Lessons from the Frontlines of Entrepreneurship
I have distilled the most important lessons from my experience as an entrepreneur.
To be a successful leader one needs high Emotional Intelligence. Having a high IQ and technical skills are necessary but not sufficient traits for leadership success. Emotional intelligence comprises of qualities such as:
- Self-Awareness—a clear understanding of one’s strengths and weaknesses,
- Self-Regulation—control of one’s emotions and ability to channel them to create a positive impact,
- Motivation—achievement not just for external gain but for internal fulfillment,
- Empathy—understanding of other peoples’ perspectives and feelings in making decisions, and
- Social Skills—skillful management of relationships with other people. These qualities can be developed by self-awareness and reflection.
Avoid the Institutional Imperative
Institutional imperative is the propensity of a business leader to do dumb things. An effective leader will put controls in place to minimize its effect. Warren Buffett has given four warning signs that can be used to identify the institutional imperative.
(a) An institution will resist any change in its current direction.
(b) Just as work expands to fill available time, corporate projects or acquisitions will materialize to soak up available funds.
(c) Any business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops.
(d) The behavior of peer companies—whether they are expanding, acquiring, setting executive compensation, or whatever—will be mindlessly imitated.
Use Positive Power. Denounce Force
A person who uses positive power (e.g. Nelson Mandela) is fair, accepting, long-term thinker, ethical and humble. On the flip side, a person who uses force (e.g. Hitler) is discriminatory, difficult, short-term thinker, unethical and arrogant. Positive power results into empowered employees, loyal customers, open communication and an environment that fosters mutual respect.
Deal Effectively with Uncertainty
Events such as September 11th cannot be predicted, but can have a lasting impact on a business. Instead of trying to predict the unknown, it is wise to determine how the unknown can impact the company. For example, I most certainly cannot predict my death, but can always prepare a contingency plan to mitigate the consequences arising from it. This can involve creating a succession plan at my company and getting adequate insurance to provide for my family.
Turn Customer Snafus into Opportunities
By following the five A’s prescribed by Danny Meyer, an award winning restaurateur, we can transform customer service problems into opportunities.
Awareness: Good customer service begins with awareness of the environment around us. If we do not catch mistakes, we stand no chance to address them.
Acknowledgement and Apology: Once a mistake is discovered, one should promptly confess and offer a quick apology. Apologies should not accompany excuses. The customers don’t really care if you were short staffed or your equipment had malfunctioned.
Action: The next step is to take prompt action to fix the issue. If the delivered product had a defect we should immediately rectify the problem by sending a replacement and informing the customer of the expected time of delivery.
Additional Generosity: Going an extra mile helps to wipe the slate clean and create a loyal customer. If a product is defective, offer a replacement at a discount accompanied with a voucher towards a future purchase.
Use Multi-disciplinary Approach to Solving Problems
We cannot find answers to all problems in a single discipline. Therefore we need to understand and to apply big ideas from a variety of disciplines such as mathematics, physics, biology, chemistry, economics and psychology. For example, the ideas from multiple disciplines such as scale and size (physics), survival by differentiation (biology), network effect (engineering) and competitive advantage (economics) can help us better understand if a business is creating or destroying value.
Keep an Unflinching Eye on Costs
A good manager does not wake up one day and decide to implement a cost cutting initiative. She is always vigorously cutting unnecessary expenses in both good and challenging times.
Negotiate Win-Win Solutions
If you negotiate really hard and if the other party feels that they have been cheated, they may not fulfill his part of the deal or refuse to deal with you in the future. Good negotiating is where both parties leave satisfied with the outcome. One way to create goodwill is to give up things that are not as meaningful to you but are worth more to the other party. For example, if you are negotiating a rental agreement, you can negotiate the rent downwards while agreeing to sign a longer lease.
Have a Life Outside of Work
Working long hours for an extended period of time is a sure recipe for burnout. Therefore it is wise to take some time off and recharge your batteries. A rejuvenated you is an asset to both your company and your family.