Entrepreneurial Process Improvement: Selling the benefits, weighing the risks

Brian Bascom, CEOFebruary 18, 2012

Overview

• Who we are• Why you care• Anatomy of a tech start-up• Forces acting on new ventures• Inside the mind of the entrepreneur• Q & A

Who We Are

• United States Veterans Chamber of Commerce– Membership-based business organization– Chapters in different cities & states– Work with local chambers of commerce, state and

local government officials, and Veteran Service Organizations nationwide

• Our mission: Helping Veterans manage, create, and develop business opportunities.

Who’s This Guy?

• Runs the USVCC national office• Army Veteran– Balkans, Middle East– Infantry, Scouts, PSYOP, Civil Affairs

• Assists member Veteran businesses daily– Advises them on marketing and financing– Works with agencies, universities, and lenders

• Worked in telephony (big firm and dot-com)• Former ASEE Programs Chair

Who You Are (Ideally)

1. Managing projects or programs2. In an established development environment3. With software and business processes

• Can be a team lead, manager, programmer, consultant, PM, or senior executive.

• Responsible for making (good) things happen.

Defining the New Venture

Our focus today: high-tech entrepreneurs/firms

•Technical start-ups•Smaller, young companies•Addressing real-world problems•Caught before they solidify their processes•Not beyond living invoice-to-invoice (or funding round-to-funding round)

Why You Care About Entrepreneurs

• Corporate landscape constantly evolves

• Must deal with smaller corporate players– They bring new technologies– They provide (sometimes theoretical) cost savings

• Might be your next career move…– Directly (new company) or indirectly (consultant)

Find Your Next Bottleneck

What Are These People Doing?

Inside the Mind of the Start-up

• “Surprise exists in the mind of the commander.” – Sargon, John Boyd

• Understand the forces operating on a start-up or young business– Reduce your surprise at their actions– Align your efforts/suggestions with those forces

Iron Triangle of New Ventures

ProductVer. 1.0

Money

Management Marketing

Talking Process

• Until the first product ships, process is a minor sideshow

• After the first product ships, process will remain a sideshow unless it positively affects:– Money– Management– Marketing

• Some examples…

Cultural Factors

1. Gather resources, create business concept2. Execute the basic business model3. Execute the planned exit strategy

This is the new cultural norm in business

“Where there is an on-ramp, there will also be an off-ramp.”

Management Ekman Spiral

“Product”-ivity

“Tria

ngle

Issu

es”

CEO

VP Opns/COO

Product Manager

Project Manager

Team Lead

Programmer

Movement on the surface does not correspond to movement beneath the surface. Deep currents move in unlike directions.

Alternative Identification Chart

Observations on Venture Production

Some Reasons for Few Processes

• How new ventures are formed:– Who do you know and like?– Who knows about the problem we’re solving?

• Competing styles and standards• Known processes not workable in new venture• “War of the curly braces”• Left a large company to escape the “stifling

development environment”

Understanding Risk v. Gamble

• Risk is recoverable; losing a gamble loses all.

• Those in a new venture are living in a soup of uncertainty (about their team, market, deadlines, and customer intent), without the safety net of a diversified product portfolio.

• Result: behavioral heuristics of uncertainty come to the forefront more than otherwise.

Heuristics Game

• Directions:– Listen to the question.– Write down your answer, “A” or “B.”– Raise your hand after you write your answer.– Follow the next verbal directions.– No questions, no talking, until the game ends (it

only takes a couple of minutes, total).• Ready?

Some Critical Heuristics

• Hyperbolic discounting• Irrational escalation• Anchoring bias (on successful start-ups)• Loss-averse risk acceptance• Framing effect (iron triangle factors)• Overconfidence effect• Availability heuristic (also knowledge bias)

Aligning With Heuristics

• Go with the flow, not counter to it• Contrarians do not fare well in new ventures– “Cohesion is more important than accuracy”– Frame suggestions as corollaries to current plan

• Sell realistic timeframes and milestones– Simplified by rampant underestimation– Milestones are process by another name

• Future pain doesn’t sell – present pain does

Questions?

Brian BascomCEOUnited States VeteransChamber of Commercebrian.bascom@usvcc.comwww.usvcc.com