I’ve been reading Daniel Pinks book Drive. It’s an interesting read which looks closely at intrinsic vs extrinsic motivation. Namely the effect that pay has on our motivation and performance. I’d come clean and admit I haven’t finished it yet. I made the mistake of picking up Game of Thrones and 4.5 books later I’m almost back to it.

However motivation and money is seriously topical right now. I see blogs every day like “The real reason staff leave your business”. This is exacerbated by the general tightness in the IT industry. Finding good staff is hard and keeping them is becoming a serious topic of conversation around any management table. I look after a team of talented Java developers and I know they’re getting offers through Linkedin on a weekly basis.

So with all this heat on keeping good staff and plenty of academic debate about I thought I would throw in my own experience in how to motivate and keep good staff. It’s a broad subject but a good chunk of it can be wrapped up in one word, Mission.

What do I mean by mission? A mission is more than a company statement. It’s a bold and exciting goal which gives purpose and context to everything the company does.

I’ve been lucky enough to work in some companies that lived and breathed a compelling mission. I’ve also worked in companies on the other side of the scale. Anywhere from non-compelling missions to no mission at all. I’ve also seen companies merge and move across the scale. This has a very predictable effect on staff.

I joined a start-up in 2002. It didn’t pay particularly well and it was housed in a building scheduled for demolition. But it embodied everything I now know about mission.

I walked into the drab and depressing building for my first interview knowing nothing about the company, other than an ex-college now worked there. I sat down with the founder and listened to the story about how they had grown quickly to 16 people and had won some fantastic awards. He talked about the product and the calibre of people. He wove a story about their mission. He was clear that they would be the largest provider of BPM software in the country. They would own the space, then move their focus further abroad. It was exciting, sitting in this horrible office listening to this infectious and bold plan for world domination. I was instantly on board.

The place positively pumped. The people were all talented and they knew why they were there. There were no politics, no opportunities for promotion, no training and the pay was rubbish. I didn’t get a performance review while I was there and I didn’t notice. I was focused on building some killer software and implementing it in as many big companies as possible. I enjoyed working with talented people who knew the goal and had the autonomy they needed to contribute in different ways to achieve it.

The company was quickly purchased by a larger company and the obvious happened. Three layers of management left in the first 6 months. Staff spent time either looking at job ads or bribing our new management for more money. I went with the money approach and got myself a big pay raise and a promotion. Despite that I left within 3 months. The mission was gone and so was the excitement. The people quickly followed.

I’ve seen this pattern repeat itself. You need to pay people fairly but the best people aren’t motivated by money. They are motivated by the mission, the chance to do creative things and the chance to work with other talented people.

When a company has a strong compelling mission they’re happy and everyone runs in the same direction. In the absence of mission they flip into what I call the What’s in it for me mode. This is characterised by people worrying about their pay, staff jostling for opportunities like promotion, people talking about training and certification. It’s all about ‘me’ in this mode. Then of course the best people leave.

So what’s a good mission? It needs to be brave, bold, simple and almost achievable. A good example is to have the biggest selling piece of software in a sector or vertical. “To be number 1….” Is always a good start.

I worked for an IT company once with the mission to become a $80 million dollar (revenue) company. That was a bad mission and yet as lame as it was it still told the employees the goal. We understood what was required of us and people did their bit to make it happen. This mission didn’t really stick but it was better than nothing.

Having no mission is much worse. A company with no mission will fail to attract good staff. The good staff that do join will leave within their first two years. Worse than no mission however is one that doesn’t line up with constructive values. I worked in a startup for a while where it became clear that the mission of the company was to sell out to a large company quickly and make a lot of money for the founder. It not only failed to inspire but it drove some terrible behaviour. The exec team focused on telling a compelling story to rich listers and VCs. No one focused on the product, or the customer. No one cared. The mission drove the wrong behaviour. A better mission would have been to dominate a vertical, top $100 million revenue or something which put the company into a healthy position for sale.

I think companies need to separate their public mission statement or vision statement with the internal mission their staff are on. Many public mission statements end up with some aspiration phrase that would be impossible for people to get in behind. For example:

Microsoft: Microsoft’s mission is to enable people and businesses throughout the world to realize their full potential.

Sounds powerful and noble. But how would I play into that? How would I know when the company got there?

Skype’s mission is to be the fabric of real-time communication on the web. That is better, but still not measurable.

When a company has a mission for its staff they need to live and breathe it. They need to report on progress and give people the autonomy to push along towards the goal.

Occasionally I’ve seen companies give people a personal stake in the end result. Small companies often use options, but at the end of the day these aren’t necessary. I’ve burned late nights and early mornings alongside teams of great people getting paid half market rates.

So I do agree with the premise that money is not the way to motivate people. To me it’s about going on a mission with a talented bunch of people. I’ve felt the power of this plenty of times and I know the warning signs when a company lacks a vision and a mission. Next time you hear someone comparing pay to roles in other companies I bet you’re in a company without an exciting mission.

Building a site that converts

Posted: April 18, 2011 in Business 2.0

Converting Customers

I’ve talked about conversion pipelines before, market testing your ideas online and maximizing online profit. A critical part of your success in all of these areas is your ability to create a site which converts. There are many pretty sites online which are totally ineffective. Many companies charge you for a flash design, then walk away and leave you floundering. It is quite something else to create a site which consistently converts visitors to paid customers.

I’ve created many sites selling complex products which convert as high as 10% of visitors to software trials, enquires or product sales. There are a few tricks to this which I’ve put into a short lesson which should get you converting traffic to sales in no time. I will focus on creating a killer home since this is where all the action happens.

If you want to look at the example site it is Centeros a dcim product.

Good Design
Good design is a critical starting point for any successful site. The design is the only thing which tells a potential customer if your company is a two man shop in Bangalore or a multi-national. Customers will decide what they think of your company within a couple of seconds of hitting your home page and the design will play a big part in this.

Web trends change like clothing fashions. A site which looked great in 2005 is going to look like brown flared pants today. So get a professional designer to do the design then keep it current.

The Journey
Putting a good design in place is common sense, the next bit is the magic. You need to hook your potential customer in within 10 seconds. This means organising your home page perfectly. To do this you need to understand the way your customer thinks and take them on a journey.

We order the page in a way which takes our viewer’s eye past everything they need to know to make the decision that we are indeed what they are looking for. The following diagram shows the journey and what we show them on the way.
1. Name – Tag Line
Our customer eyeballs the middle of the page then searches for a starting point. The question we are answering is “What company is this?”. That is why the company’s name should always be top left. Associated with the name should be a tag line. The tag line is a way of conveying in a glace what your company does. “Centeros – data center operating system”. Now your customer knows the company name and what the product is. Your customer is not interested yet, but we made it easy for them to determine they are in the right place.

2. Elevator Pitch
The next stop for your customer’s eyeballs is an elevator pitch. Your customer now wants to understand exactly what you do, but will only spend a few precious seconds on this. I’ve been to plenty of sites where it takes longer than 10 seconds to establish what their product does. Most often I give up.

Your Elevator Pitch should be clear, crisp and precise. Describe exactly what your product or service is, no more. Your customer should read the pitch and want to know more.

3. Something Flash
We now need to hit the customer with some eye candy. Show them something flash and sexy, showcasing your product. This is going to excite and leave them wanting more.

4. Credibility
As the customers eye balls browse lazily across your page you need to pop items in front of them which reinforce credibility. How do they know you are a real company? Someone they will willingly trust with their data and probably even credit card details. If you have some major customers, make sure you pop their logos on the front page.

5. Core Messages
If we don’t do the previous steps to warm a customer up they probably won’t read any details. If we did our job well, the previous five steps left them wanting more. This is the time to provide a summary of our key value areas. Keep this simple, something the customer can scan in ten seconds which allows them to understand your product will fulfil their needs. I generally break this up into core messages, each with a title.

6. Some life
A good reason for having your blog posts, or twitter syndicated to the home page is to show some life. Make sure they know there is action happening here, things being released, people buying.

7. A Crowd
Point 6 & 7 are important, people buy where other people are buying. Imagine one evening you are walking down a street with your other half looking to select a restaurant for dinner. You peek in each window checking how they look. You read the menu for sure, but the thing which leaves the biggest impression is the number of other people in the restaurant. I’m sure we have all walked away from a restaurant with no one in it. Point 6 & 7 aim to provide the feeling of a crowd of people buying from you. I often stick pictures of happy customers, quotes etc on the home page. This alleviates the customer’s fear that they are your only customer.

8. Call to Action
Some place high up on each page you also need a call to action. A big bold button with your goal often works, like “Free Trial” or “Free Evaluation”. Once you have the customer hooked you want to lead them quickly in the right direction. The call to action is the first part of this process.

If you follow these steps and design a nice looking page you are on the path to making your site successful. You should get people interested, get them excited about your product, show them credibility and give them an easy way to buy from you. Put it all together and your site will convert.

I'm a Steve Ballmer

General lack of coolness
Microsoft have always been uncool, but it never used to matter. Why? Because back when Windows 95 came out computers were still not really domestic devices. The Internet was still made up of pictures of Anna Nicole Smith, tech articles and university sites. Kids might have played computer games but that was probably about it.

Scroll forward to today and the whole scene has changed. Computers are now true consumer devices and that consumer is the notorious Gen-Y. The same Gen that spends leisure time on Facebook, Twitter, Foursquare, sharing photos of themselves and listening to MP3s is also deeply concerned about what is cool.

It all starts at the top. Go check out some videos of Steve Balmer, then Steve Jobs. The difference couldn’t be clearer. When Balmer talks about photo or music sharing you know he does about as much of that as your dad. They have tried so hard to market cool to the photo sharing public, but are being so outpaced by Apple it’s embarrassing. Meanwhile the Gen-Y’s are out in force pimping their Macbooks in cafes, flaunting their white headphones and ipads.

This will create two serious problems for Microsoft. Firstly Gen-Y is taking over the world, while the Bill Gates generation are retiring. But worse is an old secret Microsoft knew well, that business computing is driven by home computing. In the 90s business users had CD Roms, sound cards and Windows 95 at home. Anything we have at home eventually gets dragged into the office. The same thing is starting to happen for Apple. Innovation at home drives adoption in the office.

Lack of Innovation & Hardware
The best example to demonstrate the way Microsoft innovates is the touch mouse. I remember seeing a video tour of Microsoft labs last year, where nerdy looking guys demonstrated possible future mice designs. There was lots of cutting edge but blatantly awkward R&D efforts showing different designs. Among the pack they showed off several ugly looking prototype multi touch mice they had in development. Apparently at some time in the distant future this technology might make it to production.

Several months later Apple released their multi touch mouse. An elegant curve of translucent plastic containing all the flash goodies Microsoft had predicted for the future. I could only imagine the disappointment back at Microsoft labs.

As another example, Microsoft had the handheld market for 10 years and the best they could do was that horrible cut down Windows Mobile OS. The same OS made damn sure no one was dreaming about having the latest Microsoft mobile device. Apple came into the market and killed them with their first iPhone release.

MS also had a monopoly on tablets, where, like mobile, they simply added some new features to their standard OS. Remember those laptops with the fold over screen and the stylus. Once again blown away by Apples first release of the iPad.

Part of this is lack of control over hardware of course. If the best your hardware partners can come up with is a Compaq iPaq you’re pretty much f@cked no matter what you do.

For Apple innovation is business as usual. Every year they hold Macworld and show off a game changing device, that’s just what they do as a company. The company is tuned to turn out killer new devices and big leaps forward. Microsoft as a company seems to be the opposite, an organisation which stumbles around spending billions on innovation with little to show. Some light was thrown on this last year by Dick Brass, a former Microsoft exec, who released an article blasting the way the internal bureaucracy deliberately gets in the way of innovation. http://www.nytimes.com/2010/02/04/opinion/04brass.html?_r=1&hp

Do you think Steve Jobs would put up with this? No way. He’s a maniacal dictator, but one with a clear vision who gets what he wants. If he sniffed any of this behaviour at Apple there would be mass firings (without a second thought).

It shows once again that innovation isn’t a lab off to the side of a business, it’s the way a good business is setup to work. There is always a competitor coming from behind, if we don’t leap forward each year we loose our audiences attention and someone else will get it. Apple makes sure every year legions of fans are waiting for the next big thing and Apple always delivers this to them.

My Top 10 New Zealand Beers

Posted: July 19, 2010 in Off Topic

Over the last few years I’ve got more and more enthusiastic about New Zealand Brewing. I do a bit of micro brewing myself and have become a huge fan of New Zealand Boutique Brewery’s. Here is my top 10.

Update : I have now started a site dedicated to New Zealand Beer.

1. Epic Ale
Epic Ale is the Lamborghini of NZ Beers. With 23 Hops per bottle it is neither subtle or delicate, but totally brilliant. It deserves number 1 spot because it’s bold and daring and has moved NZ beer forward 10 years. However drinker beware, the name Epic could also be applied to the hangover drinking more than 3 will bring.

2. Emerson Pilsner
NZs most delicate, floral and elegant Pilsner has been a big favourite of mine for years. I’m not the only fan, it places every year in the Australian International Beer Awards, distinguished from 1170 beers entered from 34 countries. I love the description on the bottle, “oozes citrus and passionfruit aromas and flavours”.

3. Hallertau Luxe (No 1)
This is something different, a Kolsch ale. The taste is somewhere between a wheat beer, a pilsner and happiness. Exhibiting hits of summer, passion fruit, blueberries and a piece of dry straw.

4. Renaissance Stonecutter Scotch Ale
Malt and salt, chocolate on the nose and palate, a hint of cheese and cigar ash. Half red beer, half stout with huge flavour. Best matched with Haggis and a cold day.

5. Moa Original
This brew is the creation of Josh Scott, winemaker for the Allan Scott wine family. Everything about it feels champagne like to me. Light and bubbly, hoppy with fruit notes and hint of straw. This is one for the champagne flute.

6. Moa Harvest
It takes a good wheat beer to interest me and a brilliant one to make the top 10. Nelson hops and Marlborough cherries brought together by an award winning wine maker. This a summer essential, so refreshing it hurts!

7. Hallertau Statesman (No2)
This pale ale is characterised by strong Malt flavours bordering on oak, followed by a massive hop hit. It’s bold and persuasive, like an arm up your back or a gun to your temple. It tastes like Hugo Boss suits and oak book shelves.

8. Harringtons Summer Ale
Aromas of citrus, ginger and coriander, mixed with honey and a light hoppy finish. This is the king of summer ales and the only one which doesn’t taste of cordial.

9. Wigram Munchner Dunkel
True to the label it starts with crisp sharp hop flavours then quickly follows with hints of coffee and toffee. I’m even getting the advertised hazelnut essence, which greets you from the first sniff. Almost a dark beer in flavour but lacking the heaviness. Perfectly carbonated and fresh, which is sometimes a struggle for fully flavored dark beers.

10. Epic Mayhem
Until the recent release of its Stout, Epic has been a one trick pony. My tongue may be generalising but its three Ales are only differentiated by the quantity of hops. Epic Ale, Mayhem and Armageddon are the Speed, P and Crack of beer. If Epic Ale leaves you searching for more you move on till you have a $12 a bottle habit which leaves normal beers tasting like water and earns you head splitting hangovers. Mayhem is like drinking a freshly mown lawn, big and green enough to make your eyes water.

Microsoft Founders

Bill Gates & Paul Allen getting ready to make their billions

Thinking of creating a startup? One of the first things you will need to do is select who is coming on this journey with you. You make the decision while everyone is enjoying the thought of fame and fortune, then have to stick with it over years of hard graft, late nights and dwindling bank accounts. It’s not that different from marriage really, and should be taken as seriously.

In many ways it is the most critical decision you make because let’s face it, even if you get your product wrong a great team can find a way through.

The big questions are, how many founders and of what skill sets?
1. The number
If there was a magic number of founders that magic number would be 2. There is considerable power in the bond between two people working towards the same goal, but from different angles. Two people have to settle differences quickly. Much like a marriage, you bring a third person in and all sorts of bad things can happen. With three or more founders you can get politics, lobbying and ganging up.

Think about all the great companies, Microsoft (Bill Gates and Paul Allen), Apple (Steve Wozniak and Steve Jobs), Oracle (Larry Ellison and Lane), Google, HP etc.

There is nothing to say you can’t give shares to a bunch of different people, as long as there are two people running the show.
2. Skills
If there was one right answer that answer would be Development and Sales. One person builds the product and the other sells it. We all know that two introverted technical guys will create an amazing product and fail to sell it. There is always a component of selling or marketing which needs to be done and you need that skill set on board from the start. Why the start? Because people with sales and marketing skills will help you design a product which will be easy to sell. For example a person with online marketing skills will know how to design a product to fit the unique challenges they will eventually encounter.

Once you have that core blend of skills it is worth balancing them with the amount of work that needs to be done. If you have a massive amount of development work to be done, it helps if both of you can code (for example).
Founder Skill Mix

Founder Skill Mix

3. Date First
Most successful marriages start with a successful period of dating. If you last a couple of years you have proved you can work through problems together as a successful team. The same could be said of founders, before Bill and Paul founded Microsoft they were school mates and later close friends. The two Steves who founded Apple were best buddies. They knew they could work together, because they already did.

So look to people you already know and trust. You will be in a better position to judge what they bring to the table, and wither you will be compatible over the long term.
4. Passion
While larger companies run on money, most startups actually run on passion. Passion replaces a regular pay check, an office and a large team. Therefore passion is something you need to forecast and manage as closely as a functioning company watches its cash flow.

You need to pick passionate people with the right skills. Both skills and passion are important. Without skills you won’t create anything worthwhile, without passion you will give up before you succeed.

This ties nicely back into the point about friends making good co-founders. Friends enjoy each others company, they often get passionate about the same things. You may end up enjoying the work just because you are spending time with your friends. The reality is there may not be anything more to enjoy in the first few years of a startup, so grab hold of this. Good founders will keep each other passionate and motivated through the hard times.
In summary

When it comes to co-founders don’t settle for anything less than the right fit. Hopefully this will be a long term relationship, any lingering doubts you have now will destroy the relationship later. Look at people you already know and enjoy spending time with. Make sure as a team you have both sales and development (or service, product sourcing etc) skills.

When you combine that with enthusiasm you have a winning team.

Thinking of starting a small business and considering ideas…read on.

I’ve been misguided enough to work in many Startups, some which have failed and some which have succeeded. Towards the end of last year I did some of consulting work with a tech Incubator which led to a few blogs on startup related subjects, and I can see this continuing. I really believe that success in startups is part luck, but a major part science and process. If you understand the whole process from start to finish, along with all the risks you might encounter, a startup will be more likely to succeed.

Some of the companies I’ve worked with lately were thinking of investing in large product developments. To this end I wrote some blogs around testing your ideas. More recently I’ve noticed people earlier in the process brain storming ideas for their first attempt. If there was a guide to successful startup building, and it had a chapter 1 it might start with an overview of brain storming and what some of the options are. So before quitting your day job to become part of a ‘Get Poor Quick’ scheme read on.

If you are considering options now, soon you will be sitting up late at night putting the first pieces together. Oddly by this stage you have probably already won or lost, all you need to do is spend years of your personal time and a lot of money to find out which one. To mitigate against starting something doomed to failure you need to start your thinking right before committing to anything. Here is the short list of things to understand and consider.

Types of startup businesses

The first thing to understand is the type of business you start now will come with risks later.

1. Services businesses

A service business is one where your staff provide a service to customers in order to earn revenue. Consulting, software development, accounting, legal and graphic arts all fall into this category.

Starting a service business carries some difficulties both early on and later.

1. They are difficult to scale. You will need to employ more and more staff to make money.

2. They are sales driven, which means you need sales people early on. So if you’re not a sales person yourself you will need to employ some.

3. Revenue tends to surge and sag, which is dangerous when you have staff.

I’ve owned a couple of service businesses and worked in many more. The formula for success is to start with an opportunity. For example you are contracting directly to a company and they suddenly need more contractors of your skill set, you have several other friends who could fit the role. Now you have the opportunity to create a Consulting Company and contract them in. Sounds hokey I know but I could name 10 companies who started exactly like this who now have hundreds of employees. You start with a key account then use your reputation and contacts to get other customers. Having the key account before you start is important. I really advise against trying to start a service company without an opportunity, it is just too hard.

2. Product

The second type of business is one which sells a product to customers. The advantage of this is the ability to scale the business without adding staff (to the same extent as a service business). These work nicely as startups because you can keep your costs down, running the business from home after hours. The upside (dream) here is that you create a product then sell it to millions of people over the internet, earning money passively.

The difficulty here is the risk of putting a lot of time into developing a product/business before you go out and sell it. Needless to say a product business is the lottery ticket, lots of risk, lots of upside. More difficult to start than a service business but with much more potential.

3. Hybrids

A lot of product businesses start when a service business packages something up and sells it. The advantage here is that the product adds stable profit to a service business.

There are products that also require face to face sales and require work to implement. This really limits your reach compared to a purely product business with an online channel. Any attempt to go large is going to require reseller channels or many offices.

As you can see the Hybrids contain advantages and disadvantages from each camp.

Finding your Idea

So baring that in mind, what to pick? Well that depends on your skills and the opportunities in-front of you. When you talk to owners of successful tech companies they have a propensity of making their journey sound like a grand plan, carried off perfectly. Most of the time this is not the case, there is always a bit of luck, an opportunity and good timing (right place, right time). The art for you is being able to recognize when you are standing at one of these points.

The good stuff happens at 90 degrees from your focal point….

As a general rule watch for unfilled customer needs in areas you can deliver to. Don’t start something prematurely, watch, wait and discuss. Keep mindful of what is happening on your periphery. I often see large companies as being good starting points for small companies. People often meet and work with large numbers of like minded individuals, discuss ideas and build virtual teams who later go on to start things.

Your talents and skills

A good place to look for business ideas is your talents and skills. What can you successfully compete at? If you where a company what would make it great? These may be a place to start:

- Hobbies / interests

- What do you know more about than others (are better than at)?

- How do you earn your money?

- What could you build that would be world class in a particular market?

- What are your friends great at?

- What have you built or done for other people which is successful?

To illustrate how you can combine the points above (needs, your skills and an opportunity). I worked as a development manager. My skills were in running profitable development teams. I saw a need in that there were no tools on the market to allow me to track pipeline and current jobs, schedule people and manage progress. It also played to my other skill which is developing software. So I spent my weekends and evenings writing an application. Key to this was an underlying opportunity. The opportunity was that as part of my role I interfaced with many other resource teams who also needed the software. You can guess the rest, before long I had an online application and a key customer using the software in 15 different departments.

Next Step – Check your market

Once you have arrived at a short list of ideas you are ready to test each for a potential market. Up to this point you can come up with many wild and convincing ideas. At this stage in the successful startup process you research the market for each idea to determine the customer volumes you might find.

Step 1. Will your product work online (checking there is an audience and estimating revenue)

After you have researched and concluded there is a lucrative market for your product a smart entrepreneur tests those assumptions.

Step 2. Market test your idea online

After you have identified your biggest risk (probably marketing) and tested it online you have proved there is an audience for your product or service.

Summary

In summary you have:

1. Selected the sort of business you are suited for, understood the upside and risks

2. Waited for an opportunity or need to present itself

3. Picked something suited to your skill sets and expertise

4. Checked there are customers online and enough revenue

5. Tested your assumptions, building an audience who are now waiting for your product

Congrats…You are now ready to start a tech businesses, knowing that you did the first step right. The next step is picking the right team. (Blog coming soon)

In Pursuit of Reality

Posted: March 23, 2010 in Uncategorized

I’ve noticed staff in the most successful businesses have always got a strong grip on the realities of the business, its products and the market. The less successful ones either failed to discuss problems or are convinced of things which are not really true.

I’ve always watched this play out with interest and recently I’ve become convinced it’s one of the most important factors which influence a business’s success. I’ve seen people sit around meeting room tables for hours discussing the currently accepted reality without actually touching on anything remotely real.

Often when people tell me why something didn’t work they are describing a symptom, this lack of reality is often the root cause.

Jim Colins, Author of Good to Great researched 1,435 companies to find the factors that contributed to the success of the great ones. Based on this research, “Confront the Brutal Facts” is one of the first chapters.

One of the key factors in the success of the great companies was a series of good decisions. The good decisions flowed from the fact that they all made a consistent and thorough effort to confront reality, internalizing the facts relevant to their market. Having lofty goals can be good, but you can never lose sight of what the reality is on the ground, no matter how much you will it to be different.

To do this a management team must value honesty and encourage everyone to contribute their angle particularly if it doesn’t fit with the current view.

Here are some of the common examples:

Reality Fail 1. Setting strategy based on incorrect assumptions

This reality distortion happens when members of the management team come up with a direction for the company; they have drawn conclusions incorrectly and may have drawn on supporting evidence without fully understanding it. But the company is now convinced and the new reality is this plan will make the company successful.

Reality Fail 2. Failing to understand the company’s real problems

Companies that have executed on bad strategy will eventually come to a place where they have to discuss why things are not going to plan. This is the right time to really dig into the reality of why something is not working. This may take some proper analysis and will most likely dig up problems which may be embarrassing.
For many management teams this is not an option. There will be loose discussion which will surface the new idea of what will make the company successful. Then the company will go forward, the staff understanding the new direction as being reality.

Reality Fail 3. Failing to start bailing water

Later in the lifecycle this phenomenon can manifest itself in companies start to collapse, everyone accepts that everything is going well when what they should be doing is having heated meetings trying to get to the root cause of the companies problems.

The solution

Companies that fall into these traps generally flounder around changing direction till they fail. For businesses to set themselves up for success they need to make reality their common language. To do this they need to introduce a culture where staff and in particular the management team is encouraged to rigorously question and analyze what is accepted as reality. When decisions have to be made egos must be put aside, outside experts drawn into the discussions if necessary and everyone must be drawn on to present any evidence they have. No decision should be made till all the assumptions are verified.

John D Rockefeller is still the richest man in history (by a huge margin) and he did this by being an exceptional businessman. In the history he wrote of this life he found this concept important enough to write in the first page of chapter one.

We had discussed and argued and hammered away at questions until we came to agree, and it has always been a happiness to me to feel that we had been frank and aboveboard with each other. Without this, business associates cannot get the best out of their work.

It is not always the easiest of tasks to induce strong, forceful men to agree. It has always been our policy to hear patiently and discuss frankly until the last shred of evidence is on the table, before trying to reach a conclusion and to decide finally upon a course of action.

You can conclude that he put his ego aside, hired a brilliant team and put in place an environment which fostered good decision making and it worked. As Jim Clark wrote it’s not always pleasant to debate something rigorously but if the future of the business was involved the winning teams he identified did just that. They often had heated arguments which lasted for weeks, bringing more and more facts to the table until they reached a unanimous decision, then they all put aside their original differences and got on with it, comfortable in the knowledge that the direction was correct.

I think there is a lesson here for high tech companies where assumptions about markets with huge potential often go unchecked and direction is often set and accepted as right without analyzing reality. I would be interested to see how other people out there have observed and interpreted this.