Source

“…

1. Competitive advantage is not about beating rivals; it’s about creating unique value for customers. If you have a competitive advantage, it will show up on your P&L.
2. No strategy is meaningful unless it makes clear what the organization will not do. Making trade-offs is the linchpin that makes competitive advantage possible and sustainable.
3. There is no honor in size or growth if those are profit-less. Competition is about profits, not market share.
4. Don’t overestimate or underestimate the importance of good execution. It’s unlikely to be a source of a sustainable advantage, but without it even the most brilliant strategy will fail to produce superior performance.
5. Good strategies depend on many choices, not one, and on the connections among them. A core competence alone will rarely produce a sustainable competitive advantage.
6. Flexibility in the face of uncertainty may sound like a good idea, but it means that your organization will never stand for anything or become good at anything. Too much change can be just as disastrous for strategy as too little.
7. Committing to a strategy does not require heroic predictions about the future. Making that commitment actually improves your ability to innovate and to adapt to turbulence.
8. Vying to be the best is an intuitive but self-destructive approach to competition.
9. A distinctive value proposition is essential for strategy. But strategy is more than marketing. If your value proposition doesn’t require a specifically tailored value chain to deliver it, it will have no strategic relevance.
10. Don’t feel you have to “delight” every possible customer out there. The sign of a good strategy is that it deliberately makes some customers unhappy.”

Source

“… we’ll all be better off if we stop placing so much weight on the intuitive judgments of ‘experts’ — those who have risen to the top of their professions or hierarchies due, typically, to some combination of education, experience, tenure, previous success, and moxie. The business world, of course, is full of experts. We have financial analysts, product planners, business unit managers who hire people and assemble teams, marketing VPs, and an endless variety of consultants, pundits, and gurus.

And their ‘expert’ (read: intuitive) judgments – about whether a stock will rise, how a new ad campaign will go over, how a competitive battle will play out, which products will succeed in the marketplace, whom to hire and promote, and so on – should be received with great skepticism. In fact, they usually shouldn’t be received at all.

This is because human experts are overconfident, inconsistent, and subject to a swarm of thoroughly documented biases, most of which they’re not even aware of. What’s more, in many cases they’re making their confident predictions in areas where accurate predictions just aren’t possible. If anyone tries to tell you what the price of gold will be in six months, or who’s going to be on top of the high-tech industry in 2020, excuse yourself as quickly as possible.”

“I am co-teaching a class at Harvard Business School on entrepreneurship called “Launching Technology Ventures” along with my friend and colleague, Professor Tom Eisenmann.  The class kicked off this week with two cases:  Dropbox and Aardvark.

As I reflect on the class discussions, one of the interesting tension points that arose is the challenge an entrepreneur faces in selecting their primary product design approach.  Should they follow the Steve Blank, Customer Development Process school of product development or the Steve Jobs “vision” school?  In other words, should they pursue a user-centric design paradigm — setting priorities based on rigorous tests and listening excercises that determine what users want — or should they pursue a more top-down approach akin to Steve Jobs, who famously said: “It is hard to design by focus groups because most of the time people don’t know what they want until you show it to them. “

Steve Blank’s book, Four Steps to the Epiphany, has become an instant classic in Start-Up Land for good reason.  Along with the complimentary book by Eric Ries, The Lean StartUp, it provides an incredibly useful guide for starting companies, testing hypotheses and creating products that users love.”

“When Kenneth G. Lieberthal, a China expert at the Brookings Institution, travels to that country, he follows a routine that seems straight from a spy film.  He leaves his cellphone and laptop at home and instead brings “loaner” devices, which he erases before he leaves the United States and wipes clean the minute he returns. In China, he disables Bluetooth and Wi-Fi, never lets his phone out of his sight and, in meetings, not only turns off his phone but also removes the battery, for fear his microphone could be turned on remotely. He connects to the Internet only through an encrypted, password-protected channel, and copies and pastes his password from a USB thumb drive. He never types in a password directly, because, he said, “the Chinese are very good at installing key-logging software on your laptop.”  What might have once sounded like the behavior of a paranoid is now standard operating procedure for officials at American government agencies, research groups and companies that do business in China and Russia — like Google, the State Department and the Internet security giant McAfee. Digital espionage in these countries, security experts say, is a real and growing threat — whether in pursuit of confidential government information or corporate trade secrets.”

“Letting an employee go can be a stressful and even painful experience. Possibly that’s why making the firing process as easy as possible—for the boss—is something of a cottage industry. That’s too bad, because while terminating an employee is hard for you, getting fired is way harder for the employee. So forget about your feelings. Whenever you have to fire an employee you must protect your business from a legal aspect. After that, your only goal is to treat the employee as compassionately and respectfully as possible. Your feelings are irrelevant. Which is why you should never say any of the following:

1. “Look, this is really hard for me.” Who cares if it’s hard for you? The employee certainly doesn’t. Any time you talk about how difficult the situation is for you the employee thinks, “Oh yeah? What about me? How hard do you think this is on me?” If you feel bad—and you will—talk through your feelings later with someone else. And also never say, “Look, I’m not sure how to say this…” You’re sure what to say. You’re just uncomfortable saying it. Never even hint that the employee should somehow feel your pain; that’s just selfish. …

8. “I need to walk you to the door.” I worked for a company where the policy was to immediately escort terminated employees out of the building. An employee you fire is not a criminal. Don’t put them through a walk of shame. Just set simple parameters. Say, “Mark, go ahead and gather up your personal belongings and I’ll meet you back here in 10 minutes.” If Mark doesn’t come back, go get him. He won’t argue. ….”

“After the Facebook IPO, Sheryl Sandberg will become number two on the list of richest self-made women. She is the COO of Facebook. …  she is really smart (Harvard), a really hard worker (startups, Google, Facebook), a great speaker (here’s a commencement speech) … There is nothing, really, that is bad to say about Sandberg. And she works very hard to encourage other women to go as far as she has gone. The problem is, very few women want to be Sandberg, but there is very little discussion of this.

Sandberg has two young kids. She runs a company that is very public about having “lock-ins” to move fast enough to compete with Google … She encourages women to have ambition and “never take their foot off the gas pedal,” but very, very few women would choose to do this after they have kids. Pew Research shows that the majority of women would like to work part-time after they have kids. …

It’s revealing that the New York Times profile of Sandberg shows her surrounded by men who are only marginally involved in raising their kids. Obama, for instance, is shown kissing her on the cheek. At that moment, presumably, Michelle Obama was with his kids. Because Michelle has been very clear that he is almost never with their kids, and she’s pissed, and she has confessed to screaming at him that she didn’t sign up to be a single mother. In fact, she quit her job so she could manage the family while her husband’s career took off. Sandberg is also pictured with Jeff Immelt, CEO of GE. I was so struck by his lack of involvement with his kids that I wrote a whole post about it, here. He has a wife at home taking care of his kids. Sandberg is pictured with Mayor Bloomberg, who is divorced and single, and left raising his daughters largely to his ex-wife.”

“I used to think that company culture happened naturally.  After starting and building five companies, I’ve learned that great culture doesn’t just happen—you need to make it happen.  In general, a company’s most expensive asset is its people.  So it surprises me that so many companies fail to develop a culture or “people plan” to invest in and grow that asset.

When I started my most recent venture, the Rubicon Project, an online marketplace for buying and selling ads, the first thing I did was create a blueprint for our culture.  I talked with the founding team about the kind of organization we wanted to build and the values that we’d instill to guide our employees.

We didn’t start with a business plan, product roadmap, or marketing budget.  Why?  Well, what I have learned is that as you’re growing a business, everything around you is constantly changing.  The market, the product, competitive landscape, and economy all change.   Your business plan and product are far easier to evolve than your people.  I firmly believe that the difference between a good company and a great one is the strength, passion, and loyalty of its people.

Here’s how to design your “people plan”: ….”

“I like a legal department that has a sense of humor. This is the standard disclaimer that Contango Oil & Gas Company (MCF) includes with their quarterly earnings reports:

Lawyer Stuff

The future is unknowable. We have good intentions but all of our projections and estimates will be wrong, and could be materially wrong. Wildcat exploration is expensive, speculative and potentially dangerous. An offshore spill or explosion would be enormously expensive. We have insurance but it may not be enough. You could lose your entire investment. Don’t be lazy – read our 10-Q’s, 10-K’s and press releases, and if you lose money – please no tears.

“Don’t forget about risk-free T-bills in your portfolio…After inflation and taxes you’ll likely only lose 5-10% of your investment.”

- Contango V.P. Investor Relations”

“Don’t get me wrong. I believe maximizing shareholder value is a lovely result — but I also believes it’s a lousy goal.

Think about it this way. What happens when you give your employees a rousing speech about maximizing shareholder value? Once they wake up from their boredom-induced nap, they’ll go back to doing exactly what they had been doing before. After all, what can they do that will raise earnings per share? It’s like you’re asking them to count all the stars in the sky.

In other words, maximizing shareholder value — a mantra made popular in 1976 by the most-cited academic business article of all time, Jensen and Meckling’s “Theory of the Firm”— is just too vague and uninspiring to move employees to action. This viewpoint was also expressed by Peter Drucker, who insisted that the primary purpose of a business is to acquire and keep customers.

People need something tangible and actionable to focus on — something that will result in maximizing shareholder value. Tell an employee to increase shareholder value, and he’ll struggle. Tell him to increase customer value, and he can think of a dozen things to do, many of them actionable, measurable, and beneficial to your bottom line.

The uninspiring nature of the “shareholder value” mantra is only one reason I suggest you consider embracing a new one. The whole notion of shareholder value is built on a foundation of failed logic. Here are five reasons why it’s time to focus instead on understanding and meeting the needs of your customers: ….”

“Here are my top five troublesome truths about leadership:

1. You should minimize conflict. This is another one my mother taught me, and she was flat-out wrong. In an organization, you should optimize conflict, not minimize it. Avoid conflict at your own peril. I’ve seen far more trouble in company cultures for too little conflict rather than too much.

2. It’s all about the execution. Hogwash! Bad ideas executed well just cause you to fail faster. You must be heading in the right direction. Strategy first, then execution; they’re equally important. Execution, however, is a daily thing (managing complexity). Changing strategy is typically infrequent, which makes it hard to do.

3. Be nice! No … be kind. Kind means that you’ll tell people what they need to hear, even if it’s painful. Nice people often avoid tough conversations and fear upsetting someone else. Nice mangers always find something to compliment you on. Kind managers tell you what you need to hear, even if you’re screwing up. Be kind, not nice!

4. Only hire brilliant people. This is partially correct. Emotional intelligence, however, is more important than being the smartest guy in the room. In most jobs, I’d sacrifice 20 points of IQ to find someone who is self-aware and socially aware and has good self-control and social skills.

5. Be solutions-oriented. Sometimes you need to find quick answers, but I believe it’s much more important as a leader to focus on asking the right questions. More time crafting great questions will yield better answers. Too often, we’re solving the wrong problem! Ask a good question today!”