Reacting Forward: Start Smart

1889: “Fooling around with alternating current (AC) is just a waste of time. Nobody will use it, ever.” — Thomas Edison

Get educated across functions

Many successful entrepreneurs have no business experience at all. They get mad about something and start fixing it. They are often inventors or creative types who have never worked in finances or marketing. The good news is that such skills are secondary to attitude when it comes to success of a Successful Startup. Other successful entrepreneurs might have expertise in one discipline like finance or sales, which has defined their regular career, but that is not to say the rest of the business functions must remain a mystery.

Every study on success attributes concludes that self confidence is more important than anything. Getting educated across various business functions builds self confidence.

Your aim as owner of a non-employer business is to be a jack of all trades, master of none. That way you can learn enough to judge performance in other functions without the need to hire functional experts at the outset. It will save you a lot of money at the beginning.

I do not have expertise in any one business function. I started in sales. Those of you who work in sales might claim there is a skill involved, and if there is then, in my opinion, it is one that anyone can learn; talk to the customer, listen to what they tell you, and find some way to delight them. It is pretty basic if you ask me.

While I was in sales, other aspects of the business interested me. Whenever I had the opportunity to talk with people from those other functions, such as manufacturing or finance, I would take it. People love to talk about what they do, and I always asked them to identify the key aspects of their role and the biggest challenges and risks. Everyone was keen to take me on a tour of the department, and sometimes I was invited to sit in on their meetings.

I also wanted to know how they perceived the sales team, its costs, and return on investment. Those conversations led to an understanding of how the different functions worked (or failed to work) together in a company. It was easier to see how poor communication across functions, the levels of approval required to get changes introduced, and the need for the lower level to impress the higher level with what he or she thought the higher level wanted to hear, caused issues and ineffective decisions.

I noticed how much everyone filtered the information as they passed it along to their supervisors and how afraid they were to share bad news or information about risks and threats. By the time a report ended up on the desk of a CEO it bore little resemblance to the reality of the situation that had triggered it. For a large company that is bad enough, but for a start-up it can be catastrophic.

Whenever I brought my sales teams together, I would invite someone from an entirely different department who would give a simple presentation on their role, their function, and how they responded to issues or requests that the sales folks brought to their attention. The rest of the time the guest would sit in and listen to the sales people discuss their tasks, their challenges, and their successes. This led to better interdepartmental communication. There were less perceived fires internally and more effort was freed up to focus on customers instead. The main purpose, however, was to educate myself about other functions.

As my career progressed and I found myself in senior management roles, I had people who worked for me spend time shadowing their compatriots in other functions. Everyone got to understand the key tasks of the other areas of the enterprise, and to appreciate each others difficulties.

Whenever we held executive meetings, I invited select people from junior management levels to attend. The opportunity to interact with more senior members of the company motivated them, but it also helped the different levels of management better understand each others’ issues. For me the main benefit was to learn how bloated are the middle management levels of companies, and that so many roles and titles were simply complicating communication and progress. So many job titles overlapped.

Because I had sort of cross-pollinated myself across all business functions, when it came time to start my own company, I had a higher level of self-confidence to make good decisions, and I concluded that with the benefit of our technological world I didn’t need to hire anyone right away. Of course just spending time talking to a CFO does not make one an accounting expert, but it gives enough of an insight into the main issues and it certainly helped me in my selection process when I was choosing a contract CPA.

There are plenty of companies around who can provide the detailed accounting services you need, and on a fee for service basis such that you never have to hire a CFO. As you have probably guessed by now I have never hired a single employee in any of my three companies. My cross-functional knowledge has helped me hire excellent consultants because my self-confidence and intuition (probably related) help me judge.

These days just about every function you need can be provided by a company that specializes in that function. So long as you have a good handle on the main issues that each function might face you can simply manage a system of outsource contracts. In effect, you become like the conductor of an orchestra. As the conductor you can’t play any of the instruments as well as the people you conduct, but you can tell a good note from a flat one as you conduct and your role is to harmonize and interpret. A tweak here, a bit of direction there, a vision for all.

With my first company I chose to start with a 100% virtual, non-employer business structure. At the time my thinking was that I could protect my cash for a few months to allow me time to figure things out. Then I would hire whatever help was needed. In the end I never hired anyone other than sub-contractors. My investors spent the first two years begging me to hire people. After that they begged me not to because our NET profit was 76% and we were distributing it quarterly.

A few years later I found I had the first and only fully virtual company in the pharmaceutical industry. Most observers considered it impossible to succeed that way. Then, when it sold after six years for $107.5 million the new owners first action was to hire a full time employee to manage it. A year later they had thirty employees and all those lovely profits went down the drain.

So, my strongest recommendation from the outset is that you aim to have as virtual a company as you can. The biggest benefit, however, of adopting a virtual, non-employer structure is allowing you to adapt to any and all changes quickly and simply by deciding something by yourself and without needing the approval of a committee. Otherwise you end up in the situation in which you recreate the meeting madness you thought you had left behind.

Shadow the experts

1) Preceptorships

We live in an age when technology allows neuroscientists to record what happens to the brain when it is exposed to external stimuli. In his book on neuroplasticity, The Brain That Changes Itself, Norman Doidge M.D. states plainly that the brain has the capacity to rewire itself and/or form new neural pathways—if we do the work. Just like exercise, the work requires repetition and activity to reinforce new learning.

In 2007, Harvard medical school conducted a study with volunteers in a lab asked to learn and practice a five-finger piano exercise. They practiced for two hours a day for five days, and then underwent a transcranial-magnetic-stimulation test (TMS), which allowed scientists to infer the function of neurons.

The TMS demonstrated that the brain behaves more like a muscle than previously thought. The more an exercise is practiced, the more the associated motor cortex expands, just as a muscle gets larger and stronger the more it is used.

Another group of volunteers was asked to imagine playing the exercise while actually sitting on their hands. The TMS results from this group were identical. The discovery showed two critical things, firstly that mental training changes the physical structure of the brain, and secondly that the brain cannot distinguish between what is real or imagined. These data have wide implications for entrepreneurs.

Brain imaging experiments using functional magnetic resonance imaging (fMRI) have shown that the human inferior frontal cortex and superior parietal lobe are active when the person performs an action and also when the person sees another individual performing an action. It has been suggested that these brain regions contain mirror neurons, and they have been defined as the human mirror neuron system.

This is how humans learn to adapt or die. We don’t need to evolve a new behavior over thousands of years, nor actually experience that behavior ourselves. We can simply observe someone performing a new task or having a good or bad experience, absorb the knowledge and develop the neural network to mimic it.

Because the brain works by observing and mimicking the behavior of others, the good news is that no entrepreneur has to work his or her way through the various departments like Andrew Carnegie did. They can simply take the time to observe other people working in their natural environment.

One way to rewire the brain in a beneficial way is to expose it to other functions of the business by arranging a series of preceptorships. A preceptorship is a period of observational training, often used for future medical professionals, during which a more experienced medical professional (or preceptor) provides observation time for the less experienced trainee. The trainee basically shadows the trainer for a period.

If you have little experience with, let’s say, finance, you can use your network of contacts to find someone who will be more than happy, in exchange for the promise of a free lunch, to let you shadow at his or her place of work, and answer your questions as they go about their daily routine.

If you are currently the boss but hamstrung by only really understand one or a few functions, it is time to do what Jack never did… walk the floors. It is time to put your ego aside and become a shadow for a day with the leader of each function. Taking the leader out of their environment and simply discussing the function remotely over lunch is not enough. Your mirror neurons need to see the person going about their daily tasks. Find out what they see as their main challenges, and the tricks they use to ensure progress or success. In this way, you expose your brain to positive information, and because the brain cannot tell the difference between what is real and imagined, you can rewire those neurons simply by shadowing someone, watching them and imagining what they do and how they do it.

It all sounds a little esoteric, but the point is that in order to change your hardwired belief in one thing, you have to alter what the brain is exposed to. Many business owners and CEOS are intimidated by what I call the sharp end of the business, which is the interaction between the customer and the sales function. Sales and marketing staff, however, are usually only too pleased to have companionship for a day, and will happily let anyone shadow them. It is a great way to pick up tips and raise confidence in your ability to interact with customers. Your mirror neurons pick up on everything they see and without you consciously having to make a note or do the work. This leads to familiarity with the role. It is that basic understanding that gives you the confidence to sense risks and opportunities when they occur later.

After the preceptorship, the person shadowing usually tells me that they felt intimidated at first, but by the end of the day, the core elements of the function had been demystified. They have grasped the key concepts and gained confidence that they understand the process. The person being shadowed usually also learns something, and often long-term friendships are formed.

2) Function Seminars

Another way to expose the brain to new concepts and gain fast education is to attend a seminar that is based on one of the functions you are least comfortable with. More than likely there are plenty such activities in your local area, and a simple online search can find them. Attending to listen to lectures can help you identify the key issues that the functions face in today’s market. That will help you be more adaptable when they show up in your business. There is also a benefit to just being around people who work in that function, listening to how they speak, the acronyms they use, and the jargon of the function. Your mirror neurons pick up on it all.

3) Business Courses

Of course, another way to gain in depth knowledge of the different functions of a business is to attend business classes. A full-blown MBA is not necessary, and there are many local courses you can find that will broaden your awareness of one or more functions. Be aware, however, that while the education can be useful you are not learning to adapt. Your mirror neurons are not observing new behaviors because these classes take place outside of the natural environment of the function.

You are simply getting knowledge that might be useful and for your own business the most useful information of all is not about how human resource systems and management by objectives programs keep employees on track, but how functions work together across the whole business. If you get it right you should never need to hire a human resource function or system ever again. I know a few great people who have excellent careers in that function, and they will not thank me for saying it. In most successful small businesses, however, the owner or CEO can do it all. There is a power of one.

In downloadable resources are a couple of short, inspiring videos (note: Rainmaker is a boxing scene with a lot of fake blood and not for the squeamish) as well as a gift from me to you. It is a zip file of all the podcasts I did between 2012 and 2015. Each is ~ 5-10 minutes and people tell me they find them very useful pick-me-ups when traveling or in need of such. There are other ‘gifts’ dotted throughout the course.

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