New CEO Success Buzzword: ‘Openness’

CEOs Say Openness is the Trump Card for Success

What’s it take to succeed in business? How about openness, transparency and employeeempowerment?

That’s the consensus of more than 1,700 CEOs surveyed for the 2012 IBM Global CEO Study.

Corporations are catching up with how consumers and employees like to interact with companies. As a result, the pressure’s on for corporations and brands to digitalize and adapt — instilling “engagement” as a primary tool throughout their operations.

After decades of top-down corporate management, this shift identifies increased use of social media as important to tapping into the intelligence of an organization and the wants and needs of customers. When properly managed, customers and employees alike can offer fresh solutions and ideas that directly affect profit and growth.

To achieve this open atmosphere, business leaders need to shift from a chain-of-command structure to one that embraces greater collaboration. More than half (52 percent) say that they’ll be using social networking.

Such openness is refreshing, but corporations and brands must guard against security breaches and higher risks that social networking can bring to the table. As a result, many CEOs report that they’re offering guidelines for proper use of social networks.

Here’s how the CEOs ranked the advantages of using social networks to empower employees:

  • Collaboration
  • Communication
  • Creativity
  • Flexibility

 

A Lie-Detector Test for Resumes

A Lie-Detector Test for Resumes

The furor over new Yahoo CEO Scott Thompson’sinaccurate resume is shining a spotlight on inadequate employee vetting. Thompson, the third Yahoo CEO in the past year, claimed to have a computer science degree, which he doesn’t, along with his actual degree in accounting.

If Yahoo, one of the world’s largest technology companies, with $1.22 billion in revenue in the first quarter of 2012, can be misled, what’s to stop your potential hires from lying on their resumes?

If your business doesn’t have a dedicated human-resources department, you can still vet potential employees. What’s key is to slow down and think through your choice of applicants, according to John Challenger, CEO of outplacement consulting firm Challenger, Gray & Christmas.

“Sometimes when you’re in a hurry to make the decision, you’re not thorough in your process,” he says. Here’s more advice on resume lie-detecting from Challenger:

1. Conduct multiple interviews.
Interview multiple people for a single position, and call promising candidates back for a second, or even a third, interview. Although this is time-consuming for both of you, it’s a valuable way to gain insight into the person you’re thinking of hiring.

And when you interview someone, try to have other managers in the room. It’s important to get feedback from colleagues about potential hires. Another manager’s gut instinct could save you from making a potentially costly mistake.

2. Do a background check.
Internet search tools and social networks are good resources for checking on applicants. After all, Thompson’s resume offense was caught by a Google search. But it’s wise to do a background check on each new hire.

Companies such as IntelliCorp provide employee-screening services for small and midsize businesses. IntelliCorp’s packages range from $1,595 to $7,495, according to Kelly Ansboury, the company’s director of business development and marketing.

Decide first how wide and deep you want to go, and then choose a service that meets your needs. As a minimum measure, Challenger recommends checking potential employees’ criminal records and citizenship status. Looking into their credit history or asking them to submit to a drug test are further steps you can take.

3. Seek out employment and character references.
Challenger advises interviewing candidates who have been recommended by people you trust. But even then, you should still conduct your own background check on the person. With a candidate who doesn’t have a personal recommendation, you should search out personal references. Go beyond those listed on his resume. Reach out to former co-workers or others who can verify the applicant’s employment history and give you insight into the person’s character.

Although it’s necessary to take precautions when adding someone to your company, Challenger said, lying on resumes is uncommon, especially in our age of information transparency.

“With high unemployment, some people feel like their only way to find a job when they’ve been out of work for a long time is to take action they know is wrong,” he said. “But most people — whether it’s out of their sense of integrity or their fear of being caught — they don’t take the risk.”

 

Rating the Best — and Worst — States to Do Business

Rating the Best and Worst States to Do Business

How business friendly is the place you’ve set up shop? A new report rates the business climate of states and counties across the U.S., based on a survey of business owners.

The report, from 2012 Thumbtack.com Small Business Survey, presented in partnership with theKauffman Foundation, offers a roadmap — quite literally — of the friendliest places to conduct business in the U.S., on a website that enables visitors to check the business climate “score” of any county in any state.

For instance, Idaho, Texas, Oklahoma and Utah all earned A+ scores in rankings for states most friendly to small businesses. On the bottom end of the report card are California, Hawaii, Vermont and Rhode Island. Each received failing grades.

The survey asked about tax rates, simplified licensing regulations, zoning laws, environmental constraints, and established training and networking programs.

Having recently attended a conference in Greenville, S.C., I was most interested to see how the northern area of the Palmetto State fared. I’d witnessed first-hand how this TechStars/Global Accelerator Network-city caters to start-ups and small businesses.

I wasn’t surprised to see “Upstate” South Carolina receive a B+. Entrepreneurs and start-ups in Greenville aren’t only aware of locally inspired training programs for small businesses, but many take advantage of them.

The scene was a far cry from the business atmosphere here in my adopted state of California. Sure, I look out my living-room window and see the sunshine and the Pacific Ocean, but the Golden State does few favors for the small-business owner, according to the survey. It reports that the three worst cities for small businesses are located here: Los Angeles, San Diego and Sacramento.

Below are some other findings from the report:

  • Idaho, Nevada and Delaware boast the most small-business-friendly tax codes, with California and New Mexico offering the least friendly.
  • The southern portion of the US. is the most friendly to small businesses and New England is the least.
  • Small business owners in Nebraska are the most likely to believe things will improve for their enterprise this year. Those in Iowa are the least.

This study probably isn’t going to persuade any of you to pack up and move, but it does serve as a means of taking a closer look at what doesn’t work in your region and discovering another area where the issue was resolved.

 

More Businesses Burdened By Slow-Paying Customers

Getting Customers to Pay On Time or At All  Is An Increasing Burden on Small Businesses

As a prolonged recession hangover weighs on both small businesses and their customers, tracking down the cash they are owed has become a challenge for an increasing number of business owners. At issue is customers not making payments on time – or at all, according to a survey released today by the Kauffman Foundation, a Kansas City, Mo., research organization focused on entrepreneurship.

In 2008, only 2% of small business owners said getting paid was their most challenging problem. That figure jumped to 12.8% in 2009 and continued to edge up slightly to 14.1% in 2010, the most recent year the data is available.

To be sure, getting paid is always a concern for business owners. But the longer the tough times drag on, the more thinly stretched business owners and their customers become, and the more dire the need to get paid becomes.

Related: Most Retailers Saving Big on Debit Card Processing Fees

“Early on everyone is worried about finding new customers,” says E.J. Reedy, a research fellow at the Kauffman Foundation and one of two authors of the study. “The longer that the economic conditions are a little bit more unstable, the more it comes down to getting cash, and getting paid for what you have actually done.”

While it’s hard to determine exactly how much of the resistance is coming from whom, the tension is coming from both sides of the transaction. “The customers are just unable or unwilling to pay in a timely manner,” says Reedy. And, despite the report being based on data from a couple of years ago, he says the current economic environment suggests “this is still likely to be very applicable in the current environment.”

The report also notes that getting customers in the door continues to be the top overall concern facing businesses, although the outlook seems to be improving slightly for some. Slow or lost sales was ranked as the biggest problem by 43.8% of business owners in 2010, down from 53% in 2008.

Related: Small Business Hiring Slows, But Still Adding More Jobs Than Large Companies

Meanwhile, credit conditions for small businesses are still rough, but the inability to obtain credit ranked pretty low in the list of top concerns in the Kauffman study. Only 4.4 percent of firms said access to credit was their most challenging problem in 2010. And less than one percent of business owners cited the cost and terms of that credit as the biggest roadblock.

That’s because access to credit is a top priority only for businesses that are trying to grow and expand, and the companies in this survey are “adolescent” or mid-range companies, says Reedy, not the high-growth group. In 2010, only 11.1% of the surveyed companies even applied for a new bank loan or line of credit.

The Kauffman Foundation’s Firm Survey, released annually, has been tracking the same 4,928 firms since they launched in 2004, including new businesses, purchasing of franchises, and the purchases of existing businesses by a new management team. The recession has been brutal to the nascent startups: at the end of 2010, only 49 percent were still in business.

These small, young firms are “swimming upstream, flying into very strong headwinds,” says Reedy, of the economic conditions business owners are struggling with. “Young businesses are amongst the most vulnerable businesses.”

 

What Do Pinterest and a Community Bank in Lubbock, Texas, Have In Common?

What Do Pinterest and a Community Bank in Lubbock Texas Have In Common SecondMarket

A local bank and a high-growth startup don’t seem to have a whole lot in common, but they do have one similar problem: shareholders can’t turn their ownership stake into cash easily. On Wall Street, of course, portions of companies are bought and sold all day long. For companies not listed on these public exchanges however, buying and selling shares has been more complicated. And with credit still hard to come by for many business owners, new ways are emerging to turn at least part of their companies into cash.

In the private sector — from high-growth startups to community banks — alternative marketplaceSecondMarket is making that possible. The New York-based online marketplace provides a platform for private companies to sell shares of their businesses.

Initially popular for allowing employees of superstar startups like Facebook and Pinterest to trade company shares before going public, SecondMarket has since added a new type of private company to its roster: community banks.

 

Is the End Near for Traditional Advertising?

Is the End Near for Traditional Advertising?

The demise of in-your-face marketing and advertising is close at hand, to be replaced by what Facebook’sPaul Adams terms a form of advertising that depends on “many lightweight interactions over time.”

Adams is Facebook’s Global Brand Experience Manager, a job that allows him to spend the balance of his day researching and designing better ways for businesses and people to communicate and interact. Before that, he was a senior user experience researcher at Google.

Adams claims that to really reach today’s consumers, companies and brands will need to build relationships with them rather than simply grabbing their attention or utilizing disruptions as an advertising tool. In other words, marketers should be progressive rather than aggressive, adding a fifth “P” — Participation — to the traditional marketing mix of Product, Price, Place and Promotion.

Much like the way we develop friendships over a period of time, an entire generation of advertisers will need to plan their marketing scenarios around the concept of building relationships. We often meet new acquaintances through friends. We chat them up, maybe catch them later at a party with other mutual acquaintances, discover we have similar interests, and, before you know it, we’re all packed up and off on a weekend ski trip together in Vermont.

We should build our relationships with potential clients and customers the same way. And we can begin that process by subtly promoting our brands in passing — as an aside to a bigger discussion or conversation. Like Adams says: lightweight, not heavyweight. With the advent of the World Wide Web, there’s so much information out there for us to absorb and so little time to absorb it. As a result, the best way to introduce new products, content or ideas to consumers will be seamlessly, naturally and subtly through word-of-mouth interactions.

Adams believes, as I do, that within a few years, the web will need to evolve to become more personalized to our own requirements. Websites need to contain information that is more relevant to our very particular wants, desires and needs. This personalization — fostered by a social fabric that’s woven throughout the user experience online — needs to seamlessly greet visitors with information about what their friends and associates are watching, reading, recommending, commenting on and more. Further, it should move to replace random display ads, pop-up messages or banner advertisements. Those direct — “heavyweight” — ads will fall by the wayside, like so many other obsolete processes and technologies.

Adams goes so far as to say heavy-handed commercial content doesn’t sit well with consumers because it’s not part of real life. While I wouldn’t go that far (think Clint Eastwood’s “Halftime in America” Super Bowl commercial), I do believe that personalized interactions — especially ones that reflect a trust and a willingness to listen to one another’s opinions — will go a long way toward sealing the deal.

 

Steve Blank on the Era of the Lean Startup

The Era of the Lean Startup

Entrepreneur, academic, writer and advocate Steve Blank is excited. At the SXSW Startup Village, the Lean Startup movement he helped pioneer had an all-day, rotating panel session packed to the rafters with one of the most exuberant crowds at the annual festival in recent memory. Some of those attendees were wearing black t-shirts emblazoned with the hashtag #500Strong. But the real reason for Blank’s excitement is linked to the publication of his new book, “The Startup Owner’s Manual,” as well as the publication of a handful of other lean startup-themed books (notably “The Lean Startup” by Eric Ries in 2011). According to Blank there is now, for the first time, a series of books on modern entrepreneurship.

According to Blank, people have come to realize that startups are not simply smaller versions of large companies. A startup is a temporary organization that’s designed to search, not to execute. A startup, whether it’s for a physical product or for the web/mobile/cloud, is in fact searching for a repeatable and scalable business model.

Blank’s website is a trove of information, resources and an archive of past presentations. His2012 SXSW presentation is already online and available to everyone, and it merits a walkthrough.

Related: SXSW 2012 Kicks Off (Video)

As a parting thought, Blank shared the biggest mistake an entrepreneur can make – and that’s “staying inside the building.” Despite entrepreneurship being more of an art than science, entrepreneurship is still built around facts, data, experiments, hypotheses (both proven and disproven) and none of them can be discovered if you’re isolated from your customers, vendors and partners. Get out there and talk to them.

While you’re outside of the building, Blank’s recommends the book “Business Model Generation” by Alexander Osterwalder, among others.

 

Branding 101: Five Tips for Solopreneurs

Branding 101: Five Tips for Solopreneurs

Strong branding is critical in our ad-cluttered world. After all, you want to ensure that you’re the first provider in your niche that comes to customers’ minds.

But what if your brand is, well, just you? How can you be memorable and stand out?

Never fear — solopreneurs can have snappy branding, too. Here’s a quick guide and some examples of one-person businesses that have great, memorable brands:

  1. Make it visual. Simple branding is best, especially if you can make an association in people’s minds that helps them remember you. Two of my local realtors are Ed Aro and Penny McLaughlin. You guessed it — Ed’s logo is an arrow, and Penny’s is a one-cent piece with her face on it in profile instead of Lincoln. Penny has had so much success with her brand that she grew into a real-estate empire with eight brokers, a.k.a. “Penny’s Team.” Their trucks are often seen around town, with that familiar penny logo on the side.
  2. Be sure it’s tweetable. Social media is increasingly important in coming up with your brand concept. Look what happened to Netflix when they didn’t check if their chosen spinoff brand name, Qwikster, was available on Twitter. It turned out to be already taken by someone who wanted to post about their drug use. When you’re choosing a brand name, consider how and whether it would work in social media.
  3. Have fun. Some of my favorite solopreneur brands have humorous or whimsical elements. For instance, a proofreader and writing-consultant friend of mine, Stefanie Flaxman, is the Revision Fairy — check out her cool cartoon. And franchise expert Joel Libava is the Franchise King, down to posing with a red-velvet-and-gold crown (once again, great visual). What better way to instantly communicate that he’s the top expert in his field?
  4. Make sure it fits. If the entrepreneurs I’ve cited above were uncomfortable with the brands they’ve created, their brands would flounder. You may be living with this brand for a long time, so don’t go with a brand concept that embarrasses you. Customers will sense that, and you won’t promote your brand as enthusiastically.
  5. Be consistent. Once you’ve come up with your branding, you want to use it everywhere. Get new business cards, magnet signs for your car, stationery and a new sign for your store. Don’t leave any of your old, less-awesome branding lurking around to confuse people.

 

Your Community as a Startup Ecosystem

Your Community as a Startup Ecosystem

If SXSW 2012 can have an overarching theme, it’s this: You don’t have to be in Silicon Valley to be a startup. No matter if you live in Omaha, Nebraska or Detroit or even a small town in between, you can create a vibrant startup scene.

Not only is the technology there, but entrepreneurial communities centered around academic institutions are sprouting up across the country. To complete the ideal entrepreneur ecosystem, however, you’ll also need a healthy mix of angel investors, venture capitalists, recruiters, junior talent and leaders. That’s according to Betterworks CEO Paige CraigNick Seguin from the Kauffman Foundation, Shane Reiser from Startup Weekend, and prominent VC Brad Feld.

As particpants in the “How to Build Entrepreneurship Communities” panel discussion at SXSW, here are their thoughts about the state of entrepreneurship communities, what makes them strong and what they’ll look like in the future:

1. Create awareness. You can start by reaching out directly to key stakeholders in your city, both in the public and private sectors. A critical component to awareness is developing your community’s story. More often than not, it’s easier to think of your community’s weaknesses (like geographic location or population) rather than identifying the one authentic cultural characteristic that can define your city. Make that your story and rally behind it. There should also be a balance of online and offline activity. Running and updating a consistent blog is just as important as getting people together in a room or organizing quarterly events.

2. Establish a culture and community of mentorship. Ideally, these mentors won’t be divas. Rather, they should be experienced men and women who are willing to work behind the scenes — one on one — with the newest class of startups.

3. Seek out strong leaders. These entrepreneurs will be able to launch initiatives and build consensus among members. The right leaders are generally community focused and out for the betterment of their neighbors. The ultimate goal for these leaders is to help foster a “community of helping” that will attract new talent and create strong ties back to the community if successful startups leave for other cities.

What does the future look like for entrepreneurship communities? The panel had three predictions:

The JOBS Act will be a major game changer, opening up unprecedented new ways for entrepreneurs to get access to funding their startups.

The American entrepreneur ecosystem will truly be flat. Entrepreneurship communities will be everywhere, independent of Silicon Valley.

And finally, universities will play a larger role than ever, putting money and resources to work. In the near future it will be common for companies to come out of academic institutions.

 

12 Leadership Traits You Need to Thrive in Tough Times 12 Leadership Traits You Need to Thrive in Tough Times 12 Leadership Traits You Need to Thrive in Tough Times

12 Leadership Traits You Need to Thrive in Tough Times

Trying to grow your business in this sluggish economy is a little like trying to swim through Jell-O. Ineffective or uncertain leaders definitely need not apply.

So what does it take to lead a small business through this ongoing economic mess? The blogosphere is humming with ideas lately. Here’s a roundup of the important traits for entrepreneurs in 2012:

1. Listen. Tune in to what workers and customers are saying, and you’ll find great ideas for how to move forward.

2. Give credit. Workers love leaders who acknowledge their ideas.

3. Be yourself. In our age of sound bites and phony smiles, tell your story honestly. It’s rare and refreshing, and makes workers feel like they know you — and want to help you succeed.

4. Communicate. So much company dysfunction can be prevented with clear communication. Otherwise, workers are in the dark. And soon, they won’t care.

5. Don’t be trendy. Avoid the “strategy du jour” problem. Choose a course and stick to it.

6. Beat anxiety. Stop worrying and turn your negative emotions — regret, fear, sadness — into teachers that help shape your character.

7. Be service-oriented. Leaders can be sort of self-involved, forgetting that they are in a position of leadership. To serve customers, shareholders and workers stay focused on others.

8. Be accountable. Define the results you want, and acknowledge when a screw-up is your fault.

9. Use empathy. Demographic changes have foisted more and more women into the workplace. Make sure your communication and leadership style is a fit for today’s workforce.

10. Share the big picture. If your workers don’t know the company’s overall goals, it can be hard for them to solve problems. That leaves you having to micromanage every problem instead of being able to delegate and offer guidance.

11. Keep your cool. The days when being a screamer worked are long gone. If workers are worried about whether you’re in a good mood today or not, little gets done.

12. Think like an immigrant. When you arrive on new shores, you often see the business world with fresh eyes. Use your unique perspective to spot opportunities others are missing.