Dr. Earl R. Smith II

Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

Nothing is truly new under the sun and that applies to entrepreneurs as well as any others. They make the same mistakes as their predecessors. That doesn’t make them wrong or inept – just human.

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One common rationale for unproductive boards is “we have a board because our lawyer told us we need one.” Management moves to transfer accumulated liabilities to the board in an attempt to escape their own fate as failed management. The resulting lawsuits were not pretty. You can finish the title of this article any way you learned it. The way I learned it cannot be repeated here. The message, however, is one that every entrepreneur and start-up team needs to learn and, in my experience, almost none of them do learn. The postmortems that I have done on dead and dying start-ups show a clear pattern of mistakes and oversights which lead to the eventual demise of the company – and dissipation of the resourced and energy of the founders. At the center of most of these patters is the same mistake – made by team after team repeatedly.

In any logical structure, there are key assumptions that, if overturned, will result in the total disintegration of that logical structure. In philosophical terminology, these are ‘synthetic judgments a priori’. The point is that these assumptions are taken as given without question. Examples might be ‘god exists’. ‘I am alive’ or ‘today is the day after yesterday’. However, if these assumptions are proven false, the entire structure that has been built upon them crumbles and falls.

Synthetic judgments a priori are an essential part of philosophy but they are an insidious component of any business plan. Unwarranted assumptions bring down more companies than any other cause. If does not have to be that way and only is because founders ‘preach to the choir’ so passionately and avoid the hard questioning of the founding assumptions that have lead them to start a company.

A very successful entrepreneur and long time friend carries a card in his wallet with the following guidance on it:

1. Question everything
2. Particularly the most important assumptions
3. Accept nothing as true
4. Unless you have drilled down to bedrock
5. Blind faith is religion
6. Business is validating and debunking
7. Debunking is as important as validating
8. Fools accept – professionals validate

I have watched him take it out during strategic planning sessions that I was facilitating for his company – and I smiled because I knew what he was reading and why. Mostly this took place when I was unmercifully attacking one of the ‘sacred cows’ that his team had enshrined as a ‘given’ in their thinking about the company, its value proposition and importance in the general scheme.

These conversations are usually difficult. Most team members – and certainly the CEO/Founder do not like to have the founding assumptions of their dream of success and wealth creation questioned. If they engage in validation at all it usually focuses on the less important assumptions like financing, customer satisfaction or the appropriate distribution model. I do not mean to imply that these are unimportant issues. However, if the core assumptions are not aggressively tested and adjusted, the result will be a highly inefficient structure that will have a sharply diminished chance of success.

One of the best ways to avoid the proverbial ‘kamikaze raid on a vacant lot’ is to organize a high-level red-team to review the business plan and operations on a regular basis. I regularly build red-teams for this purpose and the results have been stunning. It is amazing how easily someone with two or three decades of experience can see through to the core of problem and identify the ‘of course’ – the ‘synthetic judgment a priori’ that lies at its center.

The first meeting of the red-team is always an explosive occasion. The CEO and senior team end up fighting a defensive action – defending their assumptions against an experienced and focused onslaught. The atmosphere begins to change when red-team convinces them that they were endangering the company and degrading its future by blindly assuming what was clearly not true. After that, the good teams and CEO want as much of that as they can get.

Remember: in business, it is much more important to be successful that to be right. Business is not about demonstrating the inherent correctness of your belief about reality. It is not about validating your assumptions about reality. It does not give you an opportunity to ‘change the world as we know it’. Business is about connecting a value proposition that can be delivered on with a set of customers who recognize the value of that proposition and are willing to pay an adequate price for receiving its benefits.

© Dr. Earl R. Smith II

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Related Articles:

• Good Reasons Not To – Lessons for Young Wannabees
• Change Aversion – Coming to Terms
• Balancing Work and Life
• Yes You Can
• Building Productive Relationships
• A Non-Cumulative Life

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Dr. Smith is a proven senior executive, successful entrepreneur, published author and public speaker. He serves on boards of directors and advisory boards or as a strategic adviser to CEOs. Dr. Smith specializes in turnaround management, strategic planning, leadership development and executive coaching. He also works as an executive and/or life coach in the areas of personal growth and spirituality. He is the author of Amazing Pace: Turbo-charged Business Development – a book that shows how Advisory Boards can dramatically increase revenue. Dr. Smith is also the author of Dream Walk: Parables for the Living – a book of Raven Tales and exploration.

This entry was posted on Monday, February 23rd, 2009 at 11:27 AM and is filed under Executive Coaching, Personal Growth. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.