Mix it, pour it, just don’t drink it

It’s important for entrepreneurs to believe in what they are selling — in essence, to create a field of distortion around themselves that makes it seem like anything is possible with their solution. They just need to make sure they don’t believe what they’re saying to the point of distorting their own view.

I often find myself saying to entrepreneurs “your job is to mix it and serve it, just don’t drink it yourself!” This usually slips out of my mouth when I’m talking to an entrepreneur who is pushing their idea so hard that it seems like they are trying to convince themselves of its brilliance, though in most cases I think they actually believe it, which is what concerns me.

This doesn’t mean it’s bad to serve the Kool-Aid to others (metaphorically speaking, of course). Really, as an entrepreneur that’s a huge part of your job: selling others on your dream. And while it’s absolutely critical that you make a case for your product or service that has people fighting to buy it, you have to make sure you critically assess the reality of your situation.

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The humble entrepreneur

I’m lucky to frequently meet with entrepreneurs as part of my job. Like many who work in the entrepreneurial space, I spend as much time getting a feel for the team as I do considering their idea.

I recently met with an entrepreneur who impressed me with his humble attitude. He didn’t try to convince me that he knew everything about his customers, or that he knew the industry better than anyone else — instead, we had an engaging discussion about his key assumptions and how he would like to try to validate them in the market.

That great discussion not only gave me confidence in the entrepreneur and made me interested in working with him, it also got me thinking about what traits I look for when considering working with an entrepreneur. Like many investors and partners in the entrepreneurial space, I spend as much time getting a feel for the team as I do understanding their idea and assessing its potential. Here are some of the traits that turn me on, and some that send me running as fast as I can in the other direction.

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Competing in China’s e-commerce market requires a startup mentality

Xin Wang of Brandeis University International Business School and Z. Justin Ren of Boston University School of Management wrote an interesting article about How to Compete in China’s E-Commerce Market for MIT Sloan Management Review. They analyze why companies like eBay, Groupon, and Google have struggled in China.

They offer advice relevant to both entrepreneurs and large companies: understand your customers, make decisions quickly, and pay attention to your competition. As The Startup Owner’s Manual and The Lean Startup point out, the entrepreneur’s mission is to understand their customers’ needs, test hypotheses by gathering customer feedback, and iterate quickly based on their findings. When doing this, you’ll have to discover how to solve your customers’ problems better than your competitors do. And since you are testing and iterating, you’ll have no choice but to create a culture of quick decision making.

As Blank and Dorf point out, “a startup is a faith-based initiative”. It’s important for large companies entering China, or other new markets, to remember they are also “faith-based initiatives” — even though they are market leaders at home, their approach is unproven in the new market. They need to think like a startup.

When entering a new market, make sure you understand the competitive climate and your target customers’ needs. Then, alter your offering to carve out your own piece of the market. Otherwise you may end up another example of large company hubris leading to failure in a new market.

Amazon in China — an example of localization

Amazon’s entry into China is a lesson in understanding the local market and catering to its needs. The most obvious difference is Amazon delivering goods themselves, or at least making it seem like they are. Not only do they understand the local market, but they may even be using a lean approach.

I suddenly started seeing z.cn (Amazon’s URL in China) everywhere I looked. At the time, we were still living in Hangzhou — a second-tier city about 100 miles from Shanghai — so the ads on busses throughout the city donning Amazon’s smile stood out. Advertising is pervasive in China and I wouldn’t be surprised if I found babies with logos on their foreheads; but the sheer volume of ads with z.cn and the Amazon smile surprised me.

Amazon seemed to focus on books and a few other key categories when I first noticed them making their z.cn push, though the range seems to have expanded since then. The similarity between their approach in China and the US isn’t what I find instructive, rather it’s the changes they are making for the local market that should interest entrepreneurs and foreign companies.

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China, the Lean Startup

The Financial Times, among others, recently reported that China is going to experiment with allowing Hong Kong banks to lend directly to Chinese companies in RMB within a special zone in Shenzhen. It’s poignant that this is happening in a Special Economic Zone, which also started out as an experiment that was then duplicated in other parts of China, and finally led to widespread changes in the Chinese economy.

This type of approach, at a national level, is nearly equivalent to the Lean Startup approach [Read more…]

Lean Startup vs Lean Thinking at Toyota — reflections from someone on the inside

It’s been about nine months since I left a job in Toyota’s Strategic Finance Group for an opportunity to return to China to work for Originate China. At Originate, we create innovative web and mobile apps for clients and also based on our own internally generated ideas, and we also work with entrepreneurs to support their growth by providing strategy and engineering expertise. We are an agile development shop and focus on being nimble, which makes the Lean Startup methodology a great fit for our work.

While working in various business functions at Toyota for over 5 years,[1] I was able to see first-hand how Lean Manufacturing and the Toyota Production System has been applied to non-manufacturing functions. I learned how this methodology can be very effective within Toyota, but also how the Toyota approach to Lean Thinking in a business context with a focus on consensus-building can sometimes slow decision-making to a crawl, making the business anything but nimble. I am therefore in the unique position to apply the Lean Startup methodology to our business in China while avoiding some of the features of Toyota’s approach that aren’t ideal for startups.
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