The one chart that shows how they pulled off the greatest comeback win in sports history

A recap

The New England Patriots played the Atlanta Falcons in Superbowl LI on February 5, 2017, the final game of the 2016 NFL season. The Patriots were down 21-0 with 5 seconds left in the first half when they finally scored 3 points. The score was still lopsided at 10 minutes left in regulation time when the Patriots kicked a field goal, taking the score to 28-12.

At this point, it was reported by statisticians that the Patriots’ chances of winning were about 0.3% (though anyone who has seen Tom Brady and the Patriots play a fourth quarter should have been skeptical about those odds). I had a Boston-based colleague who was talked into flying down and buying a ticket to the game by a friend of his; a Patriot fan, he was sitting in his seat at the stadium cursing the friend and searching for earlier flights home at this point.

The Patriots, down by 16, then pulled off an incredible succession of plays: a sack on Falcons’ quarterback Matt Ryan that led to a fumble, which Brady and the Patriots then took down the field for a touchdown. They made a two-point conversion (in itself a rare event), then held the Falcons, got the ball back, drove 91 yards down the field, scored another touchdown, and capped it off with a second two-point conversion to tie the game with less than a minute left. The Patriots then won the coin toss in overtime and Brady completed one pass after another leading to a game-winning touchdown a few minutes later.

The final ten minutes was flawless execution, pass completions, and scoring… which makes the question of why they weren’t able to do anything in the first thirty minutes such a compelling one.

What struck me, as I was a Boston resident at the time and had seen many similar great comebacks engineered by the Patriots, was how typical this was for the team. It seems as natural to watch the Patriots struggle early as it is to watch them easily assemble a series of long and flawless scoring drives later in a game.

The one chart that explains it

The Falcons played man-to-man defensive coverage against the Patriots. This worked well early in the game when they were able to cover them and stop Brady’s ability to complete passes. But in a game that lasted almost four hours start-to-finish, they became exhausted chasing around fast receivers. As one commentator wrote after the game, “keep a defense on the field long enough and eventually it’ll break.”

The top chart below shows the average number of yards the six most-mobile Patriots offensive players ran during the game, the same for the six most-mobile Falcons defensive players, and below both of those, the total actual yards gained by the Patriots offense. The x-axis is in terms of actual time: from start to end, the game ran about 230 minutes, though it included interruptions, such as about 30 minutes for halftime.

What you can see is that the average Patriot offensive player ran about 1,000 yards compared to about 850 for the average Falcon defender. The Patriots picked up 543 yards as a team.

In other words, the Patriots made the average Falcons secondary defender run 56% more yards than they picked up.

In bottom chart shows the same thing for when the Falcons were on the field. They picked up 351 yards total in the game which was almost exactly how much the average Patriot secondary defender ran.

In short, the Falcons defense was tired out by the end of the game. The Patriots employed plays that made them move far more than the Falcons’ play calling made the Patriots’ defenders move.

Chart showing how much the Falcons defenders ran during the game
(original analysis by watching the game film)

At first glance, you might consider that this shows a lot of inefficiency on the Patriots’ side if you consider how much the Patriots had to move to get the yards they gained. But since the Patriots’ individual movements has a direct relationship to how much the Falcons’ defense moved, the Patriots knew they had to move a lot as well. They were likely better conditioned and prepared for it over a long game.

The Patriots systematically invested in wearing the defense down from the beginning of the game and it didn’t fluster them that the return of that strategy didn’t start kicking in until they were down by many points with only a few minutes left to go: they knew that once they had the defense worn out, the rest of the game would be close to toss-and-catch for them.

One example that shows how the Patriots got the Falcons to move

The first play in overtime is a good example of how the Patriots caused the Falcons to run. The Patriots (the ‘O’s) lined up with a running back and three wide receivers. The Falcons had two defenders in the backfield (about 20 yards behind the line) and other defenders covering the three receivers man-to-man. If Brady had thrown a 20-yard pass, these deep defenders would have run very little: they would have been ready and waiting for the ball while the Patriot receivers ran the 20 yards to get to them. But Brady threw a short pass to the left to the running back (shown in blue) who then ran a short few yards along the left sideline. This drew five of the defenders over—with the two deep defenders running at least 30 yards to get to the ball. The play ended in a five-yard gain for the Patriots and 20-30 yards run by each of five defenders on the Falcons.

What does this mean for strategists?

In football, the objective is to defeat your opponent. In business, the goal is decidedly different: to better serve your chosen customers and continue to delight and create value for them.

But the Patriots’ strategy still has relevance. I think there are two lessons.

First, play the long game. Invest today in small events and decisions that add to give you advantages months and years in the future. If you can create a platform where you are creating value for your customers 18 months from now as easily as the Patriots were picking apart the Falcons’ defense in the final few minutes, wouldn’t you? Even if that means taking actions today that may seem wasted in the near term when things don’t easily go in your direction.

Second, mobility is an offensive asset. If you consistently move fast enough, competitors will be unable to keep chasing you. Mobility is one of the greatest sources of competitive advantage. It’s perhaps a bit of a stretch to compare the Patriots’ physical mobility with a company’s ability to constantly iterate and improve its products, but both are the anti-thesis of sitting still. Spend your time finding new sources of value for your customers not building walls (e.g., patents) around immobile product features that haven’t and won’t ever evolve.

. . .

All books and other resources referenced in this article

This is Part 15/18 in the series “How to Build an Innovative New Product or Company” on the topic of engaging your users’ “fast systems” to transition from occasional to continual usage of your product

A recap of a point I made in Step #4 of the “4 Steps to Develop a Strategy”:

Let me be clear: no user will use your product unless it helps them solve a problem or accomplish a critical job they are trying to solve (even if it solves a buyer’s problem and the buyer is their boss). To get product usage, you need a user’s internal triggers to fire and then you want to be the reaction they have to that trigger firing. You cannot create usage by giving people a product and saying it does something new that they are not trying to do. Amazon on a cellphone does this for many people: whenever they think they need to buy something, it’s easier to open their phone and buy it than it is to write it down on a shopping list and buy it later in a store. The internal trigger fires and Amazon is the brain’s go to response…

Does your product even have a daily usage value proposition?
Talk to your users. What are the problems/actions they tackle on a daily basis? How often do they think about the problem that your product solves? If your product is solving a weekly or monthly workflow then doing any of the steps below to drive daily usage will end up annoying your users. In that case, you may need to add features that tackle ancillary daily needs.

LinkedIn and Zillow both struggled with this. For LinkedIn, people would use their website once a year when they were considering a job move. For Zillow, it was once every few years when they were considering buying a new house. LinkedIn realized they could not use their core job-matching value proposition to drive daily usage. Thus, they bought the newsfeed aggregator Pulse and recast the front end of the site to make it more focused on staying up-to-date with your professional contacts. Zillow added Zestimate, a way for homeowners to see an estimated value of their house—something many enjoyed doing on a more regular basis.

Products typically solve daily + small problems or weekly/monthly + large ones
Few problems both are large and daily. Amazon found one for making it easy to buy anything—every day someone at least thinks they need to buy something. Problems that are both large and daily typically have many alternative and competitive options.

Daily and small problems are what users must care about.

Large and rarer workflows are what buyers care about: this is where ROI lives. The problem is that habits are only formed on daily usage. Infrequent behaviors never move from conscious to subconscious action and thus are always at risk that the behavior will be forgotten.

When trying to excite users, it is much easier to make something that is both high frequency and small appear important and thus gain attention around a solution (e.g., as Facebook does). Much harder is the inverse (e.g., as a faster tax preparation software). Said another way, our brains more naturally focus on what appears urgent than what is important.

If your product has daily users but no large ROI, then look for less frequent, larger problems to add in. If your product has a large ROI but no daily usage, look in the other direction: for small minor headaches that affect your users every day and solve them. In the “4 Steps to Develop a Strategy”, we discussed building a product with features that naturally align buyers and users and this is part of the art of doing that well.

Using your product to get users’ “fast systems” to take over and make your product a daily habit

In the prior article I wrote about psychologist Daniel Kahneman’s insight in Thinking, Fast and Slow that the brain alternates between two systems. One is the brain’s fast system that lets us brush our teeth and drive our car on a daily basis without having to think about every action and habit. The other is the brain’s slow system that lets you learn these behaviors initially.

Our goal here is to take a product that users are using on a semi-regular basis (e.g. linkedin or Zillow) and move them into a subconscious daily routine rooted in muscle memory.

Nir Eyal has a “Hook Model”

• An internal or external trigger fires, causing the user to think about your product
  • An internal trigger is when a user wants to accomplish something and your product is the first to come to mind. Ideally this is a part of their daily routine: a habit. Why does a user take a frequent action? It may be for a social connection, to avoid being out of the loop, or to avoid missing out on discussions.
  • An external trigger is when the product causes the user to pay attention to it. This could be via a daily email (with a clear button showing the action to take) or an app notification on the phone.
• An action is done by the user in response to the trigger
  • As a product owner, your goal is to make taking the action easy.
• A variable reward is delivered …
  • The reward should be a surprise; predictable rewards don’t stimulate repeated action.
  • Users will take the action to learn what the reward will be; intrigue and curiosity are motivators.
  • For example, when you open your email inbox, it can reveal all kinds of messages—predictable spam or notes from coworkers, but also updates from friends or new ideas. Posting a Facebook post can cause reactions and likes from friends.
  • Social rewards are particularly powerful as demonstrated by the value people put in their Uber rating or Quora’s ability to encourage its users to contribute to the platform for recognition.
• … and finally, the user makes a small investment back into the product
  • The user puts something back into the product—such as liking something, adding a new friend to the network, building a virtual house, or entering some more profile information. Over time, the investment adds up and makes it harder to walk away from the net investment. Also, the investment allows the product to continue to personalize the interactions and make them appear more meaningful; thus, the better the algorithm gets and then the more it may be used.
  • Over time, even small investments can lead to big changes in behavior.

 
Eyal shares a few worthy quotes. Habits, which you have to form to get to daily usage, are actions taken without thought. Those can be abused as they “can quickly degenerate into mindless, zombielike addictions.” Also: “If it can’t be used for evil, it’s not a super-power.”

Your customers can also put stage-gates and speedbumps in place that inspire the use of your product
Salesforce is a great case study. In many companies, Salesforce is a product that all salespeople use on a daily basis and keep updated with information—even when many salespeople might prefer not to.

What incentivizes sales team members to enter their sales updates consistently? There’s a natural inclination to just put a sales lead into the system when they’re about to close a deal. But doing so would skew their manager’s view of the pipeline, makes it much harder for their manager to help problem-solve active opportunities. Also, the salespeople themselves might be more likely to forget the history of interactions with a lead.

Some companies make keeping Salesforce updated a requirement to use shared resources. For example,

• You can’t schedule a conference room without referencing the Salesforce opportunity in Salesforce that the conference room is needed for;
• A pre-sales engineer won’t review and help support a deal unless it is in Salesforce;
• And if you want to schedule a flight to visit a prospect, you can’t without referencing a Salesforce opportunity

 
For your product, what are the emails users have to send to get approval to do things on a daily basis? If you build around those workflows, then adding speedbumps like the ones mentioned above could be one way to provide a source of constant but soft pressure to ensure users reference your product often.

For managers, can you build a one-stop-shop they can reference to run their weekly review meetings from? If they can just look at your application and have no need to create PowerPoint slides then the managers will create a constant pressure on their team members to keep your platform updated.

. . .

All books and other resources referenced in this article

This is Part 14/18 in the series “How to Build an Innovative New Product or Company” on the topic of engaging your users’ “slow systems” to encourage usage of your product

How the brain makes decisions

As entrepreneurs and/or product owners, it’s our job to reach out to a potential user, excite them about the concept of what we’re doing, get them to use the product and like it, and then use it enough in the first few months so it becomes a habit they no longer have to think about it.

Sound easy? The challenge is that even if our product is amazing, users’ time and ability to learn new behaviors are limited. And it matters: companies are increasingly aware that the likelihood of a SaaS contract renewal two years in the future is most heavily influenced by the user adoption rate of the product in its first few weeks.

The next two articles are about the process of crossing this bridge.

Psychologist Daniel Kahneman wrote in Thinking, Fast and Slow about how the brain alternates between two systems. One is the involuntary system that acts without us asking or even wanting it to. This is the brain’s fast system. It handles the vast majority of actions we take on a daily basis.

The contrasting system, the slow system, allows your brain to address situations it hasn’t seen before. It lets you learn new skills, such as playing the piano. After many hours of practice, much of your playing then moves into the subconscious/fast system so you can play without thinking about it.

Your goal: get users to adopt your product with their “slow system” first (through the simplest set of steps) and then move those actions into the “fast system” as a subconscious routine rooted in muscle memory.

In his book “What the Dog Saw”, Malcolm Gladwell tells the example of the VCR as a case study where this was not done well. When it came out in the early 1980s, it was a revolutionary product. You no longer had to be sitting in front of your TV at the moment a show was being aired; instead, you could record it and watch it again when you wanted. But users struggled with it for many years. In short, no one explained to the users what it did and showed them how to work it.

What Napoleon, Woodrow Wilson, and One Laptop Per Child Program have in common: A similar root cause of their failures

The original story behind the One Laptop Per Child program was compelling: just by airdropping laptops into underprivileged parts of the world, kids’ lives and futures would be shaped by the pure force of the technology. This simply didn’t happen; the kids preferred their own lives to the ones we thought they should have. Napoleon and Woodrow Wilson ultimately failed because they were so focused on rebuilding a world entirely in their own image that they neglected to see the constraints of the world that already existed.

Napoleon ignored the existing landscape and its constraints and as entrepreneurs, we cannot afford to get the wrong lesson about why change management is needed with technology to have an impact.

Strategy is a mechanism to force us to balance our aspirations, ambitions, and desire to change an audience with the realities of finite capabilities, existing cultural norms, ingrained user habits, and all of the other elements of the existing topography around us. A technology product alone cannot fully mobilize this change; it has to be supported with social interventions. Luckily, as business builders, we can create those interventions.

A 9-step process for using client service teams and product onboarding tools to engage the users’ slow system on your product

The steps are based in part on Robert Cialdini’s Influence: The Psychology of Persuasion and Owain Service and Rory Gallagher’s Think Small. Neither book is specifically about how to get users to use a product, so I’ve adopted, added to, and interpreted their ideas. They also fit into McKinsey & Company’s 4-part “Influence Model” that underpins any behavioral change. I’ve put their model components as subheadings under each of the 9 steps. The 9 steps have a bit of a chronology to them; the 4-parts are not necessarily chronological.

If you believe the results of the studies they reference, and believe the results are additive, doing these steps in the first few months of a product deployment would increase by about three times—a valuable head start on the path to developing ongoing routine usage.

This step applies in B2B contexts where we have to win over users. This assumes we’ve sold our product to a corporate-level buyer and now need to get the users to adopt it. In a pure B2C context, this section may or may not apply. The next article on converting usage into habits applies in both contexts.

A precondition for all of this is that the product works for the users. That it helps them, raises insights to them in the language that they use, and in way and time that is actionable.

Earlier in my career I investigated building a product that would help reduce patient falls in a hospital. I decided not to pursue it, but it makes a good case study. In this article, I’ll refer to it as ‘Fall Safe’.

(1) Share a top-down goal and align own their goals to it
McKinsey 1/4: “Fostering understanding and conviction: I understand what is being asked of me and it makes sense.” People seek congruence between their beliefs and actions– believing in the ‘why’ inspires them the behave in support of a change.

Start with an overall (e.g., facility-wide or social) goal, if possible. Think Small doesn’t propose this step, but they share the story of President John F. Kennedy asking a janitor what he was up to during a 1962 visit to the NASA Space Center. “Well, Mr. President, I’m helping to put a man on the moon,” was the supposed famous reply.

In an example specific to B2B SaaS companies, there has been a lot written about EHR implementations in hospitals and the myriad of non-technology work that is required to gain physician and nurse adoption of these complex systems. The research has shown that EHR implementations are most effective when they start with a “Tone at the Top”. This is where hospital leadership can articulate a simple message of how the technology will impact patients.

All stakeholders should reinforce this message throughout the deployment and for years following via internal branding. As a product owner, talk to the buyer and determine if there’s already an overarching goal you can connect your product to. If not, can we create a new one? For example, in the ‘Fall Safe’ example, …

• “Together, we can reduce patient falls in the hospital by 40% by this time next year. This directly supports our overall goal of making patient safety a top priority.”

 
Any user needs to be able to say: “I know what the organization’s goal is and why it’s important. I know what’s expected of me. I agree with it. I want to do it.” Communicating what the goal is and why we’re working on the goal is important. And communicating how the product we’re deploying will help us with that goal.

As a customer success leader, if you’re onboarding and training new users, connect the training to their managers’, or managers’ managers’ (e.g. the CEO’s) goals. For example, “Your CEO invited us in to introduce this product to you because she really thought it could help you achieve the safety goals that the organization has set for every department.”

You can cascade goals down to users if you want, but most important is to create a simple milestone. Target an aspirational end goal, but focus on what users should do: what actions or steps should I take today? Tomorrow?

• “Use ‘Fall Safe’ on at least ten patients a week who are a fall risk over the next six months.”

 
Focus on a single specific goal with a clear target. The user should not have to spend any time or energy thinking about what they’re trying to accomplish, or why, or why it matters, or how they will get there. Keep it focused and precise.

Make sure that the goal you align on with your users is a goal they are trying to achieve and that your product can help them achieve that goal 2x, 3x, 5x, or 10x faster, cheaper, or more effectively. Why should they adopt a product that helps them do something they’re not trying to do, or only helps them only marginally better?

Lessons from Simple Bank
A similar approach is to ask the user for a specific instance of the goal identified above and encourage them to use the features of your product first that allow them to reach that goal. As the co-founder of Simple Bank, Shamir Kharkal, explained to me recently, they did this by asking their users what they were saving for. Then their product helped those users reach those savings goals. By doing this, users would later tweet how Simple helped them, for example, save for a wedding they wouldn’t otherwise have been able to save for. By aligning your product to your users’ own individual goals, you can create an emotional connection with them that is very powerful. (Note that Simple Bank didn’t ask a blanket question about what the users’ financial goals were; they asked for a specific instance they had to make the single goal of achieving saving money more real.)

(2) Onboard them so they have used it at least once… and help them transition from their current systems to your product
McKinsey 3/4: “Developing talent and skills: I have the skills and opportunities to behave in the new way.” You can teach an old dog new tricks–our brains remain plastic into adulthood.

The initial screens with a product that the user sees (and/or the initial discussions the user has with a client care team) should focus them on one goal: the activation event. The user may have to take a few steps in the product, but the steps all move towards a single goal—a goal which is already important to the user. This is called the “onboarding process”: getting the user to complete a single, important goal on your product as quickly as possible.

In my current company, I believe the best method we’ve found for increasing user engagement and usage levels was to insist that we digitize the users’ current paper files and put them on our platform. It took time to do it, but once it was done, the user didn’t have a choice to go back to their prior ways of doing things. I say “insist” because the user will often say it’s not needed or not want to burden you or themselves with that moment of transition. But once you’ve done it, it makes a major difference to them. If you’re able to automate that transition moment and build it into the product, all the better. Firefox, for example, on first opening, will offer to copy over and import any bookmarks you may have saved in your current internet browser. This is sometimes called the cold start effect.

Lessons from AppCues and Weight Watchers
A user experience company, AppCues, recommends mapping this journey out, step-by-step. How many actions (e.g., creating a profile page or username/password) do you require your user to do before they can complete a goal? How does your user get to an emotional “Wow!” moment after the activation event? Is the “Wow!” moment the activation event (e.g., they completed an action) or days later when they’ve completed a few such actions or seen some response from the initial action?

By analyzing data or talking to your users, you can see where in the onboarding process users drop off. Do we give them enough quick wins? Do we overwhelm them with choices? Do we ask for too much upfront to get started? Do we make the to-do steps clear? Is there a lack of a clear progress bar (or checklist) showing the user where they are in the onboarding steps? Is the product design too unusual such that the user doesn’t have immediate familiarity with it? Do we follow up by email with users who don’t complete their onboarding?

If the onboarding process is a mix of product and client care team, they should both reinforce each other. Onboarding inside your product is a powerful approach. If your product is smart enough to know where the individual user is in their journey and inject tips and small just-in-time training as overlays to your website, for example, you can completely personalize the experience.

As Shamir explained, based on his experience at Simple Bank, “it takes some people weeks and other months, but once people start using your product as their core transactional platform, they start to discover the other features and benefits that you offer.”

Can you set a goal for a user for a product they’ve never used before? Perhaps not. But by setting a realistic overall goal for the organization, we can set aspirations for each user and adjust over time based on what’s realistic. In contrast, if there’s no goal, we lose out on the value that pressure from the top and the inspirational value of rallying around a shared goal has.

On the initial step of working as a team on a goal, Weight Watchers has found that individuals lose twice as much weight when they are working together on their own individual goals. AppCues has analyzed hundreds of user onboarding experiences and found good onboarding increases long-term user retention by 2.6x.

(3) Leverage the power of “Habit stacking”; Create a personalized plan with the user about how + when + where they will use the product each week; set up notifications to help them meet their process milestones
McKinsey 2/4: “Reinforcing with formal mechanisms: I see that our structures, processes, and systems support the changes I am being asked to make.” Associations and consequences shape behavior–though all too often organizations reinforce the wrong things.

To achieve their goal, the user will have to change their daily routines. Once the personalized plan is in place, you can help remind them, at a time and place that fits them best, of the daily changes needed.

Ask your users when, where, and how they plan to use your product to achieve the goals they committed to. What will happen right before you act? Where will you be? (For example, do they imagine using it over breakfast or look at it every morning when they open their email?) Thinking in this way creates a causal link in their brain between that event and using your product. Call it habit-stacking: tacking on a new habit onto an existing one is easier than building a habit anew. In President Obama’s campaign, they saw much great voter turnout when they asked potential voters to visualize when/where/how they would vote, such as “I will vote at the polling place on Main Street on Tuesday morning after breakfast.”

For example,

• Ask the user to schedule on their calendar an appointment with themselves, for example, “every Friday at 12:30, after lunch, when you’re back at your desk, you spend thirty minutes checking on the usage and patient feedback for ‘Fall Safe’.”—based on their feedback of where and when works best for them.
• Every morning, ‘Fall Safe’ texts the nurse leader the number of patients it is being used by. This will help the leader of the nursing floor make sure he/she is staying on top of their goal of using it on ten patients a week. “What time of the day would be best for ‘Fall Safe’ to reach out to you? Is there a time in your day when this would be most helpful to receive?”

 

Lessons from the Vietnam War and the movies
Habits are a function of environmental triggers. Service and Gallagher share a study of opioid-addicted veterans upon returning from Vietnam, according to the study; with no explicit treatment, the vast majority of returning veterans never used opioids again. Their usage of opium was connected to a particular time and place and once that was removed from their lives, so too went the habit it was connected to. Moviegoers eat popcorn in a movie theater because of the environment. Watching a movie at home, for example, will not fire the same trigger.

As with setting goals, keep the plan and its rules simple and predictable. Your brain doesn’t have the time to figure out complexities. Don’t make the plan complex such as, “log in on the weekend if your overall product usage has dropped in the prior week.”

The overall goal is to establish repeated behaviors early on that allow the brain’s fast system to take over.

Research has shown this step alone to increase adherence to a goal by 15-100%, depending on the study.

(4) Build in commitment mechanisms, such as a 1-1 coach and a personal desire to be consistent
McKinsey 2/4: “Reinforcing with formal mechanisms: I see that our structures, processes, and systems support the changes I am being asked to make.” Associations and consequences shape behavior–though all too often organizations reinforce the wrong things.

For example,

• Very early in the implementation process, identify a “peer coach” for each nursing floor. Let the coach test out ‘Fall Safe’ as early as possible. Have them trained on all the features. Let them give any configuration feedback. Ask them to check-in with other nurses on how things are going, especially for those nurses with low usage.
• Early on, have each manager pledge that they will make falls a priority. If falls are a priority for them and ‘Fall Safe’ is the easiest way for them to manage falls, then usage will follow. When they take actions that are consistent with their pledge, recognize it to continue to build the sense in themselves that they have “taken a stand” on this topic.
• Every week, ‘Fall Safe’ will email each nurse leader their usage numbers. It will show them their usage versus the top quartile. Celebrate if they’re in the top quartile of usage. If not, give them social proof to convince them they’re falling behind others.

 

Introduce them to a “coach” from your client service team. Someone who will check-in as needed to help them achieve their goals. Technology products, especially B2B ones that require behavior change, rarely exist on their own. Such products need a client care team, to help users make the most of the product.

Cialdini underscores the principle of consistency, that we “…desire to be consistent with what we have already done. Once we have made a choice or taken a stand, we will encounter personal and interpersonal pressures to behave consistently with that commitment.” This is most powerful when the commitment has been made for others to hear. It’s one reason very few people change political party affiliations.

People with a “commitment referee” are 70% more likely to stick with their goals, according to one study.

(5) Add in scarce rewards along-the-way for achieving process milestones
McKinsey 2/4: “Reinforcing with formal mechanisms: I see that our structures, processes, and systems support the changes I am being asked to make.” Associations and consequences shape behavior–though all too often organizations reinforce the wrong things.

For example,

• Send users a note of recognition from their manager when they get halfway to their goal?

 

Rewards should focus on the users’ effort and progress against their process milestones—not their impact on the ultimate goal. There have been studies that show rewarding your children for high test scores is less effective than rewarding them for working hard. The latter implants the idea that even if they don’t do well sometimes, continuing to work hard will give them a shot at doing better next time.

Cialdini discusses the power of reciprocation. If you email a user saying, “I found this insight for you” or give them some other item of value, the user will often repay it, such as by using your product.

Be careful with rewards. Offering rewards, especially making a big deal about rewards (e.g., large cash prizes) can crowd out a user’s intrinsic motivation to succeed, thus backfiring. If you do it, make the reward a small private event.

Professor Cialdini notes that scarcity is a major form of influence. If the rewards you offer appear scarce, they will be more valued. Scarcity can create (friendly) rivalries. It also provides creative approaches to rewards such as “offer only available today” that create a sense of urgency in your product purchase or usage.

(6) Make seeing and discussing progress a social activity
McKinsey 4/4: “Role modeling: I see my leaders, colleagues, and staff behaving differently.” People mimic individuals and groups who surround them–sometimes consciously and sometimes unconsciously.

For example,

• Build a discussion about group progress into a monthly meeting with all the users. With ‘Fall Safe’, usage could be discussed monthly among all the nurses on a unit. But perhaps more powerfully, all the nurse leaders could discuss their own units’ progress when they get together as a team once a month. Or share audio clips from other managers discussing stories of impact.
• Identify power users. Who is using the product the most? Get them to talk and share success stories.
• Another approach to social proof is one like what Venmo does: you can see all of your activity on one tab and certain activity from your friends (or everyone in the world) on another tab—filtered only to actions that those users have allowed to be made public.

 

Think Small has a quote which they attribute to Richard Thaler, “The purely economic man is indeed close to being a social moron.” In other words, classical economists who believe the world operates by logic and pure cycles of supply and demand is blind to the real source of motivations and shortcomings of humans: the influence of those around us who inform our behaviors and habits.

User adherence has been shown to increase 11% by this step alone.

(7) Give users feedback on their progress and leverage sources of authority, if possible
McKinsey 2/4: “Reinforcing with formal mechanisms: I see that our structures, processes, and systems support the changes I am being asked to make.” Associations and consequences shape behavior–though all too often organizations reinforce the wrong things.

Tell users what their progress is in relation to their goals. The most compelling example given in Think Small was about the “Your Speed” signs that tell you how fast you are going (and that blink if you are over the speed limit). There is no penalty associated with them, but they are they are one of simplest and most effective speed control mechanisms. The reason: they are easy to understand and actionable. You can do something immediately to course-correct.

Another feature of the signs that the authors don’t mention, but I think relevant to goal-setting for product users, is that the sign allows you to immediately get back in compliance with your goals. They don’t say “you’ve been going too fast for the last five minutes, even if you slow down now, it’s too late to meet your goal”. The goal it measures is reachable in the moment. For product users, consider measuring, reporting, and rewarding usage based on actions taken in the past week—not the cumulative actions taken over a six-month window where a change in short-term behavior will have little observable effect.

Dr. Cialdini includes sources of authority as one of his six force of influence. Obviously having a manager hold their team members accountable to a certain type of action or product usage is a very powerful motivator, but other sources of authority exist. Who is the source of authority on the topic that your users look up to? Are they celebrities or well-known researchers in a field?

Lessons from Fitbit
Fitbit is a well-known pioneer in this space as well, with an app that shows you the number of steps you’ve taken relative to your friends. This creates a transparent public forum for healthy competition. The authors warn, though, of creating too much transparency if overall product usage is low. Showing the individual user their progress against their goal for the week plus their progress against the top quartile is one way to avoid socializing low progress as a social norm.

Adherence to goals has been shown to increase by 10% in studies, such ones looking at the efficacy of the “Your Speed” sign.

(8) Make it stick by showing them the long-term impact of their efforts—and reminding them of how far invested they already are
McKinsey 1/4: “Fostering understanding and conviction: I understand what is being asked of me and it makes sense.” People seek congruence between their beliefs and actions– believing in the ‘why’ inspires them the behave in support of a change.

For example,

• Remind users of the investment they made and celebrate their progress. Send a paper letter of that progress to them or a photo of the impact they collectively made, if possible. A physical document will make this “reward” feel different from the rewards-along-the-way and perhaps something they will pin on their wall—which will then keep reminding them of the investment made.

 

Show users the long-term impact of their efforts—something people rarely get to see. Celebrate success on the initial goal. Move them into a steady state (hopefully habit-forming behaviors have been established in these initial few months). Test new ideas and learn; no one knows in advance what will work best for a specific set of users in a specific context.

Users, once they’ve invested a lot of time into doing something, are less likely to abandon it. This is because of a cognitive bias in the brain: to make a lot of investment in something implies you found it valuable and the brain doesn’t like to admit it was wrong. Thus, in our minds, if a product was valuable then, it is still valuable now.

(9) Role model the behaviors you want your users to do themselves
McKinsey 4/4: “Role modeling: I see my leaders, colleagues, and staff behaving differently.” People mimic individuals and groups who surround them–sometimes consciously and sometimes unconsciously.

For example,

• “As you can see, I’m using this product and have been for some time. I really find it valuable. Let’s get you on it too!”—your manager

 

This step also isn’t explicitly called out in Owain and Gallagher’s book but there’s a lot of other research on behavior change that highlights the importance of users seeing role-modeling by peers and their managers.

In a B2C environment, having a celebrity role model product usage is a standard marketing approach.

In a B2B environment, why would a nurse use our ‘Fall Safe’ product when their supervisor doesn’t use it? It’s not unheard of for users to “wait it out” assuming that, over time, this initiative will be replaced with another priority. If they see that their managers and managers’ manager are not only using it, but have been for a while, the impression is instead that there is a lasting investment which will help them overcome the initial hurdles to adoption.

Lessons from the high seas

For this last point, we can turn to Captain James Cook from the mid-1700s for inspiration [emphasis mine]:

The sauerkraut the men at first would not eat until I put in practice a method I never once knew to fail with seamen, and this was to have some of it dress’d every day for the cabin table, and permitted all the officers without exception to make use of it and left it to the option of the men either to take as much as they pleased or none at all; but this practice was not continued above a week before I found it necessary to put everyone on board to an allowance, for such are the tempers and dispositions of seamen in general that whatever you give them out of the common way, although it be ever so much for their good yet it will not go down with them and you will hear nothing but murmuring against the man that first invented it; but the moment they see their superiors set a value upon it, it becomes the finest stuff in the world and the inventor a damned honest fellow.

. . .

All books and other resources referenced in this article

This is Part 13/18 in the series “How to Build an Innovative New Product or Company” on the topic of figuring out how to build a product for your users that meets their needs and the buyer’s needs

The companies I’ve built have all been B2B where you sell to a buyer trying to solve a need; then you deploy your product to the users in their organization. Users typically don’t care much about the buyers’ needs and will only use a product if it meets their own needs. Solving this misalignment has always been a major pivot point in earning user adoption.
Mechanisms to drive and sustain user adoption are the subject of the following two articles.

The same discrepancy occurs in B2C products, but it’s subtle. How many things do you have in your house you bought but never used? For example, many years ago I lived near a lake and bought an inflatable kayak to paddle around it. I used it a few times, but it was a large object in my house that I hardly ever used. As a buyer, I bought it because it wasn’t expensive. As a user, I didn’t care about the price I had paid; instead, I cared about how easy it was to inflate and get to the lake. A great product would fit both needs even if they are in conflict with each other.

Resolving that disconnect is a main goal of a startup in this stage of its growth.

Startups go through these stages (B2B especially):

1. Get a product and pilot
   • Develop a strategy. Gather a founding team. Raise money. Create a first product / prototype as efficiently as possible. Sign a pilot site and put the product in the hands of actual users.
2. Get to “Product-Buyer Fit” (as detailed in the prior article)
   • Build a demo of the early product. Take it to buyers. Move sales leads through a funnel. Sign contracts.
3. Get to “Product-User Fit”
   • Keep iterating on the product so it serves users in the jobs they are already trying to accomplish.
4. Scale product delivery and sales processes

Step (3) is the hardest in my experience. In my last company, we came up with the idea of “putting kale in the pancakes” to solve it.

The origin of the idea comes from kids being notoriously unhappy when eating vegetables. A mom somewhere came up with the idea of chopping up kale (which they need but don’t like) and baking it into pancakes (which they love but may not be as good for them). In other words, this mom was reconciling a buyer-user need discrepancy.

In that company, we had an e-learning platform focused on doctors and nurses. Hospital executives needed these clinicians to learn about non-clinical topics, such as communication, awareness of bias in decision making, and how to best document a patient visit on the medical record, for example. We had tried to build courses with titles such as “Clinical communications” in the past but no clinician took them seriously. They’d scroll through as fast as possible and learned little.

On the other hand, some users loved short courses on real clinical cases. Title a course “Pediatric fever presentations in the ER” and you’d have a captive audience who’d want to learn. They were afraid of young kids coming into the hospital with a fever and not knowing what signs there are to be aware of.

So, we built a course ostensibly about pediatric fever but inside included examples of communication, bias, and documentation.

I doubt the clinicians noticed that the kale had crept in… and if they did, at least they didn’t complain about it.

. . .

All books and other resources referenced in this article

This is Part 12/18 in the series “How to Build an Innovative New Product or Company” on the topic of spending time with your users to determine product iteration and early direction

“Product-Market Fit”: the moment when a startup finds that their marketing message, sales process, and product are all aligned perfectly against an unmet market need and customers run to their door, money in hand.

I was at a conference a few months ago and an audience member asked the speaker, “how do you know if you have Product-Market Fit?” His response was, “when your product is flying off the shelf faster than you can fill the orders.” I doubt the answer was helpful, but I think the problem may have been in the question that was asked.

The better question is: “How do I know if I’m on a path to get to Product-Market Fit? And how do I get on such a path if I’m not?”

I recommend splitting it into “Product-Buyer Fit” and “Product-User Fit”

You know you have “Product-Buyer Fit” when…

• your sales demo/value proposition gets you interest, meetings, and builds your sales pipeline
• buyers rate the pain you are addressing and your solution as 8 or 9+ on a scale of 1-10
• buyers become more engaged and more excited as you step into your demo during a sales meeting

Product-Buyer Fit may be all you need to close your first few deals.

You know you have “Product-User Fit” when…

• your users are using your product as often as you intend, getting the value from it you like, having the experience you expected, and having the impact they want
• your users tell their friends and colleagues about it and offer to help get others on board

As you’re iterating on your product, keep your source(s) of advantage as your north star
If you have a choice, for example, in designing your product or marketing website in a way that highlights your sources of advantage versus another way that hides it, choose the former. (Sources of advantage are the main component of Step #3 of the “4 Steps to Develop a Strategy”).

For products I’ve developed, analytics has always been a major source of differentiation and so keeping analytics insights front and center in the product and sales demo has been a goal.

While you’re getting product-buyer/user fit, optimize for learning and speed of learning
The currency of a startup is how much it has learned that others don’t know.

Add features based, not on what users say, but on what will make a difference. Work with mockups and “false-front” product features. The goal is shortening cycle time: getting as fast as possible from user feedback to a “false front” feature that gets deployed, usage levels measured, and user feedback collected. How fast can you overhaul the UI of your product? If, six months in, following a major engineering investment, the UI is built out and locked in to where you can only consider incremental changes, you’ve not set yourself up to succeed.

The main thing you want to learn is what is the core feature and idea to build out—and product-buyer/user fit becomes a clear north star that allows you to determine what not to build and why. As Hewlett-Packard co-founder David Packard said, “More businesses die from indigestion than starvation”.

The best path to Product-Market Fit is to spend as much time as possible with your users

Spending time with users is a core tenet of the Lean Startup model, but how much time do engineers, product designers, and entrepreneurs spend talking to each other versus spending time with their users?

In my current company, we built an application for nurse managers in hospitals to help save them time and recognize nurses on their teams who go above and beyond.

When we first launched it, I was lucky to live near one of our pilot hospitals. For three days a week for many months I’d meet with our users. I scheduled thirty minutes a week with each of them and they’d use the product while I took notes as they shared what they’d change, add, or correct.

The amount of actionable feedback was critical. We had enough of a working product for them to use and be able to provide feedback but it was clear we had only gotten things 60-70% right.

One example comes to mind. Weeks in after meeting with the managers many times and going through the product, one manager said to us, “this nurse you’ve highlighted for me who has been working a lot recently… she’s part-time and on Social Security. Now Social Security has a salary cap, so this nurse cannot keep working as many hours or she’ll lose her benefits. Now I see this information, I’m worried she’ll have to stop working for us later in the year.” What we do with that insight is a product decision, but it’s a great example of the level of depth that spending real time with your users can uncover. None of us, in designing a product, even with hours of interviews informing the design, could ever come up with such an intricate use case—and getting feedback like this and making use of it enhances our value for every other user in the future.

Incidentally, there was an equal amount of valuable feedback and corrections proposed by our own internal QA team member. Even with a small team, a full-time QA person is exceptionally valuable.

Before you reach Product-Market Fit, everything you do needs to be in the service of learning as much as possible about your users and what they’re trying to accomplish

Set your goals and measure progress in terms of amount you learn (not the amount of revenue you create) in the early days.

One aspect of learning is to understand all the stakeholders around your user and buyer. Who influences them? Are there detractors—for example, who have an influence on your user, who you could also win over, thus creating a stronger ecosystem for reinforcing your product usage?

Focus on jobs the users are trying to accomplish
As popularized by Clayton Christensen, there are four types of jobs that users want to complete:

• Functional (e.g., driving to work),
• Social (e.g., looking like an expert or connecting with friends),
• Emotional (e.g., feeling safe, secure, and happy; express their personality by showing off a product brand),
• Supporting (e.g., making many small decisions as consumers, such as finding the best TV show to watch or leaving product feedback).

Not all jobs have the same actual or perceived importance. Jobs, even small ones, that occur regularly create more friction in users’ lives and are thus higher priorities for them to receive support for. The most powerful solutions solve one or two functional jobs but include social and emotional jobs. Examples include buying a bike that becomes a statement of identity or renting a movie while being part of a real-time online conversation with others who are also watching.

Users complete many jobs on autopilot. Even if your solution helps them do those jobs is better, the behavior change needed to use your product may be greater than the size of the pain. To overcome the autopilot, it helps to fit your solution into the users’ lives as seamlessly as possible. You can also advertise the dangers of continuing to do things the “old fashioned” way. Eliminate switching costs by offering to onboard users—for example, by importing the data they use from their old system into your new one to get them started. Reduce the number of features and focus on the core components that allow them to complete a job. Make sure you are helping users to complete the job they are doing much better.

Emotional jobs are particularly powerful and under-appreciated. Snapchat, for example, has built their product on allowing their users to share moments of their lives with their friends without worrying about whether others will click a “Like” button.

Stephen Wunker et al. give several examples in their book, Jobs to Be Done, based on the work of Clayton Christensen. You can’t tell what job any buyer or user are trying to accomplish by looking at what products they buy. Talk to them and ask: if you hadn’t solved this job that way, what else would you have done? For example, parents may buy move tickets for their kids on a weekend afternoon because their goal is to keep their kids entertained. The kids (as users) may want an authentic move experience; the parents (as buyers) are choosing a movie as an alternative to a playground or swimming pool.

In another example, people sometimes buy Oreos at the checkout line to stave off boredom; therefore, accessibility to mobile phones in supermarket lines has had a greater impact on last minute snack purchases than any competitive food product.

In his article “True Colors”, Malcolm Gladwell shares the story of how Alka-Seltzer launched their product to cure a stomach upset, but users also took it to cure headaches. Understanding that could not come from watching sales numbers; they had to talk to users. And it was an important insight because it caused them to change their messaging. Stomachaches are typically the result of eating too much or too much of the wrong thing: it was a user error that the user wanted the product to help them undo. Headaches are very different: they are events imposed on you. Some might argue this is a marketing insight and not a strategic one. After all, in this case, the main adjustment was the introduction of a new marketing approach claiming Alka-Seltzer cures “the blahs”, a tidy way of including both needs. But how can you have a robust product strategy if you don’t know what your buyer or user values your product to solve for them?

When looking for ways to better solve a user’s job, Wunker et al. also give a few common approaches. On the jobs that users most care about, can your product allow them to significantly…

• Save time by doing the job 2x-5x faster?
• Reduce complexity of a job by 2x-5x?
• Do more 2-5 different types of jobs in a single place—as Microsoft Office does?
• Improve the quality of the job being done by 2x-5x—as Windex does for users cleaning windows?
• Make completing the job 2x-5x easier or more comfortable—as Slack does for reducing email communication within a company?
• Add the completion of an emotional or social job in with a functional job?
• Make the job completion meet the needs of more stakeholders—as McDonald’s does, branding Happy Meals for kids and coffee and salads for adults?

Is there a way to measure “product/market fit” as early as possible?
A recent article by Superhuman founder and CEO discussed how he stumbled upon a metric used by Dropbox founder Sean Ellie. The ideas is a variant of “Net Promoter Score”: simply to ask users “how would you feel if you could no longer use the product?” and then measure the percent who respond “Very disappointed.” The other two answer choices: “Not disappointed” and “Somewhat disappointed”.

If the percent is >=40%, the evidence shows you are on track to fit; if not, you’re not there yet. According to the article, the popular application Slack reached 51% in 2015, when it was just at the beginning of its upwards trajectory.

The article also claims that as few as forty responses are enough to get a directionally correct indication of this metric. Something that can be measured early and often in a startup’s growth.

An additional question to categorize the user—their role or personal as is relative to the product—helped Superhuman differentiate their detractors from their strongest supporters. Armed with that information, it can trigger the internal discussion of whether it would be better to target the product to the strongest supporters or to update the product to also win over the detractors.

. . .

All books and other resources referenced in this article

This is Part 11/18 in the series “How to Build an Innovative New Product or Company” on the topic of creating and updating your sales pitch for B2B companies. In the prior articles, I’ve shared an approach for pitching to investors in your early days. Here we’ll discuss some ideas for pitching to potential early adopter customers.

… And the point that they’re missing is that you need many sales decks. You need one to raise funds (a pitch deck, discussed in an earlier article). You’ll need other sales decks for different audiences in a B2B selling process.

Over time, your sales deck will naturally evolve. When you’re selling to an early innovator, before your product has been fully built, it will be much more focused on the opportunity and a “imagine a world where…”-type approach. After you’ve built the product and piloted it and have had the benefit of many discussions behind you, your sales document will grow to reflect the new learning.

The best sales decks I believe are the smallest. No one likes looking at PowerPoint pages. A punchy version of your demo is one your best sales tools, especially if the product is structured around the users’ needs and buyers’ value pool.

At one point, I thought doing a good demo was all you needed. Through experience, I’ve evolved my thinking on this. You need to tell an executive audience in one slide (e.g., an executive summary), what category of thing you are, what it is you do, whom your users will be, why they will love you, and what impact you will have. You need to remind them why the problem exists, such as the challenges that their users face on a daily basis, and what the ROI of solving the challenge is. Then a demo paints the picture of how it works. The whole PowerPoint section can be done in 5-10 slides. The demo has to hit a few salient points, not cover all details and functions. And then perhaps you come back to a version of the executive summary slide that tells them again what you’ve already told them.

The Innovator’s Paradox: How can a customer say “I’ve never seen anything like this before!” and “I can’t live without it!” at the same time?

It’s a paradox. The greatest value creation opportunities are when you create something entirely new; where no market currently exists. And you know you’ve got it right when prospective customers look at your product and say, “I love it! I’ve never seen anything like this before!”

And yet, as soon as they say it, they’ve also explained why they should be in no rush to buy it from you. If they’re surviving and they’ve never used a product like yours before, how critical can it really be? Sure, it might have a large ROI, but they’ve got lots to worry about on a given day, so why do this now?

How do you bridge the gap?

You have to tell a story that the world has changed.

A sales message for a disruptive new product in the early days (e.g., pre-product build)

Do not start your sales pitches by talking about the value pool.

This is especially true if the value pool has existed for a while. You’ll lose any sense of urgency: “We’ve had that problem for a while. Why do we need to act now?” You need to create, even if artificially, a sense of urgency.

And don’t start with the problem and how unsolved it has been; that has an undertone of “what you’re doing today is wrong.” You don’t want to paint the image where you’re trying to convince a buyer that they have this huge problem and, by not solving it, they’re not doing their job. If the value pool you chose to focus on is real then you shouldn’t need to have to educate them on it.

Here’s an outline of a story that can work:

• Team: We are a team that has been working together in the space for many years.
• Situation (or need): We heard about this lasting problem and need from senior leaders over that time and none of the existing tools were working. We did a lot of research, including aggregating data from a consortium that we assembled and many hours of interviews, in the beginning to determine the root causes of the problem.
  • We learned the key factors that underpinned the problem and built a framework around it.
  • Getting this fixed also impacts many other larger areas of performance in your business as well.
• Complication (or why the need is unsolved so far): New changes have created an unsustainable situation – e.g. current processes, systems, or people are being stretched to their limit.
  • (One thing I’ve observed in comparing our sales pitches around year 3 to where they were around year 1 is that we’ve built better diagrams that support these points. For example, consider building a diagram that shows your customers’ current systems today on one side … and on the other side, the emerging process and needs and how unstructured and unserved those new ones are.)
  • Your users can’t unlock this opportunity because of certain constraints and the fact that the tools they need to overcome them are not available. For example: Have you talked with those users lately? Are they always worn thin? Balancing more complexity than ever before? Have less support and help than ever before? Don’t have the time to invest in their teams or long-term planning? Have you seen those symptoms more now than ever?
• Resolution:We have the tool you need to solve it.
  • Our solution is a product that organizes and supports these new needs.
  • It has these three core capabilities that buyers and users love. It is laser-focused on the value pool.
  • (Another useful diagram may be one that shows the steps your product takes to go from raw data through an analytics layer to serve your users in a timely and intelligent way … or similar, as it applies to your product.)
  • Then do a product demo.
• The ROI is real. Here’s proof that we will jointly have an impact on the value pool. Sure, the proof points now may be thin, but here are some supportive quotes from users and early adopter buyers. (This connects everything back to the buyer and their value pool. A case study here is best. In the early days, before you have one, leverage the thinking from the 4 parts of your strategy, as covered in the earlier articles.)
• Implementation will be great. Our customer success approach is holistic and ensures high adoption and utilization among your users. Technical implementation is easy and has these simple steps. (More on what a customer success/change management/user adoption approach might look like in future articles.)

The exact wording will have to vary according to your context. But after a message like this, you can step in and explain why only you can uniquely tackle this. There’s a popular article on Medium called “The Greatest Sales Pitch Deck I’ve Ever Seen” that follows a similar outline. To some extent, it also reflects the logic of the investor pitch: the solution will happen.

Note the Situation-Complication-Resolution (SCR) framework is in here. I’m convinced it is the core of most sales presentations. It’s actually the core of all good stories. If you’ve heard of a 3-act play (the setup, the confrontation, the resolution), it’s the same concept.

Translate the ROI from a number into exactly where savings will accrue
One of the ways to coax your prospects into identifying a budget urgently for your product is to enumerate exactly where ROI will take effect.

For example, in my current company, we have proof that our product generates a 15:1 ROI in reducing nurse turnover. While most prospects have been convinced of this, many are still unsure how that will translate into budget and funding for the project.

So we started to list out where the savings would accrue. For a $100k contract with a 15:1 ROI, you’d anticipate $1.5M in savings. From published research on the costs of turnover, we could then say $150k of that $1.5M would be realized in reduced use of training materials. Another $150k in reduced use of hotel costs for temporary replacement nurses, etc. In other words, the hard, measurable savings of any one of these categories alone will fund the project. Even better, these different categories may be controlled by different members of the C-suite thus providing funding access for many potential different buyers by simply reorganizing their own budgets.

Transitioning from an investor pitch to a sales pitch
Part of raising funds requires you to explain how you are well-versed in the value pool that you’re focusing on and why you are the right team to solve it. Therefore, there is a natural inclination to continue to prove yourself in later pitches to customers. For many companies, this continues for years later. Pitch decks talk about the number of customers they are serving already and show all the research the team has done into the problem as a way to build credibility. It’s probably not needed by that point; skip it. The best way to demonstrate credibility is to demo the solution you’ve built (if you have it) or to tell your story. Your buyers and users will immediately see if you understand the problem at hand, the context that the users operate in if you’re bringing a lot of unique ideas and value to the table. Let your work speak for you. In the rare case where someone pushes you on whether you’ve got the credibility or wants to understand how you disaggregated the drivers of the value pool, you can always answer them by pulling up the pages from an appendix.

Many versions of the pitch and demo

While you need to keep the overall message consistent across conversations and audiences, the examples and areas of detail you go into may vary.

If you’re meeting with a CIO you may want to highlight the ease of data integration and how you add new value to their existing systems. For a CFO, a stronger focus on user adoption rates and buyer value pool impact is probably more important. For a CHRO, you may want to allay their concerns that you are competing with data in the core HR systems that they are responsible for and are instead providing new inputs into, and new use cases for, those assets.

In a B2B sale, there are often multiple stakeholders and they all have different concerns, needs, and interests. Learning the persona of each and adjusting your message to them may be critical to getting enterprise deals done.

How the audience will respond

If they ask themselves, “can we build this ourselves?”, that’s at least acknowledgement of the value pool and your approach. Maybe one in ten customers will choose to build over buy; the rest will realize the ROI doesn’t make sense when your solution exists.

For a brand-new product category, attempt to push pricing conversations off until later in the process. They’ve never seen (let alone purchased) a product like yours, so how can they interpret your pricing? Engage them deeply on the value pool and the ROI first; pricing has to be a function of it, not of pre-conceived constructs they may have about other products that they’ve purchased before. For a SaaS company especially, price is the most important lever because most of your other costs are fixed and the incremental cost of serving a new customer are probably quite low. So not under-selling yourself on the revenue side will have the largest impact on your overall viability and profitability.

. . .

All books and other resources referenced in this article

This is Part 10/18 in the series “How to Build an Innovative New Product or Company” on the topic of crafting a mission and value statement

Developing (or re-imagining) a company’s mission statement can be a powerful mechanism to align and energize a company … but my guess is that it rarely fulfills that promise. It’s most often a “do-it-because-we-have-to” exercise for corporate executive retreats.

For startups, building a version of a mission statement early on can be a way to align and inspire the team around a long-term direction, especially once you’ve got a draft of a strategy (per the “4 Steps to Develop a Strategy”). Mission statements are a nice way to then step back and say, while our strategy may define the next few months or years for us, let’s set a direction for what the company could be over the much longer term, especially as we grow beyond our first product. And finally, a strong mission can be a great motivator when it comes to recruiting and hiring employees. People are no longer just looking for a job, or even a job with equity, they want to spend their life and career in the pursuit of something meaningful to them. To get great early employees, it really helps to be able to articulate what that is for you.

There are many definitions of mission and vision statements. Here I’ll build on Bain & Company’s:

Vision statement:

• This is a “We imagine a world where…”-type statement. This is not specific to your company or its products; though presumably, your products will help get the world a bit closer to this vision.
• I don’t think vision statements are especially helpful. Maybe marketing wants to write a sentence like this and use it. That’s fine, but there’s little strategic value in it.

Mission statement:

• A declaration that you share with the world about why your company exists and why it is going to win customers.

A good mission statement has three parts (which mirror the core components of a strategy)

1. The biggest view on how we will serve our buyers and users (from their perspective, not ours),
2. How we will create an emotional connection with them and turn them into raving fans,
3. What our unique twist will be that goes beyond product/feature/function

By coincidence, one of the oldest and most valuable brands in the world, Coca-Cola, happens to have a 3-part mission statement that follows this exact outline:

“To refresh the world… To inspire moments of optimism and happiness… To create value and make a difference.”

It may not be the most poetic mission statement, but I’m a fan for its directness and adherence to core concepts.

The use of the word “refresh” speaks to the goal of the product for the customer—which is why it is not worded as a purely product-oriented tagline such as “sell them drinks”.

Declaring that Coca-Cola will inspire moments of optimism and happiness is explicitly claiming the emotional connection they will make. The aim of its marketing team is then to create connections in your brain between happy moments in your life and opening a Coke (as demonstrated in their Christmas and polar bear-themed commercials).

Their unique twist is to make a difference in the world, which is an unusual goal for a beverage company. (For our purposes, we can safely ignore how effective they are at actually doing these things.)

Another inspiration for mission statements is the quote, “the first person to live to 150 has already been born,” from Cambridge University geneticist Aubrey de Grey. It paints a radical picture of progress and innovation and makes people look up and think “I could be part of that journey now”. It inspires people to believe the future is real and it’s already here.

Another tagline that I like (I’m not sure it’s officially a mission statement), is from Slack’s marketing website: “Where work gets done.” They are carving out the vision to be a complete platform for work-based communication. But they do it in a way that doesn’t put anyone on the defensive; they’re not saying that work doesn’t get done without Slack.

Here are a few thoughts on the process of building your own

Use your mission statement to define your long-term direction, not just the product you sell/are developing today. Think big in your aspirations.
Gather a few bits of information before you start, to use as material in the problem-solving sessions:

1. Who are your end users? Who are your buyers?
2. What do can they accomplish with your product that they can’t with others?
3. What do you bring to them that others ignore or overlook?
4. What do you do that makes them raving fans? How does your product make them feel?
5. What do you and your products do for them, in their words? Talk to them and listen to their words they use.

If you’re a single product company, your mission statement should, of course, capture the essence of these things for your product. But it should be bigger than one product. It should create a direction that will determine which future products you add (or don’t add) in the future.

One way to approach creating a mission statement is to create options for each of the paths by which the company could grow.

As an example, imagine your product is a quick drive-thru oil change, focusing on busy families (e.g. you have play areas for kids). Your value pool is reducing time spent waiting.

You might imagine two vectors for future growth:

1. Own the value pool for all your customer types, regardless of how many different products you need to add to do it.
   • Your mission statement could be to “Save drivers time in all aspects of driving—one oil change and one traffic jam at a time”.
2. Or serve this one type of customer completely and fully, across many different metrics.
   • … “Turn chores into family moments that will inspire and nurture your kids for years to come”.

The final word can go to the former Chief People Officer at Google, Laszlo Bock:

Google’s mission [to organize the world’s information and make it universally accessible and useful] is distinctive both in its simplicity and in what it doesn’t talk about. There’s no mention of profit or market. No mention of customers, shareholders, or users. No mention of why this is our mission or to what end we pursue these goals. Instead, it’s taken to be self-evident that organizing information and making it accessible and useful is a good thing… it is a moral rather than a business goal… These bursts of creation and accomplishment were a direct result of articulating Google’s mission as something to keep reaching for, just beyond the frontiers of what we can imagine.

. . .

All books and other resources referenced in this article

This is Part 9/18 in the series “How to Build an Innovative New Product or Company” on the topic of entrepreneurial fundraising, specifically for a seed round

How do you raise $5M?

The good news is—it’s possible. I’ve been part of startups that have raised between $4 and $17M. I’ve observed and advised colleagues as they’ve raised $2–5M in a few months for their first venture.

I’ve also seen entrepreneurs with great ideas and passion struggling to raise anything at all.

What’s the difference?

The main difference is (a) your strategy, (b) the record and commitment of team that you’ve assembled, including yourself, and (c) your ability to tell that story.

In terms of (a), some funds only invest in B2B companies because they know there’s high risk and cost of acquiring customers in a B2C model. Investors may also only invest in companies who are local to them and who are focused in industries that the investors know well. If your venture is one that reduces hospital patient falls, for example, you will certainly find a stronger receptive audience if you talk to investors who have been nurses or who work in hospital leadership roles because they know that the problem exists. If that’s not possible, find those people who can validate the problem and bring them on in some advisory capacity so that investors can see an independent validation of the problem and your solution. This is stronger if those advisors commit to investing as part of the round themselves.

Further building on (a) - your strategy should be anchored in a value pool. Investors prefer startups that are playing in large value pools. Having said that …

A smart entrepreneur starts with a small slice of the value pool and seeks to dominate it before expanding her reach

Investors may need a little educating on this front. If they don’t accept it from you, perhaps they’ll take it from Peter Thiel, founder of PayPal (italics are in the original) from his book “Zero to One”:

Every startup is small at the start. Every monopoly dominates a large share of its market. Therefore, every startup should start with a very small market. Always err on the side of starting too small. The reason is simple: it’s easier to dominate a small market than a large one. If you think your initial market might be too big, it almost certainly is.

A colleague’s startup that I was observing recently had a smart strategy: take a product where they already had a proof point and simply expand it in the first phase to dominate a $30M market. Then build on that base of usership in a second phase to expand into the full $100M+ market. There is no such thing as a strategy that says you’re going to win by getting a small part of a large market; that’s simply avoiding doing the real thinking about how you’re going to win. Unfortunately, some investors looked at the market size of the first phase and didn’t look much further.

Your goal as a business owner is to win. GM’s innovative car brand Saturn is a classic case study in half-heartedly going after a large market. GM invested only enough (in commitment, drive, and resources) to make Saturn a player in the market while all of its competitors were battling for survival. As a startup, your only option means winning in a small, winnable segment and then expanding into larger ones.

Relationships with investors

For a seed/angel round, the only other difference about how easy it is going to be is whether you have trust-based relationships in place with private investors. For a venture round, which typically applies when you have $5M+ in revenue and are looking to raise $10–30M to scale to the next level, how easy it’s going to be is based on the size of the value pool you’re going after and the strength of the team and your current revenue/customer base.

Raising money is a full-time job. It takes hours a day for weeks and months.

I’ve talked in prior articles about how important it is to have members of a founding team deeply know the buyers and the users. Raising funds is similar; if you know people who are investors, it makes things much easier. If you personally do not, consider keeping a spot on your team or your Board open for someone who can make those connections can be one shortcut.
Some companies have founders who were born into a world of connections. There’s one company I know whose founder’s grandfather started a company and that company became his grandson’s anchor customer when he went to start one. If you have close connections like that you probably don’t need to read any further.

Finding investors

One legal note: there are restrictions to how you can solicit investments. The fact that companies can raise money outside of the public markets (e.g. an IPO) is due to an exception to an SEC rule that, if you break it, will prohibit your ability to raise money privately. You’re unlikely to break this rule - just don’t mass email people suggesting that you’re raising funds.

The best advice is to go out and talk to people without your pitch deck. Get comfortable telling a story, like the outline above, in two minutes. Find local entrepreneurs and get their advice on whom to talk to. Talk to managers of local incubators. Look for companies that are in your industry and have a similar size or location as yours and look on CrunchBase to see who funded them. Note that this may only reveal venture funds; angel/seed-round investors may not be listed.

For seed-round investing especially, I have found that investors prefer to invest both locally and with entrepreneurs they have a personal connection to. Part of the reason may simply be it’s so hard for even experienced investors to really know whether a company will take off or not and so this is one good way to filter the potential options.

gust.com and AngelList (angel.co) are websites that can help match startups to angel investors although I haven’t known anyone who has successfully used them, perhaps because it’s hard for investors to filter through the many opportunities on them.

Ultimately someone will hear your story and say “I need to introduce you to so-and-so.” If that doesn’t happen, keep refining and trying. There’s no shortcut. Raising money is a lot of work - but no more work than finding a problem, building a solution, finding and serving and delighting customers… it’s all equally tough. If you give up on this step, odds are you would have given up on a later step anyway.

If you’re a company with some assets and revenue and looking to grow, can you do it with a loan? A loan avoids giving away equity. Chobani yogurt was actually started this way. Alibaba also grew without capital. “In 1995, I started my business with nothing. Capital consisted of collective willpower and teamwork. Many entrepreneurs say without money they can’t start anything. That is wrong. Entrepreneurs should be guided by responsibility and teamwork, not money,” said Jack Ma, founder of Alibaba, at Alibaba’s 5th E-Business Champions Awards Ceremony in 2008.

Be persistent but polite. People are busy. Get their cell phone number and text if you can - it tends to get a quicker answer over email. Have an update to share every three to five weeks with everyone you have in the process - sales contract you’ve signed, product updates, relationships you’ve put into place. Over time, telling a story of continued growth is a great way to get or keep a potential investor excited.

University-based and federal research funds

Many universities today have a commercialization and angel investing network. These groups are typically local investors who appear once or twice a month to hear pitches by vetted and university-affiliated startups. They may choose to invest individually or collectively.

I’ve never used SBIR/STTR grants but colleagues of mine have built companies starting with them. These are federal grant programs that offer multiple rounds of essentially free money. Specifically, they are non-dilutive funds for small companies commercializing innovative solutions to topics of interest to government agencies and which solve a large $ customer pain point. In other words, they have the exact same priorities that other investors have.

The majority of the grants/contracts are from DoD, HHS/NIH and the Department of Education. Other agencies include NASA, NSF, USDA, EPA, DOT, and DHS. For market potential, the DoD, NASA, and others may be a potential customer at the end of the program (i.e. they give you a contract); the other agencies require you to identify your customer (i.e. they give you a grant).

STTR requires a university research partner; SBIR has no such restriction. Both require that you have a team member that has the credentials (such as, but not necessarily, a PhD or a prior lead research position in a large company) to conduct the core research. With STTR, you can leverage a university partner for that requirement; SBIR requires that person to be primarily employed on your team once the grant is issued.

Total funds can reach $1.75M over three years.

Qualcomm and 23andme are examples of startups that began with these grants. Navigating the programs requires a bit of expertise but North Carolina, for example, like many states, has a non-profit small business technology development center that offers pro bono advice for startups applying for the grants.

Funding round process

Three questions they may ask are:

(1) How much are you raising?

• To determine how much you need to raise, build out a quarter-by-quarter financial plan (although, in practice, you should aim to learn from customers and not follow a plan). What salaries do you need? When will you hire those employees? What are your expected sales? What if it takes longer for sales to materialize? If they do, how much cumulative cash will you need to make sure you don’t run out of cash and thus don’t need to raise again in an emergency? How will you spend the money? Don’t raise any more than you need; investors want you to spend the money they give you.

(2) What is the pre-money valuation?

• Pre-money valuations for a B2B/B2C SaaS business with experienced founders with low/no revenue but with revenue projections of $5–10M over next 3–4 years are $7M-12M in my experience (as of 2018). I only mention this because this appears to be based on a market gestalt, not mathematics.

(3) How did you get your valuation?

• There’s typically no precise mechanism to set it unless you have a few million of revenue and a history of growth, in which case a revenue multiple can be applied. If you can have a large investor early and have them set the valuation, that’s one good way to lock it in.

In the seed round stage of the companies I’ve been a part of, as well as a colleague’s round that I observed, we split the round into two tranches. Leaving the first tranche window open for, say three months, allowed anyone who was able to get their funds in at that time to do so. Anyone who committed to putting some of their funds in the second tranche, which, say remained open for another six months, allowed the company to get access to funds early while removing the pressure from all the investors to get all their funds in as quickly. Investors who committed to the second tranche but didn’t do so lost their Class A shares - even for funds put in earlier, so the risk to the startups were limited.

Another option for a first raise is convertible notes: they buy into the company now, but the pre-money valuation that applies to that investment is set only on a later round.

Securing a lead investor

All of these steps are much easier when you can say, “I have an investor who’s already committed for $250k and has set the pre-money valuation. Tranche one is going to close based on their timing in the next two to three months.” Getting investors to piggyback on someone else’s due diligence … creating a reason for moving now versus six months from now … creating the evidence of social proof … these are what get investors to go from “interesting idea” to “how and when do I get in?”

. . .

All books and other resources referenced in this article

This is Part 8/18 in the series “How to Build an Innovative New Product or Company” on the topic of writing what used to be called a business plan

Business plans used to be the recommended way to put down the story of the opportunity as you see it and the steps that you propose. As written documents have been replaced by PowerPoint presentations broadly and as a lean / agile mentality has taken off (i.e. that you should make the first few months of a company about learning and not pretend to have all the answers and a perfect plan in advance), business plans have become less useful, even unhelpful.

Pitch decks are a simple way to explain your strategy (which should be in place before your lean startup journey), why the team you have is the best one to execute the strategy, and your request from (and proposition to) potential investors.

Building your investor pitch deck

Your document for investors should roughly have these parts:

• Opening page
  • The five bullet-point summary showing what you will do, in terms of attracting a big value pool and creating unique value for your buyers, users, and investors.
• What’s the value pool and how big is it?
  • One page. It’s a big problem. Lots of $. How much it costs an average buyer/customer not to solve it.
• Why buyers have this value pool; why existing solutions don’t work
  • One to two pages. Ways people are solving it today. The economics of those solutions. The major competitors that use each approach—ideally in a simple grid showing two different dimensions that competitors can be segmented based on and that there is no one in our grid area. The dimensions can be that the product is focused on buyers versus users (e.g. as Microsoft versus Apple differentiated); the different ways to solve the problem; those that use new technologies and trends versus those who don’t.
• What we’re going to do and why it’s different and better
  • One page on our product. A screenshot mockup is a good idea. Otherwise an investor will be thirty minutes in and say “wait a minute. What’s your product again? Is this a mobile app or what?”
• How the market forces and trends have made right now a pivotal moment for a new approach
  • One page. Maybe a quote or example from how this trend has revolutionized another industry.
• Who we are and why we’re the best team to tackle this value pool
  • 1-2 pages. Say a lot about the founders. Are they working full time on this company? What successes have they had in the past? If there’s a Board or set of advisors in place, who are they? How close is this new company + business model to the experiences and success of these key people?
• What our milestones are; some projections of how we plan to grow revenue and costs
  • Assuming company will be valued at the greater of 6x revenue or 15x EBITDA (if it’s a fast-growing SaaS company), what will be its valuation in four years?
  • Potentially a page on potential acquirers.
• What we’re looking to raise
  • How much is already locked, if applicable: the more money committed by the founders, the lower risk the investment will appear
  • The pre-money valuation

Note that almost all of these come directly from the “4 Steps to Develop a Strategy”. If you’re this far down the process and you don’t have clear, well-articulated answers to these questions, my guess is you skipped through the strategic thinking steps and no pitch deck can cover up gaps in good thinking.

Some advice for pitching to angel / seed round investors

All investors (regardless of stage and size of investment) are fundamentally looking for the same thing: to invest at an inflection point in the company’s growth that will allow them to have a meaningful part of the next few years’ growth. Investors are investing in the value pool (a real problem that exists) and in you and your team as the best people who can solve it. They’re not investing in your technology or your widget. A lot of young companies become enamored with their approach or their product; smart investors know product ideas will as customers use them.

There is a difference in whether you’re able to get connected to potential investors through a warm connection or if the outreach is cold. Ideally, it’s someone you know. In that case you can aim to have a conversation with them over coffee and share your story. If it’s a cold outreach, the investor may ask to see your pitch document in advance by email and you may have to send out many documents in order to get a few meetings.

If you’re worried about investors seeing your secrets before you even meet with them, do what the HotMail founding team did: send out a pitch that’s a more generalizable instance of your technology than the actual product. If they pass on you (e.g. because they believe your team is too junior), you learned the outcome without risking anything.

Try to meet the potential investor over coffee. Try to tell your story for the first ten minutes before opening the pitch deck. If you can avoid it, don’t send the deck in advance: they may read it and come to certain conclusions and misconceptions about it and you won’t know what those are or how to navigate them. If you can avoid using the document at all during the meeting, even better—you can keep it as a follow up to send by email afterwards. Don’t ask them to sign an NDA; investors see so many pitches they cannot do so.

Keep your document simple. Less graphics. Don’t let presentation and design get in the way of your story and the value pool. Focus on the message.

A rough outline of one effective story (of course your actual story will vary)

“I have been working in this industry for a long time—first as a buyer and a user and, most recently, a vendor. As a vendor, I saw my customers had a problem and we couldn’t solve it. The problem is large—the value pool is large. I realized I had to stop working at the vendor because the problem needed a new solution, one that could only be built from the outside. I thought, in my prior role, that the existing vendors were part of the solution; however, we were getting in the way. Ten years from now, we’ll look back and say, ‘of course that’s how this problem is solved now.’ The transition to this new approach is going to happen whether we are in on it or not. We have a chance to be in early and to shape the direction. Others may attempt this approach too but the opportunity is large enough for there to be multiple winners. This is not a hypothetical idea. It’s been proven. It’s real. We have a proof point that it’s working. What we need to do is scale it. I’ve put together the best possible team to take this on.”

The main aspects of this story, which is one you can tell over coffee, naturally lead you to the key pages in the document outline proposed earlier in this article.

The feedback you’ll get and the reasons they’ll say “no” … and what to do about it

A company I was advising recently was building a learning platform for doctors. Doctors have to take a certain amount of learning every year to remain certified. Their platform was loved by its early users because they found a way to make the learning so fast and easy. The company billed themselves as a better “annual learning” platform for doctors.

The first investor they pitched to said “no … because doctors have many free ways of doing annual learning.” At this point, alarm bells should go off for the strategist. The value pool that this company is playing in is not annual learning, it is saving busy, highly-paid doctors time. Their time is the most valuable thing they have. They either want to be billing $400/hour or to be home with their families. My advice was the company should instead position themselves as a platform for doing that. In that case, the argument that “free learning is a competitor” no longer applies.

The reasons investors will turn you down after hearing your pitch may fit into these categories:

• The value pool is not large enough to grow a business that will be interesting to them. Hopefully this is solved because you completed the “4 Steps to Develop a Strategy”.
• Too many potential competitors. See the anecdote above for one way to avoid this. Make sure you are positioning yourself around the value you create, not the thing you do.
• They don’t invest in x or y types of companies, of which yours fits. For example, some funds only invest in certain industries, that are alums of their college, at a certain valuation level, or that have specific business models (e.g. B2B SaaS). Not much you can do about that objection, although, for the latter case, it’s worth reconsidering if you have chosen the best business model. Very few investors I’ve talked to will fund a B2C technology; most prefer B2B.
• No lasting sources of competitive advantage; too open to copycats. If you’ve got a rock-solid answer to the question, “Why us? Why can’t two kids in a dorm room do this?” (from Step 3 of the 4 Steps), then you just need to make sure that you’re articulating it.

Is there value in your investor pitch deck after you complete the fundraise?

You may never refer to it again. Your strategy should be reviewed and referred to regularly and you may find value in comparing your actual milestones and cash spend to the ones you proposed. But if you are being agile in your product development and using your first few months and years spending time with customers and learning what the actual product should be, then your original plan will be out-of-date as soon as it’s written. Startups fail when they use a fixed plan and then blindly execute on it. Learning is the job of a startup, not adhering to a plan. Boards and investors may need to be educated on this. One litmus test about whether you are on the wrong track is whether, a few weeks into starting your product development, you have a clear idea when your “product” will be completed.

. . .

All books and other resources referenced in this article

Some lessons I’ve learned from growing a company

A couple of years ago, we sold our startup to a larger company. I joined the parent organization for a few months to aid with the transition and to see if there was a mutual fit for a longer-term opportunity. While I ultimately decided to leave and do another startup, I learned a lot from the experience about what the challenges of growing a company.

Our acquirer had about 400 employees and was growing rapidly.

The challenge that they found themselves in months earlier was the need to bridge the gap between a senior executive team and a young and ambitious workforce. Most members of the senior team had been with the organization for ten or more years. The average employee otherwise was in their early 20s; for many, this was their first job after college. A few experienced hires were made to fill in the director and VP levels, but the gap was still felt.

For this millennial workforce, job-hopping was considered a norm and the executive team wanted to continue to reward and encourage the top performers. One very effective mechanism that they used was to offer functional rotations within the firm so that over the course of a few years, a high-performer would have the ability to get exposure to different areas in the product and sales organizations.

The next idea was to promote the high performers. With 400 people in the company and about twenty people in the levels of director and above, more managers weren’t needed to solve any particular growth or span of control issue; the idea was to simply promote the highest performers within each working team into a formal team leader role to help retain them.

When I was pulled into the organization, there were a collection of three- or four-person working teams with a manager in each one. Those managers reported up to a director who themselves only had ten or fifteen total employees under them.

A few months later, the leadership team began to consider adjustments to the organizational model to better reflect the new structure of the company following a few acquisitions. Looking at the org chart, anyone would have raised the question about how efficient the company was being with its use of middle managers. While I’m personally an advocate for middle managers as frontline leaders, whenever you have a plethora of managers with less than seven direct reports each, the org chart tells a story of inefficiency. Before the manager promotions, these high performers were playing the role of player/coach; they were informal leaders on their teams who also were generative contributors as well. Now, from a payroll and org chart perspective, they looked like inefficiencies. So, in one fell swoop, the company made a choice that was the right one given the situation: between ten and fifteen of these formerly-top performing managers were fired.

Could this event have been anticipated? Could it have been avoided? And how can you reward young, ambitious employees, while acknowledging that promoting them prematurely is not the right path?

There have been a lot of surveys and reports in the past couple of years about how to engage and retain the millennial workforce and I have found a few principles from them to be helpful:

• If you have a larger organization, then relocation opportunities, especially ones that provide international experience are valued. Rotational leadership programs are valued.
• If you are a smaller organization, engaging deeply on culture, mission, and vision is valued. How many of your employees are just showing up for a paycheck? How many are truly invested in the goal of your organization? How many can even articulate your mission?
• According to a recent Gallup poll, millennials are looking for a coach, a purpose, and ongoing interactions about their role and their future with an organization. Millennials are pushing the migration from annual performance reviews to real-time discussions, sometimes occurring via text, for example. In another example, the free food and gifts that were valued by employees twenty years ago are more likely to be considered patronizing by employees today; there is no shortcut to engaging an employee on their purpose and their role in your organization’s mission.

Acknowledge that sometimes losing an employee after a few months is a good thing, if they were not truly invested in being an exceptional member and leader of your organization. I’ve met people who joined IBM in the 1970s and showed up for work every day for thirty years; they never quit, but they also never lived up to their potential.

But what could we have done differently? The organization prematurely made managers of high performers as a retention tool. At the time it was easy to do; in the long run, it was very difficult and costly for all who were involved.

The fact that the move was relatively easy and fast to implement - from conception to execution - is the main clue that it was not a long-term solution. The commonality between all of the insights above is that they require long-term thinking and fundamental changes in perspective.
We should have pushed ourselves to move more quickly and more deliberately down a path of working with each individual team member on their own leadership journey. The organization did a great job, I believe, of setting an aspirational mission. But it takes a real change in priorities of the leadership team to work with each employee individually to understand their own career goals, to map those goals to the organization’s mission, to recognize and reward individually month-by-month as the team members contributed to that shared journey, and to articulate the set of criteria that would allow each person to take the next major step in their journey (such as a relocation, rotation, informal leadership, or promotional opportunity).

Making those changes in norms and behaviors to just avoid turnover may not prove worth it. But it is worth doing so because it pushes all leaders to be the best they can be. And for the incentive to change, we can thank a new generation of employees who are unwilling to settle for anything less.

. . .

All books and other resources referenced in this article