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Leading Through Chaos, part 3: Seizing Opportunity!

Leading Through Chaos, part 3: Seizing Opportunity!

In part 1 we covered the need for predictability. We took Nassim Nicholas Taleb’s advice in part 2 to cover our worst-case scenarios.

Reader Shari Aaron asked: My business faces short-term disruption. Client budget approvals are very slow, due to so much uncertainty. How do you balance the need to keep your business healthy, when you believe it will come back once we have more clear direction on economics/tariffs, etc.?

We’ve already seen that priority #1 is Don’t Die! But don’t go into survival mode, just yet. Because even in survival mode, you need to keep the tools to rebuild.

You need to grab any upside that comes with turbulence. You can’t use prediction, remember. The rules are changing too fast.

I’ve personally never been good at ambiguity. My mind is orderly. It runs on plans. No plan? No problem. I’ll make a plan to create a plan. Then I’ll follow that. To my mind, it’s plans all the way down.

But when faced with things that can’t be planned, I freeze like a deer in headlights. Cold headlights. Subzero headlights. With a freeze ray. I really freeze.

I’ve always wanted to be able to plan for the unplannable. And after decades of searching, I learned there’s a way.

We have role models right in front of us who operate where the rules are unknown. Where opportunity is all around, and the skill shifts from predicting the future to shaping the future.

As it turns out …

Entrepreneurs Live in Uncertainty

It’s entrepreneurs! They do what we need! When they invent new products or open new markets, they don’t know how it will turn out. The successful ones limit their downside while grabbing opportunity. The very barbell we want!

Even better, we know how to think to do this.

Babson College has been the world’s #1 school in entrepreneurship since 1994. I worked with the President during their strategy redesign, and there learned about Entrepreneurial Thought and Action.

It start with Professor Saras Sarasvathy at the Darden School of Business. She found serial entrepreneurs with multiple successes. All had invented new products and markets. Prediction and planning were impossible.

Successful entrepreneurs limit their downside while grabbing opportunity

She gave them challenges and had them describe their approach to overcoming them. Successful entrepreneurs all used the same mindset. A mindset that captures good luck, while protecting against losses.

She called it “Effectuation,” an easy-to-remember, evocative name that instantly conveys deep meaning. Jk.

For me, it was love at first read (the concept, anyway. The research itself makes a great insomnia cure). It gave a framework! Not as good as a plan, but a way forward. A way to take action when faced with my dread nemesis, The Unknowable.

Acting Under Uncertainty: The Basics of Effectuation

We usually make decisions based on plans. Or the way we think the future will unfold. Effectuation complements that approach.

Where we can’t plan, we can effectuate. When plans work again, we reach for our beloved GANTT chart.

“Effectuation” is for whenever there isn’t a firm roadmap: starting a company, dating, writing a theatrical piece, launching a product, building a gigantic Burning Man art installation, learning a skill, or anywhere else you can think of.

Learn the Effectuation principles and apply them as needed:

Pilot in Plane. Don’t think about the future as something you predict; think of the it as something you shape. You’re not a passenger in the plane, you’re the pilot. You can change where it’s going by taking action. As business scholar Peter Drucker often said, “The best way to predict the future is to create it.”.

Bird in Hand. Textbook business development classes tell us how to make the future happen:

  1. Set an end goal
  2. Build a plan to reach that goal
  3. Raise the money from investors to execute that plan.

But knowing a goal and plan requires prediction. Instead, try doing whatever you can with what you have on hand—from money to hard assets to relationships.

Identify how to invest the fewest resources to get the most learning to direct you towards the right course of action. Invest those. Then use what you learn to decide on another learning cycle or a switch into planning mode.

Crazy quilt. In uncertain times, listen to people who have skin in the game. Everyone has advice, even though they can’t predict any better than you can. Hold their advice lightly … unless they put skin in the game. If they’re committed enough to their ideas to put down money, time, or sacrifice, they’re worth taking seriously.

That doesn’t just mean doing what they say. It’s adding another relationship, another patch, to your quilt of committed stakeholders. The more people have skin in the game, the more you’ll support each other. You’ll all be motivated to roll up your sleeves, get creative, and make the business work together.

Affordable loss. To sleep well at night, never invest more than you can afford to lose. Once again, this addresses the “Don’t die!” barbell.

Every so often, review what you can afford to lose and still sleep at night. How much money? How much reputation? How much time? Then ask, “given what I can afford to lose, what can I do to make as much progress as far as possible?”

Combined with Bird-in-Hand, Affordable loss is how you choose a path forward that keeps you sane while keeping you solvent.

Lemonade. When life gives you lemons, make lemonade. When things don’t go the way you want, always be asking how to turn the new circumstances into advantage.

This is where you find the other half of your barbell, upside! When you are nimble—because you have limited your downside to your affordable loss—you can experiment when opportunity or brilliant ideas come your way.

Remember, everyone else is also without a roadmap and disoriented. So when you see a $100 bill on the sidewalk, grab it! Everyone else might be missing it because they’re too busy trying to figure out why their plans aren’t working.


Effectuation gives you a way to take short steps (the size of your affordable loss), with committed allies (crazy quilt), to direct your resources (pilot in plane, bird in the hand) towards seizing opportunity (lemonade), all while sleeping well at night (affordable loss).

Two colleagues and I trained in Effectuation. We then founded a company and ran it for a year and a half explicitly using effectuation. At its peak, we had a team of 14 people, an alpha-level product, and a total capitalization of less than $5,000.

What we know so far:

If you’re changing how you plan, how you prioritize, and turning planning into learning cycles, you need to change the way you make decisions.

Next time, we’ll look at how your company can make high-quality decisions to go down possibly new, lemonade-covered paths.

Leading Through Chaos, part 3: Seizing Opportunity!

Leading Through Chaos part 2: Don’t Die! (aka Barbells and Risk of Ruin)

I have long planned to buy a new computer in 2026. My current desktop is nearing its end of life, but it still limps along. I’d rather not invest right now; cash is tight, tariffs are high, and my portfolio is down. But supply chain disruptions might mean that prices jump later this year. 

What do I do? 

Do I stick to my original plan? Do I change my priorities and buy now? Do I sit tight and not spend money until I know what’s coming? 

In part 1 of this series, I suggested that Nassim Nicholas Taleb’s “barbell” approach to risk makes sense here. 

As Anti-Fragile made clear, our top priority is protecting against risks that could wipe us out. 

Find What’s Likely to go Wrong (80/20 rule)

We can’t predict business-as-usual, but we can probably predict business as unusual

We humans focus on best-case and worst-case scenarios. Right now, the best case is unclear, but the worst case probably isn’t. We often know where things are unstable.

We just need to know which major disasters could reasonably come our way. An asteroid strike? Probably not worth our attention. But a drop in order volume, or a rise in tariffs probably is.

The full risk assessments and risk management efforts I’ve done with clients have often taken one or more days, to be thorough. But things are changing too fast to reconsider everything each time there’s a shift.

Instead, focus your attention and your risk management efforts first and foremost on the things that are easy to identify: the things that could tank you and tank you fast. 

Burning Man’s Risk Management Pays Off

Burning Man is a city that exists for one week each year. It’s built out of experiential art in the Black Rock Desert in Nevada. Most years, it’s hot and dry. But in 2023, it rained. As it happens, the playa dust turns a clay tarpit when wet. It became impossible for people to get it or out. Mud would collect on car wheels and mire the wheels in the ground.

The organizers did their risk management. They had considered this possibility and the Burning Man Organization handled ‘mudpocalypse’ just fine.

A picture of a fantastical Burning Man structure in a dry desert, juxtaposed with a picture of a soggy hippy trudging through the mud after a rainstorm.

Plan for many possible downsides. Identify the government policies, external signals, and actions others could take that could lead to disaster for you. 

For Burning Man, it was rain. For your business, it could be clients leaving you for political reasons.

For each scenario, brainstorm:

  1. How to reduce chances of that happening
  2. How to recover if it does happen, and
  3. How you’ll know that scenario is becoming more likely.

Don’t Panic!

I once considered buying a house as an investment. It needed a lot of repairs. About a hundred thousand dollars’ worth. YIKES!

Here was my thinking:

Pros 15 years of slightly better-than-breakeven expenses and rent. Then it becomes a steady income stream. If rents rise with inflation, it could fund part of my retirement.

Cons Guaranteed need to cover mortgage and taxes even if it’s not rented. It puts me in debt for a six figure amount. I’ve never managed contractors. Cost overruns could bankrupt me.

RUN AWAY!

The Cons scared the pants off me. I declined.

After looking up the property’s last assessed value, letting this deal go definitely ranks as one of the five worst decisions of my life.

What I should have done: tease apart different scenarios and consider them individually.

Avoid Risk of Ruin … But Be Smart!

The problem is that I was treating the Cons as if they were guaranteed. And I was treating the upside as if it was highly uncertain. 

In reality, the opposite was more realistic. The upside was near certain, and the downside was only somewhat likely. 

Furthermore, there were many ways to limit the downside losses:

  • Property Damage. Take out insurance.
  • Shoddy repairs. Pay more for a highly reliable contractor. (“More” yes, but in the grand scheme of things, not that much more.)
  • Slow contractors. Structure the renovation to make payments contingent on completion.
  • Too-large an amount to risk. Bring in an experienced real estate investor as a minority (or even majority) partner on the deal.
  • Costs spiral out of control. (The “nuclear option”) Resell the building at below market, a modest loss, if expenses were too great.

When it comes to my new computer, the major downside scenarios are (1) wait and have my current computer fail or become obsolete completely, forcing me to buy at a much higher price if costs rise substantially (2) buy now and having a better model come out later and (3) buy now when the money could be used for other things.

When I listed the downsides individually, it’s pretty clear that the downside of waiting is an interruption to my business and a possible bigger purchase price. The downside of buying now is entirely opportunity cost.

Since I don’t have any opportunities on the table that would be hurt by the purchase, I placed the order while I was writing this essay.

(Yup. I really use risk analysis, myself!)

But this is only one part of the equation, limiting the existential risk. You still need to increase your chances of finding the upside in the chaos. We’ll tackle that in the next newsletter. 

P.S. What are you afraid might happen? Where are your most likely risks? Let me know and I’ll choose a reader scenario to use as an example going forward.

Leading Through Chaos, part 3: Seizing Opportunity!

Leading Through Chaos, part 1: What’s the Root Problem?

The world is pretty crazy right now, and it’s hard to know what to do. About anything. But even wait-and-see is doing something.

Or maybe, we can step up as leaders. Business leaders. And since everything is in flux, not just business, we can also be family leaders. Friend and community leaders.

Leading or not, we need a way to deal with the chaos.

The first step is understanding why chaos is even a problem.

America has decided to step down as a world power. Given our central role in the world’s economy, America shifts, and so does everyone else. Stock markets are dropping. Currencies are fluctuating. We’re talking decades of ripple effects. And that’s just the economy.

We don’t know what the world order will look like five years from now. We don’t know what our lives will look like. But different. Almost certainly, different.

Personally, I’m plenty scared. My whole life has been based on stories about the future:

  • There’s always opportunity available if you decide to grab it.
  • I have control over my future.
  • My later years will be spent with family and friends.
  • Physical health and fitness is possible, if you just put in the work.
  • The world will generally get better over time, leading to more opportunity, health, prosperity, and safety.

In short, I’ve assumed that everything needed for a vital, fulfilling life is available.

Do Lunch or Be Lunch

But there’s the rub. When those assumptions are up-ended, everything else seems in doubt.

  • Will there be opportunity, two years from now? As I write this, GDP forecasts have dropped from +3% to 0% in the last six weeks.

  • Will there be health care, sanitation, food standards, and public health that can help support me in my old age? It’s looking unlikely.

  • Will my country even be conducive to community, mutual support, happiness and love?

We want to know these things so we can plan for them.

My Harvard Business School professor Howard Stevenson changed my thinking more than anyone else. He has a knack for reframing life situations in powerful ways.

In his book Do Lunch or Be Lunch, he suggests that the fundamental human drive isn’t survival, it’s predictability. Predictability is what helps us survive.

We don’t want to Be Lunch; we don’t want to be the hapless victim of the Saber Tooth Tiger.

We want to Do Lunch. We want to be the ones in control. We want to build, plan, and do so we can be the diners, not the meal.

Building and planning means knowing the future. Or at least knowing what the future is likely to be. That’s why science is great. Science tells us how the world works.

When we combine “how the world works” with “what we see, feel, and hear” (also known as data), we can predict future:

There’s a huge tree outside my window. The branches are near the house (observation). Close branches + wind = broken windows (how the world works). Knowing that, I can ask an arborist to trim the tree.

Note to self: Call the arborist. That tree’s getting a little too close.

It’s far from perfect, but it works better than anything else humans have tried.

Risk? Defuse it!

When you “Do Lunch,” that’s risk management. We do it everywhere.

Financial professionals are always looking for ways to get high returns with downside protection—that’s risk management.

Ever hear of a “hedge fund?” They started as funds designed to help investors “hedge their bets” against downturns in other investments.

Households save for a rainy day. Or for college, just in case our kids don’t get a full scholarship (does anywhere even give full scholarships).

We buy life insurance policies for our families, in case we get eaten by a Saber Tooth tiger.

We audition for Broadway, and also learn a marketable skill, just in case we don’t get selected as Elder Price in Book of Mormon. (h/t to my friend Pete, who despite being a “triple threat” singer, dancer, actor, also learned to code.)

We don’t like chaos because it screws up our ability to predict—and thus control—the future.

Change, even good change, can be bad

The ultimate in predictability would be if we could freeze everything the way it is. I watched the 2023 movie Barbie last night.

In it, the character Gloria (delightfully portrayed by America Ferrera) tells Barbie, “That’s life. It’s all change.” (Barbie’s response? “That’s terrifying—I don’t want that!”)

Nevertheless, the world changes. We can adapt to slow change. It gives us time to learn the new rules. Then we make new predictions and new plans.

Fast change is another matter. Too fast and our systems start breaking down without giving us time to learn the new rules.

The fundamental human drive is predictability. — Howard Stevenson (paraphrased)

When change is too fast, we stop investing for the future. Consider college: Who wants to spend four years and thousands to learn advanced skills that might be obsolete in ten years? When college is a path to success, it’s a no-brainer. When the job market changes so fast that college is a six-figure gamble? Not so much.

We can’t plan long-term during unpredictability, so we have to settle for short-term tactics. But that’s dangerous. Because short-term gains often come at the expense of long-term health.

The way to deal with chaos is to find predictability wherever you can.

Start from your bedrock

Find what you can predict and plan for it. Then find other ways to deal with the unpredictable.

If your supply chain is breaking down, or your retirement savings drops by 30%, use risk management for some short-term options. Then learn some new ways to think about strategy under uncertainty. We’ll cover my favorite later in this series.

In the book Anti-Fragile, Nassim Nicholas Taleb lays out a proposal for how we manage risk. It’s a barbell strategy. We deal with the extreme downsides and the extreme upsides.

First and foremost, we arrange our lives to protect against the worst-case scenarios. The risk of ruin. Things there’s no coming back from.

My own retirement strategy started with an investment account that I couldn’t touch until age 59 1/2. It invested in low-risk, long-term, dependably predictable investments. If nothing else worked, it’s protction against ruin.

The second part of Taleb’s strategy is the other end of the barbell: the extreme upsides. Always make sure you have some exposure to the best possible cases.

We’ll cover everything in the next few newsletters — protection from ruin, managing to find upsides through turmoil, and where to lean in as a leader.

But let’s start at the beginning. In the next segment, we’ll look at how to protect yourself against risk of ruin.

AI is Computerized Theft. Today, it’s Zoom

AI is Computerized Theft. Today, it’s Zoom

Zoom, the video conference company, just updated their Terms of Service. Section 10.4 lets them use your meeting content to train machine learning and AI models.

  • They could use this to duplicate your expertise, if you deliver your expertise via Zoom.
  • This could put you in violation of the law if you’re in a privacy-regulated profession.
  • Zoom says they’ll asked for consent first, but they don’t say how. It could be as deceptive as “You must click Accept on our updated terms.”
  • I’m looking for privacy-protecting alternatives to recommend.

The background.

Does Machine Learning really duplicate expertise? Yes.Machine learning is the new hot topic in Silicon Valley. It is a statistical analysis method that uses large data sets to create computer programs that can predict things. For example, medical diagnosis systems would be given a huge number of medical cases. Each would be given the symptoms, the eventual diagnosis, and whether that diagnosis was correct.

With enough data, the system would be able to diagnose as well as (or better than) any of the doctors who provided the training data.

Getting enough high-quality data is the key to building a model that works.

Cloud services are using user data to create and “steal” those users’ product. Adobe has released truly astonishing new capabilities in their image processing program Photoshop. The latest Photoshop can fill in blank spaces in images, as if by magic.

How did the AI get that ability? By training on images that graphic designers had stored in the Adobe Cloud over the last decade.

The Terms of Service did say, buried somewhere in several dozens or hundreds of pages of legalese, that data stored in the Adobe Cloud could be used for the creation of new products and services.

I think it’s highly unlikely that (a) users knew that clause was there, (b) users understood the implications of letting Adobe train an AI on their images (implications that Adobe can now duplicate their work) (c) users thought that a cloud service, which is usually a storage product, would be used to train an AI for delivery in a separate product.

Is this theft? Legally, probably not. But morally and ethically, I use a different test: if the users of Adobe Cloud had been told “we will use any image you store with us to train an AI to be able to generate similar images without paying photographers or designers royalties of any sort,” I’m fairly sure most people would have opted out. They probably would have said “You mean you want to steal my images and design style? Hard pass.”

This is playing out right now in Hollywood. The actors’ and writers’ strike shows that when people understand that they’re being asked to give away their creative work for free, they refuse. The actors and writers are simply asking for protection against exactly this sort of AI duplication of their work and likeness.

Does one person’s data really matter? If Zoom is collecting data on billions of meetings, do my meetings really make that much difference in their machine learning models?

No. And Yes. If (as has happened) a bank accidentally charges 100,000 accounts an incorrect $10 fee, does that matter? $10 is unlikely to bankrupt anyone. But the bank just walked away with a million dollars. I think we would all call that theft.

AI companies are doing the same thing now, only with expertise rather than money.

How this affects you.

Legal effects. If you’re a doctor, trainer, consultant, therapist, lawyer, or anyone who delivers your product or service via Zoom, this means that your private conversations may be used to train a machine learning model.

Depending on your profession, there may be legal implications for you if this happens.

Ethical effects. If Zoom then releases that machine learning model in some form (or even just uses it internally), that model might produce output that is similar to the conversations you’ve had. It may use slightly different words, or omit proper names, but it may summarize your conversations or convey the gist of them. Depending on the summary, it might give enough hints that a reader could deduce the actual details.

Competitive effects. If you make your money from your advice giving, the model that Zoom builds might be used, as Adobe’s was, to produce a product that directly competes with you in the marketplace. Why hire an interior decorator when Zoom will let you pay $50 to work with an AI that’s been trained on a few hundred thousand conversations that real interior decorators had with their clients.

What to do next.

If you think there may be legal implications with your conversations being recorded by Zoom, check with your lawyer. Point them to sections 10,2, 10,3, and 10,4 of the Terms of Service. Also, the privacy policy.

If you’re concerned about your conversations being used to put you out of business, stop using Zoom and refuse to deliver your services over anyone else’s Zoom account (they may have given consent for their account to be used for training data).

Be vigilant. These clauses are becoming more and more common with cloud services. When you use any new high tech product, search “Terms of Service” pages for the phrases “Machine Learning” and “AI” and “artificial intelligence” and see what rights you’re giving up to your own work product.

(Cars are now a high-tech product, by the way. Pay particular attention to whether the car company can monitor and record everything you do and say inside your car. Some car companies have you grant that right as a condition of buying the car.)

Stay safe out there. Because now, it’s your very own productivity tools that are trying to take you down.

What is market size?

I’m a judge for Mass Challenge, as well as the Harvard Business School competition, and I’ve noticed that many entrepreneurs don’t know what market size means. Let me call out two of the most common mistakes, which can be the difference between recognizing a real opportunity and fooling yourself into believing something is an opportunity when it isn’t.

When a potential investor (including you, investing your time and career!) asks the size of your market, they’re asking how much money is out there (or how many customers) that could conceivable be spent on your company.

Market Size Isn’t Demographics

“The market for our new deodorant is anyone over the age of 12.” Actually, it isn’t. That’s way too general. Your market is defined at least in part by who you can reach. Your accessible market is what matters. You can’t reach everyone over the age of 12. “The market for our new deodorant is teenage girls between 14 and 18.” That is a much more realistic assessment and probably much more reachable through advertising in an identifiable set of magazines, TV ad spots, etc.

Market Size Isn’t Your Customer’s Revenues

The other big mistake entrepreneurs make is giving the market size as the total market revenues of all possible customers. “We sell hand sanitizers to media companies. Combined media revenues were $100 billion last year.” That’s a slippery evasion, because no media company will spend all their income on hand sanitizers. The market is not total revenues of all possible customers, but total amount all possible customers are likely to spend on your product. “Media companies spent $100 million on hand sanitizer last year, so that’s our market size.”

Market Size is the Potential Revenues You Can Reach

“The market for our internet-enabled back scratchers is middle-age men who feel the need for meaning in their lives. There are 50 million of them in my country, and at $19.95 (+ shipping and handling) that’s a billion dollar market.” Yes, except there’s no way to reach all 50 million of those customers. If there were a mailing list of all 50 million, you could do it. And you can certainly try your best to cover every possible advertising and media outlet that reaches middle-age men. But at the end of the day, only people you can reach with your message are potential customers.

An acquaintance of mine is developing a product for online gamers who make a living by livestreaming their games. That’s an addressable market, because there are forums, awards, conventions, podcasts, and an entire media ecosystem that pretty much every live streamer follows.

To put it all together:

When you’re evaluating the potential of an opportunity, be careful to ask how much money could reasonably come your way from the customers you’re explicitly able to reach. That is a much better number to use for market size.

The Business of a Magician

All businesses share the same underlying foundation: a flow of money in and out. The money in has to cover the costs of the money out. It has to pay for the production of your product or service, and have enough left over to fund growth and expansion for the future. This is the basic equation whether you’re Amazon or General Electric or Tesla. Some businesses aren’t profitable (Tesla, as of when I’m writing this), but they still get money in. Their money comes from investors, in the form of loans or equity investment.

Some simple back-of-the-envelope calculations can help you understand a business. It’s most obvious in a small business. Say, a one-man business. Magician Evan Northrup and I sat down to talk about his business and how it works. He graciously allowed me to share the video. In the first half, we walk through the basic numbers of the business. In the second half, we ask how to make his product stand out from his competition.

 

What do CEOs do? A CEO Job Description

What do CEOs do? A CEO Job Description

The Chief Executive Officer is one of the most coveted titles, and least understood jobs in a company. Everyone believes that CEOs can do whatever they want, are all powerful, and are magically competent. Nothing could be further from the truth. By its very nature, the job description of a CEO means meeting the needs of employees, customers, investors, communities, and the law. Some of a CEO’s job can be delegated. But several elements of the job must be done by the CEO. Read on for the details of what makes a CEO.

What is intrinsic to the CEO’s job?

This isn’t a traditional job description; it’s an examination of the actual roles that a CEO plays (legally or de facto) within a company. A CEO’s job description includes a few important areas. Any individual CEO may take on any tasks that they wish, but these are the things that can’t be delegated:

  1. Setting strategy and direction
  2. Modeling and setting the company’s culture, values, and behavior
  3. Building and leading the senior executive team
  4. Allocating capital to the company’s priorities

While a CEO may get input for some of those duties, it is the CEO’s—and only the CEO’s—responsibility to perform those well. Being the CEO, they can spend the rest of their time doing whatever they decide they want to spend their time on. But ultimately, everything else about a given CEO’s job is optional.

Success as a CEO requires more than just knowing the CEO’s job description. A CEO needs to know how to measure their success as a CEO, avoid the pitfalls that are unique to the CEO’s job, and conduct themselves to stay sane and skillful over time.

A CEO Job Description, Part 1

Admit it. We all feel a touch of awe when someone has it: the CEO title. The power, the salary, and the chance to Be The Boss. It’s worthy of awe!

Too bad so few CEOs are good at what they do. In fact, only 1 in 20 are in the top 5%[1]. Many don’t know what their job should be, and few of those can pull it off well. The job is simple—very simple. But it’s not easy at all. What is a CEO’s job?

More than with any other job, the responsibilities of a CEO diverge from the duties and the measurement.

A CEO’s responsibilities: everything, especially in a startup. The CEO is responsible for the success or failure of the company. Operations, marketing, strategy, financing, creation of company culture, human resources, hiring, firing, compliance with safety regulations, sales, PR, etc.—it all falls on the CEO’s shoulders. Being responsible means that the CEO is the one held accountable for the success of the company’s efforts, across the board. But of course, the CEO doesn’t actually do all that work.

The CEO’s duties are what she actually does, the responsibilities she doesn’t delegate. Some things can’t be delegated. Creating culture, modeling values, building the senior management team, financing road shows, ultimate approval of how money gets spent, and, indeed, the delegation itself can be done only by the CEO.

Many start-up CEOs think fund-raising is their most important duty. I disagree. Fund-raising is necessary, but the CEOs contribution is in building a superb business with the money raised.

Setting strategy and direction

What is the CEO’s main duty? Setting strategy and vision.The senior management team can help develop strategy. Investors can approve a business plan. The Board can approve, advise, or ask the CEO to revise a business strategy. But at the end of the day, it’s the CEO who ultimately sets the direction:

  • Which markets will the company enter? Against which competitors?
  • What will the company’s product lines be?
  • How will the company differentiate itself? Will it be low cost? High service? Convenient Locations? Flexible financing? High-touch? Mass produced?

The CEO decides, sets budgets, forms partnerships, sells off incompatible product lines, makes acquisitions, and hires a team to steer the company accordingly.

Modeling and setting the company’s culture, values, and behavior

The CEO’s second duty is building culture. Work gets done through people, and people are profoundly affected by culture. A lousy place to work can drive away high performers. After all, they have their pick of places to work. And a great place to work can attract and retain the very best.

Culture is built in dozens of ways, and the CEO sets the tone. Her every action—or inaction—sends cultural messages (see “Life Under a Magnifying Glass”). Clothes send signals about how formal the workplace is. Who she talks to signals who is and isn’t important. How she treats mistakes (feedback or failure?) sends signals about risk-taking. Who she fires, what she puts up with, and what she rewards shape the culture powerfully.

This can not be emphasized enough! People imitate a CEO’s behavior when deciding how to act. The book Pre-suasion by Robert Cialdini, documents at length the ways in which, for example, a dishonest CEO makes employees feel as if they can cut corners, steal from the company, and generally behave according to those same standards.

A project team worked weekends launching a multimedia web site on a tight deadline. Their CEO was on holiday when the site launched. She didn’t call to congratulate the team. To her, it was a matter of keeping her personal life sacred. To the team, it was a message that her personal life was more important than the weekends and evenings they had put in to meet the deadline. Next time, they may not work quite so hard. The emotion and effect on the culture was real, even if it wasn’t what the CEO intended. Congratulations from the CEO on a job well done can motivate a team like nothing else. Silence can demotivate just as quickly.

If vision is where the company is going, values tell how the company gets there.Values outline acceptable behavior. The CEO conveys values through actions and reactions to others. Slipping a ship schedule to meet quality levels sends a message of valuing quality. Not over-celebrating a team’s heroic recovery when they could have avoided a problem altogether sends a message about prevention versus damage control. People take their cues about interpersonal values—trust, honesty, openness—from CEO’s actions as well.

Building and leading the senior executive team

Team-building is the CEO’s #3 duty. The CEO hires, fires, and leads the senior management team. They, in turn, hire, fire, and lead the rest of the organization.

The CEO must be able to hire and fire non-performers. She must resolve differences between senior team members, and keep them working together in a common direction. She sets direction by communicating the strategy and vision of where the company is going. Strategy sets the direction for the senior team, who in turn set it for the rest of the company. With clear direction that everyone understands, the team can rally together and make it happen.

Don’t underestimate the power of setting direction. In 1991, at Intuit’s new employee orientation, CEO Scott Cook presented his vision of Intuit as the center of computerized personal finance. Intuit had just 120 employees and one product. Ten years later, it’s a billion-dollar company with thousands of employees and dozens of products. Worldwide, it is the winner in personal finance, bar none. The success is due in no small part to every Intuit employee knowing and sharing the company’s vision and strategy.

Allocating capital to the company’s priorities

Capital allocation is the CEO’s #4 duty. The CEO sets budgets within the firm. She funds projects which support the strategy, and ramps down projects which lose money or don’t support the strategy. She considers carefully the company’s major expenditures, and manages the firm’s capital. If the company can’t use each dollar raised from investors to produce at least $1 of shareholder value, she decides when to return money to the investors. Some CEOs don’t consider themselves financial people, but at the end of the day, it is their decisions that determine the company’s financial fate.


Footnotes for Part 1

[1] Pay no attention to the math background peeking from behind the curtain… back

Measuring Success as a CEO.

Knowing the job description is a good first step for a CEO, but to know how she’s doing, she needs to design her own measurement system.

Unlike inconvenient lower-level jobs, no one tells the Chief Executive how she’s doing. Do managers let her know she’s undermining their authority, making poor decisions, or communicating poorly? Not likely. Even when a CEO asks for honest feedback, the fear is there: non-flattering feedback may stall a promising career[1]. Even when a company uses 360-degree feedback, no one penalizes the CEO if she doesn’t act on the feedback.

The Board of Directors supposedly oversees the CEO, but they are far removed from day-to-day actions. Over time, they can evaluate performance, but they look mainly at share price and company strategy. They are rarely interested in—(or qualified to comment on!)—the CEO’s daily behavior.

But the CEO’s daily behavior will make or break the company! The CEO’s duties don’t change because they are unmeasured. Indeed, lax measurement makes it easy for the CEO to feel confident, even when she shouldn’t. Good feedback is the only way to know what’s working, but share price simply doesn’t do it. External measures measure the company, not the link between the CEO’s actions. A low share price tells her something’s wrong, but it doesn’t help her figure out what.

By measuring her performance based on her duties, a CEO can learn to do her job better. As explained in part 1, the CEO’s job is setting strategy and vision, building culture, leading the senior team, and allocating capital. The last of these is easy to measure. The first three are more of a challenge.

How does a CEO know she’s doing the vision thing? It’s hard. Having vision isn’t enough—that just takes a handful of mushrooms and a vision quest. Communicating the vision is the key. When people “get it,” they know how their daily job supports the vision. If they can’t link their job to the vision, that tells a CEO that her communication is faulty, or she hasn’t helped her managers turn the vision into actual tasks. Either way, a CEO can monitor her success as a visionary by questioning and listening for employees to link their jobs with the company vision.

Culture building is subtle, the culture a CEO sees may be very different from the culture of the rank-and-file. One company had a facilities policy that all equipment within 450 feet of the senior management offices was kept in top working order. Senior managers saw a smoothly running company, while everyone else saw neglect and carelessness.

Surveys about openness, values, and morale can be used to develop a measure of culture. The questions to ask aren’t rocket science. The book First, Break all the Rules gives a great questionnaire for measuring overall culture. Also, check turnover. When 95% of your workforce says they can’t wait to get to work, something is going right. If people rarely leave, and if it’s easy to attract top talent at below-market prices, you can be sure the culture plays a large role. If people leave (especially your top performers), again—look to culture. And don’t underestimate the power of walking around and counting smiles. If people are having fun, it will show.

The CEO’s success at team-building can often be measured through the team. Teams usually know when they’re effective. They can also rate their team using assessments that measure specific behaviors. For example, “I can trust my teammates.” “My teammates deliver their part of the project on time.” “Every member knows what is expected of them.” Regular team self-assessments can help the CEO track the team’s progress and hone her abilities to keep the team running smoothly[2].

Easiest to measure is a CEO’s capital allocation skill. In fact, financial measures are the ones made public: earnings and share price. But how can a CEO link those to her actual decisions? Working with her CFO, a CEO can devise financial measures appropriate to her business. Sometimes traditional measures are most appropriate, such as economic value added or return on assets (for a capital-intensive company). Other times, the CEO may want to invent business-specific measures, such as return on training dollars, for a company which values state-of-the-art training for employees. By monitoring several such measures, a CEO learns to link her budget decisions with company outcomes. Ultimately, the CEO’s should be creating more than a dollar of value for every dollar invested in the company. Otherwise, her best bet is to return cash to the shareholders for them to invest in more productive vehicles.

In startups, earnings begin low to nonexistent, and share price is more about salesmanship and vision than earnings. So the CEO gets almost no useful feedback about her capital allocation wisdom. She doesn’t know whether a dollar spent on a slightly nicer-than-necessary copy machine is wasted or is a wise investment in a long-term. Careful attention to the design and tracking of financial measures can help her prepare for the transition to an earnings-driven company.

In his 1988 Annual Report, Berkshire Hathaway chairman Warren Buffett included an excellent essay on CEO accountability. Click here to read Mr. Buffett’s observations on CEO measurement.


Footnotes for Part 2

[1] The CEOs don’t help the problem. Many of my CEO clients highlight the value of honest feedback from their coach. Yet they complain about employees who disagree with them, just don’t “get it” or don’t have enough information “to understand the real issues.” In a coaching call, they can hear feedback and consider it. At work, they treat disagreement as dissension, and then wonder why everyone’s a “Yes man.” back

[2] There are dozens of team effectiveness surveys. You can start by checking out http://www.cambriaconsulting.com, http://www.ccl.org, and http://www.pfeiffer.com. back

Pitfalls and Solutions for the CEO

A CEO can tank a company by not understanding their duties, or failing to set up good measurement systems. But it’s also true that the job itself can screw up the person, as well. It’s said that power corrupts, and few positions are more powerful than CEO. While the USA may be a democracy, our companies are legal dictatorships with the CEO calling the shots(1). While she may be having a great time playing Boss, the position may be taking a very human toll.

It’s all too easy for the CEO to become a …; jerk(2)  …; without realizing it. They can forget—if they ever knew—what it was like to have a boss. They are free to ignore feedback that they don’t want to hear, and no one will call them to task for it. They can bypass the chain of command when they want to meddle. They can give themselves raises and genuinely believe they deserve it. And most dreadfully, they can forget what it is like to be “one of the little people”:

workerI have to leave early today.
CEOWhy?
workerTo pick up my kids from daycare.
CEO Oh… (looks genuinely perplexed) Why don’t you have your nanny do that?
workerI don’t have a nanny.
CEOOh…; wanders away with a mildly confused expression

The worker was an incredibly productive person. She worked harder than the CEO, got more done, yet couldn’t have afforded a nanny if her life depended on it. The CEO didn’t intend to be a jerk, but his lack of empathy didn’t win many supporters.

A CEO can become arrogant by externalizing blame

Having no day-to-day accountability for her actions can also turn a CEO sour. When things go wrong, she can blame everyone around her without facing her own shortcomings. “My employees just don’t get it,” proclaims the CEO, never thinking for a moment that she is the one who hired them. Did she hire incompetents? Or has she failed to communicate goals consistently and clearly? “Market conditions have changed.” she declares. A nice excuse, but isn’t it the CEO’s job to anticipate the market and position the company for success under a variety of scenarios? Without someone to keep her honest, she can gradually absolve herself of all responsibility.

Believing in a title can lead to overconfidence

Arrogance also threatens a CEO. “Because I am CEO, I must know the business better than anyone else.” It has been said, but it just isn’t true. No CEO can be an expert in all functional areas. A CEO who is doing her job is spending time with the big picture. If she knows the details better than her employees, she’s either hiring the wrong people or spending her time at the wrong levels of the organization. It’s appropriate for a CEO to manage operations if absolutely necessary, but she should quickly hire good operational managers and return to leading the whole business.

If she also comes to believe that the CEO title grants infallibility, watch out. Even the Pope is only infallible a couple of times each century. But CEOs can reinforce their delusions of grandeur by giving themselves higher salaries (surely she deserves it! After all, salary benchmarks show how underpaid she is) and more perks. Then when layoffs come, the CEO wants applause for having the moral strength to make “hard choices,” quietly overlooking how her own poor decision making led to the need for layoffs.

CEOs can stop learning well

Of course, once infallible, there’s no more to learn, and a CEO may quietly stop learning. Without daily oversight and high quality feedback on how she does her job, she can mistakenly believe her actions lead to success. In reality, she may be doing the wrong thing, but her staff may be working around the clock to cover for her.

Furthermore, sins of omission aren’t penalized. A CEO who does an adequate job, but far less than she could/should have done—goes unnoticed. In hindsight, XYZ Software(3) could have had a $1 billion market niche, and gone public with a valuation of tens of billions. Instead, it stuck to one product, had little understanding of its markets, and ignored competition. Yet it still went public in a $300-million IPO. Was management penalized for a lack of vision and market responsiveness? Hardly! The top managers walked off with $60 million apiece, reinforcing the notion that they had done a great job. Yet with a slightly grander vision, the company might have been 10 or 100 times its size.

Setting vision is the CEO’s job, but nothing tells her if her sights are too low. She isn’t penalized for missing the grander vision. Such sins of omissions are a CEO’s worst enemy. She can be lulled into mediocrity by not knowing what would have been possible. The four-minute mile was considered impossible…until Roger Bannister ran it. Now, it’s commonplace. Likewise, a CEO may limit herself by not realizing she can do her job better.

Though salary benchmarks are common, performance benchmarks are surprisingly rare. Quality learning demands a CEO benchmark herself against other superb CEO’s. Her central learning question is not “are you doing a good job?” but “are other CEOs doing a better job and if so, how can you learn to measure up?(4)


Footnotes for part 3

(1) Ok, ok. Technically the Board of Directors has hire/fire authority over the CEO, but the Board can’t control day-to-day operations. And while there are certainly boards that replace inept CEOs, it takes sustained incompetence over a long time to move a board to action. So for practical purposes, the buck stops with the CEO. back

(2) Her employees may use less diplomatic terms. back

(3) Names are changed to protect the innocent. back

(4) An excellent book on management best practices is “First, Break All the Rules” available by clicking here to go to the books page. back

Coaching tips to stay sane and skillful at the top of the heap.

These coaching assignments will help an executive avoid some of the pitfalls of the CEO job. They are simple, easy, and won’t take much time. They’ll help a CEO stay connected with workers, keep herself humble, and increase her learning while becoming more successful. The suggestions strive to be quick and easy to do, while still producing real results.

Make Space to Practice These Assignments

Set aside 5 to 10 minutes, daily, to developing as a leader and human being. This will be the time you think about the below topics and set your mind for the day. Schedule the time if necessary. Just make sure that you do what’s right for your growth.

Pace yourself. Life is long. Adopt these suggestions one or two at a time, and practice until you make them your own. Then move on. Forcing won’t help; this is about developing at your own natural rhythm. Do one assignment for a few weeks, then move on to another. Keep the ones that work for you and drop those that don’t.

Staying connected with “the little people”

Cultivate an attitude of respect—your respect for them. The “little people” are the ones turning your vision into reality. Meditate on this for a few minutes and ask yourself whether you can their jobs as well as they can. If you can, then you’re not hiring the right people—go change that! Otherwise, once a day, go talk to one of your low-level employees—someone more capable than you in their area of expertise—and learn from them. Choose a different person each day. Get as close to the front line workers as possible.

Listen with an open mind and learn. Learn about their job. Ask what works for them and what doesn’t. Above all, listen to their comments without judgment. Your goal is to connect with their experience of the world, not impose your own. Learn about their life. Find out what motivates them. Why did they come work for you instead of somewhere else? Simply by spending a few minutes understanding their life, you can greatly increase your appreciation of how they’re different (and similar!).

Share your vision and job with them, from a position of service. Pretend that your job is to make this person a success. Ask them how their job fits into the work the company does. If they don’t know, take on the responsibility of helping them understand how their job links to the vision. Clarify any confusion they may have about where the company is going. And ask them what you can do to help them succeed at doing their best. Then do it.

Staying humble

Acknowledge, often! Without your employees, your dreams and plans wouldn’t amount to much. Take every available opportunity to acknowledge the contribution of those around you and give them credit, especially in public. Feedback is rare in most companies, and positive feedback is rarest of all(1).

“Get” that it’s all your responsibility. When things don’t go the way you want, take responsibility—whether or not it’s your fault. The mindset of responsibility will put you in a much more powerful place than the mindset of blame. Regularly review circumstances asking, “What could I do differently (or stop doing) to make a positive difference?” Identify the action and then take it. You’ll be surprised how much more power you have over externalities, operating from responsibility rather than blame.

Gather honest advisors to hold you accountable for your behavior. Sometimes a Board of Directors will give honest feedback, but they are removed from your day-to-day behavior. Actively solicit feedback from third parties: friends, peers, associates. Share your issues and how you’re handling them, and ask for an honest assessment. Everyone in a company is accountable to someone for their behavior, except the CEO. Make yourself accountable as best you can.

Identify your limits. Ask, “can someone else in the world do my job better than I am currently doing it?” If the answer is Yes, seek out that person and ask for their guidance in getting better. If the answer is No, validate that answer by asking your advisors, competitors, suppliers, customers, and employees. Many companies have crashed and burn because they believe they were the best, for no good reason but pride and ego.

Create measurable performance criteria for your executive team, including yourself. Make sure people within the organization know your goals, and know what you can be counted on to do. Hold yourselves accountable. If you don’t meet your goals, withhold your bonus, take no raise, and treat yourself exactly as you would treat an employee who missed their targets. It sends a powerful message to the company that you’re serious about performance.

Ask your direct reports, your Board of Directors, and anyone else you work with for feedback a couple of times a year. You can use a 360-degree feedback process or simply ask in an e-mail. It’s a lot easier to hear feedback on your performance if you’ve explicitly asked for it.

Videotape yourself receiving bad news. Watch the videotape and decide whether or not you would want to work for that person. If the answer is No, learn to chill when you hear bad news.

Learning well

Study excellent CEOs. Call a CEO you admire and invite them to lunch. Exchange tips and adopt tactics that others have found useful. Read books like First, Break All the Rules, which are broad-based studies of habits of top-performers. Adopt at least one new habit a month.

Create systems for gathering feedback. Interview customers, competitors, analysts, and others in your industry to know how your company and products are perceived. Make sure you’re gathering feedback that will disconfirm your beliefs about the world, as much as confirms it. For example, if you think you’re #1 in your market, don’t just ask customers why they like your products. Ask what other products they use, and how your products fall short.

Spend time learning about the fundamentals of a CEO’s job:

  • Setting strategy. The strategy and vision for the company determine where everyone will focus their efforts. Find a vision and strategy and use it to align your entire company.
  • Creating the corporate culture. Your culture will determine what people do and don’t try, who will stay, who will leave, and how business will get done. Culture starts with you. Decide how you want people to act and start modeling the behavior publicly.
  • Capital allocation. Every dollar you raise and spend should produce more than $1 of return for the company, or it’s a waste of money. Learn how to make these judgements.
  • Hiring and Firing. The job of executives is primarily team and culture building. Hiring and firing are must-have skills. Read, take classes, and review past hiring successes and mistakes. Do whatever you can to hone your abilities.

Raise the Bar

Hold yourself to higher standards next year than you did this year. Challenge yourself to learn to get more done with fewer hours and fewer resources while creating a more balanced life for yourself.

These are just a few of the things you can do to increase your chances for success as a senior executive. I also believe in working with a coach to identify and overcome (or compensate for) blocks in your performance. Success can be had with many different skill sets. The more you learn about yourself and your capabilities, the better you will be able to shape a job that works for you. The more you learn about the capabilities of those around you, the better you will be able to build teams that produce spectacular results.

Do Great Things!


Footnotes for Part 4

(1) Social psychology has shown that rewarding desired behavior is far more effective than punishing bad behavior or non-performance. For reasons that aren’t entirely clear, our culture has evolved around using punishment as the main way of controlling behavior. Unfortunately, punishment doesn’t work very well. Interestingly, animal trainers have known this for years. For an excellent book on the subject, check out Don’t Shoot the Dog by Karen Pryor. back

Further Reading

You may also enjoy the article The Executive Mind-Set and my book on business leadership, It Takes a Lot More than Attitude…to Lead a Stellar Organization.

Back to Stever’s articles index

How you scale an organization

I just returned from Black Rock City, NV, better known as Burning Man. Burning Man is an annual event where 70,000 artists, engineers, performers, and makers descend on the Black Rock Desert in Nevada. In one week, they build and inhabit a city made of interactive art. Then they dismantle it and “leave no trace.” They take every bit of refuse home with them, leaving the desert the way they found it.

You know what’s even more amazing? It’s all done by volunteers. Think about that: 70,000 people, paying to attend the event, cooperatively pitching in to build and run a city. (Yes, it’s the size of a city. I once thought it was just called that. Nope. It’s a city.)

Burning Man started as a party with a dozen people on Baker Beach in 1986. As someone who loves growing organizations, it fascinates me. So many organizations struggle with growth. How did Burning Man scale from a beach party to an actual city?

Scale requires different people.

The people you need to run a small organization are different from the people you need to scale. In a small organization, everyone knows everything that’s happening. People can pitch in as needed. They may still have different jobs, but if the situation warrants, you might ask the accounts receivable person to handle a customer service from someone they know. You need generalists.

As the organization grows, jobs shrink. The original crowd at Burning Man handled all aspects of what was, then, basically a camping trip. Each person would be part of choosing where tents would go and how things would run. Generalists make the small event run. 

With a city-sized event, just laying out the street grid requires dozens of people. Each person will spend every day, all day planting flags at the corners of streets that will later guide the city construction. The best people for the job are those who enjoy focusing on this one task, and doing it superbly.

Scale requires uniform processes.

When you’re small, you can get away with everything being ad hoc. If Ozzie Obstacle (the most annoying of your 12-person party) is pitching their tent in the wrong place, you can yell over, “Hey, Oz! Move your tent ten feet to the right!” 

When tens of thousands of people are pitching their tents, you can’t just do everything by the seat of your pants. If you yell “To the right!” while someone yells “To the left!”, poor Oz’s head will explode. And at Burning Man, that could mean literally.

Getting large requires that people be able to coordinate at a distance. Doing the same things, the same way lets people coordinate when the ad hoc approach no longer works.

Scale requires explicit process.

It’s not enough for processes to be uniform. People have to know them, which means they need to be documented and communicated. Sometimes this is done informally, through mentorships or apprenticeships. But often, it’s done via classes, checklists, and explicit instruction. 

With 70,000 people constructing a city, the behind-the-scenes organizations (the Rangers, the Department of Public Works, camp Placement) not only have uniform processes, but they have extensive training and reference resources to teach those processes. They have classes, certifications of skill levels, Wikis, and gatherings to explore and deepen the shared understanding of what gets done and how.

When your organization is successful, you’ll reinvest for growth. But pay attention carefully to the changes that scale requires. You’ll need to change who you hire, how they do their jobs, and how they get trained. It changes the nature of the work, but if done right, you’ll be laying the foundation for great success.

How to overcome fears and microfears that sabotage you, part 3

How to overcome fears and microfears that sabotage you, part 3

As we saw in part 1, and part 2, we often we get stalled because we have “microfears.” These steer us away from the Important Things we want. It’s our thinking that does it. We imagine what might go wrong, feel a bit of fear, and then suddenly notice we have a pressing urge to watch Netflix.

The good part is that we’ve noticed how things might go wrong. The bad part is that we’ve responded by avoiding, not by taking care of what might go wrong.

  • Where are you stalled?
  • What’s not getting done?
  • Where do you shy away?

It’s easy to find fears; just ask!

Stop right now and think of where you’re stalled. Now just ask yourself:

  • What am I afraid of?

Give as many answers as come to mind. Then give one or two more. You’ll often find the answers spring to mind quickly.

Use your brain, deliberately

Remember: your brain is not logical. List the answers, no matter how realistic they may be.

Imagine you’re afraid to say “No” when your boss asks you to work weekends. You might have a sort-of-reasonable fear like “I’m afraid I’ll get fired if I say No.” You might also have over-the-top fears. “I’m afraid I’ll die alone in a gutter, covered in mud, smelling of bad whisky.”

Both are triggering your fear response, so you need to deal with both of them.

Separate emotion and information

Now bring in your Thinking Brain to address your imagined futures. For each one, mentally make a plan for how you can prevent the fear from happening, and how you can address it if it does happen.

I’m afraid I’ll get fired. I ask my boss ahead of time, “what will happen if I say ‘no’?” I can also keep up-to-date on my networking so if it does happen, I have a fallback plan.

I’m afraid I’ll die alone in a gutter. I’ll look at my bank balance and credit limits to be sure I can get enough money to keep my apartment if I get fired.

Now implement those plans.

Congratulations! You’ve handled a microfear. You heard the messages your brain was concerned about. Rather than falling into fight/flight/freeze, you made a concrete plan. The next move is up to you, not your fear.

The microfears that derail you are imaginary. Literally! part 2

The microfears that derail you are imaginary. Literally! part 2

When things get stalled, as we saw in the article that answered the question What is a Microfear?, fear is often why. Not big fears; small ones.

  • We’re afraid of failing at something we want to learn.
  • We’re afraid of starting an ambitious project that might fail.
  • We’re afraid of choosing the wrong job and missing a better opportunity.

Ash realized that their business partner was no longer a good fit for the business. But they were scared to have the difficult conversation, because it might destroy the relationship.

Look carefully. All those fears are about something that isn’t happening in front of you. Every one.

Fear began as a way to save us from danger that was present and immediate. We’d spot a Saber Tooth tiger or killer jellyfish and get afraid. Very afraid. And we’d run, or fight, or freeze. As long as we chose the right one for the occasion, those reactions served us well.

Our brain still has that reaction, however, even to our own imagination. We run a mental movie of our business partner getting upset during a conversation. Then we get afraid that they really are upset. But we’re really just projecting what we think will happen. Then we get scared of our mental movie and decide we won’t have that difficult conversation.

If you aren’t making progress on Something Important, blame fear. The fear comes from your beliefs and thoughts about the future.

Fear = perceived danger + emotion

Yay, Brain!! We can anticipate problems and respond in advance.

This is a good thing!

What sucks is the fight/flight/freeze response. It helps us survive a killer jellyfish, but not much else. And it certainly doesn’t help us have a difficult conversation when we need to.

When you anticipate a problem, however, you have plenty of time to be smart about it. If you can defuse fight/flight/freeze while still knowing the problem, you can use your smarts to deal with it.

Without fight/flight/freeze: Ash imagines the business partner freaking out and … calmly calmly and carefully rehearses the conversation. Ash tries several presentations, choosing the most respectful, gentle approach. (In the real case, the partner knew he wasn’t a fit. He was relieved to discuss it and left amicably.)

Without fight/flight/freeze, you can take deliberate action. You can plan. You can take action to choose your future. You don’t have to let your emotions choose your actions:

You imagine failing at something you want to learn … and you calmly identify tutors, extra reading, and other resources in advance to help.

You’re afraid you might fail at an ambitious project … and you recruit a team with the needed skills. You do good risk management up front, making success much more likely.

You believe you might choose the wrong job … and you make a plan. You keep in touch with your other prospects so you have a backup network.

Make your fears work for you

Your brain is great at projecting What Might Happen. You have plenty of time to plan. But when your fear hijacks your thinking, you end up avoiding the very things you want to do.

  • Where are you stalled?
  • What’s not getting done?
  • Where do you shy away?

In part 3, I’ll share some tips for finding and overcoming your fears.