via : http://futureofonlinemarketing.dqna.com

If you spend much time with Web entrepreneurs or investors these days, it quickly becomes clear that "pivot" is the hottest term in Silicon Valley. It signifies a young company's shifting of focus, and everyone has an opinion about whether it's something start-ups should be doing or not. The answer, it seems, is yes. And as long as it's done at the right pace, it can even be an extremely lucrative and important step. In fact, young Web outfits that pivot once or twice can raise two-and-a-half times as much money, see 3.6 times the user growth, and are half as likely to scale too soon than start-ups that either never pivot or that do so more than twice.

That was one of the major conclusions of the initial report of the Startup Genome project, an initiative put together by a group of Silicon Valley investors that aims to identify the DNA of successful Internet start-ups and the teams and investors that build them.

The project began last December as an attempt to "find a way to accelerate start-ups in a scalable way," said Bjoern Herrmann, one of the leaders of the Startup Genome project. It was initially a survey of about 50 start-ups, but over time, the team's ambitions grew, and as the crew set out to codify what works and what doesn't with Web start-ups, its research grew to include surveys from more than 600 companies.

Today, Herrmann and his partners on the project--Max Marmer and Ron Berman--released the first version of their study (PDF), a 59-page volume that breaks down the experiences of those 600-plus ventures and draws some very clear and potentially actionable conclusions.

The authors of the report acknowledge that there have been previous attempts to isolate the winning strategies of successful Web outfits, including Eric Ries' Lean Startup and Steve Blank's Customer Development project. But, the report's authors write, none of these efforts have given would-be entrepreneurs much more than the initial patterns of how a start-up should be built.

"Most founders don't know what they should be focusing on and consequently dilute their focus or run in the wrong direction," the report says. "They are regularly bombarded with advice that seems contradictory, which is often paralyzing. And while start-ups are now gathering way more qualitative and quantitative feedback than they were just a few years ago, their ability to interpret this data and use it to make better business decisions is sorely lacking."

And that's why, the report continues, the Startup Genome team set out to build the "flexible framework that enables the integration of the principles, methodologies, and wisdom that have been discovered about how to create a successful start-up."

The major conclusions 
The full 59 pages of the report are probably going to be read only by certain investors and entrepreneurs. But for those short on time, there are a number of main conclusions, starting with the idea that Web start-ups tend to pass the same kinds of development milestones, and that those that skip those steps tend to perform poorly. "They tend to lose the battle early on by getting ahead of themselves," according to the report.

Here are some other major conclusions:

• "Founders that learn are more successful: Start-ups that have helpful mentors, listen to customers, and learn from start-up thought leaders raise seven times more money and have three-and-a-half times better user growth."

• "Many investors invest two to three times more capital than necessary in start-ups that haven't reached problem-solution fit yet. They also overinvest in solo founders and founding teams without technical co-founders, based on our indicators that show that these teams have a much lower probability of success."

• "Solo founders tend to stick to their original concept way too long and take much longer to reach scale. Compared with a founding team of two, they are 2.3 times less likely to pivot, and take 3.6 times longer to reach the scale stage."

• "Business-heavy founding teams are 6.2 times more likely to successfully scale up with sales-driven start-ups than with product-centric start-ups. Technical-heavy founding teams are 3.3 times more likely to successfully scale up with product-centric start-ups with no network effects than with product-centric start-ups that have network effects."

• "Balanced teams with one technical founder and one business founder raise 30 percent more money, have 2.9 times more user growth, and are 19 percent less likely to scale prematurely than technical- or business-heavy founding teams."

• "Start-ups that haven't raised money overestimate their market size by 100 times and often misinterpret their market as new."

In addition, the report divvies most Internet start-ups into six discrete development stages, each with several substages. "This creates a kind of directed tree structure and allows for more granular assessment by being able to pinpoint the main drivers of progress at each stage."

Those six stages are Discovery, Validation, Efficiency, Scale, Profit maximization, and Renewal.

Does it make sense? 
It's all well and good to compile a study like this, but the work done by the Startup Genome team is clearly only as good as its data. The question is, do their results matter in the boardrooms and offices of Silicon Valley and beyond?

To be sure, the report is just out, and it's too early to reality-test its conclusions. But the team did share an early version with a number of independent successful Silicon Valley investors and entrepreneurs, asking each to evaluate the report's advice.

At least two of those who've seen the report cautiously suggest they think the Startup Genome project is on to something.

"A lot of these things make sense," said Ilya Fushman, a principal at Khosla Ventures. "Are they actionable, or are they going to get someone to stop what they're doing and re-evaluate? And I think at the end of the day, if you look at the state of start-ups now, you have a very broad gamut of founders with varying levels of expertise, and at the very early stage, this can be helpful to start-up teams, especially with teams out of university." Some, of course, may look at the major conclusions and think that there are few surprises. But whether that's true doesn't mean entrepreneurs can't learn from them.The conclusions are "sort of obvious once you think about them," Fushman said, "but the question is, does everyone think about them? The answer is, maybe they do, maybe they don't."

And that's the key to the report, it would seem: to get people thinking about the process of building a company and to shine a light on the things that work and those that don't, and to give would-be founders some ideas of what they might do, and what they should stay away from, if they want to be successful.

"I buy the [report's] major conclusion, that start-ups evolve in phases and that awareness of the phase you are in helps to focus the founder's attention and increases the likelihood of success," said Soeren Stamer, a board member at the European think tank the Lisbon Council and CEO of a start-up called Yokudo. "Some of the results are very helpful [for raising] red flags for a team: pivoting too often, not at all, etc. Again, that is helpful to create awareness and constructive discussion within a founding team."

But Stamer also pointed out that start-ups should be wary of thinking that if they follow the conclusions in the report to the letter they will automatically be successful. After all, the report is merely a framework, as Herrmann put it, and its data points more to averages of what has worked in the past. There is no substitute for real experience and expertise. As he put it, founders should be careful not to conclude, "we have to pivot two more times to be in the green zone."

What's next? 
The initial report is out, but Herrmann said it's just the beginning. Though more than 600 start-ups participated in the survey, there are countless others in Silicon Valley and elsewhere that could contribute their own data, and the Startup Genome project is now going to work on a second, larger survey. At the same time, Herrmann said he thinks the report is a "pretty significant map" that could give a lot of people "a better understanding of the world of entrepreneurship."

The team is also considering repackaging the data as a free product that would give investors a dashboard through which they could assess the start-ups they're funding. Ultimately, Herrmann said, the project is about helping to pinpoint some key elements of successful start-ups in a measurable way that could help future innovators as they get started in business.

"We've reached a critical mass of people who have been describing certain patterns of entrepreneurship," he said, "and we're seeing entrepreneurship evolving as a science. For the first time, [we've started] to develop specific repeatable patterns for entrepreneurs building high-tech start-ups."

via : : http://news.cnet.com/8301-13772_3-20066256-52.html#ixzz1NuhR2MPn

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When IBM recently polled 1500 CEOs across 60 countries, they rated creativity as the most important leadership competency.

Eighty percent of the CEOs said the business environment is growing so complex that it literally demands new ways of thinking. Less than 50 percent said they believed their organizations were equipped to deal effectively with this rising complexity. But are CEOs and senior leaders really willing to make the transformational moves necessary to foster cultures of real creativity and innovation?

Here are the six fundamental moves we believe they must make. In all my travels, I've not yet come across a single company that systematically does even the majority of them, much less every one.

1. Meet People's Needs. Recognize that questioning orthodoxy and convention — the key to creativity — begins with questioning the way people are expected to work. How well are their core needs — physical, emotional, mental, and spiritual — being met in the workplace? The more people are preoccupied by unmet needs, the less energy and engagement they bring to their work. Begin by asking employees, one at a time, what they need to perform at their best. Next, define what success looks like and hold people accountable to specific metrics, but as much as possible, let them design their days as they see fit to achieve those outcomes.
2. Teach Creativity Systematically. It isn't magical and it can be developed. There are five well-defined, widely accepted stages of creative thinking: first insight, saturation, incubation, illumination, and verification. They don't always unfold predictably, but they do provide a roadmap for enlisting the whole brain, moving back and forth between analytic, deductive left hemisphere thinking, and more pattern-seeking, big-picture, right hemisphere thinking. The best description of the stages I've come across is in Betty Edward's book Drawing on the Artist Within. The best understanding of the role of the right hemisphere, and how to cultivate it, is in Edwards' first book, Drawing on the Right Side of the Brain.
3. Nurture Passion. The quickest way to kill creativity is to put people in roles that don't excite their imagination. This begins at an early age. Kids who are encouraged to follow their passion develop better discipline, deeper knowledge, and are more persevering and more resilient in the face of setbacks. Look for small ways to give employees, at every level, the opportunity and encouragement to follow their interests and express their unique talents.
4. Make the Work Matter. Human beings are meaning-making animals. Money pays the bills but it's a thin source of meaning. We feel better about ourselves when we we're making a positive contribution to something beyond ourselves. To feel truly motivated, we have to believe what we're doing really matters. When leaders can define a compelling mission that transcends each individual's self-interest, it's a source of fuel not just for higher performance, but also for thinking more creatively about how to overcome obstacles and generate new solutions.
5. Provide the Time. Creative thinking requires relatively open-ended, uninterrupted time, free of pressure for immediate answers and instant solutions. Time is a scarce, overburdened commodity in organizations that live by the ethic of "more, bigger, faster." Ironically, the best way to insure that innovation gets attention is to schedule sacrosanct time for it, on a regular basis.
6. Value Renewal. Human beings are not meant to operate continuously the way computers do. We're designed to expend energy for relatively short periods of time — no more than 90 minutes — and then recover. The third stage of the creative process, incubation, occurs when we step away from a problem we're trying to solve and let our unconscious work on it. It's effective to go on a walk, or listen to music, or quiet the mind by meditating, or even take a drive. Movement — especially exercise that raises the heart rate — is another powerful way to induce the sort of shift in consciousness in which creative breakthroughs spontaneously arise.

These activities are only possible in a workplace that doesn't overvalue face time and undervalue the power of renewal.

"I still think that reputation and game mechanics are the future of social software."

- Tweet by Paul Pedrazzi, VP, Strategy & Innovation at Oracle Corporation

What an intriguing, and provocative, statement by Paul Pedrazzi. At first blush, I can hear your thoughts... "What? C'mon!" Which is exactly how most innovations start.

The reason it's provocative is that business is serious... business. And that goes for social software as well. Anything that smacks of addressing intrinsic human behaviors and motivations is suspicious on arrival for some. Just make my job efficient so I can get home.

But Paul's opinion is valid, and holds a lot of merit. The issue of creating collaborative tools has mostly been solved. Not solved as in finished in terms of innovation, but solved meaning the basics of easy posting, making content sharable and searchable, and connecting with others are done. These are the table stakes for any social software.

What's emerging on the social landscape is the notion of making contributions and sharing part of a richer, more engaging experience.

What Foursquare Is Teaching Us

Foursquare is a fast-rising social network site where users check-in from whatever location they're at. The table stakes aspect is the ability to find friends that are in a same location, and to be aware of where people have visited for future reference (e.g. when you need a recommendation). This by itself provides the core utility of the site. Similar to the core utilities of social software, as mentioned above.

But Foursquare is even better known for its game mechanics. The site has compelling attributes:

• Points - vary by type of activity
  
• Leaderboards - see who's on top
  
• Badges - for a wide variety of activities
  
• Mayors - the top person checking in to a location

News flash! Turns out people like lighthearted competition, status, recognition and earning awards. Integrating these as a part of the experience, not as the entire experience, is a powerful basis for increasing people's awareness and interest in a particular activity.

Game Mechanics 101

Indeed, Amy Jo Kim makes this very point. Kim holds a PhD in behavioral neuroscience, and is CEO of Shufflebrain, builders of smart games for social networks. She has helped design social games and social architecture for such companies as Electronic Arts, Digital Chocolate, Viacom, eBay and Yahoo!

In an interview on Mixergy, she makes the following observation about metagames:

"A metagame uses feedback like the kind of feedback you might see in games, statistics, a that kind of stuff. Plus rewards, which are badges and leaderboards and points and prizes and all different kinds of things that are carrots that you dangle in front of people to get them to continue to perform behaviors. Again, I want to emphasize, effective metagame design supports the reason people are there already. It doesn't distract them from it. It supports it."

This is not tacking on metagames for the sake of instantly being fun. It's metagames that are considered in the light of what the business objectives are.

Kim also discusses two types of points approaches:

• System points
  
• Social points

System points are those a user earns through direct interaction with the system. Straight activity incentives. These have their place in any social software.

Social points are where it gets more interesting. These "are points that you amass as people react to things you've done. A reputation system is based on social points-other people's reactions to what you have done." This approach is a terrific blend of rewarding quality activity, because the community is the one that determines the value.

There are rating systems in place with social software now, but few have formalized that into game mechanics.

Finally, Kim relates five game mechanics that are "particularly useful for social software and web services. They're useful, they're low hanging fruit, they're predictable. There's a lot more sophisticated things you can do, but these five are a great place to start."

1. Earning points: anything that looks like points, smell like points, cracks like points, you know, is going to be points.


2. Collecting mechanic: The game mechanic of collecting is very main stream. Very familiar to people. You amass collections.


3. Feedback: Feedback keeps you on the road to mastery. It tells you if you're on the right track. It helps you get better like a great coach. That's what great feedback does.


4. Taking turns: Taking turns or exchanges is the shorthand I use for that. So this fundamental feeling of taking turns, playing chess is taking turns, having a conversation is taking turns, many games have this back and forth of taking turns. What's important about this mechanic is that it can be implicit or explicit. And it creates social capital.


5. Customization: Any time you have a rich profile you can decorate. Go look at people's profiles. They kinda look like games. There's badges you're collecting, they're very rich. All that kind of customization was really pioneered by games. And thinking about how to allow people to customize their experience is much more what's traditionally been in the gamer dynamic.

Some good thoughts on game mechanics and social software.

Mixing Fun with Achievement

MIT professor and Enterprise 2.0 leader and thinker Andrew McAfee wrote a post asking, "Should Knowledge Workers Have Enterprise 2.0 Ratings?" The focus of the article was on making measurement an integral part of the motivation for employees to use social software:

"And imagine further that the leaders of the organization are sincerely interested in pursuing Enterprise 2.0 and getting their people to actually use the new tools. What would they then do? What would be their smart course(s) of action?

Virtually everyone agrees that coaching, training, explaining, and leading by example would be appropriate and beneficial activities. But what about measuring? It's a technical no-brainer to measure how much each individual has contributed and to generate some kind of absolute or relative metric. Would doing so be helpful or harmful?"

In the graphic below from his post, you can see an example of how these measurement might look:

Why not turn this into something fun? Or are dry Excel spreadsheet the only approach? McAfee's proposal is one of measuring and motivating. Well, as Amy Jo Kim notes above, game mechanics are terrific way to integrate such an objective into an engaging experience. For example:

• Positive feedback = reputation score


• Authoring = activity currency


• Interacting = collaborator badge

Pedrazzi's tweet makes a lot of sense. We're naturally competitive, and achievements and recognition have always part of work life. Adding fun, social feedback and an achievement orientation becomes a key differentiator for companies. Integrating these dynamics into a collaborative, emergent, results-oriented culture is a clear winner.

We'll leave it with this perspective from Dachis Group's Bryan Menell:

"What better way to change behavior than to introduce elements of gaming and competitiveness? Think of the Foursquare leaderboard. Everybody wants to see their name in the Top 10...

Applications like Foursquare and Gowalla are in their infancy, but it is this type of technology, attention to culture and behavior change, combined with support for processes that will help organizations become more socially calibrated.

The way that we work, interact, and reward people in the enterprise of tomorrow will be very different. How likely is your organization to adopt similar concepts?"
by Hutch Carpenter