I know that many of you (including me) have been trying to enjoy the holidays and relax a bit. However, I wanted to interrupt your holiday programming to let you know that for the past couple of months we’ve been heads down working on the next version of the StartupLounge.com site.

In short, we are putting the finishing touches on what will be an unbelievable online social platform and community. I don’t want to get into too many details right now, but it will go far beyond the simple blog and podcast that we have running currently. We’re really taking the whole thing to a completely different model.

Stay tuned …

Cheers.

I’ve been so busy with PlayMotion over the past few months that I hadn’t realized that there was a bug in PWC/MoneyTree scripts that generate the cool dashboard on my home page showing Georgia venture capital activity.

The bug is fixed, so the data is now accurate. The other good news, is that there was more of a focus in early-stage deals over Q3/2007, and a decrease in later-stage activity. Now that we are approaching the end of Q4, I’ll be curious to see those #s when they get published in Jan or Feb.

Cheers.

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Ok, I will confess that I am a process improvement fanatic. I suppose it has something to do with my experiences early in my career working in a TQM environment at TSYS, and working with a key customer (AT&T Universal Card Services) to win the Malcolm Baldrige Quality Award. In reality, though, it probably has more to do with my desire to create “well-oiled machines” and tinker with numbers.

So what is process improvement anyway? Well, let’s first consider a definition of a “business process”. Tom Davenport lays it out pretty well:

”a structured, measured set of activities designed to produce a specific output for a particular customer or market. It implies a strong emphasis on how work is done within an organization, in contrast to a product focus’s emphasis on what. A process is thus a specific ordering of work activities across time and space, with a beginning and an end, and clearly defined inputs and outputs: a structure for action. … Taking a process approach implies adopting the customer’s point of view. Processes are the structure by which an organization does what is necessary to produce value for its customers.”

What a mouthful. Accurate, but what a mouthful. The net-net is, processes are a series of tasks and activities that are designed to achieve some desired outcome. The key word that was left out in Davenport’s definition is repeatable. Something can only be considered a process when it is repeatable, otherwise, you just have a project plan.

Some basic examples of processes - the way that your company:

• drafts and approves proposals and contracts for your customers
• performs implementations/installations for your customers
• performs software quality assurance testing, logs defects, etc.
• submits and approves expenses
• hires new employees

The art of “process improvement” can therefore be generalized as applying some series of additional activities in an effort to improve existing processes. Improving is a relative term, of course, but in general, you are most likely seeking to decrease something (e.g. number of software defects, the time necessary to pay out expenses, etc.) Process improvement can be a huge strategic advantage for a company; however, it can be one of those proverbial roads that lead to nowhere, paved with good intentions and failed initiatives.

Process improvement is generally accompanied by overhead - and overhead is rarely something to get excited about. Conversely, shooting from the hip and hoping that processes get better on their own is not going to be a productive path either. So where does that leave us?

Sometimes it can be hard to do process improvement, when you have no processes at all - or no product. You see this quite often in startups and early-stage companies. Everyone is focused on getting to the next milestone, and improving processes is something you’ll “tackle later.”

But let’s suppose there are some processes in your small company that you want to improve. Trying to implement modern process improvement tools and strategies such as Six Sigma or TQM would equate to overkill in most cases. You’d spend most of your time trying to track and capture data, and not enough time innovating. Creativity is critical to startups - and obviously, you don’t want to introduce anything that is going to stifle creativity. In fact, there was a great article on this in Business Week a few months back - excellent reading. The article is called “3M, A Struggle Between Efficiency and Creativity“, and is a must read if you have an interest in this space. It is a thorough treatment of how Six Sigma was used to make 3M an incredibly efficient company, at the cost of stifling creativity.

So how do you begin to improve your processes, without trying to kill a fly with a sledgehammer? A good alternative for early-stage companies is the concept of the 5-whys, as used by Toyota. Simple, elegant, and completely pragmatic - all of the traits of the modern startup.

Essentially, it is a method of asking questions to arrive at the root cause of a problem. Ultimately, you want to explore the cause/effect relationships that feed into any given process or problem. For example, let’s say that while doing a demo to a key new customer, your software product kept crashing with embarrassing errors, and the customer backed out of the deal. Clearly, this is a problem that needs to be addressed. Instead of breaking out Six Sigma methodologies and trying to improve all of the many things that feed into that software, you simply ask the question “Why?”. it is important to point out that the gut reaction of any salesperson in this scenario would be to blame it on the software (”damn engineers, they keep pushing out buggy code!”). But once you start digging, things can often play out differently.

• Problem: We lost the deal.
• Why? The demo crashed.
• Why? The code is obviously buggy.
• Why? The engineers aren’t paying attention to detail and testing thoroughly.
• Why? The engineers didn’t have enough time to test.
• Why? The customer wanted a last minute feature added in, and there wasn’t enough time available in the project plan to do testing.

Obviously, you don’t have to limit yourself to five questions (whys), but you get the idea. Once you arrive at the root of the problem, you can address it with a laser focus. In this case, there would appear to be a broken process around how change requests from customers are factored into the project plan. So instead of running down the hall and throwing inanimate objects at the nearest software engineer, your energy is probably better expended by working with your project management team to ensure that it doesn’t happen again.

Granted, this is an incredibly basic approach to solving problems, but it works. It is time-efficient, and allows you to implement spot solutions to address deficiencies quickly.
Six Sigma and other types of methodologies are cool - especially if you love to crunch numbers. But again, implementing those in a startup is, in my opinion, overkill.

There can be a case, however, for certain processes within a startup to be measured with something like Six Sigma. Especially if the process is an automated one, and something that is at the core of your business. In such cases, it probably makes sense to do more robust data gathering and analysis (viva DMAIC!).

Cheers.

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I learned to play the game of chess as a kid, although I’m certainly no Gary Kasparov. I have always been intrigued by its simultaneous complexity and simple elegance. After running several startups, and going through the exit process more than once, I have come to the conclusion that running a company is very akin to playing chess, although running one effectively is probably closer to mastery of the game. Chess is a great game for entrepreneurs - it is a lot like entrepreneurship at its core.

For starters, consider the pieces. Chess is played with a number of pieces, ranging from the pawn (the lowly foot solder) to the queen, the most powerful piece on the board. Although the various pieces are each equipped with their own unique abilities, they are all critical to winning.

The Opening

There are two sides in chess - black and white. Your company is one side, and your competition is the other. Two armies standing toe-to-toe, each trying to topple the other.

Traditionally, the player playing the white pieces moves first. This is the first-mover advantage. As experienced chess players will tell you, many amateur players lose the game on the first move (the opening move). However, it isn’t enough to simply have an “opening move”. A monkey can make a first move. It is knowing what to do after that first move that really counts. How will you execute once your plan has been set in motion? Unless you have a plan, don’t move. When you move, move with a purpose. As Sun Tzu once merrily quipped “Let your plans be dark and as impenetratable as night, and when you move, fall like a thunderbolt.”

The Pawn

The pawn is the most common piece on the board. Each team controls eight (8) pawns. The pawn is a “soldier”, and while they can only move freely in one direction (forward), and can only attack in one direction (diagonally), they are critical to the game.

For starters, the pawn is the only piece that has a different set of movement rules for their first move. They can move up to two (2) squares forward on their opening move. However, after their opening move, a pawn can only move one square at a time. Just like employees in a startup company - everyone is juiced coming out of the gate, but eventually, they normalize, and don’t move with quite the same fervor as before.

From a strategy standpoint, the concept of pawn chains is an important one in chess. A “pawn chain” consists of two or more of a player’s pawns connected (lined up diagonally), where a rear pawn is protecting a vertically forward pawn one rank forward and in the file to the left or right of the rear pawn. In other words, one pawn is covering the ass of another. With a nice arrangement of pawns, you can really block an opponent. Think about your employees - do they cover each other? Is there sufficient cross-pollination and a team-culture in your ranks?

The Specialty Pieces (Knights, Bishops, and Rooks)

While pawns are cool, the real fun can be had in mastering the various specialty pieces: the knights, bishops, rooks, queen, and king. The specialty pieces are analagous to your management team, each excelling in their own field.

Bishops can move any number of squares, but only diagonally. Rooks have the same freedom of movement, but along the vertical/horizontal axes. Knights have a quirky set of movement restrictions. They can move two squares foward, and then once to the left or right.

Okay, so those rules are fairly easy to understand. However, to effectively win in chess, you have to not only master the movement constraints that accompany each piece, but you have to master the various ways in which the pieces can be used together to accomplish your mission. I don’t think I have to point out that the same can be said of running a company. Unless your rooks, bishops, and knights can work together, the king and queen are dead. The same can be said of marketing, sales, engineering, public relations, and IT.

The Royalty (King and Queen)

The king is the most sacred piece on the board. The King can move in any direction, but only one square at a time. You lose the king, and the game is over. I like to think of the King as your “Chairman of the Board” (or “chairperson”, if you prefer). Powerful, but limited in its ability to affect the game.

The queen, on the other hand, is the most powerful piece on the board. She can move any number of squares, in any direction. This is your CEO. She can kick the ass of any piece on the board, but if you lose your queen in battle, you are sunk (unless you are Gary Kasparov). It is incredibly difficult for the remaining pieces to rally together for a victory if your queen falls.

A Random Thought (Does Size Matter?)

In chess, the pieces are often different heights/sizes. The pawns are the shortest, and the king is the tallest. In theory, they can be arranged from shortest to tallest, in the order of their relative importance to the game. While an argument can be made about the sizes of bishops, knights, and rooks, at the end of the day, the king/queen are taller, and the pawns are the smallest. However, in the world of business, this is where the analogy to chess ends. While the CEO is important, he or she alone cannot win the game. Without the minions in play, the game wouldn’t last very long.

A search on google for “chess business” reveals that I am not alone in my thinking. Here are a few selected entries if you’d like to take a look:

• Kasparov on Business and Chess
• Should Business Managers Learn Chess?
• All The Right Moves (Fast Company)

Food for thought. Have a great holiday season everyone! I’m gonna settle in for a game of Chess Titans, courtesy of Bill Gates.

Cheers.

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The other day I spent some time volunteering to teach the kids down at Wheeler High School’s Magnet program. What fun! Of course, as I walked down the hallway toward the office to sign in, I couldn’t help but feel like my life had come full circle. 20+ years later, and there I was, back in the principal’s office. Ha! Thankfully, schools have done away with paddling, otherwise, I’d have had to resort to my old trick about wearing sweat pants under my jeans. Yes, I was a mischievous kid - big surprise - But I digress.

The focus of the class was on “business networking”, and I taught it twice that day, one for each of the Magnet groups. Business networking is a topic that I have become increasingly passionate about over the years, in no small part to my good friends Ricky Steele and Mike Blake. Trying to relate a dry topic such as “business networking” to a group of high school seniors was challenging, but I think I pulled it off.

It was especially rewarding for me, given my recent post about Sam Eisen. It brought some sense of closure for me, as I walked the halls and talked to the kids.

Good kids, great teacher, and a good program down there. Some observations:

• I covered the basic tenets of business networking, how to do it right, how NOT to do it, and tossed in a ton of real-life anecdotes and stories.
• We took an informal survey of the kids in the room, and what their desired post-college careers were. The biggest concentration was in the educational field - a lot of these super bright kids wanted to be teachers or counselors. That brought a smile to my face.
• One kid in each group said they wanted to be an “entrepreneur” - very cool. I invited them to attend our next StartupLounge.com Capital Connections event as an observer - nothing like mingling with other entrepreneurs and investors to get the juices flowing. It would be a great experience for them - seeing the process in action.
• One girl had the best, and probably the most honest answer of them all - “I simply want to be rich.” Getting rich takes hard work, and a plan to succeed, but hey, at least she knows what drives her. Hopefully, she will become an entrepreneur and create the next Home Depot or ISS.
• One girl was an aspiring artist - a very talented one at that - I gave her my card and told her to drop me a line - we use outside artists all the time at PlayMotion. Business networking at its core!
• I don’t have many regrets in life, but boy, it sure would be great if I could go back then, knowing what I know now!

At any rate - it was good fun. Thanks to Dr. Adams and the folks at Wheeler for having me down. I encourage other entrepreneurs and business leaders in the community to give their time to schools as well. Helping to shape these kids for tomorrow’s workforce can be a rewarding affair.

Cheers.

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