Four Steps to the Epiphany

Steve Blank in a nutshell ...

Jim's TooSense: While "Customer" is the catch-all term, in many cases the functions of a customer (buyer, user, specifier, influencer, decision maker) may be split between multiple people. Very common for commercial enterprises to split these functions by design, but even in a consumer family they could be "shared". For example, going out for fast food: everyone in the family may be the end-user, the buyer is probably the mom or dad, the specifier could be the mom, the influencer could be the dad, but the decision makers might be the kids!

(c) VentureNotebook.com ... 1.03


Don't just start a business, solve a problem!

As long as consumers have problems, they will always search for solutions. People will always look for better, faster and smarter ways to accomplish everyday tasks. And fortunately for entrepreneurs, there are still lots of rooms for improvements in existing products. That said, the biggest issue for most founders is finding these painful problems and matching them with the best solutions possible.

Here are a couple pieces of insight to get you started.

Focus on building a must-have not a nice-to-have product. Consumers are overwhelmed with the paradox of choice on daily basis. Attention spans are getting shorter in the age of multi-tasking and only few products are getting noticed – with many being a solution for a must not a want. The demand for quicker and faster results make it difficult to fully satisfy the needs of consumers. You need to be doing something different and better to make it in this world, as do consumers expect and demand more than just another product.

Solve real painful problems. Google made search better. Amazon simplified online buying and selling. Netflix solved on-demand streaming media. Uber is trying to make on-demand car service better. What can you make smarter or better?

What is the one painful problem you can solve without struggle? To grab your customer's attention, start by solving their needs, wants rarely make the cut. If your product is not a must-have, you could still find a way to repurpose it to solve a pressing need. If you have been able to identify a crucial problem that you can effectively execute and deliver to market, you will be able to create a real business that matters.

Your business should be your passion. Some entrepreneurs look to solve problems they identify with or feel passionate. They choose this path because work because less about work and more about enjoying the journey.

You will need all the inspiration, commitment and the perseverance you can get to make it as an entrepreneur, hence the need to start a business you are passionate about.

"The happiest and most successful people I know don’t just love what they do, they’re obsessed with solving an important problem, something that matters to them," Dropbox co-founder Drew Houston said during the 2013 MIT commencement address.

Coupled with passion, is the ability to execute. If you can't deliver, you are not in business. Products with a real need are easy to market and you won't have to convince people about the existence of the problem and the need for your product because they identify with it.

You don't want to start a business that may not survive. Do your homework, validate your idea and make sure you have a real market for your idea. Don't just start another business, solve a real problem people actually have to increase your chances of success.


[Attribution: entrepreneur.com]

2.05



Innovation has a revolutionary reputation, but an evolutionary reality!

An innovation is (simply) something new and better. Some innovations are very complex, many are relatively simple incremental improvements of existing products, services, processes, methods, models, and positions.

Some times little improvements can make a big difference.

Glue that doesn't stick very well + a yellow piece of paper = Post-it Notes (3M) >>> billions of dollars in revenue!


(c) VentureNotebook.com ... 1.04

Innovation "Hot Spots"

While innovation is often associated with new products, new gizmogadgets, a broader perspective shows innovation occurring in many areas of a business and often has little or nothing to do with products.

Here are some key areas of innovation opportunity for a business venture ...
  1. Products (yes, still high on the list, of course!)
  2. Services
  3. Processes
  4. Business methods
  5. Business model
  6. Positioning (relative to the competition)
  7. Paradigm (a combination of several innovation areas)

1.08



Make something better for someone else!

It's a core principle of entrepreneurship! Just making something (chocolate chip cookies, a robot, a smartphone app, et al) may be fun, it may be nice, it may be creative, it may be inventive. But it's not entrepreneurial, not unless someone else needs it, wants it, desires it rather than the available alternatives.

That's entrepreneurship step one ... making something better for someone else.

Entrepreneurship step two, a bit harder to achieve, is to capturing value ... getting paid for delivering your something better to someone else!

(c) VentureNotebook.com ... 1.08

Tools for Innovators and Entrepreneurs

Adam Tank, a McG grad from 2015, posted this link to a web site that has a lot of good tactical tools for innovators and entrepreneurs. (FYI, one of my faves: "Strategies are the right things to do, tactics are the right way to do them.")
Thanks, Adam!

Classy Pics!

Some classy McG2016 pics at SPLUCK.net

Basic Financial Objective Statements

Basic Financial Statements
Income Statement
ActionItemUnitsPercentageNotes
count the ...Number of Units Sold# in a given period of time (day, week, month, quarter, year)
times (x)Average Selling Price$% of List Priceper unit
equals (=)REVENUE$100%total for the given period of time
minus (-)Cost of Sales$% of Revenuetotal ... sometimes called Cost of Goods Sold (COGS)
equals (=)GROSS PROFIT$% of Revenuetotal for the given period of time
minus (-)Operating Expenses$% of Revenuetotal for the given period of time ... marketing, administration, R&D, et al
equals (=)EBITDA$% of RevenueEarnings Before Interest, Taxes, Depreciation, and Amortization
minus (-)ITDA$% of RevenueInterest, Taxes, Depreciation, and Amortization
equals (=)NET PROFIT$% of Revenue
Venture Valuation
EBITDA (TTM)$ Trailing Twelve Months (TTM)
times (x)Industry Average Valuation Multiplenumber typically ranges from 3 (low value) to 20+ (high value)
Venture Valuation Estimate$
Cash Flow Statement
Cash at Beginning of Period$
plus (+)Cash In During Period$ period is typically per month
minus (-)Cash Out During Period$
equals (=)Cash at Ending of Period$
also equals (=)Cash at Beginning of Next Period$
Balance Sheet
Assets of the Venture$ at the end of a particular day
minus (-)Liabilities of the Venture$ at the end of a particular day
equals (=)Net Worth of the Venture$ at the end of a particular day
Assets of the Venture$ at the end of a particular day
minus (-)Liabilities of the Venture$ at the end of a particular day
minus (-)Net Worth of the Venture$ at the end of a particular day
Assets of the Venture$ at the end of a particular day
Liabilities of the Venture$ at the end of a particular day
plus (+)Net Worth of the Venture$ at the end of a particular day
A0.08

Let's go where our customers are and our competitors aren't.


That "blue ocean" space where there are lots of fish to catch and fry, but no sharks already there eating them alive (and making it "red ocean" ... use your imagination why the ocean would be red!).

Business Venture Design Worksheet 2


What are the critical transformations, from customer inputs (problems, needs, wants, desires) to customer outputs (solutions, products, services, business methods and models, processes), that must take place within our venture?

There are two crucial activities in a healthy company ...

1] The core business operations focusing on the Transformation process ... transforming customer needs, wants and desires into products, services, and business methods that keep customers coming and satisfied. This is typically the part of the venture where most people are employed.

2] The continual Planning process, focusing on sustaining core competencies, competitive advantages, and growing the business in ever-changing environments. This part of the venture is (and should be) driven by the senior management team, particularly the strategic planning. Other employees from throughout the company may (or may not) be involved.

(c) VentureNotebook.com ... 2.11

Startup and Launch Checklist


So you want to start a business – congratulations! Once you get over the initial excitement, it’s time to break down the process of launching your startup into manageable chunks.

You might get overwhelmed with the sheer number of items on your to-do list. But not to worry; this startup checklist is divided into two parts: the primary tasks you need to do now, and those that you can defer until later.

[Jim's TooSense: This is a generic list ... most items will likely apply to your venture, some may not, but you are likely to have many more critical items that should be added to this list. Have at it!]

What You Need to Do Now

Do the following tasks either before launch or during the early days of your startup.

1. Determine viability

Be brutally honest. Your startup needs to be something you can make a profit doing or delivering. Ask yourself: would you buy it? Run the numbers: will customers pay enough so that you can cover costs and make a profit? Here is a list of 29 more questions to ask, attributed to noted investor Paul Graham.

2. Create a business plan

It’s easy to convince yourself that you don’t need a business plan, but creating a business plan with financial projections forces you to think through details. Keep your plan a living breathing thing that you revisit and adapt regularly.

3. Figure out the money

Most startups take a lot more time to get off the ground than you expect. Know where your living expenses for the first year will come from (savings, a job, spouse’s income, etc.). If you need financing for the business start investigating as soon as possible.

4. Get family behind you

Spend time to make sure your spouse and other close family ‘buy into’ your startup. You’ll have enough challenges without resistance from family.

5. Choose a business name

You want a name that will stick in your target audience’s heads. And it shouldn’t already be taken by another company. Do Google searches and use a corporate name search tool to see if the name you have in mind is unique. Check at the state and Federal level.

6. Register a domain name

Get a matching domain to your business name. An AOL email address or a website with free hosting and a name like mysite.wordpress.com makes it seem like either (a) you are not running a real business or (b) you don’t plan to be around long.

7. Incorporate / figure out legal structure

Incorporating your startup can protect your personal assets. Talk over structure (corporation, LLC, sole proprietorship) with your attorney and accountant.

8. Apply for an EIN

An Employer Identification Number (EIN) helps you separate yourself from your business. You’ll need it if you plan to incorporate your business or open a business bank account. Plus, with it you can avoid giving out your social security number (an opening to identity theft). EIN numbers are free; apply online.

9. Investigate and apply for business licenses

You may need one, if not several, business licenses for your startup, depending on your industry and where you are located. Most licenses are at the state or local level. Here in the United States, the SBA has a helpful business license and permits tool.

10. Set up a website

Get your website up and running as soon as possible. Today, it’s necessary for credibility. Even if your product is not yet built, you can start with company information.

11. Register social media profiles

Getting set up on the major social media channels (Facebook, LinkedIn, and Twitter, to start) will make marketing on them later easier. Also, it’s important to reserve your brand as a profile name. Try Knowem.com to reserve the names.

12. Start your revenue stream

Start generating revenue as soon as possible. At the early stages of a startup there is never enough money – resist the temptation to wait until things are “perfect." Oh, and get your lawyer to create any customer contract forms necessary.

13. Rent retail or office space

If you’ve got a brick-and-mortar business, you’ll need to sort this out early. If you plan to run a retail business, pay attention to foot traffic, accessibility, and other factors that will affect the number of people that will walk in your store. EXCEPTION: If you don’t have a brick and mortar or retail business, then hold off renting an office as long as possible to avoid saddling your startup with lease payments.

14. Order business cards

As a startup founder, you’ll be doing a lot of networking, so order plenty of business cards. They are inexpensive enough that you can reorder them later if things change. Without cards you lack credibility.

15. Open a business bank account

It’s all too easy to use your personal bank account to pay for business expenses, but it becomes a gnarl to untangle later.

16. Set up your accounting system

Once you have your bank account set up, choose an accounting program. Start as you intend to go. Few things will doom your business faster than books that are a mess.

17. Assign responsibilities to co-founders

If you have one or more founders, it’s imperative that you decide who will do what up front. Put it in writing. Co-founder disagreements can destroy your business.



What You Can Do Later

While you don’t want to put off these tasks too long, they don’t need to be checked off your list before you launch.

18. Upgrade your smartphone and choose apps

As an entrepreneur you are going to be on the go – a lot. I can’t emphasize enough how useful a good phone with good business apps can be, in running your startup. Get a credit card swipe device to accept payments, too.

19. Find free advice

Your local SBA office, SCORE, and other small business resources can provide you with free advice, access to business templates, and other tools.

20. Consult your insurance agent and secure coverage

Depending on the type of business you’re starting, you may need insurance of one kind or another, like liability, workers’ comp, or health insurance, especially if you hire full-time staff.

21. Hire your first employee

Depending on the type of business you have, you may need staff from day one (retail) or you may be able to outsource to freelancers, interns, and third-party vendors for a while (service and tech businesses). Just remember, trying to do everything yourself takes you away from growing the business.

22. Line up suppliers and service providers

Finding a good source of inventory is crucial, especially in certain types of businesses (retail, manufacturing). Beyond inventory, line up good reliable suppliers and service providers so you don’t have to sweat the details.

23. File for trademarks and patents

The best thing to do is consult an attorney early about the need for patents, especially. Get the advice early. Then you may be able to defer filing for a while, depending on the nature of your business.

24. Work your network

Reach out to former co-workers and colleagues, as well as friends and family. Don’t pressure them to buy your products or services. Instead, tap into them for introductions and help with other things on this startup checklist.

25. Don’t waste time on “partnerships"

Be careful about wasting time on “business partnership" discussions. Your business won’t be attractive to potential partners unless and until you start making headway. Focus your precious time to make sales and get customers.

26. Refine your pitch

You need a good elevator pitch for many reasons: potential investors, customers, prospective new hires, bankers. If you can’t persuasively and clearly pitch your business, how can you expect key stakeholders to buy in?

27. Refine your product, and marketing and sales approach

As you go along you will learn more about the marketplace. Use customer feedback to refine your product and service offerings, and your go-to-market approach.

28. Secure your IT

Whether you’re running a tech company or not, you likely have sensitive data on computers and devices that you want protected. Protect it from intrusions and disasters. Back it up! IT problems can derail a fledgling company.

29. Get a salesperson or sales team in place

In many startups the business owner starts out as the chief sales person. But to grow you need a dedicated sales function, so you can focus on activities other than day-to-day sales.

30. Get a mentor

It’s all to easy easy to work “in" your business rather than “on" it. As Michael Gerber tells us in The E-Myth, we need to be working “on" our businesses if we want them to grow and flourish.A mentor who has succeeded in your industry can provide you with priceless advice and serve as a sounding board.

Your checklist might be longer than this, but organizing what needs to be done before you launch and what you can take care of down the road makes it easier to prioritize your tasks.

[Attribution: Anita Campbell]
1.05

Basic Venture Startup Terminology

  • Accounting: the action or process of keeping financial records relating to a particular period or purpose
  • Advertising: describe or draw attention to a product, service, or event in a public medium in order to promote sales or attendance
  • Alternate Value: another term for Social Responsibility, which see
  • Benefit: an advantage or profit gained from something
  • Better: a more excellent or effective type or quality
  • Budget: an estimate of income and expenditure for a set period of time
  • Business: a venture focused on the work that has to be done to profitably solve customer problems
  • Business Model: a design for the successful operation of a business venture, identifying revenue sources, customer base, products and services, operational processes and methods, and details of financing
  • Business Plan: a formal statement of a set of business goals, the reasons they are believed attainable, the strategies and key tactics for reaching those goals, and information about the organization or team responsible
  • Cash Flow: the total amount of money being transferred into and out of a business
  • Change: become or make different
  • Core Competency: a defining capability or advantage that distinguishes a venture from its competitors
  • Cost: an amount that has to be paid or spent to buy or obtain something
  • Critical Success Factor (CSF): an element that is necessary for a venture to achieve its mission
  • Desire: strong feeling of wanting to have something that is not absolutely needed
  • Earn: obtain money or other value in return for products or services
  • Elevator Pitch: a short summary used to quickly and simply define a venture, product, service, organization, or event, and its value proposition
  • Enterprise: a project or venture, typically one that is difficult or requires effort, initiative, and resourcefulness.
  • Entrepreneur: a person who organizes and operates a venture
  • Entrepreneurial Mindset: the ability to recognize opportunities for innovation and enterprise
  • Entrepreneurship: the process of starting a business venture or other organization
  • Environment: the setting or conditions in which a particular activity is carried on
  • EPSCPBC: an acronym for "Earn a Profit Solving Customer Problems Better than the Competition" ... something every business venture must do to survive and thrive
  • Executive Summary: a short document or section of a document that summarizes a longer report, proposal, or a group of related reports in such a way that readers can rapidly become acquainted with the core material without having to read it all
  • Exit Plan: a means of withdrawing from a current situation after a predetermined objective has been achieved
  • Forecast: a prediction or estimate of future events
  • Goal: a long-term aim or desired result
  • Ideation: the formation of ideas or concepts
  • Income Statement: a financial document that gives operating results for a specific period; it typically includes sales revenue, cost of sales, gross income, operating expenses, and earnings
  • Innovation: make something new and better, or improving something by introducing new methods, models, ideas, products, services, processes, market positions, or paradigms
  • Input: a contribution of work, information, money, or material
  • I-T-O: abbreviation for Inputs-Transformation-Outputs
  • Judgment: the ability to make considered decisions or come to sensible conclusions
  • Management: the process of dealing with or controlling things or people
  • Margin: an amount of something included so as to be sure of success or safety
  • Market: a demand for a particular commodity or service, and the customers that create that demand
  • Marketing: the action or business of identifying, promoting and selling products or services to selected markets
  • Mission Statement: a statement of the purpose of a venture or organization, and its reason for existing; the mission statement should guide the actions of the organization, spell out its overall goal, provide a path, and guide decision-making
  • Need: something that is a necessity
  • Operations: the harvesting of value from assets owned by a business; manufacturing, production, and delivery of goods and services
  • Organization: the structure of related or connected people, places, and things to achieve specified objectives
  • Output: something produced by a venture as a result of transforming inputs applying processes and resources
  • Plan: a detailed proposal for doing or achieving something
  • Price: the amount of money expected in payment for something
  • Problem: a matter or situation regarded as unwelcome or harmful and needing to be dealt with and overcome
  • Process: a series of actions or steps taken in order to achieve a particular end
  • Profit: a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something
  • Research & Development: work directed toward the creation, innovation, improvement, and introduction of products and processes
  • Resources: a stock or supply of money, materials, staff, and other assets that can be drawn on by an organization in order to function effectively
  • Reward: something received as a result of achievement
  • Rocket Pitch: another term for Elevator Pitch, which see
  • Risk: the possibility that something unpleasant or unwelcome will happen
  • Sales: the exchange of a product or service for money; the action of selling something; the organization within a venture responsible for the selling activities
  • Social Responsibility: an obligation to act in ways that benefit society at large
  • Something: a product, service, process, position, method, business model, or paradigm
  • Solution: products, services, processes, and/or methods formulated to address particular problems, need, wants, and/or desires ... Also, see Something
  • Strategic Position: the orientation of a venture relative to the competitive environment
  • Team: two or more people working together
  • Technology: the application of scientific knowledge for practical purposes
  • Time: the indefinite continued progress of existence and events in the past, present, and future regarded as a whole
  • Timing: the choice, judgment, or control of when something should be done
  • Transformation: a qualitative change from one set of elements (inputs) into another (outpus) by a predetermined process(es) utilizing a set of resources
  • Value: the importance, worth, or usefulness of something
  • Value Equation: Value equals Benefits divided by Price (V = B/P)
  • Value Proposition: a promise of value to be delivered and a belief from the customer that value will be experienced
  • Venture: an organized activity involving risk but with a reward for success; a business enterprise
  • Vision: the ability to think about or plan the future with imagination and/or wisdom
  • Want: a strong desire for something
  • Work: activity involving mental or physical effort done in order to achieve a purpose or result

(c) VentureNotebook.com ... 6.14


Jim's Venture Startup Scorecard A

For each category (1 through 30), pick the description that most accurately fits our venture. Each description has a score, from 0 to 4. Add up the total score for our startup venture. A score of 50, give or take, generally means the venture concept is probably viable and should move forward with some effort on our part. A score of less than 20 generally means our venture is still very sketchy, needs a lot more work if we want it to succeed. A score of 100 or more is ... whew!! This puppy is rockin' and rollin'!

The basic Scorecard is below ... or download the .pdf version.

[A0.04]

Jim's Venture Startup Scorecard A
Name of Venture:
Date of this Scoring:
Score:01234
Category:
Industry KnowledgeNoneSomeKnowledgeableExpertsIndustry Leader
Stakeholders, InvestorsFoundersFamily, FriendsFanatics, FoolsAmateurs, AngelsProfessionals, VCs
Paying CustomersNoneSomeManyLots!Cannot Keep Up
Team Industry Experience010 years20 years30 years40 years
TeamSelf& Co-founders& Advisors& Balanced Team& Board of Directors
Customer DevelopmentNoneDiscoveryValidationBuildingSelf-generating
Customer TypeNoneFamilyFriendliesCustomer ReferralsWord of Mouth
Products and Services PhaseIdeaConceptAlphaBetaStable
Development StrategiesBegBorrowCopyCreateInnovate
Venture ConceptFuzzyVisibleClearFirmVisionary
Target MarketsNone1SeveralManyLots
Venture LocationVirtualMailboxShared SpaceOfficeBuilding
Development StageIdeaConceptPlanningStartupStable
EBITDA/RevenueNegative0 to 5%5%+10%+20%+
Sales RevenueGuesstimateEstimateProjectionsObjectivesAssignments
Venture StatusDreamPlanningStable OperationsScalingScoping
Launch Timeframe-10 months-10 weeksFirst real sale+10 weeks+10 months
Valuation of Venture0More than $10KMore than $100KMore than $1MMore than $10M
Money RaisedNoneMore than Max NeededMinimum NeededRequested AmountRequested Amount + 25%
Business ModelWhat business model?Buy low, sell highCopying competitorImproved from competitorInnovate from competitor
Core CompetencyNoneSomeAdequateCompetitiveBest in the Industry
Funding ProposalGuesstimates ... WAGsEstimates ... SWAGsDetailed BudgetFormal ProposalFunding Committed
InnovationCopyCreateIncremental InnovationFundamental InnovationParadigm Innovation
OperationsDon't knowConceptCanvasFlowchartsRefined manual
Product DevelopmentIn Process1 Launched5 Launched20100
Marketplace Brand RecognitionQuizzical LooksSmilesGigglesApplauseCheers
Business MethodsNon-existentConceptsCopyCreativeInnovative
Business PlanFuzzyVisibleClearFirmVisionary
Transformation100% Solution Focus75% Solution Focus100% Problem Focus75% Problem Focus50% Problem/Solution
Budget for Effective MarketingOutrageously HighExorbitantly HighHighMediumLow

Download PDF

Rapid Prototype Venture

Venture: an undertaking involving uncertainty as to the outcome, usually with significant risk, such as a new business start-up.

Rapid Prototype: the process of quickly making a realistic model in order to gain early insight into the usability, needs, and functions of the final version, with end-user inputs into the design in order to to detect and correct flaws during development.


[1.08]

The Creative Personality

Creative individuals are remarkable for their ability to adapt to almost any situation and to make do with whatever is at hand to reach their goals.

Of all human activities, creativity comes closest to providing the fulfillment we all hope to get in our lives. Call it full-blast living.

Creativity is a central source of meaning in our lives. Most of the things that are interesting, important, and human are the result of creativity. What makes us different from apes—our language, values, artistic expression, scientific understanding, and technology—is the result of individual ingenuity that was recognized, rewarded, and transmitted through learning.

When we're creative, we feel we are living more fully than during the rest of life. The excitement of the artist at the easel or the scientist in the lab comes close to the ideal fulfillment we all hope to get from life, and so rarely do. Perhaps only sex, sports, music, and religious ecstasy—even when these experiences remain fleeting and leave no trace—provide a profound sense of being part of an entity greater than ourselves. But creativity also leaves an outcome that adds to the richness and complexity of the future.

I have devoted 30 years of research to how creative people live and work, to make more understandable the mysterious process by which they come up with new ideas and new things. Creative individuals are remarkable for their ability to adapt to almost any situation and to make do with whatever is at hand to reach their goals. If I had to express in one word what makes their personalities different from others, it's complexity. They show tendencies of thought and action that in most people are segregated. They contain contradictory extremes; instead of being an "individual", each of them is a "multitude".

Here are the 10 antithetical traits often present in creative people that are integrated with each other in a dialectical tension.
  1. Creative people have a great deal of physical energy, but they're also often quiet and at rest. They work long hours, with great concentration, while projecting an aura of freshness and enthusiasm. This suggests a superior physical endowment, a genetic advantage. Yet it is surprising how often individuals who in their seventies and eighties exude energy and health remember childhoods plagued by illness. It seems that their energy is internally generated, due more to their focused minds than to the superiority of their genes.
    This does not mean that creative people are hyperactive, always "on." In fact, they rest often and sleep a lot. The important thing is that they control their energy; it's not ruled by the calendar, the dock, an external schedule. When necessary, they can focus it like a laser beam; when not, creative types immediately recharge their batteries. They consider the rhythm of activity followed by idleness or reflection very important for the success of their work. This is not a bio-rhythm inherited with their genes; it was learned by trial and error as a strategy for achieving their goals.
  2. One manifestation of energy is sexuality. Creative people are paradoxical in this respect also. They seem to have quite a strong dose of eros, or generalized libidinal energy, which some express directly into sexuality. At the same time, a certain spartan celibacy is also a part of their makeup; continence tends to accompany superior achievement. Without eros, it would be difficult to take life on with vigor; without restraint, the energy could easily dissipate.
  3. Creative people tend to be smart yet naive at the same time. How smart they actually are is open to question. It is probably true that what psychologists call the "g factor," meaning a core of general intelligence, is high among people who make important creative contributions.
    The earliest longitudinal study of superior mental abilities, initiated at Stanford University by the psychologist Lewis Terman in 1921, shows rather conclusively that children with very high IQs do well in life, but after a certain point IQ does not seem to be correlated any longer with superior performance in real life. Later studies suggest that the cutoff point is around 120; it might be difficult to do creative work with a lower IQ, but an IQ beyond 120 does not necessarily imply higher creativity. Another way of expressing this dialectic is the contrasting poles of wisdom and childishness. As Howard Gardner remarked in his study of the major creative geniuses of this century, a certain immaturity, both emotional and mental, can go hand in hand with deepest insights. Mozart comes immediately to mind. Furthermore, people who bring about an acceptable novelty in a domain seem able to use well two opposite ways of thinking: the convergent and the divergent. Convergent thinking is measured by IQ tests, and it involves solving well-defined, rational problems that have one correct answer. Divergent thinking leads to no agreed-upon solution. It involves fluency, or the ability to generate a great quantity of ideas; flexibility, or the ability to switch from one perspective to another; and originality in picking unusual associations of ideas. These are the dimensions of thinking that most creativity tests measure and that most workshops try to enhance. Yet there remains the nagging suspicion that at the highest levels of creative achievement the generation of novelty is not the main issue. People often claimed to have had only two or three good ideas in their entire career, but each idea was so generative that it kept them busy for a lifetime of testing, filling out, elaborating, and applying. Divergent thinking is not much use without the ability to tell a good idea from a bad one, and this selectivity involves convergent thinking.
  4. Creative people combine playfulness and discipline, or responsibility and irresponsibility. There is no question that a playfully light attitude is typical of creative individuals. But this playfulness doesn't go very far without its antithesis, a quality of doggedness, endurance, perseverance.
    Nina Holton, whose playfully wild germs of ideas are the genesis of her sculpture, is very firm about the importance of hard work: "Tell anybody you're a sculptor and they'll say, 'Oh, how exciting, how wonderful.' And I tend to say, 'What's so wonderful?' It's like being a mason, or a carpenter, half the time. But they don't wish to hear that because they really only imagine the first part, the exciting part. But, as Khrushchev once said, that doesn't fry pancakes, you see. That germ of an idea does not make a sculpture which stands up. It just sits there. So the next stage is the hard work. Can you really translate it into a piece of sculpture?" Jacob Rabinow, an electrical engineer, uses an interesting mental technique to slow himself down when work on an invention requires more endurance than intuition: "When I have a job that takes a lot of effort, slowly, I pretend I'm in jail. If I'm in jail, time is of no consequence. In other words, if it takes a week to cut this, it'll take a week. What else have I got to do? I'm going to be here for twenty years. See? This is a kind of mental trick. Otherwise you say, 'My God, it's not working,' and then you make mistakes. My way, you say time is of absolutely no consequence." Despite the carefree air that many creative people affect, most of them work late into the night and persist when less driven individuals would not. Vasari wrote in 1550 that when Renaissance painter Paolo Uccello was working out the laws of visual perspective, he would walk back and forth all night, muttering to himself: "What a beautiful thing is this perspective!" while his wife called him back to bed with no success.
  5. Creative people alternate between imagination and fantasy, and a rooted sense of reality. Great art and great science involve a leap of imagination into a world that is different from the present. The rest of society often views these new ideas as fantasies without relevance to current reality. And they are right. But the whole point of art and science is to go beyond what we now consider real and create a new reality. At the same time, this "escape" is not into a never-never land. What makes a novel idea creative is that once we see it, sooner or later we recognize that, strange as it is, it is true. Most of us assume that artists—musicians, writers, poets, painters—are strong on the fantasy side, whereas scientists, politicians, and businesspeople are realists. This may be true in terms of day-to-day routine activities. But when a person begins to work creatively, all bets are off.
  6. Creative people tend to be both extroverted and introverted. We're usually one or the other, either preferring to be in the thick of crowds or sitting on the sidelines and observing the passing show. In fact, in psychological research, extroversion and introversion are considered the most stable personality traits that differentiate people from each other and that can be reliably measured. Creative individuals, on the other hand, seem to exhibit both traits simultaneously.
  7. Creative people are humble and proud at the same time. It is remarkable to meet a famous person who you expect to be arrogant or supercilious, only to encounter self-deprecation and shyness instead. Yet there are good reasons why this should be so. These individuals are well aware that they stand, in Newton's words, "on the shoulders of giants." Their respect for the area in which they work makes them aware of the long line of previous contributions to it, putting their own in perspective. They're also aware of the role that luck played in their own achievements. And they're usually so focused on future projects and current challenges that past accomplishments, no matter how outstanding, are no longer very interesting to them. At the same time, they know that in comparison with others, they have accomplished a great deal. And this knowledge provides a sense of security, even pride.
  8. Creative people, to an extent, escape rigid gender role stereotyping. When tests of masculinity/femininity are given to young people, over and over one finds that creative and talented girls are more dominant and tough than other girls, and creative boys are more sensitive and less aggressive than their male peers.
    This tendency toward androgyny is sometimes understood in purely sexual terms, and therefore it gets confused with homosexuality. But psychological androgyny is a much wider concept referring to a person's ability to be at the same time aggressive and nurturant, sensitive and rigid, dominant and submissive, regardless of gender. A psychologically androgynous person in effect doubles his or her repertoire of responses. Creative individuals are more likely to have not only the strengths of their own gender but those of the other one, too.
  9. Creative people are both rebellious and conservative. It is impossible to be creative without having first internalized an area of culture. So it's difficult to see how a person can be creative without being both traditional and conservative and at the same time rebellious and iconoclastic. Being only traditional leaves an area unchanged; constantly taking chances without regard to what has been valued in the past rarely leads to novelty that is accepted as an improvement. The artist Eva Zeisel, who says that the folk tradition in which she works is "her home," nevertheless produces ceramics that were recognized by the Museum of Modern Art as masterpieces of contemporary design. This is what she says about innovation for its own sake:
    "This idea to create something is not my aim. To be different is a negative motive, and no creative thought or created thing grows out of a negative impulse. A negative impulse is always frustrating. And to be different means 'not like this' and 'not like that.' And the 'not like'—that's why postmodernism, with the prefix of 'post,' couldn't work. No negative impulse can work, can produce any happy creation. Only a positive one." But the willingness to take risks, to break with the safety of tradition, is also necessary. The economist George Stigler is very emphatic in this regard: "I'd say one of the most common failures of able people is a lack of nerve. They'll play safe games. In innovation, you have to play a less safe game, if it's going to be interesting. It's not predictable that it'll go well." Most creative people are very passionate about their work, yet they can be extremely objective about it as well. Without the passion, we soon lose interest in a difficult task. Yet without being objective about it, our work is not very good and lacks credibility. Here is how the historian Natalie Davis puts it: "I think it is very important to find a way to be detached from what you write, so that you can't be so identified with your work that you can't accept criticism and response, and that is the danger of having as much affect as I do. But I am aware of that and of when I think it is particularly important to detach oneself from the work, and that is something where age really does help."
  10. Creative people's openness and sensitivity often exposes them to suffering and pain, yet also to a great deal of enjoyment. Most would agree with Rabinow's words: "Inventors have a low threshold of pain. Things bother them." A badly designed machine causes pain to an inventive engineer, just as the creative writer is hurt when reading bad prose.
    Being alone at the forefront of a discipline also leaves you exposed and vulnerable. Eminence invites criticism and often vicious attacks. When an artist has invested years in making a sculpture, or a scientist in developing a theory, it is devastating if nobody cares. Deep interest and involvement in obscure subjects often goes unrewarded, or even brings on ridicule. Divergent thinking is often perceived as deviant by the majority, and so the creative person may feel isolated and misunderstood. Perhaps the most difficult thing for creative individuals to bear is the sense of loss and emptiness they experience when, for some reason, they cannot work. This is especially painful when a person feels his or her creativity drying out. Yet when a person is working in the area of his of her expertise, worries and cares fall away, replaced by a sense of bliss. Perhaps the most important quality, the one that is most consistently present in all creative individuals, is the ability to enjoy the process of creation for its own sake. Without this trait, poets would give up striving for perfection and would write commercial jingles, economists would work for banks where they would earn at least twice as much as they do at universities, and physicists would stop doing basic research and join industrial laboratories where the conditions are better and the expectations more predictable.


[From Creativity: The Work and Lives of 91 Eminent People, by Mihaly Csikszentmihalyi]
2.04

Our "First 100 Competitors" List

Yes, we do have competition. Ignoring them won't make them go away, but it could suck our customers away! We don't need to get paranoid about the competition, but we do need to be aware of their strengths, their weaknesses, what the are likely to do in the future and how it may affect our venture.

Let us never, ever discount the competition. Never, ever think (much less say aloud!): "We don't have any competition!" Seasoned entrepreneurs and business veterans know that is a sure sign of ignorance and impending venture death! Thinking "We're number one, we're number one!" means there is a number two, and that number two might just be a mean old pit bull ready to rip our venture guts into pieces!

So let's take a deep breath, put emotions to the side, and start making a list of direct head-on competitors, those ventures that do what we do and are after our same market. (For example, McDonald's and Burger King are direct competitors.)

Then add to the list the indirect competitors, substitutes, alternatives, and replacements that our customers could choose instead of us. (For example, McDonald's and Taco Bell are indirect competitors ... they don't sell the same products, but they do compete for the same lunch-time crowd!)

Finally, add to the list the others that are in our domain space but not necessarily head-on competition.

We won't stop until we have 100 names, and as good as information about each as we can gather. Nothing magic about 100 ... maybe it's 200! Or, maybe it's only 20. Point is ... let's make sure we know as much as we can about the "other guys and gals". Let's use that information to learn what they do right, and make sure we do it better. What do they do wrong? Let's make sure we don't do the same dumb things! We do want to be number one, and we do want to keep that pit bull at bay!

We can "borrow" ideas from our competition, within legal, moral, and ethical boundaries, of course. Nothing says we have to start our venture from ground zero when others have already beat down the bushes!

Remember, our mission is to Earn a Profit Solving Customer Problems Better than the Competition. Customers decide who is better ... let's make sure it's us, not them!

(c) VentureNotebook.com ... 3.04



Our "First 100-Slide" Master Venture Plan Draft

As we develop the plan for our venture, we will be gathering data, information, research, ideas, thoughts, opinions and more. What do we do with all that "schtuff"? It does need to be organized so we can access it as needed. File folders, filing cabinets, notebooks, banker's boxes ... good old-fashioned methods that still work today!

Of course, there are nice "electronic" tools, too. Personally, almost all of my research is now filed electronically. Two invaluable tools for me ... Evernote and Google Drive (and Docs). Clip and save!

But ... ultimately we need to create our venture plan, and be able to communicate that plan to others: prospective investors, bankers, partners, employees, and more.

I recommend creating a slide show presentation from day one. 100 slides. Nothing magic about 100, but that's about the number of topics we may have in our master business plan draft. Each slide should have a heading topic ... Marketing, Operations, Management, Customers, for examples. In the body of the slide, put the most relevant key information for each topic. For example, on the Customer slide, put a list of prospective customers. Don't worry about how the slides look ... just use them to summarize the research.

Don't worry if more than one slide is needed for a particular topic. Editing will come later. Most ventures will share about 50 topics. Another 50 topics are unique to each venture. For example, a medical products venture may have a slide titled Solution Efficacy. A restaurant may have a slide titled Menu. Not likely these two ventures would share either slide topic!

Highly recommend using as much graphics as possible. Not just words on a slide, but is there a way to convey the information with a chart, a map, a photograph, a diagram? A picture is worth a kiloword!

On day one, there won't be much in the slide set. By day 10, there should be a pretty good collection of information. Confidence in the venture should be growing or not, depending on how these 100 slides are shaping up!

When the time comes to create a more formal business plan and presentation ... this is the model, the draft, the source of vetted information.

1.01

Jim Jindrick

VentureNotebook.com is a collection of tips, tools, and rules of thumb for innovators and entrepreneurs. Start at the top or pick a subject from the list below. --Jim Jindrick

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