October 2021 - Edvysor Blog

Why Forcing Employees Out Of Their Comfort Zones Achieves Greatness

25 October 2021/0 Comments/in COVID-19 Resources, Crisis Management, Decision-Making, Employee Behavior, Leading Change, Remote Work, Risk Management, Uncategorised, Workplace Environment, Workplace Environmentironment/by Dishen

Diverse teams are smarter teams. They have higher rates of innovation, error detection and creative problem solving.

In environments that possess diverse stakeholders, being able to have different perspectives in the room may even enable more alignment with varied customer needs.

Being able to think from different perspectives actually lights up areas of the brain, such as the emotional centres needed for perspective taking that would previously not be activated in similar or non-diverse groups.

In a nutshell, you use more of your brain when you encourage different perspectives by including different views in the room. However, work done at the NeuroLeadership Institute has proven that this only works when diverse teams are inclusive, and this still remains a key challenge in business today.

When we consider the amount of diversity present in the modern workplace and the addition of more diverse thinking as a result of globalisation and the use of virtual work teams, it’s clear that the ability to unlock the power of diversity is just waiting to be unleashed.

Here’s how you can unlock this powerful performance driver.

The Social Brain

Despite the rich sources of diversity present in most workplaces, companies are still often unable to leverage the different perspectives available to them in driving business goals. Recent breakthroughs in neuroscience have enabled us to understand why.The major breakthrough has centred around the basic needs of the social brain. We have an instinctual need to continually define whether we are within an in-group or an out-group.

This is an evolutionary remnant of the brain that enabled us to strive to remain within a herd or group where we had access to social support structures, food and potential mates.

If we were part of the out-group it could literally have meant life or death. We are therefore hypersensitive to feelings of exclusion as it affected our survival.

The brain is further hardwired for threat and unconsciously scans our environments for threats five times a second. This means, coupled with our life or death need for group affiliation, we are hypersensitive to finding sameness and a need for in-group inclusion.

When we heard a rustle in a bush it was safer to assume that it may be a lion than a gust of wind. It is this threat detection network that has kept us alive until today.The challenge is that society has developed faster than our brains. In times of uncertainty we often jump to what is more threatening. Some of the ways that this plays out is when we leave someone out of an email and they begin to wonder why they were left out.

The problem is that it’s easy to unconsciously exclude someone if we are not actively including. The trouble occurs when we incorrectly use physical proxies to define in-group and out-group, as this is the most readily available evidence used unconsciously by the brain.

Barriers to Inclusion

A study done between a diverse group and non-diverse group demonstrates how this plays out in the work place. Both groups completed a challenging task and were asked how they felt they did as a team after the exercise.

The effectiveness of the team and how they perceived effectiveness were both measured in the study. It’s no surprise that the diverse team did better in the completion of the problem-solving task, but what is surprising is that they felt they did not do well.

In contrast, the non-diverse team did worse, but felt that they had done well. Working in a diverse team feels uncomfortable and that’s why we perform better.

Discomfort arouses our brain, which leads to better performance. It feels easier to work in a team where we feel at ease in sameness, but in that environment we are more prone to groupthink and are less effective.

Creating Inclusion

We can’t assume that when we place diverse teams together we will automatically reap the rewards of higher team performance. As discussed, we’re hardwired for sameness and if we’re not actively including, we may be unconsciously excluding.

If we want diversity to become a silver bullet, we need to actively make efforts to find common ground amongst disparate team members. This in turn will build team cohesion and create a sense of unity, including reminders of a shared purpose and shared goals. Many global businesses put an emphasis on a shared corporate culture that supersedes individual difference.

It’s the same mechanism that is used in science fiction films that bond individuals together against a common alien invasion. It can also be used to describe why we felt such a great sense of accomplishment during the 2010 World Cup as we banded together as a nation.

We must also make sure we uplift all team members by sharing credit widely when available and recognising performance. The last thing we can do to further inclusion is to create clarity for teams.

By removing ambiguity, we allow individuals to not jump to conclusions about their membership within groups and calm their minds so they can use their mental capacity to focus on the task at hand.

The Investment Lifecycle of a Company

18 October 2021/0 Comments/in Decision-Making, Investment/by Dishen

The following excerpt is from Ross O’Brien’s book Cannabis Capital. Buy it now from Amazon | Barnes & Noble | iTunes

There are countless stories of entrepreneurship that can be traced back to a point in time when the founders wrote out their business plan on the back of a napkin. So many, in fact, that it has become a common trope for describing the ideation and planning phase of a business startup. It’s a great example of how a business is often little more than an idea; it’s so small you can write it on a napkin. And when you have the ability to take that initial napkin idea and develop it into an operating company, the business will grow and change.

At each phase of the cycle, there are specific dynamics that need to be managed and common strategic options and outcomes, along with sources of financing, that are specific to the needs of a company. It’s helpful to understand how companies develop, not only for the purposes of raising capital, but also for managing and building value over time. Here are the five key phases, along with the primary elements and types of financing that make the most sense:

Seed

Company elements: Founders are developing ideas about what the company will be. There are limited resources with no product or service ready, and no revenues being generated. The company is run by the founders and isn’t capitalized to acquire staff or other resources. It’s without contracted suppliers, customers, or vendors.
Types of financing: Equity from founders’ friends, family and angels, and debt from credit cards (founders’ personal resources)

Development

Company elements: The founders are refining the product or services to deliver, along with the operating model. Any R&D and technology development is scoped out and underway. The operational plan is defined, and resourcing requirements have been identified. Early adopter customers are identified and in discussions, but the company is still in a pre-revenue phase.
Types of financing: Equity from founders’ friends, family and angels, and equity from high-risk venture capital

Related: How to Raise Cannabis Venture Capital

Go-to-market

Company elements: The company is generating revenue, but it’s not yet profitable or just at break even.
Types of financing: Equity from founders’ friends, family and angels; debt from credit cards (founders’ personal resources); equity from high-risk venture capital; equity from private equity funds or family offices; bank debt

Expansion

Company elements: The company achieves profitability and meaningful customer adoption.
Types of financing: Equity from high-risk venture capital; equity from private equity funds or family offices; bank debt; strategic financing from corporate partners

Exit

Company elements: When a company has core value drivers such that a buyer will want to acquire it, exit opportunities are pursued, and early-stage risk is largely mitigated.
Types of financing: Equity from high-risk venture capital; equity from private equity funds or family offices; bank debt; strategic financing from corporate partners, access to the public markets

Two important terms that reflect where a company is in its lifecycle are “pre-revenue” and “post-revenue.” These terms are widely used by investors to quickly identify a company’s stage. When a company has demonstrated that it can produce revenue, it implies that there’s a developed market-ready product or service and all the work has been done to get to a point where an external customer is willing to pay money for the product or service.

If a company hasn’t yet reached that point, it’s considered a “pre-revenue company.” Many investors define their investment parameters by stating whether they will invest in pre-revenue companies, meaning whether they are willing to take on earlier stage risk.

A “post-revenue company” will require investment for a completely different set of activities, so using revenue as a benchmark allows investors to quickly characterize what their investment will likely go to fund, what the next set of outcomes will likely be, and in what anticipated time frame they will occur. Companies with revenue are broadly managing how to scale while pre-revenue companies are managing developing products and an organization in anticipation of scaling.

How to Drive Growth — With or Without VC Funding

11 October 2021/0 Comments/in Decision-Making, Investment, Leadership/by Dishen

Is venture capital funding becoming obsolete? As The New York Times reports, some entrepreneurs are starting to reject offers of funding, suggesting that founders are trending away from the traditional VC model.

More than that, we’re seeing leaders in the startup space outwardly express the need to shift focus away from VC funding. Bryce Roberts, co-founder of O’Reilly AlphaTech Ventures, for example, suggests that startups reconsider VC funding or avoid it altogether, while MeUndies founder Jonathan Shokrian urges entrepreneurs to find alternate paths to success.

In my experience as a founder, CEO and investor, I’ve found that the path to success is the middle ground between depending on VC funding and rejecting it altogether. Venture capital is valuable to a fledgling company, but even well-funded startups fail without smart leaders to guide their growth.

Big checks from venture capital firms still offer plenty of appeal. VC funding provides social validation, which helps founders recruit better talent. More money can also extend the runway for companies to find a scalable product-market fit.

But outside funding also means outside expectations. Those same checks that empower startups to scale often pressure them to do so at any cost. High-dollar investments in an immature company can tank operating discipline while founders chase top-line growth despite massive operating losses.

Before jumping at new funding opportunities, founders should step back and consider whether their companies genuinely need more funding or whether continued lean operations would be more effective for long-term growth.

Slow creep of VC dependence.

During my years on the entrepreneurial scene, I have learned to recognize the signs that a direct-to-consumer company is becoming overly dependent on VC funding. It happens in three phases of investment and growth, ending with untenable situations for both founders and investors.

The first phase — a new company acquires a bunch of cash, finds a good use for the money and starts to rapidly grow — is fun. We saw this eight years ago when companies like Birchbox and Warby Parker, among others, had tremendous early revenue growth and a singular focus on scaling channels at any cost. As channels grow, however, companies need even more money to sustain the momentum. Warby Parker, for example, needed to raise another $75 million last year despite its already impressive size.

As the market becomes saturated, we enter a second phase in which once-reliable channels become less capital-efficient. But companies have to keep feeding the machine, because their funding is based on the promise of continued revenue growth. That creates mounting pressure on businesses to scale at all costs. Add to that the difficulty of shifting from a focus on shareholder returns to one on profitability and long-term viability, and it’s clear why Birchbox needed to raise new money and wipe out existing investors last year.

In the final phase, companies are sitting on significant capital raises with no exit in sight. They’ve raised too much capital to slow down revenue growth in their current business model, but they can’t make the leap to acquisition because of inflated valuation expectations from the VCs funding them. Buyers look at the opportunity and pass because excessively pursuing funding has made the business unsustainable.

My company used to prioritize the same things as everyone else, but over the years, I have discovered that lean operating proficiency predicts success better than any other trait. Companies that cannot thrive on a limited budget rarely thrive on a larger one. Efficiency, not comfort, predicts growth. To make the most of your capital, follow these essential tips:

1. Partner up to reach new audiences.

To grow an early-stage business, you need customers — not only active users, but paying loyalists — in order to survive without relying on VC funds.

Audiences don’t fall in love with unknown brands overnight, however. Marketing partnerships can help two brands with common ground grow large audiences on small budgets. Casper, for example, had already become a major brand by 2016, but when it partnered with West Elm, Casper got its products into stores, where consumers could try them in real life.

This kind of partnership marketing, in which one company partners with another to provide mutual benefits and exposure, helped Caspar tap into a large audience of potential buyers. West Elm moved on to Leesa Sleep a year later, but Casper leveraged the limited exposure to boost growth without big spend. It was a partnership that was helped by VC funding, but it allowed the company to build a viable business for the long term.

2. Resist the siren call of rapid scaling.

Companies relying on VC funding are often pressured to shift focus away from their niche and scale in a way that doesn’t make sense. To stay on course, think back to the problem the company originally set out to solve. MailChimp got off the ground when co-founder Ben Chestnut designed an email tool to streamline a tedious process at his old job. Unnecessary funding could have turned MailChimp into another failed marketing agency, but maintaining focus kept MailChimp at the top of its niche.

When you keep scaling as a peripheral goal, you can make building a loyal customer base the center of your strategy. When you build trust and engage customers consistently, you develop loyalists who boost the return on every marketing dollar –just a five percent increase in customer retention can boost profits by 25 percent to 95 percent.

At my company, we discovered that regular content creation provides a cost-effective way to develop affinity within an existing audience. We use news, knowledge and education pieces to build a relationship of trust before we ask for a purchase. Users also provide feedback through content channels, which helps us test new product ideas and take the pulse of our audience. This is only possible, however, if you keep a steady focus on your niche and resist outside pressure to scale too quickly.

3. Foster an efficiency-first culture.

To develop a sustainable business model that doesn’t rely on endless rounds of VC fundraising, make efficiency — and efficient growth — a priority. Hire people who share a vision for efficient growth while keeping a core operating team of leaders who encourage one another to keep the vision on track in the face of temptations to go off-course.

For efficient growth, identify and own repeatable processes instead of outsourcing important functions. Dating site Plenty of Fish could have joined the fray of the dating site boom and abandoned its core values anytime after its founding in 2003. However, by focusing on the fight against spam accounts, Plenty of Fish maintained a good reputation and sold for $575 million to Match Group in 2015.

Extra money always sounds nice — until it causes more problems than it solves. Focus on your core mission, build an audience and invest carefully in the development of the brand’s biggest fans. Investors will always want a piece, but founders who build their companies with limited help get to keep more of the rewards.

4 Things to Understand When Buying a Business

4 October 2021/0 Comments/in Decision-Making, Investment, Leadership/by Dishen

Have you been at a job for a few years, but think you want to be your own boss? One way to achieve this is by owning a business.

You might not have the stamina to start a company from scratch. However, you can buy a business that already has credibility and make it your own.

Before you look for companies to buy, there are some key things to understand. For most, this will be a large investment, so you want to make the best choice. Here’s what you need to know when buying a company.

Seek out businesses that align with your passion

When you decide to own a business, it needs to be about more than just money. You should be passionate about it, so that the work won’t feel like work.

When are you the happiest? Is it when you’re cooking for family, or maybe brewing beer with friends? Perhaps it’s when you’re on the water or browsing unique boutiques.

Whatever it is that excites you, this is what your business should be about. You can own your own restaurant, brewery, marina, or store. When you love what you do, you’ll have more passion, which usually portends better outcomes.

Thoroughly research businesses for sale

Once you determine what type of company you want to own, the next step is to look for established businesses for sale.

Some factors to look for are location, price range, and reputation. Are you willing to travel or even re-locate? Unless you wait for a business near you to go up for sale, you’ll likely have to move around. Think about what you’re willing to do for your new investment.

Next, look at price. What’s your budget? You’ll want to aim for the ideal balance between location and price range. It might be beneficial to wait until these factors align, rather than make impulsive decisions.

When you find a promising company, you should research its reputation. What’s wrong with the business, and how can you improve it? Remember that even when the ownership changes hands, you’ll take on some of these issues.