How can a well-meaning startup avoid “Silicon Valley Syndrome” and actually use a social startup to create real value for society?

Every era has an industry that epitomizes its values. At the turn of the 20th century, nascent car companies like Ford and Packard were the symbols of a growing middle class. A couple of generations later, the best and brightest were lured to IBM and Xerox to develop the infrastructure of the information age. And in the 1980s, a booming Wall Street captured that decade’s spirit of self-interest.

As for today, there’s little doubt that the startup has become 2016’s quintessential business model. Inspired by the garage-to-riches mythology of Bill Gates and Steve Jobs, millions of young people are spending their prime years honing business plans, practicing sales pitches and tweaking their personal brands. Whereas the previous “it” industries profoundly reshaped society through corporate R&D, the rise of the startup has enabled scrappy entrepreneurs working out of college dorm rooms and coffee shops to transform how we listen to music, how we get around, even how we communicate our very identity.

But is all this disruption actually making the world a better place? It depends, as it turns out, on what kind of startup we’re talking about. Technically, the word can describe any kind of business in its launch phase. But the ones that dominate our news feeds and app screens are all startups of a certain flavor: those that are based in Silicon Valley, funded by millions of dollars in venture capital, and hoping to be bought out by one of the industry’s titans.

Business Models That Increase Middle-Class Convenience Through Automated Algorithms

For all their rhetoric of a better world through tech, most business models of these startups amount to increasing convenience for middle-class consumers through automated algorithms. Very few of them even manage to create a positive cash flow, electing instead to subsist off of venture capital funding until they get bought out or go public. Yet because these specific kinds of startups are the most visible, we’ve accepted their approach – brash, informal and dead set on glory – as the norm for all new businesses.

Fortunately, not everyone is buying it. As of late, social enterprise consultants, celebrated technology authors and syndicated business columnists have stripped away the gee-whiz factor and critiqued Silicon Valley’s startup model.

How to Create Real Value for Society

So how can a well-meaning social startup avoid “Silicon Valley Syndrome” and actually create real value for society? Here are a few pointers:

What is your goal? For many centuries, a successful business was one that improved a community by meeting its real needs. But at some point, “success” came to mean relaying an investment into short-term profit. Regardless of their original intent, many Silicon Valley startups get pushed into the second category by their over-reliance on venture capital. Social enterprise startups, meanwhile, build social impact into their core business model, and would never accept investment that causes them to compromise their mission for the sake of profit.
How big is best? The Silicon Valley ecosystem thinks big, pushing entrepreneurs towards high-stakes, industry-shaking concepts – the vast majority of which fail. For every Instagram, we’re left with 99 other similar ventures that fell flat. The sad thing is, many of these businesses could have thrived on a more modest level, sticking with a specific community or service. It’s great to think big, but sometimes, small is beautiful.
How long are you in it for? Tech companies tend to go all in on the 21st-century obsession with quick fixes. But it can take years, or even generations, for institutions to reach their full potential. Even if the founders are long gone by then, planning for the long view is important from Day 1.
As more and more entrepreneurs and thought leaders realize the downsides of the much-lauded tech startup, the backlash can’t be far behind. Before long, we’re likely find ourselves in a new era. And with any luck, the values we bring to our startups today will help define whatever comes next.

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Joining Vision and Action, a Denver-based consulting firm, offers a new program called the Social Enterprise Navigator.  This one-on-one social enterprise coaching series guides social change organizations through an efficient, well-defined, highly-collaborative process to grow and sustain long-term impact via the marketplace.  Adam Brock is the director of that program.

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Myth 1: Execution Equals Alignment

The typical approach to execution is to translate strategies into specific objectives, assign them to employees, use tools such as management by objectives and balanced scorecards to measure results, then hand out rewards based on performance.  To fix implementation problems, adjust the processes that link strategy to action throughout the organization, leading to greater alignment and thus better results.

Unfortunately, in most companies, the problem isn’t alignment. It isn’t even having the right people on the bus.  The problem is silo thinking.  Their research found that 84% of managers say they can rely on their boss and their direct reports all or most of the time, while only 9% can rely on colleagues in other functions.  Two out of three times, those colleagues screw things up.

And even for companies that have systems in place to manage commitments across silos, only 20% of managers believe they do enough good.  Most want more structure to coordinate activities across units; more bridges across those silos.

Myth 2: Execution Means Sticking to the Plan

Many companies treat plans as sacred objects. That’s great if obedience is your strongest priority, but it doesn’t encourage agility.  Effective implementation requires managers that adapt to changing opportunities and threats quickly, but that’s not going to happen if adherence to the plan trumps all other considerations. And it’s also not going to happen if capital resources and staffing are tied up in less productive uses, rather than reallocated to support strategic priorities.  Most companies, for profit and nonprofit, tend to be very slow to discontinue declining activities, denying resources to growing areas.

Myth 3: Communication Equals Understanding

Communication is good, so more communication is better, right? Not necessarily. Many organizations push out so much internal communication that the important stuff gets lost in the shuffle.  Keep it simple and reinforce the central points.

Myth 4: A Performance Culture Drives Execution

What matters is what you do, not what you say.  While many organizations offer a compelling official culture, reflected often in core values listed on the web site, but in practice what tends to get rewarded is individual or team performance (certainly a good thing), while collaboration across units, ability to adapt, agility and risk-taking, those attributes are rarely rewarded.  Too much focus on a performance culture leads to an unwillingness to experiment, to be open about challenges, to take risks that might lead to set backs.  In other words, keep it safe, hit your numbers, that’s the real internal culture at most companies. And that doesn’t encourage the kind of openness and risk taking that’s essential for long term success.

Myth 5: Execution Should Be Driven from the Top

While leadership from the top is essential, an execution-driven organization needs to encourage middle managers to have the authority to make execution decisions on their own, taking initiative and ownership of the results rather than expecting all of that to come from the top. Get clarity on the objectives, then managers figure out the best ways to get there.

Thoughts?

Good luck!

Copyright © 2014 Rolfe Larson Associates
Venture Forth! endorsed by Paul Newman of Newman’s Own

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Such is the claim by Chuck Blakeman in his recent article in Inc. magazine.  He writes:

“Momentum doesn’t come from balance, but from giving it your all up front.  An airplane burns up to 50% of its fuel just getting to cruise altitude. Most businesses do too.”  And:

“Live out your highest priorities — everything else should play 2nd fiddle to those.  And yes, you’ve got to choose.  You can’t have it all — right now.”

While I don’t entirely agree with him about this, his perspective is a valuable one.  Many people writing business plans believe they can achieve all their lofty business growth goals, AND live a balanced life.  For most people, however, for at least some of the time, that’s hopelessly unrealistic.  So in that case, the business planning process is a good time to do some life planning as well: are you ready at this point in your life to take on the goals you have for your business?  And if they’re aggressive goals, as they usually are, can you give it the time it needs? If so, great.  But if not, you’ll need to either scale down those goals, or defer launching your business to another time.

Thoughts?

Good luck!

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I also noticed folks talking about the B corp community as an economic network.

In the panel discussion last week, and in numerous smaller conversations afterwards, many people described how being a B corp is not only about what their own company does socially and environmentally, but also about their relationships with suppliers, customers, even competitors.

So, for example, they’re now having conversations with their supply chain about why they became a B corp, how this has increased staff motivation, retention, productivity, and ultimately profitability. Which not surprisingly leads to expressions of interest by those companies.

And, I’ve noticed, some B corps are expressing a preference for buying from other B Corps, as a means of aligning their values up and down their own supply chains.

The interesting question then is this: could being a B corp provide your company with a competitive advantage? I have talked to B corps who argue quite convincingly that being a B corp strengthens their company, but mostly in the past they have talked about how it provides their employees with a warm glow, one that makes everyone feel good about working there.  That’s a good thing, but there might be more…

Now it seems being a B corp may also improve how you reach, attract and retain customers. That sounds like something for any business to consider as they do or re-do their business plan.  Becoming a B corp is a pretty small investment if it works for your values, for your employees, and for your customers.

A recent article in the New Yorker about B corps can be found here.

Thoughts?

Good luck!

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A recent report entitled Forget the Glass Ceiling: Build Your Business Without One, commissioned by Dell, identified four specific ways that women bring new value (and values) to the marketplace:

1. Social Responsibility is Built Into Their DNA

2. Giving and Volunteering Benefits Both Nonprofits and Your Business

3. Women Help Other Women Achieve

4. Business is More Than Just Making Profits to Women.

My observation has been that women entrepreneurs bring longer-term sustainability to their companies, and in time I believe there will be data to support that observation.

Good luck!

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What sets a business plan apart is its singular focus on market and operational feasibility. In contrast, a strategic plan clarifies the long term direction of the organization; most business plans look at a shorter period of time, typically 2-3 years, and drills down thoroughly how the work will get done and dollars will be earned. Business plans typically take more resources, both internal and often external (in the form of consulting assistance) to develop the kinds of operational and financial analysis necessary to fully test the feasibility of business venture or an organization as a whole. It gets down to specifics about who the customers will be, what they will pay (with research backing that up), what marketing will be needed to reach them, who the competition will be, and how the finances will work out, in detail.

The feasibility part of the business plans means that it’s entirely possible that the idea you seek to develop is not feasible, at least not with your current set of assumptions. While strategic plans in theory have that escape clause also, rarely is it used. Finally, a credible business plan has to include who (the skilled managers) who will carry it out. It’s not a business plan if it doesn’t include the people who will implement it.

The above is a graphic from our colleagues at Social Impact Architects laying out some of these differences for the social sector.

Good luck!

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Mindful Entrepreneurs

There are now many examples of this in the corporate and entrepreneur community, which argue strongly for including these practices in your business plan. For example, Google has been the most visible with its “Search Inside Yourself” (SIY) course, which teaches employees emotional intelligence through meditation. Forbes described it as “rock-solid business-friendly mindfulness.” SIY has now been spun off as the Search Inside Yourself Leadership Institute. Additional companies using these practices include Apple, General Mills, Mayo Clinic, and Kaiser Permanente.

Mindfulness-Based Stress Reduction

The co-founders of Twitter and Facebook have build in contemplative practices into their new enterprises, with regular meditation sessions and work routines organized around mindfulness. More than 20,000 people have completed Mindfulness-Based Stress Reduction (MBSR) training; moreover, MBSR has been adopted by more than 80 companies.

Silicon Valley Discovers Mindfulness

Perhaps the strongest anecdotal evidence of how these practices have entered the entrepreneur community, and suggest you might want to consider them for your business, is from Wired Magazine:

“Meditation and mindfulness are the new rage in Silicon Valley.  And it’s not just about inner peace — it’s about getting ahead.”

Put differently, meditation is no longer just for Buddhists. It’s for business. Your business.

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So here’s a suggestion: spend more time in your cave, every day, no interruptions, to increase your creativity. And others on your team.

According to a recent FAST COMPANY article: “Creativity happens when you work independently [without distractions]. Individuals are really good at generating a whole lot of ideas, while groups are good at selecting, shaping and refining those ideas.”

That means, for example, when working on your business plan, to avoid groupthink, get people to think through their ideas BEFORE they come to the meeting. There’s no bigger time waster, in my experience, than long and often ineffective meetings that would have been far more productive if everyone had worked, really worked, on the problem previously. Have them — have yourself — work in their caves first, then get  together around the campfire.

What do you think? Are YOU getting enough cave time…

Good luck!

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This will help address the problem many small business owners face by creating a mechanism to connect with investors, which until had to be done “privately” — which for many small companies meant not at all. 

Here’s the catch: it only applies to “accredited investors,” those with a personal net worth of more than $1 million or those whose annual income is greater than $200,000.

So the idea that the general public would get a chance to invest their own money in small companies they believe are poised for rapid growth, is still on hold. That is expected to happen, sometime in the next year or two; the SEC is struggling to find a way to make this work without encouraging a huge wave of fraudulent offers that rip off people.

That said, for some small companies with great market potential but limited access to growth capital, this just might be the ticket.

Here’s a recent article in the New York Times on this topic.

What do you think?

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The flip side of that is an entrepreneurial person or a group (sometimes called a “skunk works” team) that uses innovative and risk-taking strategies to convert an idea into a profitable finished product in a large organization. Those people are sometimes described as “intrapreneurs” as in entrepreneurs “inside” a big company. They pursue the goals of the organization, working hard to break through the innovation gridlock that prevents many large companies from taking best advantage of their resources. 

Certainly the most well-known person who took that approach was Steve Jobs, yet many employees with much less authority have used these strategies successfully. In other words, you don’t need to be the boss or senior manager to be an intrepreneur: you just need to be innovative and smart (so you don’t get fired!) to get the job done.

And you often need a business plan, whether it be formal or informal, long or short. As always, a business plan lays out how you’re going to get from where you are now to where you want to be, based on solid research and analysis of things like markets, competitors, pricing, marketing, and credible financial projections, along with an innovation strategy — how to work inside (and sometimes outside) the organizational culture to reach the desired result.

Here’s a structure for an intrapeurial business plan, from Gifford Pinchot, a leader in this area.  This structure pretty similar to any other business plan. Good business planning is good business planning, regardless of the sector or size of organization.

http://company.pinchot.com/PDFs/BusPlan-1.pdf

Good luck!

What do you think?

• Copyright © 2013 Rolfe Larson Associates
• Social Impact App, find social enterprises nearby and online
• Venture Forth! endorsed by Paul Newman of Newman’s Own

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