One of my favorite bands of all time is Rush. My video selection for this blog is a popular favorite, and it just seems to fit with the subject.
I’m on a flight back from Chicago where I was teaching a training course, and I am able to enjoy one of my favorite pastimes…reading the Harvard Business Review. My lack of personal interests that are not work related should not come as a surprise to anyone that knows me well. For the rest of you, “Hi, my name is Rob and I’m a workaholic.”
Anyway, I was reading an article titled “Why Serial Entrepreneurs Don’t Learn from Failure.” The authors of this article review the results of a survey involving 576 UK-based entrepreneurs. The authors observe that entrepreneurs involved in multiple businesses simultaneously (i.e. – “portfolio entrepreneurs”) learn from their mistakes, while entrepreneurs involved with only one business at a time (i.e. – “serial entrepreneurs”) refuse to reflect on their failures or to adjust their expectations.
The article says, “Psychological research suggests that strong emotions often prompt people to blame others or external events rather than themselves so that they can maintain some semblance of self-esteem and a sense of control.” As an experienced entrepreneur, I think the “research” seems a little thin. Most entrepreneurs are optimistic about their chances of success, and some people fail to take the time to reflect upon mistakes and learn from them. However, this does not explain why “portfolio entrepreneurs” succeed.
If an entrepreneur is simultaneously managing three successful enterprises, the secret to her success is OPTIONS!
You may be familiar with the cliché “don’t put all your eggs in one basket.” The serial entrepreneur recognizes the wisdom of this philosophy, but he is faced with a dilemma. He only has one egg and one basket. The entrepreneur that has started multiple companies (i.e. – “baskets”) simultaneously is constantly forced to make decisions on how to distribute her time and money (i.e. – “eggs”) between the various projects. The simple fact that she has multiple choices creates a perpetual vetting process. Great ideas will get the most resources, while mediocre ideas will only get leftover scraps.
Medical device companies can learn from this. Most companies use a stage-gate process to design new products. The original intent behind a stage-gate process is to help companies decide which design projects should get resources for the next phase of development. Unfortunately, many medical device companies have only one or two projects in development. For a two-project company, typically one project will be early-stage and one will be late-stage. Most of the company’s resources will go to the product that is almost ready to launch and the new project gets whatever is left over.
Most senior managers focus on getting the lead project to fruition. They do this because they need that lead project to start generating revenues to sustain the company. I call this a PULL strategy. The problem with this strategy is that senior management tends to micromanage projects and actually slows the project down. My recommendation to senior management is to focus on how to build a pipeline of projects to choose from. I call this a PUSH strategy.
If a company has a competent sales team, they will be anxiously awaiting the new product. The sales team will pull new products onto the market as quickly as regulations will allow. Senior management needs to push the pipeline behind the new products to ensure that there will always be a new product for the sales team. Senior management should be working with marketing and engineering to identify new product candidates. This is strategic management. Senior management should not be picking out the color scheme and graphics for the next advertising campaign. That is an advertising tactical decision—the domain of a product manager in the marketing department.
If senior managers follow this advice, the worst possible outcome is that the new product will fail. Fortunately, the CEO will look like a genius for having a replacement product waiting in the wings. The best case scenario is that the CEO will have a successful product launch and she can use the profits to invest in the next product that is almost ready to launch. If senior managers develop only one project at a time, like a serial entrepreneur, the best case scenario is that the CEO will have a successful product launch and he will overspend the profits on advertising because other product ideas are too early in development to require large investment. The worst case scenario is that the new product will fail and the CEO will have no contingency plans. Instead of failing small, the company will go out of business.
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QC is Dead 