Entries in Entrepreneurship (14)
May already! And finally some gorgeous weather! No surprise that in April's top 5 reads, Jessica Esch's post was tops again! (See a pattern here!) and, proudly, with only being up two days of the month, my daughter Chana's post was a top read as well! Thank you Dorie, Tanveer, Jessica and Chana for guest posting!
Tyler Gage and Dan MacCombie are the founders of one of my favorite startups ever, Runa. We drink the tea in our home all the time. Runa is a wonderful example of a B-Corp, doing well and doing good. Their business model is unique and there are so many lessons for our businesses and organizations from their story. Tyler shares their story about talent with us. Go buy some Runa Tea, enjoy, and learn. Thank you, Tyler.
I studied indigenous Amazonian languages and Ethnobotany in college and managed to avoid taking any math, science or business courses (yes, I went to Brown University). Starting a business, let alone a beverage company, as an undergraduate was not something I had planned on doing. As ill prepared as I was, my passion for creative communication and intercultural exchange gave me a unique basis for becoming a manager and running what is now a 70 person organization in only 3 years.
Runa is a now vertically integrated beverage company that creates livelihoods for indigenous Amazonian farmers. We produce beverages made with guayusa ("gwhy-you-sa"), a “Super Leaf” from Ecuador that has as much caffeine as coffee and double the antioxidants of green tea. We’ve built our entire supply chain from the ground up and are the first to introduce guayusa to international markets. We sell our bottled beverages and tea boxes in over 3,500 of the top retail accounts in the US from Whole Foods to Vitamin Shoppe and are generating over $100,000 / year of direct income for 2,000 indigenous farming families in Ecuador.
My business partner, Dan MacCombie, studied Marine Biology, so he was equally inexperienced in the art of management (unless we decided to employ invertebrates). We knew early on that building a strong team and bringing in key leaders would be essential for our growth.
More specifically, we decided to model our staffing approach from two examples: one cultural and one environmental. Traditionally, indigenous communities wake up together before dawn to drink guayusa. They sit around the communal fire drinking gourds full of guayusa until sunrise. During this time, the community members recount dreams, tell myths, and discuss hunting techniques, politics, and weather patterns. Every time I used to get up and drink guayusa with the Kichwa communities in this way, I was struck by a seemingly simple realization: the foundation of this entire culture that has thrived for thousands of years stands on this simple cornerstone: waking up, drinking tea, and sharing with each other. My theory may sound reductionist, but witnessing the strength it builds in these families and communities is what convinced me of this tradition’s power.
As we began envisioning our business, we thought that if we could get a community of different partners from managers to farmers to government officials to consumers to collaborate, we could build a thriving organization. This spirit or exchange, respect, and transparency became essential to our strategy for building partnerships and learning from industry “elders” who had walked the path before us.
The second example that reinforced this strategy for us was our understanding of Amazonian ecology. The average sugar, corn, or tea farm is very weak ecologically – in being dominated by one specifies, the flow of nutrients is stifled, natural water flows are hindered, and soil structure becomes degraded, requiring heavy inputs of fertilizers and pesticides. In a forest ecosystem, no intervention is needed. The diversity of species naturally cycles nutrients, protects the soil, and manages insect populations. Thinking about how this might relate to our organization, we saw that a team of Tylers and Dans would be tremendously weak. This analogy for me is the most concrete rationale for the true value of diversity I’ve encountered.
Our first hire in Ecuador was a great man named Fausto. We met Fausto through a friend of a friend of a friend. He was an experienced forestry engineer who had managed a number of different cacao and coffee projects in the region. A driven man who had a natural ability to lead, Fausto gained our confidence. We decided to empower him as our Regional Manager, and give him the freedom to be entrepreneurial in building his team. We let him pick the communities we were going to work with, hire his staff, partner with other local organizations, and develop his own research programs. Fausto helped us grow from nothing into a team of 15 people and about 500 farmers, at which point Fausto’s leadership started to falter. What I learned in working with Fausto was that Entrepreneurship, Management, and Leadership are three very different things that often get lumped together. Fausto was an inspiring leader, a creative entrepreneur, but a poor manager. His contribution early in our growth allowed us to take the first step, but as our focus shifted and we began thinking about how to scale, tight management became more of a priority.
After he built his team and was more responsible for reporting, planning, and overseeing a team, he outgrew his job and we had to replace him with some one who was less creative but much more diligent, personable, and attentive to details. When thinking about new job descriptions and interviewing candidates for positions, we use this lens of “Entrepreneur, Leader, Manger” to assess our real needs and where an applicant’s skills truly are.
One level below Fausto, we hired a team of “técnicos,” field staff who directly recruit, train, and coordinate farmers. These técnicos are a key lifeline of our organization, because they are the direct point of contact between Runa and the farmers that grow the guayusa. Early on we found 3 técnicos who were charismatic and natural leaders in their communities. They leveraged their relationships and reputations to recruit farmers to commit their time and productive resources to grow a crop they had never commercially sold to some young gringos who had no local credibility. Their ability to inspire farmers and know what they cared most about is what made them successful.
Over time, the intimacy of their relationships with farmers came to be a weakness, in a way, for the institutional capacity of Runa. Once we caught a técnico driving his company motorcycle while drunk and fired him immediately. This meant that we lost our direct connection to 100 farmers whose homes in the jungle we could barely locate. We recognized the need to value, but not overly depend on, the técnicos’s relationships. As our reputation as a legitimate organization grew, farmers knew us as “Runa” and less as “that organization that Fernando works for that we sell guayusa to.” We’ve instituted a system where técnicos rotate into different areas and take detailed GIS coordinates of all the farms.
Recruiting new técnicos has been a further bottleneck to scaling. We adopted a tactic I learned from Andrew Youn, Founder of One Acre Fund, to counteract this pinch. One Acre puts dozens of farmers through a multi-week training course to become field staff, even though they only have a few job openings at a time. The genius of the model is not that they get to pick from a large pool of candidates and analyze their capability over an extended period. The real value is in the aspiring applicants that don’t get the job, and return to their communities with a substantial amount of knowledge (that they then share with the rest of the community) and an even deeper connection to the organization. This training program has worked well for Runa and helped us scale more rapidly.
We’ve now copy-pasted this strategy in the US with our internship programs. This summer we’ll have over 20 interns. We have a great track record of hiring interns for new job opening (which is part of the reason we receive so many applications), but most don’t get jobs. The ones we hire will have been vetted for 3 months and already trained by our staff, while the ones we don’t hire will continue to be our biggest advocates and promoters at their universities and in their local communities.
Transitioning from being a scrappy start-up to a more stable organization, while not losing our personality, is a major challenge. In Ecuador, we’ve developed very strict rules and very high standards for our team and our suppliers, working against the tendency of people to see us as just another NGO that is “here to help” (aka doesn’t take our work seriously). If anything, being “mission-driven” weakened our ability to be respected and listened to early on.
Keeping the inspiration alive becomes the next challenge, especially when most of our staff in the US spends their time negotiating promotions in supermarkets. To keep everyone engaged, we frequently have Skype calls between farmers and our sales reps in the US, field staff and our Board of Directors, and consumers and our regional managers. Every other month we send detailed updates between each one of our entities (non-profits and for-profits), keeping every staff member aware of the progress we’re making and the challenges we face. We’ve also committed to sending all of our team members in the US who have been with us for more than 1 year to Ecuador to visit the farmers and experience our work on the ground.
In retrospect, studying anthropology and linguistics might not have been the worst way to enter business (though the language of Balance Sheets and Cash Flow Statements is still fairly lost on me).
Learning from the communities that we aim to support as mission-driven businesses can not only inspire us to do good work, but even influence our business models and talent management strategies.
I am so thrilled my friend, Joseph Pistrui, agreed to post on my site. Joseph is Professor of Entrepreneurial Management at IE Business School in Madrid, Spain and in the IE-Brown Executive MBA program as well as Visiting Fellow at the London School of Economics and Political Sciences. He just started a must follow blog, Nextsensing, to help entrepreneurially minded leaders make sense of "disruptive ambiguity". One of the things I admire about Joseph is his ability to simply and clearly communicate the complex and ambiguous. Enjoy! I know you will and definitely follow him at @nextsensing.
All business leaders say that they want their businesses to be competitive. It’s not unusual to hear that they have set “ambitious,” “aggressive,” or even “audacious” goals for their companies. That’s great — as long as they are also aspiring.
Aspiration, however, is tricky when it comes to management. The reason for that is in the root definition of the word. To aspire inevitably leads you to the word hope, and you’ve probably either heard or spoken the phrase “hope is not a strategy.” Yet, the state of the business world today is one of enormous disruptive ambiguity, an incoherent jumble of trends, headlines, opportunities and threats.
In such a state, it’s increasingly difficult to answer even the most basic questions about your own business. The marketplace seems, to many, a swirl of new competitors (is Apple soon going to be making wristwatches?), new risks (will the price of oil plunge or soar?), and new challenges (what new government regulations will we face next month?). As a result, few, if any, business leaders speak with rock-hard confidence about the probability of success for their own firms (other than on some public relations platform). One reason for this is that few business leaders seem to feel certain about the integrity of their customers’ baselines for probable future success. Simply put, whenever someone’s future is ambiguous, their mind is usually disrupted by fears.
So, they set goals. And, sometimes, they hope.
Which is why I found Deb’s thoughts on the HBR Blog Network so compelling: “Hope recognizes the reality that failure happens, success is not assured, the laws of physics don’t change and prudence is needed to discern when to persevere — and when to pivot. Hope doesn’t demarcate a linear path, but it does guide us through twists and turns. Hope views the glass as half full, not half empty. Hope supports realistic optimism, a necessary component of success.”
In fact, hope can be a winning asset when viewed as an aspiration to do something extraordinary, to discover something new, or to generate a key insight that can set new actions into motion with enough confidence to persevere. Hope is also a required ingredient when one is engaged in nextsensing.
Nextsensing is a process that I have been refining for several years. It’s a structured yet open-minded way for leaders to think forwards, not backwards. Too often, people confront a problem (such as defining a credible business strategy when the future is a haze) by trying to solve it by facing backwards. The default impulse for many leaders is to employ techniques learned in the past, to come up with solutions designed to return to the way things were before they had to confront a new and challenging future. For example, if sales are sagging this year, many executives fall back and use the same techniques they used last year when sales were more robust. (“Let’s do what we did last year — only faster!) It’s as if, when lost while driving, they can get back on track simply by increasing their speed.
However, thinking backwards lacks aspiration and, as a consequence, blocks (intentionally or otherwise) the necessary foresight to keep pace with changing times and to find new ways of doing business. It’s a form of wishful thinking rather than novel thinking.
Remember Napster? It introduced a platform for users to trade digital music files across the Internet, and the recording industry scrambled to shut Napster down. Instead of recognizing the critical digital shift in the world of music and attempting to find a way to capitalize on that new reality, the industry sought to stop file sharing.
By contrast, the industry could have engaged in a process that (1) honestly and objectively observed conditions as they are, not as one would wished them to be, (2) organized these observations into patterns and insights — pivot points for moving in new directions, and (3) originated a novel point of view, one that listed any and all interesting and emerging possibilities. These three steps (observing-organizing-originating) are the heart of the nextsensing process, which strives to leverage our cognitive, emotional and social capacities to unravel new meaning from current data and events.
When engaged in nextsensing, we are interested in unlocking the meaning hidden in the ambiguity of a promising opportunity. In short, nextsensing is about converting confusion into clear thinking. Only then can business leaders evaluate the full range of potential opportunities inherent in an evolving market.
Imagine how the state of things today might have been different if the recording industry had invented first what the world now knows as Apple iTunes. The recording industry then — and many other industries now — will never succeed by driving their status quo vehicle faster, by setting goals that attack their problems in a backwards way, and by deep discounting the hope inherent in aspirations.
Thus, the counterweight to disruptive ambiguity is opportunity foresense. I urge leaders and their management teams to use a simple Opportunity Canvas that reduces their critical need to observe-organize-originate to a one-page thinking exercise. The amount of paper needed to catalog new thinking may be slight, but the task itself is as big as the available collective knowledge base and imagination reach.
This is why I urge leaders to aspire whenever they set goals. When the hope for something new or something better (even something that may never have been done before) is integrated into a disciplined thinking process, finding one’s next is a hopeful process of discovery.
My friend, Doug Sundheim’s new book, Taking Smart Risks, is an early winner for 2013 Must Reads. Before I get to how great the book is, the story of how Doug and I met starts with taking a smart risk! Doug had read a post of mine about my wonderful client, Menasha Packaging and asked if I would be willing to introduce him to them for a book he was writing. Of course, I did a bit of due diligence into this Doug guy and said yes. I’m so glad I did!
Part of the problem with risk today is how it’s defined and ingrained in our society. Take the definition, “exposing oneself to the possibility of loss or injury.” The definition talks about what can happen as a direct result of risk – the ‘output’ of risk but definitely not the outcome, which is what Doug eloquently supplies – “exposing oneself to the possibility of loss or injury in the hopes of achieving a gain or reward.” For many people, though, “the emotional cost of not risking and having to live with that regret [is] much greater …than any career or financials … costs.”
By reframing the definition of risk, Doug shows the power of smart risk taking. We rarely look at the risk of NOT doing, of NOT innovating, of NOT trying. In essence, it a different perspective of opportunity costs – the opportunity cost of NOT doing something. I see this everyday in my work – organizations that see innovation as a risk instead of seeing not innovating as a bigger risk. Doug makes the costs of playing it safe very clear: we don’t grow, win, create and we lose confidence and bluntly, don’t feel alive and meaningful. If we can get this to change, imagine the positive power that can be unleashed.
Which gets to another key point in Doug’s book – the paralysis of security. We create an illusion of security around us today, one that is heavily dependent upon our other illusion of control. The issue isn’t going from security to insecurity. We’re already not secure in terms of ‘stuff’ whether we recognize it or not. We’re already not in control of our circumstances whether we recognize it or not. However, we can be secure in who we are and what we stand for and in how we control our own reactions to life. A key to smart risk taking is, as Doug says, the ability to “increase our tolerance for uncertain circumstances.” If we are secure in who we are, what we stand for and how we will react, we can welcome uncertainty for the opportunity it really is. That is why I truly believe that entrepreneurs, for instance, are not more risk-o-philic but fundamentally define risk like Doug does.
The book’s practical wisdom, advice, and tools for how to take smart risks are critical. This is uncharted territory for many and Doug’s practical guidance will make it easier for us to learn how to and actually take smart risks. This is particularly important for some of the hardest areas of smart risk taking – our own ego and our ability to communicate. Through stories about humble leaders and constant communicators, like Mike Waite, Doug demonstrates how critical the ‘soft’ skills are in successfully taking smart risks…and in the payoffs. These are truly fundamental to taking risk.
It’s been almost exactly 1 year since Doug and I met for breakfast in NYC and talked about his book and how I could help. That was the start of our friendship! I introduced him to the incredible leaders at Menasha Packaging and Thogus, my 21st Century manufacturing client. The result of Doug’s taking the risk to “ask”? He got some very real and powerful stories of leaders we can emulate and learn from, I got two of my fabulous clients in his book, and we all now have a field-guide for the New Year and beyond to help us take smart risks. I look forward to seeing the great things that will happen because of it!