What’s The Most Difficult CEO Skill? Managing Your Own Psychology.

http://techcrunch.com/2011/03/31/what%E2%80%99s-the-most-difficult-ceo-skill-managing-your-own-psychology/

9 Women Can’t Make a Baby in a Month

http://techcrunch.com/2011/03/30/9-women-cant-make-a-baby-in-a-month/

Bottom up is key

Yes, this is my main conclusion: Bottom up is key. Everything else mentioned in the articles revolve around it.

I cannot agree more that throwing arbitrary assumptions around is not very insightful (e.g. even if tap into 1% of the total market...)

Another key point that was emphasized was being lean and staffing "hungry" people. It was argued that a dream team is not necessary. Although I see their point, I am not 100% convinced. I agree that you don't want to bring people who you clash with on a personality level just because they are experts in their field. But there is value in having the "right" executive team. I also remember from another article that team comes first and idea second... Open-ended discussion here...

Also, I liked the idea of starting as a service business. Do some consulting work to generate some cash flow to keep the engine running and also get more hands-on experience by doing so and improve your value proposition with the gained insight.

I'd like to conclude with uncertainty modeling. Discovery-driven planning is all about it. I think all entrepreneurs should have a model of some form, preferably a spreadsheet and a fancy software (@RISK, Crystal Ball, Analytica, etc.) installed to illustrate how uncertain assumptions affect your bottom line and constantly revisit the model. One thing I learned in my research career is that deterministic assumptions do not lead you to meaningful results too often.

Launching a risky project

I believe every project has it own share of risk, there is no guarantee that any of our projects would be 100 percent safe or provide good returns. There are going to be glitches in every project. However this article on launching a risky project give us idea and points to take note of/think of while we launch our projects.

1. 1. Decide what level of achievement counts as success or failure. This to me entails setting small short term goals to achieve and gradually growing to bigger long term goals. I many of our projects, I have noticed that many of us have suggested pilot projects as a test to begin our projects.

2. 2. Incorporate sociopolitical forces: This involves looking at all factors that have a possibility of affecting your business venture, these factors might be social, political or economic factors.

3. 3. Keep costs low in the beginning and plan for scalability has: Professor Zak mentioned this to us many times in class, to always keep our cost low at the beginning, starting with our pilot projects and achieving successful short term goals initially and learn from that before we grown to bigger projects.

4. 4. Establish specific measurable goals of what you plan to provide: This goes hand in hand with the points above, setting out short term goals that are measurable.

5. 5. Preplan a realistic exit strategy: As mentioned, all projects are risky and there is the possibility that the project might not just work out. The point is how are you going to exit the market/industry if and when the project does not succeed. Preparing an exit strategic would also help save costs if the project is failing, having an exist strategy would help you better prepared.

6. 6. Anticipate unintended consequences: As stated in the article, this is very difficult to do, but what for my project, I am also thinking of what could possible go wrong and the actions I would take if there are any unintended consequences. I have created a decision tree, where I consider every possible unintended consequences and the actions I hope to take .and even beyond this, i know that there are other consequences that might occur.

Finally, Learn then invest.

Framing for Social Ventures

As indicated by this week’s reading, it is important to implement discovery-driven planning when embarking on ventures that have no historical examples on which to rely. When entering such unchartered territory, one should implement six techniques: framing, competitive market reality specification, specification of deliverables, assumptions testing, managing to milestones, and parsimony (Cooper 2008).

I was particularly interested in the framing technique, especially given my assumption that framing for a social venture would be different than framing for a traditional business. My research led me to an article that stressed the importance of using cultural framing to successfully launch social initiatives in established businesses.

Although the article’s premise of starting social initiatives within established companies is not 100% correlated to our purpose of starting social ventures, the article does contain information that can be of use to us and is overall a good read. Interested parties can locate the article here:

http://appreciativeinquiry.case.edu/uploads/2003%20AME.pdf

Has anyone read this or something of similar context in the past? If so, please share with me your opinion. I am interested in learning more about the subject.

Sources

Cooper, Robert. "Technical Note: Putting Discovery-Driven Planning to Work." Kellogg School of Management, 2008: 2.

Implementation & Planning

The two web articles one by Guy Kawasaki and the other one by Kimberly Weisul offered practical and sound advice on implementing a business plan. Some of the things which I thought were particularly interesting were:

• Focus on Cash Flow and not profitability: Focusing on keeping the organisation running paying up bills on time is important in the first few months of launching a social venture. At the end of the day if your company does not have enough money to pay off its bill / suppliers , not only spoiling the reputation of the firm but also loosing trust among partners.

• Forecasting from bottom up : The paper on Discovery driven planning also stresses on the same point through out the paper. I think its one common mistake all entrepreneurs make is to plan from the top-down. I thought this was a brilliant suggestion because it helps us in planning and forecasting better and not overestimating profits or expenses.

• Establish specific measurable goals of what you aim to provide: The Kellogg article also stressed on this in the Framing section. Understanding the business model and being able to predict the unit of business plays a key role in this goal. Also being able to relate it to the cost and architecture of the proposed business model would help to plan financially the financial business model. I think the business unit for my venture would be a service contract between the school and my firm because we will not only offer our time but also share our knowledge and skill set.

• Forget the "Proven" team: I strongly agree with the author on this one. As I have notice my family firm when executives having lot of experience who have worked with fortune 500 firms have been hired , they tend to have certain limitations at the kind of work they can do. Sometimes the best employees are the most unexpected - students have the passion and drive to perform well and go the extra mile to deliver results.

The question that I want to ask today is how do you know which business unit would be profitable for your business? Is it a good strategy to try out a few and then reach a conclusion?

Managing Development Projects with Discovery-Driven Planning

I am in agreement with Bret that the article on discovery-driven planning (DDP) is essential reading, not only because it sheds some light on the subject of managing innovation but also because it is an apt model for my particular venture's business. In general, it is probably one of the more useful project management tools for development/redevelopment/construction. Having studied some project management here at Heinz, and, having experienced the way that assumptions about any single redevelopment change over the life of the project, I know that DDP is the right approach. A few points in DDP stand out for me. First, the setting of deliverables is always important in construction, as it provides clarification as to what exactly will be done and what product will eventually be offered. A lot of times, development projects go forward under no operating assumptions other than a general statement like "we're going to build a technology park" or "we want to develop a strip mall to make X% return over Y years). In some instances, construction work is even "fast tracked" before architectural and engineering planning has been completed. This is the oposite of DDP because it doesn't involve any rigorous analysis of the underlying process but is more of a "build it and they will come" approach. This simply won't work for an innovative product in a competitive market like housing though, not to mention the fact that it is costlier and less attentive to details). The good thing about my venture, however, is that there is already a defined project area and scope and, using DDP, I can manage the project's progress from point A (vacant historic building) to point B (multi-use green building with historic designation, with an annual return yet to be determined) while using insights from the process to minimize costs and maximize returns. This leads to my second point which is, when you have a well-developed set of deliverables or operational requirements, you are much more capable of managing hurdles as they come along during a project. Flexibility is the key in construction, and I think this is especially true in my case because of the nature of green preservation work. The venture would start with a litany of operational requirements that function that are our deliverables to the target market (i.e. nice green housing, workspace, and neighborhood revitalization). The trick would be to manage any hurdles that come up that would challenge our ability to meet operational requirements, cost overruns obviously being the most important factor. This is where DDP is helpful because, as this is a somewhat nascent industry, there is presumably a lot we are going to learn about our suppliers, our capabilities, material costs, etc. during construction that will change our operating assumptions.

Why Startups Need to Blog (and what to talk about …)

http://techcrunch.com/2011/03/27/why-startups-need-to-blog-and-what-to-talk-about/

Discovery-driven Planning: A MUST read for new entrepreneurs

I think "Discovery Driven Planning" is a great article and one that should be read by every new entrepreneur as early in their business development as possible. Why? It's the first thing I've seen that's realistic about what it's like to develop something innovative.

One of the things that's always bothered me about the way I've seen traditional (if there is such a thing) business development work is that it's exactly like the "conventional planning" referenced in the article--it is expected that people put together things like financial projections when there is very little to base the models on and then write them up/present them with as straight a face as possible. Everyone knows that the projections it won't work out like that, but for some reason we keep doing it.

What I liked about this article was that it was based on a more common sense approach. Figure out what you know. Write down your assumptions and what you think the implications of them are and then test them. Build and update your plan as new information is discovered.

Testing assumptions is what I'm doing with onlyinpgh now that I have a developer working with me on it, and it's been enlightening. There are a ton of things we're discovering about available data, how to put it together, interface issues, etc that I had no idea about prior to getting into it and that I wish I could have discovered months ago. Based on these I'm considering changing my primary business model, and it's all because we're only now really testing assumptions that I've had for a long time.

The best thing an entrepreneur that's investigating a new idea can do is identifying assumptions and developing a plan to test them. What assumptions do you need to test?

The Joy of Bootstrapping?

Very pleasantly suprising, the article about bootstrapping gave a refreshing view point to startups. Some of his ideas relate to Guy Kawasaki's book "The Art of the Start" but a few points gave suggested easier methods of developing a business.

One of my main worries I have about my startup is acquiring fantastic staff. As described in the article, was to understaff. At first hire people energized and hungry and worry about adult supervision later. I really liked hearing that (as I am worried about hiring etc.) and it made sense. Even though it is really important to have the right inner circle working with the founder, it is really hard to snipe those people out of the crowds. Just worrying about getting motivated, young people to get on ship would be much more probable and cheaper. In the long run, those early hires may even become your 'dream team' so just because your early hires aren't the cream of the crop, doesn't mean they won't grow to something excellent. This more laid back approach to hiring makes creating a working usable staff more reasonable and obtainable. From other readings at the start of the semester, it seemed like a much more daunting task.

Learn then invest! Another excellent point except by the Launching a Risky Project article. You may plan to have a gorgeous day at the beach but unless you get outside and see clouds, you wouldn't know to bring an umbrella in case of rain. It makes sense, I may try and develop the best informational product for my consumer but until I see what works and what they really need, I could have a really misconstrued concept of what a successful product is and what the consumers really need. Launching early and then deciding from there where to go is additionally wise for not investing too heavily in a bad idea. If you test the waters before diving in, it is more likely that where you dive in, you will be able to 'tread water' and swim to the banks (hopefully with a lot of money to deposit). Too many water analogies, I know, hah! Must be all that waterpolo.

For the sake of setting milestones and goals, do you set fairly achievable goals to look very successfully? Or do you set monumental tasks that seem unachievable within the next 5+ years? I think both but which are more important, the small ones, or the big kahuna at the end of the 10 year tunnel?

Discovery-Driven Planning

For a project or an endeavor, when the outcome is highly uncertain, the Discovery-Driven Planning may be used to mitigate risks due to unknowns.

“In Discovery-Driven Planning, success means generating the maximum amount of useful learning for the minimum expenditure.” For me, this was very stimulating concept. For a venture, seldom is the future predictable. Most of the time, the assumption-to-knowledge ration is high. In those situations, it is frequent to think that planning is unfeasible, or even impossible. The article addresses planning in this kind of situations.

There are six disciplines for the Discovery-Driven Planning

• Framing: Define the meaning of success. Identify quantifiable impact on the firm.

• Competitive market reality specification: Understand the reality of competition: the advantages and disadvantages compared to other companies in the market.

• Specification of deliverables: Define the operational requirements. Translate strategic objectives into common understanding. Focus on competence. Discover dangerous assumptions.

• Assumption testing: Document and test the assumptions. This discipline is what mainly differentiates from traditional planning.

• Managing to milestones: Key points in time which the assumptions are tested. After each milestone, the plan contains further detail. All assumptions are mapped to milestones.

• Parsimony: Find ways of avoiding investment in assets and fixed costs until there are enough justification.

Before the article, my financial projection was top-down. From 20 million senior citizens, 10% are searching for job. From the resulting 2 million, my venture will aim for 50%, and so forth. Now it changed my though. Exercising the reading on my venture,

Framing

Formulating the finance using bottom-up, calculating the required profits, required return on asset and required unit volume changed the perspective. At this point of time, the required profit would be related to the comparable income I could get otherwise. In this case the target for required profit is $300,000/year. Given the membership price of $10/person, the venture should maintain annual members of 300K.

Checking market reality

The market has already competitors. The advantage that I should exploit it the usability and social networking features not explored by existing competitor.

Specifying deliverable

The business will be worthwhile if we achieve the following

- If 1.5% of the job-looking senior population is made member of the site.

- Maintain a constant growth of member at a rate of 10% per year.

Documenting assumptions

There are two key assumptions in the venture:

- The senior citizen indeed are looking for jobs (either full-time, partial time or contract based)

- The senior citizen uses internet and probably other communication technology such as smartphones.

The next activity will be planning to learn at key milestones. At this point I will require further advice on how to conduct the milestone planning.

The article provided me with novel concept in planning. Nevertheless, having an engineering background, I still find it abstract. I will require further research in the topic to make proper use of this tool.

Young Suk

Strapping the Boots

This article was of particle interest to me as it highlighted two points that I was having particle trouble with:

• Forecast from the bottom up: figuring a more likely (and realistic number) compared to how many total African Americans in Pittsburgh would be more realistic goal. First thinking of my target audience, I assumed that it would be the age span of this population. However, to successfully serve a particular population, I must be more specific. I must successfully serve just a portion of this target audience before I can expand to serve another section.


• Under staff: In developing my building block from last week, I unintentionally developed an organization model that was too large than what I originally had planned. This article made me re-think the organization model that I developed. Now with this insight that was provided, I plan re-organize my model to reflect a more appropriate form.

Taking from the article "Launching A Risky Project", what is the best way to "scale up" with The People's Station?

Specific location decision as part of implementation plan

One aspect of my venture that I have yet to finalize is how I will implement the transition to a permanent space as my venture begins to grow. In terms of affordability, Lowell offers some of the best access to low price commercial real estate in Massachusetts. Alongside support from other non-profits, there are also a number of resources for supporting location decisions.

The Lowell Office of Economic Development offers a commercial real estate database which will be very helpful in finding the right space to build my venture’s first permanent repair garage (http://www.lowellma.gov/depts/dpd/services/econdev/sitefinder). Although there is very little open space for building a new building, that probably wouldn’t be a financially viable route for our first dedicated site. Lowell has a number of large, vacant industrial complexes which are relatively affordable. The price of commercial real estate varies from $1.25-2 per square foot per month depending on the location and access to other resources. A repair garage which doesn’t need to interface directly with high paying customers should be able to occupy a space on the lower end of this price range.

As a more long term alternative, Lowell also offers advantageous support for permanently redeveloping a space. The MassDevelopment Brownfields Redevelopment Fund provides interest-free funding for environmental clean up and rehabilitation of industrial sites. This is supported by both the local government, and the EPA at a national level. If the right space is acquired it’s possible to get an interest free loan of up to $50,000 to support a project. Where this funding takes place on a case-by-case basis, it is very likely that a carefully constructed redevelopment plan could gain access to these funds. http://www.lowellma.gov/depts/dpd/services/econdev/brownfield

There are currently 52 local sites that were identified as vacant or underutilized and essentially have funding preapproval from the original redevelopment plan passed in 1996. If an interest free loan is not approved, there is also a $30 million allocation of state funding that provides favorable, low interest loans for redevelopment in the Lowell area. This will be a major consideration in further honing my location decision. One particular site of interest is a 900 space rebuilt parking garage with attached commercial real estate. This could be a very valuable resource is a partnership allowed for spaces to be rented for storing vehicles or providing them on a rental basis to clients.

Writing the social venture business plan

A guide on writing a business plan for social venture:

http://www.jeffreyrobinsonphd.com/socialventureplan.pdf

Testing Previous Goals and Assumptions

The article on discovery-driven planning is a great piece. It elaborates on six aspects of discovery-driven planning that differentiate it from conventional planning. I believe it provides a solid test on the feasibility of goals and assumptions of a venture. This could serve as a perfect test for the assumptions that I put forward previously for my venture with regard to market size, amount of donations and commissions.

Framing
For a social venture, I would set a profit margin at 5%, or a profit of $100,000. It is a proposed goal and should be a decision that my management team agrees upon to be achievable and good enough. For future framing, I would use its surplus level as an estimated basis. To obtain it, revenue level should be at least $2 million. That leaves allowable costs of $1,900,000. If setting ROA at 5% as well, allowable investment on assets is expected to be $2,000,000.

According to benchmark on a similar organization with similar size, its costs on Administrative and Fundraising are $270,000. It means that $1,730,000 is left to purchase insurance policies for the uninsured. Given an average of policy cost the venture is able to get for customers is $300 per month, it implies that the number of families that we can help is 480 families. Thus 480 families per year is the goal for my market penetration.

On the revenue side, the $2,000,000 revenue goal is consisted of $51,900 of commissions (estimated based on a commission rate of 3%), and $1,948,100. It says that my venture needs to raise a fund level of $1,948,100 to deliver these products and to cover other expenses.

Checking Market Reality
From market research, it is found that there are 13,820 people are involuntarily uninsured in Pittsburgh. The targeted market segment is Married with Children group which has a size of 1,960. The 480 families, or 1,508 people, accounts for 77% of the market segment and 11% of the Pittsburgh insured market.

In terms of donation size, Pittsburgh has a median contribution of $4,591,492. The goal of contribution level required for my venture is 58% lower than the median level, which is achievable for a start-up social venture like mine.

Documenting Assumptions
Assumption Number Assumption Type of Assumption Range
1 Profit margin Internal ±10%
2 Profit level Internal ±10%
3 ROA level Internal ±10%
4 Administrative cost Internal ±30%
5 Fundraising cost Internal ±25%
6 Average family insurance cost External ±40%
7 Average family size External ±10%
8 Commission rate Internal ±100%
9 Uninsured rate in Pittsburgh External ±20%
10 Size of Married with Children External ±25%
11 Average donation External ±100%

This exercise is so important that it fundamentally changes some of the targets that I set previously for the venture, e.g. number of customers served. This new estimation is more realistic and bottom-line supported. On the article of the Art of Bootstrapping, I particularly like two points that the author proposes, i.e. Position against the leader and understaff. They tie to the characteristics of my venture. I could use his advice and position my venture as “offering free Highmark like insurance”. People would be attracted to it given their familiarity of Highmark products and the catchword “free”. I also think understaff is necessary for my venture. The large amount of donation required to offer products for customers leave me little leeway in covering huge administrative costs. Potential people that I bring onboard have passion in what the venture provides and will preferably provide volunteering services.

However, one thing I do not agree with is “Forget the ‘proven’ team.” It is really a “it depends” case. A management team with needed skills is extremely important for my venture, especially in its initial period. I need this team to create a “buzz” in the community, establish partnerships, solicit support from donors and attract customers. All of these are critical enough to make the venture succeed or fail. I cannot risk losing any of these battles by cutting a short cut to offer a small pay for people who lack necessary skills.

This week’s readings along with previous articles all suggest that the venture should start small and keep costs low in the beginning stage. There seems to be a dilemma with regard to getting the right team to make the venture work and cost it takes to get these people on board and retain them. My question is: for NPO type of social venture, what are options available for attracting and retaining experts on the team? Material incentives, aligning with mission and others?

Discovery Driven Planning and Bootstrapping

This weeks readings intrigued me. The Kellogg article titled, ‘Technical Note: Discovery-Driven Planning’ opened up new avenues in thought. From my previous experience in the industry, I have often taken part in planning when the outcomes are known and the means to achieve the outcome are known from previous experiences. So this article was an eye-opener. What were the main take home messages for me?

• Framing: This was something novel to me. In my initial financial plans, I had made the exact mistake that the authors (and the web article on bootstrapping) said most people would make. I assumed that I would target a population of 1% and worked my way down, basing my entire sales strategy and financials on that assumptions. And there was no way I could validate this assumptions without paying the price. The article (and the web article too) indicated that one must set a target profit level and then back-calculate the number of units that I must sell in order to meet these goals. Excellent! Eureka moment!
• Checking Market Reality: This was pretty much on things I already knew and had incorporated. However important questions were raised by the authors in this article.
• Which group do you want to target?
• Compare your product/Service against your competitors using useful rations (key ratios).
• In the case of Kao, they had a competitive edge over the competitors in the experience with chemicals. This enabled them to offer their product at a much lower price. Underlines the need to develop an expertise area which competitors cannot copy.
• Specifying Deliverables: ‘As you create your deliverables specifications, document your assumptions’. I thought this sentence to be prudent. The example of the multi- million dollar company was also very indicative of the errors we can do in finding numbers that match our analysis. This must be avoided. Remember that you are trying all ways to find faults in your analysis (this is much better than learning on the job).
• Document Assumptions: It is easy to get lost and forget what the assumptions were in the first place. So the authors suggest that one re-visits the assumptions and check if they still hold good –> Which sort of build into the next point of Planning to learn at key milestones.

The other article titled, ‘The Art of Bootstrapping’ was equally insightful.

I found the following points in the article go ‘click’ in my head.

• Focus on Cash flow and not profitability. Short billing cycles keeps the cash flowing. I have seen family members choke and have to close their businesses for lack of free flowing funds and I recognize the importance of this.  So how can I ensure that my products have short billing cycles? What about providing financing options for my customers? Will that affect my cash flow? These are things I have started to thing about.
• Forecast from Bottom Up: Sort of overlaps with the previous article. But this point cannot be overstated. A mistake I made! And glad to see that I have corrected it now.
• Ship and then Test: I do not agree with this at all. I don’t think sacrificing the company’s image can be worth anything. It destroys the long term objectives. Especially for my company, which deals with rural households where pennies matter and trust is the altar of God. So I ignore this judiciously.
• Go Direct: Yes. Makes sense. But what if there is no infrastructure to do so? This would imply the dire need of tying up with local partners who understand the local business topology.
• Take the red pill – Love the parallel! Do we have a choice?

So in short, make assumptions on the reliable data. Do not find data to fit your assumptions. Wok bottom up, Bootstrap and always take the red pill!

7 Common Mistakes Startups Make on Accelerator Program Applications

http://mashable.com/2011/03/23/mistakes-startup-accelerators/

Leadership vs. Management

This week’s readings provided information on how to successfully build capacity within nonprofit organizations. One aspect of doing so was the ability to foster both effective leadership and effective management within the organization. Since the definitions of these two factors are often mistakenly intertwined, I decided to focus my blog for this week on the differences between leadership and management and how to be successful in both areas.

One key difference is that “leaders have followers” and “managers have subordinates” (Changing Minds n.d.). In other words, leaders are responsible for inspiring their followers to reach company visions and managers are responsible with handling the day to day tasks that go along with implementing said visions.

These differences are further explained within the following sites:

· Changing Minds. Org: Leadership vs. Management - http://changingminds.org/disciplines/leadership/articles/manager_leader.htm#lea

· CoachforGrowth.com: Leadership vs. Management: What are the Characteristics of a Leader and a Manager - http://coach4growth.com/leadership-skills/leadership-vs-management-what-are-the-characteristics-of-a-leader-and-a-manager

· Practical Management: Leadership Vs Management: "Lead subordinates, Manage projects " - http://www.practical-management.com/Leadership-Development/Leadership-Vs-Management.html

Take a look at the readings and let me know what you think. Do you agree with the stated differences between leadership and management? If not, what is your opinion?

Source: Changing Minds. n.d. http://changingminds.org/disciplines/leadership/articles/manager_leader.htm#lea (accessed 03 21, 2011).

'Body-Building' for Non-Profits

I believe a balance must be achieved. Most of these factors like unifying mission statement to unified leadership and vision I agree to be pertinent. Yet in the early stages of growth, how do you know what to fix if you haven't started yet? Don't you have to go into the deep end of the pool before you realize you don't know how to swim / tread water?

These industry enhancers as presented in the article come across as undeniably important. The difficulty I foresee in implementing these standards are as follows:

When is it too early to build capacity?

When do you know you need to build capacity?

If you just getting established can you really afford to spend a lot of time building capacity?

An infrastructure just being created has no room for improvement, in my opinion. If the bricks just started getting laid, how do you know if you need to re-shingle the roof?

The reports emphasis on importance of every one being on the same page completely lines up with prior readings and the desire for all founding members to be like minded. I agree with this suggestion that everyone aiming at the same target will be easily guided through new strategies in order to achieve the common goal. If there are divided goals or aspirations, misaligned motives could easily skew a company between service, profit, and self promotion.

If a company starts out defining all these factors before it starts or focusing on capacity building at the start, will it be much more successful / not need future capacity building? Or would the divided resources diminish its initial growth and extinguish its success?

A review of ‘Effective Capacity Building in Non-Profit Organizations’

 

In this post I would summarize the main points of this week’s assigned readings and apply it to my venture.

The reading, ‘Effective Capacity Building in Non-Profit Organizations’ talks about building capacity and its importance in any venture and especially non-profit ventures. Since my venture is a social venture, there are many pointers one I could incorporate into my organization, especially at a stage where I am setting down processes and administrative structures.

The authors argue that most non-profits tend to focus on the goal and the means to achieve it rather than building up an effective capacity. This could be due to the fact that most donors want to see tangible results – the so called “brick and mortar” effect. This is also helped because the link between building capacity and increased social impact is not seen very clearly. However the authors quote many examples to back their claim that building capacity is essential for a successful non-profit. The authors propose a capacity framework

• Aspirations: Purpose and Objectives
• Strategy: Means to achieve the aspirations
• Organizational Skills: Planning, Resource Management, Performance measurement and networking capabilities.
• Human Resources: Staff and volunteers.
• Systems and Infrastructure: Physical infrastructure, processes and technological assets.
• Organizational Structure: How the company is organized.
• Culture: The thread that binds the company together. Behavior, Norms and Practices.

So how would I adopt these 7 principles into my firm?

Aspirations: We addressed aspirations last week, where we had a detailed look at mission, vision and goals.

Strategy: Having defined the mission, vision and goal very clearly, I how have to decide how does my venture go about achieving them. Keeping in mind that I want to maximize social impact (of lighting people’s life), the main strategy of the venture must revolve around networking with villagers and setting up distribution channels. To do this I propose to divide my venture into business segments by geographical regions within the state of Karnataka. I would propose an initial division by the number of districts in the state and assign one team per district. This gives a total of 30 working teams. Each of this team is assigned the specific goal of maximizing the sale of Solar Lamps. A half-yearly performance review is done to evaluate the progress of each of these teams. Monthly team meetings are held to motivate, correct and discuss strategies/ share learning’s. It is important in this exercise to underline the fact that performance is NOT evaluated based just on the number of lamp sales (because the teams might find a way to sell it to a wholesale market which would defeat the purpose of the organization). Performance would be measured based on the number of households who have been provided light and the reach of the team into previously un-explored areas.

Organizational skills: This point overlaps with the previous point to some extent. But one fact that must be underlined is that the importance of creating local networks. This is the key to my ventures survival. And this cannot happen without every member sharing the vision of my company. The real question is how does one ensure that this happens? This is where, linking the performance of each team to the ability to establish sales in previously unexplored areas becomes even more important. However I am yet to develop a quantifiable, measurable indicator to do this.

Human Resource: The key to my business. Human resource must be local to the districts they are from. There is no way a person from the urban background can relate to rural problems (and vice-versa). This makes it very important to assign the right people to the right locations. Secondly, motivation is something that must be kept high. A news letter can publish comments/feedback from satisfied customers and this can be directly attributed to the teams. There must be a general “feeling” in the organization that the organization is run by the teams and not by the CEO. A flat working structure must be maintained. Another possibility is the fact that I (the CEO) spends 2 days each month with one team, doing what they do, to motivate the staff and better understand the problems they face. I have found, in my previous large organization, that there is a clear disconnect between the policies of the higher management and the actual ground realities. This causes a HUGE loss in motivation among colleagues. The common complaint is, “What do those guys, sitting in the boardroom know about what’s out there”? This attitude must be avoided at all costs.

Success must be celebrated together and so must failures. Responsibility must be shared for both among every single individual.

Systems and Infrastructure: Being a social venture with a small capital, this is the point where we could go wrong. In order to minimize costs, it can so happen that we do not pay the infrastructure as much importance as the other fields. But this is the ground reality and this is a constraint.. Having said that, any infrastructure that is seen to contribute to the social impact cannot be denied. Transportation to each of the teams, good housing in the rural areas, need to be set up. This also means setting up branches in each of the districts, which I had not previously factored into my economic calculations. This now means that there is a correction in my estimates. With regards to systems, I believe I have addressed the processes involved in timely reporting and the general method of flow of information between the teams and the management (I dislike this word, but use it more in the context of “Central Node”).

Organizational Structure: I have addressed this in each of the above points.

Culture:  The crucial aspect of my organization. I have addressed this before, but I reiterate that it is imperative that my organization tries to give a feeling of a flat structure. This is a good way to keep motivation high. At no point must any of the colleagues feel that they are being coerced to do things. Work must be out of mutual respect to each other.

Having addressed each of the above 7 points, I notice that there is a lot of flux between each of the above areas. Is this okay? Or is it important to maintain the clear distinction between each of the 7 areas. What do you think?

I tried to also adopt the ‘McKinsey Capacity Assessment Grid’ to my firm. I would refrain from posting the results here, as the post would run into pages. However the general observation is that the venture ranks between 1 and 2 for most of the categories.

As the venture development stage progresses, I cannot but think of the complexities involved in setting up a venture. I had always thought it to be easy, requiring only motivation. But now, the readings, the classes and the exercises have given me a good foundation to incorporate strategies that I need for my venture. That is, after all, the value of education.