Lessons I Learned Today 7/1/09 –Seeing the Forest Beyond the Trees

This is a digest and recap of highlights, quotes, and comments from articles and discussions posted on this date on the Applied Entrepreneurship, LinkedIn group site.


*CEOs Who Saved Their Companies 

 “It’s a position many entrepreneurs will be familiar with, though Sonim’s journey from stardom to near-bankruptcy will be faster than most. Jamie Constable, CEO of turnaround investment firm RCapital (which now owns Little Chef) says there’s ‘a very steady flow of companies getting themselves into serious financial trouble’. Survival in this environment depends ‘not on how well run you are, but on how you’re structured financially.’”

“For investors, it’s essential to distinguish between good businesses that are simply running out of cash, and those with more fundamental issues.”

“Sometimes turnarounds are more about a fresh approach than a complete change of direction. Richard Brighton, MD of electronics manufacturer Exception EMS, was hired to turn round a company that was ‘going through a degree of stagnation, always making around £17 million, always chasing sales to make up for the customers it had lost, always at a break-even level.’”

“Viewed with hindsight, the solutions to a company’s problems may look obvious. But when you’re at your lowest ebb, those troubles can seem insurmountable.”

“Cutting costs, accepting low profitability and focusing on retention of customers may work in the short term, but often you’ll need to look further ahead and consider more radical changes to your business.”

“Economies of scale can be achieved as businesses pool resources such as buildings, equipment, specialist staff and back office functions. New products can be developed on the back of the companies’ combined expertise.”

“A business may not constitute a viable independent entity in the long term. If other companies are in the same position, a merger may be the most feasible option, minimizing competition and increasing market share.”


*Take advantage of being a startup company — while you still can by Elizabeth Cogswell Baskin

“As a brand new company, you can probably use all the help you can get. You won’t be a startup forever, so take advantage of it while you can. Don’t be shy about asking for help.

In the beginning, other business owners in your industry see you as a kindred spirit, or maybe like a younger, greener version of themselves. But sooner or later, as your company begins to pick up steam, that willingness to help will decline. Think of it as a compliment. This means people now consider you a strong competitor. Ask other business owners for advice. Ask everyone you know for referrals. Ask a potential customer for the sale.”


*Distress is painful: delay, deadly

“Ask any seasoned Interim or Turnaround Manager why distress is painful:  simply put, there’s a huge amount to do, inadequate and/or insufficient resources and time available, and frequently people are focused on doing things that are not top priority.  Early challenges include:  getting a clear understanding of the situation;  managing customer and supplier expectations;  understanding how long things have been deteriorating;  discovering what has prompted action now;  and gently challenging assumptions in the brief!”

“Probe deeper and ask why things don’t always go smoothly once the agenda is set.  Even then, denial, prevarication or obstruction by or between the stakeholders can easily constrain the speed with which the turnaround can be started, let alone executed … … and that assumes that taking modest risks is not restricted by an urgent need to operate within tight banking covenants and closely-monitored headroom. ”

“Given a situation with many of these factors, the number of issues compounds; and, unless they have had prior experience of a distressed situation, few stakeholders understand how rapidly deterioration can accelerate with the passage of time.”

“If you think you’re doing everything right, but the numbers don’t reflect that, go back to basics.  Double-check all operational and financial statistics and their interdependence.”

“If the numbers are still not right, or if things are starting to go badly wrong, why not bring in a Turnaround Manager or an Interim to help stabilise the situation?  As with any walk of life, there are times when it pays to seek out specialist help from someone whose training and experience equips them to work well in a specific field: they will almost always outperform those for whom this is uncharted territory.”

“Interims and Turnaround Managers have the added advantage of not being wed to any of the historical mental frames that inhabit most businesses.  Their focus is on a successful outcome for the company or the stakeholders, so they are not necessarily bound to existing strategies or emotional ties.  They are often able to ask pertinent questions based on their experience which may help to identify disconnects between the activity and the reported data.”

“t takes courage for an executive board to call for help from an external source – – sometimes they need to be prompted to do so by other stakeholders – – but the earlier that operational and financial difficulties are recognised and an Interim or Turnaround Manager is engaged, the better are the chances of survival.”


*Small Business Strategies: The rules you can break when starting a business by Elizabeth Cogswell Baskin

There are plenty of people, books and seminars out there to tell you all the things you should do when launching and running a business. A great deal of it is sound advice. But as the owner of the company, you make the rules. I don’t advise blindly accepting some of the business rules others consider common wisdom. Here’s a handful of rules I think are worth breaking:

  • The rule: It’s all about the bottom line.  The reality: It’s about doing the right thing.
  • The rule: Entrepreneurs all work 24/7.  The reality: You control when you do the work.
  • The rule: You can’t start a business without a business plan.  The reality: Many successful companies skipped that part.
  • The rule: You ought to have a thorough understanding of business.  The reality: You don’t have to know everything.
  • The rule: It’s important than everyone like you.  The reality: Being the boss and being liked are sometimes mutually exclusive.


*Gen Y is taking the entrepreneurial plunge like no generation before by Elizabeth Cogswell Baskin

“The Millennial generation is now opening businesses at a faster rate than Gen X and Boomers. The Boston Globe reports that 30-40 percent of new graduates from top colleges are forgoing the interview process in favor of the startup process. Other research shows at least 50 percent of all Millennials count working for themselves as one of their goals.”

“I predict the majority of these new businesses will succeed. The odd quirks their generation brings to the workplace that are driving their corporate bosses crazy are the same traits that will help them be successful as entrepreneurs. Most important among those traits is their expectation that they are qualified to lead, starting now. Millennials also tend to chafe at being judged by their experience instead of their ability to do the job. That’s also a valuable trait for a business owner, because starting a company from thin air requires you to demonstrate that ability.”

Gen Y defines leadership differently than previous generations. This is what I would recommend for any Millennial contemplating a startup:

  • Create an informal group of trusted advisors.
  • Associate the risk of business with some physical risk you enjoy.
  • Develop perseverance.


*Anatomy of a $1.67 Billion IP Verdict by Zusha Elinson

“News of the record-setting $1.67 billion patent verdict against Abbott Labs had patent lawyers slack-jawed across the country.”

“Abbott lawyers pressed the argument that Humira was entirely different from J&J’s competing arthritis drug Remicade, made by a division called Centocor Ortho Biotech. They said that Humira didn’t infringe and tried to invalidate the patent at issue, which Centocor had exclusively licensed from New York University. They also tried to convince the jury that Abbott’s drug came first, and Lee alluded throughout the trial to the Chinese proverb, “Give a man a fish; you have fed him for a day. Teach a man to fish; and you have fed him for a lifetime,” to illustrate the idea that Abbott had taught the world about how to make the arthritis treatment.”

“J&J’s lawyers weren’t afraid to turn to aphorisms. In what observer Carter called a “fire and brimstone” closing, Dallas trial lawyer Sayles quoted the biblical prophet Isaiah, asking the jury, “Come now, let us reason together,” as they discussed the huge damages in the case.”

“Sayles and Elderkin had the task of convincing the panel that the multibillion-dollar damages weren’t absurd, since they were tied to Abbott’s sales of Humira, which totaled $4.5 billion last year. They originally asked for $2.2 billion in damages. On the other side, an expert for Abbott put the damages at a much lower $200 million if in fact there was infringement.”

“After five hours of deliberations, the jury went with the Johnson & Johnson lawyers, finding willful infringement and awarding $1.17 billion in lost profits and $504 million in royalties. The award broke the previous record, a San Diego jury’s $1.52 billion verdict against Microsoft, in favor of Alcatel-Lucent.”


*Michael Jackson, Entrepreneur; The culture and politics that made his success possible. by Brian S. Wesbury & Robert Stein

“Regardless of what one thinks of Michael Jackson’s music or his life choices, it is easy to recognize how enormously productive Jackson was. He broke all the records for album sales, put MTV on the map and propelled music videos into the mainstream.”

“He created something out of nothing. He used his talent, hard work, and creativity to please the ears and eyes of consumers around the globe. If Jackson–or any entrepreneur for that matter–had asked a certain kind of economist whether he should pursue this line of work, this innovation, he would have been told it was foolhardy. “‘f there really was a market for that kind of stuff, someone would have done it already,’ they would say. But this is a static view of the world.”

“In reality, the economy is dynamic. And what allows that dynamism, what creates the environment for entrepreneurship, is the institutional framework–property rights, the rule of law and even the level of common trust among citizens.”

“Economic laws can either enhance or undermine the vibrancy of an economy, helping or hurting individual incentives and the flow of creative ideas.”

“Raising tax rates, regulating business and redistributing income can all interfere with these incentives. Americans know this, but politicians often listen to economists who don’t. With so many big items–like health care, cap-and-trade and large tax hikes–on the table, the decisions of the next few years will help determine whether the U.S. produces more Michael Jacksons, or not.”


What I Think

I think there are any number of lessons to be learned from the articles posted on this date, but, as usual, I’m going to try to find a primary lesson to focus on. In looking at these articles, although each of them has value, three sentences stick out from the article, CEOs Who Saved Their Companies:

“Sometimes turnarounds are more about a fresh approach than a complete change of direction.”

“Viewed with hindsight, the solutions to a company’s problems may look obvious. But when you’re at your lowest ebb, those troubles can seem insurmountable.”

In many respects, this is the reason for starting the Applied Entrepreneurship group on LinkedIn and for converting this blog to digest and comment on such insights. Put another way, as the old adage goes, sometimes it is hard to see the forest for the trees.

James Dicks puts an interesting spin on this in his article, Can’t See the Forest for the Trees. Dicks’ article, posted on Evan Charmichael’s blog, includes the following advice:

“Every day is a new challenge and, if it’s done right, the ball moves forward, inch by inch, and that’s all that can be expected in these troubling times. There is a catch though. You have to do something and sometimes that something is just getting off the couch to try and make something happen. Most times it is the small things that turn into the big things and sometimes the things you try your hardest at turn out to be nothing. But whatever you do will always give you new light into what you have already done and that’s when inspiration springs to life.”

It is really only hard to see the forest for the trees if you are too close and don’t have the experience to get an accurate perspective on your situation, or a guide who can educate you. Elizabeth Cogswell Baskin’s article, Take advantage of being a startup company — while you still can, teaches us that in particular, owners of start-ups may be able to get good free advice more easily than owners mature companies, because other business owners will see start-up entrepreneurs as a sort of kindred spirit on the one hand, while not necessarily seeing them as a threat on the other. Her advice is to take advantage of this as much as possible, since this will change fairly rapidly.

The other article by Baskin posted on this date, Small Business Strategies, warns us, that although there is a great deal of information and advice available for small businesses, be careful what you adopt as “gospel.” Her article goes through a number of small business “rules,” which may be better ignored than followed. Determining what is a good rule for your situation and what is not, is an art, but to some extent it is a coachable art. Having a good mentor will go a long way to helping you sort this all out. Working hard brings rewards more often than not, but working smarter should almost always net you a better bottom line and happier path to it. 


Applied Entrepreneurship Logo-small

If you enjoyed my impression of these articles, why don’t you read them for yourself and see what you and I missed or hit? Join the Applied Entrepreneurship group on LinkedIn. Membership is free and I try to post about ten articles a day there. We have some great discussions going and if you are an entrepreneur, we hope you will join us.

Tagged with: , , , , , ,
Posted in Applied Entrepreneurship, Intellectual property, Planning for a business, Recession strategies

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow me on Twitter
August 2009
« Jul   Sep »
Business Blogs
Support local businesses

Help your local favorite business win!

Bookmark and Share
%d bloggers like this: