The 'founding mother' of the organic, locally-grown and slow-food movements describes the roots of her vision and the importance of teaching young children how to eat. She describes how she created a new model for fine dining that took the best elements from intimidating French restaurants and relaxed, 'cheap and cheerful' restaurants to create a welcoming environment with top-calibre service. She also describes how her food philosophy evolved, beginning with the teachings of Maria Montessori and the importance of educating all five of the senses.
Salesmanship is central to a start-up's success, but many entrepreneurs ignore this simple fact. They may believe that their idea will sell itself or that there's no point visiting a prospective customer without a finished product in hand. Those who search for sales advice find mostly tools and techniques for established companies. In a study of 120 entrepreneurs in six countries, more than half fully developed their products before getting feedback from potential buyers. Looking back, most said that was a mistake. Those who did start selling early did not spend enough time listening to prospects' reactions. Other mistakes included offering discounts to close initial deals, making early sales to family and friends, and failing to choose first customers strategically. When they did go on sales calls, the entrepreneurs fielded tough questions about the efficacy of their products, their credibility and experience, the size of their companies, their prices, and the cost of switching to an unproven offering. A sales model geared to entrepreneurs accounts for the fact that information gleaned during the sales process can be crucial in designing (or redesigning) the product itself. The model calls for meeting with prospects as soon as an idea is conceived to learn if it has broad appeal. The answer to that question determines whether the entrepreneurs jettison the idea, return to the drawing board, or proceed to prototype development and further testing with potential customers.
As the director of private equity for the Kauffman Foundation and a former venture capitalist, Mulcahy has observed the industry closely. In 2012 she and two Kauffman colleagues published a report titled "We Have Met the Enemy . . . and He Is Us," based on a comprehensive analysis of the foundation's more than 20 years of experience investing in nearly 100 VC funds. Her research and experience lead her to advise aspiring entrepreneurs against falling victim to these common myths about venture capital: (1) It's the primary source of start-up funding. (Actually, angel investors fund 16 times as many companies, and in 2012 more than 18,000 entrepreneurs raised nearly $320 million through a single crowdfunding site.) (2) VCs take big risks with start-ups. (Often they're insulated against risk by hefty annual fee streams.) (3) Most VCs offer great advice and mentoring. (To avoid disappointment on this front, ask the CEOs of other portfolio companies how they'd rate the firm.) (4) VC generates spectacular returns. (Since 1997, less cash has been returned to VC investors than they have invested.) (5) Bigger is better. (Research shows that fund performance declines as fund size increases above $250 million.) (6) VCs are innovators. (Apparently not. The innovation is coming from online platforms such as AngelList and SecondMarket.)
VC-entrepreneur partnership agreements often contain flaws that become highly damaging as the parties come up against issues of power, trust, and much more. Yet many of the flaws are systematic and predictable--and hence preventable. The author, a longtime consultant to the VC industry, outlines four recommendations for entrepreneurs sitting down at the table with prospective funders. Understand your leverage. Your leverage is not only a function of your alternatives; it has a lot to do with the VC's as well. Seek to understand them, and be prepared to educate the VC about why his exercising too much power could hurt both parties in the long term. (1) Maximize trust. Beneath all the financial projections, the VC negotiation is a process in which people are deciding whom they want to associate with for years to come. If the VC is vulnerable, use the opportunity to build trust rather than to take advantage. (2) Focus on value--not just valuation. Nonfinancial considerations such as control are also important. (3) Strive for understanding. Seemingly abstruse provisions can be highly consequential. And bear in mind that the choices a VC makes when negotiating can contain important clues about her assessments and expectations. Above all, when you're negotiating with a VC, think not only about what will look good in a press release today but also about what will help you create and capture value over the long run.
In the 1990s, just out of college, Andreessen went knocking on VC doors in Silicon Valley, looking to fund what became the breakthrough web browser Netscape Navigator. Within 18 months the company had gone public and he'd become a symbol of the internet generation. Now he's a cofounder and partner of Andreessen Horowitz, a venture capital fund that looks for smart tech start-ups. In this edited interview he talks with HBR's editor in chief about what kind of entrepreneur his firm likes to fund, why start-ups are still feeling the effects of the last boom and bust in tech stocks, what they should do to prepare for an IPO, the role of hedge funds, and more.
No organization can fulfill every hope and desire of its employees, so it helps to know which ones matter most to people. Goffee and Jones have identified the six most essential imperatives for creating an ideal work environment. Their insights come from surveys and interviews of hundreds of executives from all over the world. Few organizations embody all six attributes of the dream organization, many are difficult to achieve, and some even conflict with one another. But they nonetheless stand as an agenda for executives who wish to create the most productive, most rewarding workplace imaginable. Agenda: (1) Let people be themselves. (2) Unleash the flow of information. (3) Magnify people's strengths. (4) Stand for more than shareholder value. (5) Show how the daily work makes sense. (6) Have rules people can believe in. This list contains no surprises, but implementing the elements is no easy task. Almost all of them require leaders to carefully balance competing interests and to reallocate their time and attention. Companies like Arup, LVMH, Waitrose, and even McDonald's are doing it to varying degrees. Your challenge is to match--and then to exceed--what they have managed to accomplish.
The Cleveland Clinic has long had a reputation for medical excellence. But in 2009 the CEO acknowledged that patients did not think much of their experience there and decided to act. Since then the Clinic has leaped to the top tier of patient-satisfaction surveys, and it now draws hospital executives from around the world who want to study its practices. The Clinic's journey also holds lessons for organizations outside health care that must suddenly compete by creating a superior customer experience. The authors, one of whom was critical to steering the hospital's transformation, detail the processes that allowed the Clinic to excel at patient satisfaction without jeopardizing its traditional strengths. Hospital leaders: (1) Publicized the problem internally. Seeing the hospital's dismal service scores shocked employees into recognizing that serious flaws existed. (2) Worked to understand patients' needs. Management commissioned studies to get at the root causes of dissatisfaction. (3) Made everyone a caregiver. An enterprisewide program trained everyone, from physicians to janitors, to put the patient first. (4) Increased employee engagement. The Clinic instituted a "caregiver celebration" program and redoubled other motivational efforts. (5) Established new processes. For example, any patient, for any reason, can now make a same-day appointment with a single call. (6) Set patients' expectations. Printed and online materials educate patients about their stays--before they're admitted. Operating a truly patient-centered organization, the authors conclude, isn't a program; it's a way of life.
In 1965, a time when quantitative, computer-driven planning was very much in vogue, Royal Dutch Shell started experimenting with a different way of looking into the future: scenario planning. Shell's practice has now survived for almost half a century, and has had a huge influence on how businesses, governments, and other organizations think about and plan for the future. The authors interviewed almost every living veteran of the Shell scenario planning operation, along with top Shell executives through the years. They identify several principles that both define the process at Shell and help explain how it has survived and thrived for so long. For instance, Shell scenarios are stories, not predictions, and are designed to help break the habit, ingrained in most corporate planning, of assuming that the future will look much like the present. They must above all be plausible, with a logical storyline, in order to encourage intuition and judgment. They create a safe space for dialogue and for acknowledging uncertainty. They must also be relevant, not simply disruptive and challenging. And they need some quantification to be credible--but the numbers must flow from the stories, rather than the other way around. Otherwise, there's always the danger that quantitative models will hide assumptions and constrain thinking rather than refine it. Because scenarios follow a rhythm distinct from the annual strategy cycle, they allow an organization to see realities that would otherwise be overlooked.
A growing middle class in the Arab world yearns for progress and modernity, but has no interest in abandoning its religious traditions. Companies that gloss over the interplay between culture and religion ignore a critical factor for success in the region.
Leaders with a cross-cultural mind-set are in high demand. Gaining that perspective takes great effort, but it also allows you to create value for your company. So argue Unruh and Cabrera, who chart a clear path for business leaders who aspire to join the global elite. The process starts with learning to think and act globally. It requires extensive study, foreign travel, cultural exploration, and interpersonal experiences that must be undertaken with an open mind and heart. Once you enter the global elite, there's no coasting. You'll have to suss out cross-cultural divergences and convergences--and build diverse networks--to give your company a leg up. But you should be inspired less by figures on an income statement than by a sense of global citizenship. That's what makes members of the global elite a rare, influential breed that achieves both measurable and ineffable results.
Stefan Konrad is the head of South Asia and Middle East business for the consultancy Leman Highlander, headquartered in New York. He's concerned about employee turnover in the Mumbai office, where the firm's star performer, Vijay Kumar, is doing a great job of attracting clients but also of alienating employees. Two years earlier, on one of Stefan's regular visits to Mumbai, he asked Vijay about some consultants who had abruptly quit. Vijay's response was to storm out of the office and send a letter of resignation to the firm's managing partner--who talked him down and instructed Stefan to keep Vijay happy in the future. But the problems are continuing, and on this latest visit, Stefan gets an earful from some of Vijay's colleagues. He must decide whether and how to raise the issue over dinner that night. Ishan Raina, the CEO of India's OOH Media, and Eric Olson, the global managing partner of leadership consulting at Heidrick & Struggles, offer commentary.
Stefan Konrad is the head of South Asia and Middle East business for the consultancy Leman Highlander, headquartered in New York. He's concerned about employee turnover in the Mumbai office, where the firm's star performer, Vijay Kumar, is doing a great job of attracting clients but also of alienating employees. Two years earlier, on one of Stefan's regular visits to Mumbai, he asked Vijay about some consultants who had abruptly quit. Vijay's response was to storm out of the office and send a letter of resignation to the firm's managing partner--who talked him down and instructed Stefan to keep Vijay happy in the future. But the problems are continuing, and on this latest visit, Stefan gets an earful from some of Vijay's colleagues. He must decide whether and how to raise the issue over dinner that night. Ishan Raina, the CEO of India's OOH Media, and Eric Olson, the global managing partner of leadership consulting at Heidrick & Struggles, offer commentary.
Stefan Konrad is the head of South Asia and Middle East business for the consultancy Leman Highlander, headquartered in New York. He's concerned about employee turnover in the Mumbai office, where the firm's star performer, Vijay Kumar, is doing a great job of attracting clients but also of alienating employees. Two years earlier, on one of Stefan's regular visits to Mumbai, he asked Vijay about some consultants who had abruptly quit. Vijay's response was to storm out of the office and send a letter of resignation to the firm's managing partner--who talked him down and instructed Stefan to keep Vijay happy in the future. But the problems are continuing, and on this latest visit, Stefan gets an earful from some of Vijay's colleagues. He must decide whether and how to raise the issue over dinner that night. Ishan Raina, the CEO of India's OOH Media, and Eric Olson, the global managing partner of leadership consulting at Heidrick & Struggles, offer commentary.
At the age of 32, Bill Marriott became the head of the company his father had built up from its beginnings as a root beer stand in 1927. Until 2012 it had had only two CEOs, and Marriott had always thought that one of his four children would succeed him in that role. Two of his sons have worked for the company for many years, and of them, John, seemed destined to succeed his father. But as time went on, Bill Marriott realized that it wasn't the right fit--either for John or for the company. He writes here about meeting Arne Sorenson, hiring him, and grooming him to become the current CEO. (An edited interview with Sorenson accompanies the article.) But that doesn't rule out another Marriott as the fourth chief executive, he says.
Too often, companies launch sustainability programs with the hope that they'll be financially rewarded for doing good, even when those programs aren't relevant to their strategy and operations. They fail to understand the trade-offs between financial performance and performance on environmental, social, and governance (ESG) issues. Improving one typically comes at a cost to the other. But it doesn't have to be this way. It's possible to simultaneously boost both financial and ESG performance--if you focus strategically on issues that are the most "material" to shareholder value, and you develop major innovations in products, processes, and business models that prioritize those concerns. Maps being developed by the Sustainability Accounting Standards Board, which rank the materiality of 43 issues for 88 industries, can provide valuable guidance. And broad initiatives undertaken by three companies--Natura, Dow Chemical, and CLP Group--demonstrate the kind of innovations that will push performance into new territory. Communicating the benefits to stakeholders is also critical, which is why integrated reports, which combine financial and ESG reporting, are now gaining in popularity.
In the past few years, a new methodology for launching companies, called "the lean start-up," has begun to replace the old regimen. Traditionally, a venture's founders would write a business plan, complete with a five-year forecast, use it to raise money, and then go into "stealth mode" to develop their offerings, all without getting much feedback from the people they intended to sell to. Lean start-ups, in contrast, begin by searching for a business model. They test, revise, and discard hypotheses, continually gathering customer feedback and rapidly iterating on and reengineering their products. This strategy greatly reduces the chances that start-ups will spend a lot of time and money launching products that no one actually will pay for. Blank, a consulting associate professor at Stanford, is one of the architects of the lean start-up movement and has seen this approach help businesses get off the ground quickly and successfully. He believes that if it's widely adopted, it would reduce the incidence of start-up failure. In combination with other trends, such as open source software and the democratization of venture financing, it could ignite a new, more entrepreneurial economy. There are numerous indicators that the approach is catching on: Business schools and universities are incorporating lean start-up principles into their curricula. Even more interesting, large companies like GE are applying them to internal innovation initiatives.
On 10 May 2011, Microsoft announced that it would buy Skype for $8.5 billion. The price tag was undoubtedly high - roughly ten times Skype's revenues in 2010 ($860 million), around twice its recent valuation. In late 2009, eBay sold the majority of its stake in Skype to an investor group led by Silver Lake Partners at a valuation of around $2.75 billion. What makes this more interesting is that Skype itself had not been profitable since its foundation in 2003. So what was the reasoning behind the deal? How did Microsoft finally arrive at that price? Why was it willing to pay such a large amount of money? Was there something more? The brand, the networking, the technology, the possible strategic and product synergies...? Learning objectives: The case provides a good opportunity to discuss valuation issues in a fast-growing company in the high-tech industry. The acquisition was undoubtedly expensive. But how did Microsoft arrive at that price? Let us go back to valuation basics. What was the value of Skype at the time? Although it was a private business, Skype was ready to go to public in 2010 and therefore some inside information is available about its financial performance. Based on these documents as well as analysts' reports, participants can learn how to justify a firm's valuation by using the discounted cash flow method. Both Microsoft and Skype were large-sized companies operating in the technology sector. The case also provides a good opportunity to discuss the characteristics of the industry in general as well as the strategic/synergistic fit of these two companies.
A small startup firm in the environmental services industry has spent the majority of its time developing its technology and overcoming the significant regulatory hurdles involved in bringing its technology to market. Having achieved success with the technology, the company must now decide which path to take to grow. The owners can try to raise the money themselves through a bank loan and do the expansion on their own terms. On the other hand, they can forge a financial partnership with a venture capital firm or a strategic partnership with another firm, or they can issue preferred shares to a local investment fund or corporate bonds to a local insurance company. These alternatives will share the risks and expense of expansion, but the company may lose some autonomy in its decision making in future.
Luca de Meo, chief marketing officer of Volkswagen Group, reflects on his time leading the marketing department at Volkswagen Passenger Cars brand. In particular, he thinks about the environmental sustainability initiative launched by marketing called "Think Blue." and its success throughout the company. During his time at Volkswagen, de Meo focused on transforming the marketing department into an engine of innovation. De Meo and his team in marketing worked together to build a strong global brand.