to go viral and make the big bucks. But it didn’t! Why should we try again? Well, 1.Because you can’t help yourself when it is in your blood and 2. Because if you don’t keep trying, you will never provide the opportunity to truly succeed.

Over time, I have been made aware of how chasing these opportunities can get you into trouble and open you up to the “dark side” of entrepreneurism, as was described by Steve Wynn at the 2007 EO 20th Anniversary Celebration in Las Vegas. He said that the need to seek out opportunities that may push you to put it all on the line for the next big thing is addictive and scary, but it gets the blood moving for those of us with the itch. Wynn did this when he started his casino. He put it all on the line and almost lost it all.

You may recall a blog I wrote on how entrepreneurs suffer from overconfident optimism – another area that can create blinders to the reality of your situation and get you in trouble. There are a couple of ways to deal with that, as I discussed in the blog, and they are doing a premortem and firing bullets that Jim Collins reveres to in his book, Great by Choice. The approach that we have taken is to fire a bullet and not bet everything on one idea or situation.

Having our business flow with processes that work on getting projects done and getting business in the door has to be done first. Then we can test out ideas that could be big, as in fire bullets but not bet the farm on one idea that will risk everything.

So my main point is that those of us that get caught up in the entrepreneur euphoria, just be aware of the “dark side” and the over-confident optimism that seems to follow, and take steps to rein it in before it gets us into trouble.

We have had a nice run in the markets over the past few weeks, hitting record highs for seven consecutive days. It would seem like good times ahead and I would so much like to jump on that bandwagon. I have seen this before and it makes me very cautious, given what is probably ahead. With any market and economic difficulties, there is always opportunity. The key signature of the DNA in a real entrepreneur is always being in search of opportunities in any environment, and then acting on them.

When looking for opportunities, we must first practice the Stockdale Paradox, which is coined by Jim Collins in his book Good to Great. In the book, Admiral Jim Stockdale makes observations of those that survived being prisoners of war in Vietnam and those that did not. Admiral Stockdale was there for eight years and endured the most brutal of situations.

When asked “Who did not make it out?” Stockdale replied, “The optimist.” He shared that they would say, we will be out by Christmas, Easter, and Thanksgiving, and when those markers came and went, the POWs would die of broken hearts.

He went on to say to Jim “This is a very important lesson. You must never confuse faith that you will prevail in the end – which you can never afford to lose –with the discipline to confront the most brutal facts of your current reality, whatever it may be.”

So what are the brutal facts of our reality? We have a huge amount of debt ($16 trillion) that is as much as the combined total of all the goods and services transacted in one year for the US economy. Each year the bureaucrats are spending $1 trillion more than they take in from taxes, so we are adding a trillion to the total debt each year. The worst part is they don’t show any desire to stop spending! We have major uncertainties of how all the tax increases, more government controls, and medical health care changes will affect our businesses.

The fear and uncertainty makes people sit and wait it out, for the most part. We are experiencing some positives now because of pent-up demand. Some areas don’t have enough new homes to account for the demand. Some businesses are spending on things that they have been putting off for a long time and can’t wait any longer.

This is not the environment of record-breaking stock markets that means things will change. I was in the investment world when the Fed flooded the markets during the late 90s and worried about lots of things, but mainly Y2K. This money mostly went into stocks and drove the markets to a massive bubble that soon burst. Sadly, I watched my money and that of so many others lose unfathomable sums.

Because of the brutal facts and my experience, I am being careful about the markets and business investments. I am also keeping an eye on any opportunities that may arise, given major changes that may occur. Remember that companies like General Electric, IBM, Disney, Burger King, Microsoft and Apple, all were founded in major recession or great depression. Opportunities are not limited to the good times.

I am writing this week’s blog on Friday, October 5, which has great significance for me. My partner of 20 years back in my investment days was born on this day, along with my lifelong best friend Ronald Poles. It is also one year from the day that Steve Jobs passed away. Verne Harnish reminded me of this in his blog, and he shared this video put out by Apple. It is a nice tribute and a great reminder of what he and Apple have done for our everyday lives.

Steve Jobs is an icon of our time. In this country, we all love the story of the underdog or a great comeback story! That is the story of Steve Jobs. The board of the company that he started himself removed him, but then they asked him to return when things went bad, and he turned Apple into the most valuable company on the planet.

I also find it interesting that a man who demanded so much from his people and was considered so difficult to work with managed to accomplish so much. Walter Isaacson discusses the details in his book about Steve Jobs. Jobs pushed his people further than they thought they could go. I remember this saying I came across many years ago: When you look back over your life, the people that you will remember the most outside of your immediate loved ones are the ones that got the most out of you.

If I think back, that is true for me. The teachers and the coaches that pushed me to do more than I thought I could do are the ones that stand out in my mind. Jobs was that type of person. Even though I am sure many people got frustrated with him, those same people remember going to the next level because they were around someone that pushed to get the most out of them.

Steve Jobs also focused on one key priority and spent three hours a day on that issue. He considered this to be vital to moving forward and creating successful products. He also had lunch most days with Jonathan Ive, his chief designer. During this time, they discussed the areas Steve thought mattered most and decided how to move forward with those ideas to create the great experiences we have today with Apple products. Adam Lashinsky outlined this in his book “Inside Apple.”

That type of time takes a lot of energy to get the “Flywheel” spinning, as discussed by Jim Collins. And what a Flywheel and legacy Steve has created! It still pushes out “gee-whiz” products that will have people standing in line for hours just so they can be one of the first to buy them.

I know I could definitely be more focused in my efforts. How much focus and effort are you putting on the most important areas of your company and your life?

We held our quarterly meeting this past week, and with it came some great discussions. Most of these conversations were centered on our direction and reaching our Big Hairy Audacious Goal, as introduced by Jim Collins. One major point that came up: How do we get where we want to go when we’re consumed by our day-to-day work activities?

We also discussed the Flywheel concept, as Collins examines in “Good to Great!” I realize that in business, we all want to get there and get there now! However, building a business is more like pushing on a huge 20 ton flywheel, 100 feet in diameter, and 10 feet thick. The flywheel represents your company, and it is at a standstill when you start out or maybe even when a big change hits you.

It takes a tremendous effort to get it to move an inch. With proper alignment as well as continuous effort and energy, you get it to spin one time, and then another and another. Then at some point, you break through with enough momentum that it spins around and around without any additional effort. This is the flywheel effect in action. It takes time to make it happen, but when it does, watch out!

There has been lots of buzz around the quick success of Instagram, but this isn’t
the norm. As the research from Collins pointed out, it takes about 25 years before before a good company begins the journey to turn into a great company. It’s faster to connect to a marketplace today with the internet and social media than it has been in the past, but it still helps me to be reminded of this, and I guess it may help you also.

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As an entrepreneur, I consider myself a pretty optimistic person.  I look to the future and see a rosy picture filled with visions of a lifestyle that incorporates my dreams.  I will sacrifice now acknowledging that I will see better times ahead.  Knowing that the little steps of progress I see in my company is leading to something better really gets me excited, and the optimism overflows even more!  Have you ever thought this could be a little risky?  I didn’t, but let’s explore this some more.

When I was preparing for India, I knew I needed some good reading material to entertain me on the 24 hours of travel time I would have each way.  I went to Barnes & Noble to search and came upon a really good book called “Thinking, Fast and Slow” by Daniel Kahneman.    Daniel won the Nobel Memorial Prize in Economics in 2002, and with this book he aimed to “improve the ability to identify and understand errors of judgment and choice in others, and eventually in ourselves, by providing a richer and more precise language to discuss them.”

 I have found this book to be very interesting and mentally stimulating in the same vein that I did with “The Black Swan,” which you can read more about here on my blog.  I have not finished the entire book yet but was very intrigued with a chapter called “The Engine of Capitalism.”  Here, Daniel discusses the advantages of optimism and how it leads to happier, healthier, more resilient people.  The optimists are the inventors, the entrepreneurs, and the political and military leaders, which he points out are not the average people.  They get there by seeking challenges and taking risk.

Most interestingly, he discusses how an optimistic bias can blind an entrepreneur from seeing the full risk of an undertaking or the decisions they make.  In study after study, Daniel shows that optimistic people were not capable of predicting or generating the results they expected.  What do we do with this overconfident optimism?  Daniel suggests one option would be to do a “premortem,” and I see another option of firing “bullets.”

The premortem occurs when the organization has almost come to an important choice but still before the big decision.  They gather a group of people involved in the assessment, and they write a brief history imagining that they implemented the decision and it died, so now they have to imagine they are looking back and come up with reasons why it might have failed. Daniel says this does two things.  First, it overcomes group think when it appears a decision is moving forward.  Second, it opens up the floor for knowledgeable individuals to express their doubts when they may have been suppressed by the leader before.

I think there is another way to handle overconfident optimism, and that is to fire bullets, as Collins discussed in “Great by Choice.”  When you test the market reaction by looking for empirical evidence with small, low risk exposure (firing a bullet), your confidence comes from real world market feedback.  Only then do you fire the big cannon ball without worrying that your optimistic bias got in the way of a venture that could have been devastating to your company.

I know my over eager optimism has gotten in my way and has been costly. How are you managing yours?

Side note on the 4 Billion Customers’ blog last week:  I read David Meerman Scott’s blog this week, reinforcing the mobile expansion to all parts of the world.  He was in the jungles of Central America and experienced tribal people with no running water or electricity using mobile devices to better their world.  Check out his blog.

So much of what we do in business is about the things we need to get done.  I need to write a report.  I need to send e-mails to my clients.  I need to create a budget.  I need to put a plan together for the next quarterly meeting.  On and on it goes with stuff we need to do in order to make progress in our business.  Nothing is wrong with this, especially when it creates progress.  Progress has been determined to be the number one motivator of both business owners and employees.

However, we really ought to find the things that we need to STOP doing!  It is the one thing we, myself included, often neglect to do.  What is it in my business or my world that I need to stop doing?  Business guru Jim Collins and coach to the Fortune CEO Marshall Goldsmith emphasize this topic frequently.  They ask, “What is on your STOP doing list?”

When we want to create value, we want to DO something.  At times, we can create value by stopping the things that are wasting our time, distracting us from important work, and keeping us from clients and other people vital to our business. 

There are various things I find myself doing that I should stop.  I should stop having my e-mail open all day long because I get distracted from what I am working on every time I receive a new e-mail.  I need to stop not writing the important things on my calendar because time management is event management.  I write my blog when I happen to get around to it rather than putting it on the calendar and letting the calendar manage my events.

I also need to stop looking at things once, leaving them, and then coming back to spend more time on them.  I will read an e-mail, leave it to do something else, and continue this process by moving on to something else again instead of taking care of it right then.  This is a major waste of time, and I need to STOP it.  When something comes up, I should get it done now, move it to the calendar to do at a later time, delegate it to someone else, or delete it and move on.

What do you need to STOP doing?

It makes me pause and wonder why it bothers them at times or why they joked about it, because I see it as something so natural that everyone should do it.

If you asked me the business authors out there who I think provide the most value, I would have to say Jim CollinsPeter DruckerIPS Millennium Fund i

In Great by Choice, Collins and Hansen set up an awareness of how three key areas acted as the common themes in the companies that have dealt with uncertainty, chaos, and luck as well as why some companies thrive despite all this. What they found was very interesting and contradicts common thinking about great companies. They discovered what they call 10Xers (companies that have been beating the marketing and comparison firms by at least 10 times in stock market performance) were not more visionary, more bold, more risk taking, more innovative, or more creative than the comparison companies.

They were more of 3 things:

1) More Disciplined

2) More Empirical

3) More Paranoid

This book is very eye opening! When we think of a company that has had great success, we usually assume it has done so with a new break through idea, a new patent, or by taking a big risk that is paying off. However, this was not the case. Of course, to a point, these companies were innovative and creative, but they became really great by finding what works through empirical evidence, testing that out, and then being super disciplined to get it done. They also worried excessively about what was out there that could change the game for them.

I will discuss each in more detail in next week’s blog. Happy New Year, and I wish you much success this year being worried about what is coming, gathering evidence that your ideas work, and implementing them with vigorous discipline.

My experience has been that we are rarely lacking strategy and planning, they are abundant. What we do lack is execution around those plans, which is the major problem we face running a business.

We follow a 5 step process to gain execution on our strategies, and it’s had a major impact on our business.

To set the stage, think of your goals this way: After creating your BHAG (Big Hairy Audacious Goal), you will usually set shorter term goals that create the path to reaching your BHAG.

Here at Efficience, we have our BHAG, 3 to 5 year Goals, 1 year Goals and then Quarterly Goals. Each goal is a stepping stone to the next goal. When we set our company Quarterly Goals, each person on the team is assigned individual Quarterly Goals that help work toward the company’s Quarterly Goals. Every week we have a weekly team meeting where we review each person’s progress, defined as Next Steps, towards reaching their quarterly goals.

Here are our 5 steps to Execution:

1Stop for a minute and plan what the next step is you can take towards reaching your short-term goal.  For us, this has to be something achievable within the coming week.

2Write it down and make it visible for your peers to see. This can be posting it on a bulletin board, posting it online, sending an email…just so long as it’s visible to more than just you.

3Put it in your calendar: this means setting a specific date and time to work on your Next Step.

4Tell your peers what you are going to do. This works best if you have a rhythmic meeting schedule, such as weekly, where you can share it with everyone, and then flow right into number….

5Meet with your peers once more and tell them if you completed your task. As stated, this works best with a rhythmic meeting schedule, where every meeting you tell your peers what you did/didn’t do the previous week, and what your next step is for the upcoming week.

As humans we come standard with egos, and none of us like to look bad in front of others. Knowing that we’re being held accountable by our peers drives us to do what we say we’re going to do.