the secret sauce

March 25, 2016

Failing forward’ is seemingly the motto of Silicon Valley companies. How rewarding can “expecting failure and embracing failure” be?

It can be rewarding when one understands the concept. Failure is actually closer to success than mediocrity.

You see, excellence is only achieved via radical action, yet radical action has an incrementally higher probability of failure. Silicon Valley companies recognize this, accept it, and move on because they are not interested in incrementalism, but rather are committed to ‘denting the Universe,’ as Steve Jobs liked to say. This is how Silicon Valley companies keep ‘failure’ in perspective and do not let it overwhelm them.

619-1For some reason, outside of Silicon Valley, the assumption in business has evolved into the belief that every idea, every product, and every concept must work and ‘must not fail.’ And, the mainstream thinking goes, if it is not working just get a bigger hammer and hit it harder. That does not just make sense in today’s business world. Not all ideas work.

The comforts and joy of embracing failure will come when people adopt the philosophy espoused by Thomas Edison when he said, “I’ve never failed, I’ve just found 10,000 ways that don’t work.” And, when they do that they experience the liberation that results from discarding moribund ideas and plans, and pivoting to a new and significantly more successful course of action.

Could you elaborate on the philosophy—‘turning the arrow back’? How does it work towards reinserting entrepreneurial benefits and accelerating growth?

There is no more profitable situation than having a specialty product in a commodity market. My phrase, ‘turning the arrow back,’ is a simple way of explaining how one can accomplish that. It is applying technology to a commoditized product or service to take the company back to the fast-growth, high-margin days of the entrepreneurial phase again. At Ardica, the company that I wrote about in ALMOST, we applied this concept. We took everyday clothing and outerwear and put in our patented power-pack to provide heat-on-demand and to provide power to charge and run mobile electronic devices. We reimagined passive clothing in the commoditized and slow growing field of outerwear as an active, environmental-controlling entrepreneurial device. As a result we were innovators in what is now the booming field of ‘wearable technology.’

Ardica had all the trappings of a brilliant company on the verge of making it big. But it could only almost achieve it—lack of strategic planning and paucity of funds stood on its path. Your views on strategic planning as an imperative for startups.

I believe that the most important thing a young company can do is ‘de-select.’ Strategic planning is where de-selection takes place.

Need for diligence in raising and streamlining funds…

Given the usual limited funds in a startup, the key is to be laser-like focused on what the enterprise is going to do, and what the funding is applied toward. Being all things to all people is a guaranteed losing strategy.

A clash of cultures was the bane of Ardica Technologies. Could you explain the need for alignment against the backdrop of the Ardica experience?

As the book shows, there were numerous cultural clashes Ardica faced, ones that ultimately led to the failure of the company. The most obvious clash revolved around the question—‘do we make what we can sell, or do we sell what we can make?’ The product development engineers never wanted to make more than one of any product. The sales people all wanted to make lots and lots of exactly what was selling today. It was a clear case of self-interest where a combined culture of the two was what was needed to ensure a viable, long-term business.

A second culture clash was between those who believed in quick riches and overnight successes, and those who believed that success was going to take a long time and cost more than could ever be anticipated. The former group had no use for business processes and disciplines. The latter group believed in plans, processes, and orderly execution.

The third and most pervasive culture clash was between the CEO, who was a lifelong naval officer who had always had and relied on big government money and myself—a scrappy, serial entrepreneur who grew up in the frenetic non-traditional environment of Berkeley, California.

Failure and self-interest of leadership could derail all the hard work. How impactful can robust leadership be, especially in an early-stage startup?

Authority differs from influence. People in a company do not follow people, rather they follow visions. Robust leadership in a startup and rapidly growing companies requires clear articulation of the vision to get buy off from all the participants. Bill Gates probably defined it best when he was asked what his role at Microsoft was. He said, “To have the vision and articulate it.” The person who says “I will” and then ‘does’ is the one who is essential to lead team members through the uncertainties associated with early-stage startups.

What is the best way a leader can ensure inclusivity and alignment?

Set up an environment where everyone can thrive. There are astonishing reserves of energy that seem available to those who enjoy what they are doing and find meaning in what they are doing. When you establish an enterprise that is doing something remarkable about which the employees care and care deeply, you win.

How difficult is to retain employees once the initial euphoria dies and the company starts going through a rough patch?

It is not the mountain that wears you down, it is the grain of sand in your shoe. Overcoming the lethargy that grows when a company shifts from a sprint into a marathon is what differentiates the winning companies from the losing companies. And, the one that almost always seems to retain its employees. It is a major challenge.

Innovation = Invention + Commercialization. How would you deconstruct this equation?

For some reason, lots of naïve employees still believe that if you build a better mouse trap, people will come swarming to your door—i.e, they believe that inventing something new is innovation. But, it is not. Innovation only comes when you commercialize that invention. Stated another way—invention is all about design and engineering. Commercialization is all about sales and marketing. Innovation, true innovation, comes from the combination of those diverse talents and efforts.

Is being revolutionary a prudent product strategy? Should not one also make what one can sell?

Innovation is the foundation of a company’s competitive advantage. Product life cycles are

a fact of life in business, and successful companies manage those life cycles well and replace dated products with new and exciting ones to ensure the company’s long term viability. In fact, the rate of change is accelerating exponentially so the problem gets more acute every day. A simple fact that highlights this: 95% of all patents ever issued were in the last five years, and that rate of introductions is accelerating. So, to thrive for the long term, you have to not only sell what you have but continue to develop revolutionary new products that obsolete your old products—before your competitors do.

How far can a well-defined marketing/branding strategy impact a startup’s product journey?

A great marketing/branding strategy is essential to guiding a startup’s product journey. Properly done, a brand clearly identifies the DNA of a company, what makes it truly different. Once defined and codified, the company has a road map for product development that will keep the company being unique far into the future. A great, clear brand develops a monopolistic position for a company that auto-magically guides the company and protects it from competition.

Your views on customer centricity as the core of company culture.

A company must provide something the customer wants, not what it wants them to want. Listening to the customer is the efficient way to accomplish this. It avoids the waste of false starts in a variety of unnecessary directions and allows the company to put all its resources into satisfying the customer’s needs while simultaneously improving a company’s value proposition (and profits) because it is customer needs rather than product costs that will then be determining final prices. Listening to customers is essential. The customer is always right—sometimes misinformed, rude, stubborn, changeable, but never wrong. It is the customer and the customer alone who will be the final determinator of how large your enterprise will ultimately be. So, succinctly stated, if you want to thrive, a commitment to being customer centric is an essential element of a company’s culture.

As told to Anitha Moosath

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