McDonough School of Business, actually help create a foundation upon which to build the skills of an entrepreneur. In fact, I've actually developed my own framework, from which I think I can base much of the success we've had at Wild Creations.
The Entrepreneur's 4 S's
The Entrepreneur's 4 S's
- SERVICE - All good companies need to offer something that consumers want. Be this a service or a product or both, the service has to be differentiable and value-driven. We actually look for product with three basic elements:
Winnable - Can the product or service win in the industry in which it competes? Pretty simple. If the industry is large and saturated, your service better have a unique feature or distinction that will allow it to compete. If the industry is young or fragmented, the service better have a strategy to capture the available market share. Also, you should be able to charge a premium for your service with margins that permit continued growth and R&D. In the end, ask the question ... is it worth it? If the answer is, "eh ... (shrug)", then don't bother.
Defendable - Can the product or service be easily defended against competition? If it is not patented or unique, you better have a winning proposition that makes consumer purchase this service over the competition. Too many people use "brand loyalty", which is a valid argument if you are Coke, but consumers are fickle these days, and if your Google returns negative feedback, forget about loyalty. There are plenty of ways to defend against competition, but you better be sure to understand what those are and how to capitalize on them.
Scalable - Is your goal to grow your company? If so, then you will need to know how to scale your business in manner that is fast and efficient. I am a big fan of KISS ("keep it simple stupid", not the band, although a Kiss concert was one of the earliest childhood recollections, and I'm still a fan), and if a service can't be easily scaled up, then the business model doesn't work.
Adaptability - If you are building a business and/or a portfolio of services, every new one should be able to quickly and simply fit into your business organization. You shouldn't, for example, try to merge, say a toy company with a tequila company. As much as I hate using "synergy", this doesn't have that. Regardless, too many entrepreneurs reach, and reach real far, to justify bringing a service into a business model that just doesn't work. Remember what Steve Jobs seaid ... "Say "No" to a 1,000 things, for what you DON'T do will affect your success and legacy as much as what you do do."
- SYSTEMS - A good service is nothing if you can't get it into the hands of consumers and increase the value for your shareholders. As much time and effort needs to be put into the operational side of a business as does the product and R&D side. Of course, providing exactly what a consumer wants is important, but equally important is being able to get it to them and provide support. This includes understanding the basic functions of a business:
Finance - Pretty straight forward, but often overlooked as least important by entrepreneurs, which is why I put it first. Let's face it ... you have have the next great product or company, but without fuel in the gas tank, you are going to be confined to your parent's garage until they make you go out and get a real job. Entrepreneurs need to at least understand the basics of finance, given it is the global language used for business. As well, if not understood and set up properly at the beginning, then fixing later is a huge hassle, not to mention expensive. If you don't have the finance prowess, and have no willingness to learn it, then at the very least, hire a capable and trustworthy person to do it for you. Just make sure it's in the budget.
Human Resources - HR is another part of a business that is often undervalued by entrepreneurs. I would say, in fact, that if there was one aspect of the business system that could be most refined is the understanding of leadership. Of course, there are legal and tax issues that must be understood when considering your HR strategy, but most important is creating a culture that attracts and keeps your most valued employees. Sometimes, this just comes down to being a good leader.
Operations - How does the company source, produce, and delivery its service? How does in forecast and control inventory? What technical infrastructure is needed increase efficiency and reduce waste and redundancy? How much warehouse and office space do you need? What is your approach to handling vendors? What are the operating hours? You get it ... the basics.
Marketing - Although part of the "service" part of this diatribe, marketing has to be figured into the overall scheme of the business. Ideas in marketing need to be integrated with operations (to make sure they are realistic), with finance (to make sure they can be paid for), and with HR (to make sure that the people are available to pull it off). Additionally, marketing is changing in today's business climate. Understanding the impact of social media, the advanced and ever changing preferences of young consumers, the amount of information and data online ... it all has to be considered in a marketing strategy.
Technology - This is fairly new to the mix, but as technology continues to define the business, as well as personal, environments in which we live, understanding the impact of technology on a business is a must. This is true not only externally (understanding how customers are consuming technology and using it to make buying decisions) but also internally (understanding how technology can be used to increase efficiency in the business, communicate with customers, etc.) Regardless, the type of business ultimately will dictate the amount of resources needed toward technology, but any company wishing to grow, operating globally, and be a leader, needs to understand its impact.
- STRATEGY - Of course, have a great service and system of delivery is great, but without a strategy and vision for the business, it will undoubtedly get garbled (business term). The business climate is changing every day and at a pace most of us are having difficulty to fathom. These days, it is no longer valid to ask, "Where will your company be in five years?" Visions and strategies need to focus on the long term strategy of the company but with the understanding that, more than likely, the "who, what, why, when and how" of the company will be different. This isn't true of all companies, but entrepreneurs who wish to lead the business change and grow a business will need to understand and expect this.
- SPINE - I can credit my business partner, Rhett Power for this. I still remember sitting around a bar table discussing over Sierra Nevada's the then "2" s's (service and systems), and joking that, in order to be a real business school philosophy, it needed at least 3 s's. That's when he boldly said, "spine ... you need to have spine." Instantly, I knew he was correct. Entrepreneurs are different than business managers or CEOs of Fortune 500 companies. Most top level managers actually consider their position a job, one that requires a salary and bonus, an office and steady hours. Most probably believe that they can leave to find another at any time, and spend most of their time building a resume. An entrepreneur understands that being the CEO of his/her company is not a job. It is a lifestyle. There is no "quit and put your resume on Monster.com". Failure is not an option, because often a home mortgage or a vast amount of borrowed money is at stake. The only option to an issue is "how do we get out of this mess". Understanding this and actually going through with it takes courage ... and arguably a little mental imbalance. I can say from my experience that it is a trait that is not easily learned, but can be refined. It demands perseverance, thick skin and an desire for mental anguish at times. I often think of entrepreneurs as marathon runners. Most of these physical marvels were not born to run 26+ miles. They trained. They understood the time and effort and, yes pain, needed to succeed in this endeavor. More important, they had the will power to follow through. In the end, each new marathon gets little easier (if you don't blow out your knee) and the runner gets a little better ... just like starting and running a new business. If you don't have the spine for this kind of physical and mental torture, then more than likely upper management is your gig ... which ain't such a bad thing!