What Port Gridlock can Teach a Start-up about Contingency Planning

One of the pitfalls of freelance consulting is that there isn’t enough time in the day to do everything. I’d consider being cloned. Being busy with solid clients is great, but blogging and communicating business trends and issues, outside of posting a few items to LinkedIn or Twitter, can sometimes take a back step. That is to say, until you have a good couple of hours to sit down and write a blog post, piecing together the brain-space is difficult. In this respite, I can write. Deep breath.

I’ve been fortunate that in the last month I have had diverse and challenging work. Two such clients took me out of the start-up area and in one case, back to a puzzle that harmonizes most of my talents (although I was still assisting three start-up clients), and of considerable national security interest. Since the middle of last year, longshoremen have worked without an agreement along the West Coast. In February after much to-and-fro, lock-outs, negotiations, and a Federal mediator, a tentative agreement was reached. There were ships sitting off the coast, trucks couldn’t enter the ports, and the containers and bulk goods were piling up. Delays were (and still are), significant. Long before the Christmas rush however, the dispute caught the attention of a consortium serving the interests of the US Navy, and having done some work in logistic optimization for one of the companies in 2013, asked me to conduct an independent “damage assessment” using “a lot of counter-factuals” to understand what the “strategic outcomes might be of all players” in the mix – how it might play out, what different scenarios might favor one actor over another, possible avenues of conflict resolution pattern may be emerging, the winners and the losers, and the people in-between.

For these companies, in a fast changing landscape of  fuel prices, Iran negotiations, the Ukraine-Russia conflict and ISIS, prepositioning and reliability across all threat assessments, have real foreign policy implications, not to mention across the supplychain, from rail to road – and it’s a long tail.

Meanwhile, writing my report, the ports stoppages continued unabated. I traveled to Oakland, Seattle, San Diego, Long Beach and Los Angeles. As the quote goes, “[No one wants to]…suffer operational and tactical disadvantages and be forced throughout the battle into an adoption of compromise solutions”.

Factoring in all contingencies is part of the strategic mindset. Forgetting one, or overcompensating for another may spell disaster. It’s a balancing act. Since my business mainstay is the start-up ecosystem, there are some valuable lessons to be gleaned from taking a ‘big-picture’ approach to strategic alignment. If the military do it, and frequently, assessing various threats, there is no reason why small businesses shouldn’t either. Not to mention how many small businesses were effected by the port slowdown, many of whom didn’t plan any contingency.

Start-ups need to know and understand this kind of course, so their outcomes are synced with their business cycle, sales efforts, and product launches; they need to understand the focus of the customer, trends in the market and how the competitive environment is shaped.

Without going into too much detail (because I can’t but for brevity and simplicity), here is what I learned from my study that is applicable to start-ups:

1. Risks and Threats are a normal part of business – unwelcome and unexpected. Challenges are important whether the company is dealing with negative events or the unexpected pressure of having to rapidly expand production to function in spite of the demands of a particularly large order. The first step in any contingency and continuity planning is to assess the risks and threats to which a business can be exposed – that is the possible, probable and potential threats, determine how likely, serious and credible those threats are, and apply some kind of corrective action for each. This requires scenario and sensitivity analysis, and when that is completed, looking at all the variables, noting the best outcomes  given the resources and each threat seriousness, act out various scenarios (like, business wargaming and brainstorming), and then playing ‘devils advocate’ in a methodical way to resolve any gaps.

Estimating a threat isn’t easy, but it will increase, more generally, favorable outcomes. Even a question, something simple like, “What might my competitor do in this situation?” could be a very effective tool in marking a particular threat.

2. Planning and Back-Up Planning should be done regularly by any business and updated to reflect the changes in the market, business environment, and the extent of the threat. ‘Plan B’s’ are a really good idea. If, as part of your initial risk assessment you identify several areas needed to address, there should be a back-up for each. While this may sound rigorous and tedious, it will save valuable time and keep you competitive should anything arise that prevents or delays your businesses continued operations.

The data center is down? Is there server space across town? In another country? With a different vendor?

3. Decision Making is critical. To make the right decisions, you need to research. There needs to be good policy and procedure in place at the high-level and at the ‘shop-level’ in order to create the conditions around which sound business continuity can be established. Now there is no need to get bogged down in this regard in a small business with breaking OODA Loops, rational choice theory or group cognitive styles (think, Myers-Briggs), or optimization. Simple decision trees are effective for small business and large operations alike. Flow charts simplify the procedure. Collection of data relevant to a continuity undertaking is relevant, and necessary. Figure out first what the problem might be, then look at the objectives that need to be overcome. Follow that up with an evaluation and input from all stakeholders might be a worthwhile exercise to establish an effective framework.

4. Fail-safe: This could be anything from ensuring that your business has adequate insurance, has mitigated existential threats and analysed any internal risks from business behavior, intelligence and legacy operating procedures, to deciding what would be absolutely essential to a start-up/small business to begin again after a disaster, crisis, or if a complete shipment missed delivery deadline, and so did your business in making payroll.

Also, that all steps be ensured so that those essential components be available immediately and that the right people are handling the contingency. From an insurance perspective, besides obvious physical disasters, consider the damage that could result from other areas. Then there’s the potential liability factor if your small business is engaged in activities that might open you up to lawsuits – particularly IP (patents, trademarks and copyrights). On this point in particular, businesses should take the time to dot-their-i’s and make sure they are in compliance – in what ever regulatory or standard regime exists in their market.

Where I was perched looking at the ports, many small businesses were stranded at the ports with little direction to go, being at the mercy of the ports facilities operators, the unions, and the various other players vying for the competitive space and jostling for a more powerful bargaining position. While we heard about the Lululemon cargo being slow in transit for the Christmas shelves, who had sufficient leverage in the market to get their product on-time, scale had significant factors in outcome. That’s not to say that larger companies didn’t lose money or market share in the process, just that the spoils go to those that are able to manage their supply chain and value chain better.

Again, in a review position of damage assessment, and from a military-industrial perspective, the ability to get equipment, and materiel into an operational theater may cost lives and both a tactical and strategic position. The ports move the vast majority of a nations war fighting ability and position it on a battle field. Delivery is essential, and how much, in what time, while calculating loss is key. As it should be for any business undertaking. Prepositioning is an essential part of military logistics, and there is no reason why it shouldn’t be for small business. The only limitation is scale. Contingency can resolve this, and reorganize to limit any future contingencies

5. Course of Action: Of course the first thing any business should do in a continuation plan is protecting important business data and inventory. Theft or destruction of intellectual property, such as trade secrets or computer programs, key machinery or equipment, or any other valuable assets a company needs for its operations and maintenance of its market position are generally covered by a security plan. This also includes the security of the company’s internal computer network and confidential files. A security plan attempts to block any negative contingencies that might occur, but when they do, the company’s contingency plan prescribes backup of certain customer and corporate records, and intellectual assets.

Legal strategies are also included in a contingency plan for the purpose of helping to mitigate the damage created by such events. Fraud, theft, operational errors, mismanagement and personal scandal are all crises that require special public relations strategies as well as various types of insurance.

The handling of these crises involves careful attention to legal considerations and liability to the shareholders and if not handled immediately with efficiency and confidence, they can ruin the company’s professional image and ability to do business. For this reason, companies create a system of checks and balances to prevent such problems in addition to creating detailed action plans to deal with these contingencies.

Your small business may need more people and materials before it can reopen. Which people are key to your operations? Do you need particular equipment? Perhaps an arrangement can be made with another business that has the equipment you need. Would you need certain supplies? Find out now who the alternate suppliers or shippers would be.

So, taking your operational decision and coupling it with correct course of action, taking into account any course corrections in the process of undertaking the contingency or continuity plan, you should be ready to communicate this to staff and the outside world…

6. Communications: If something happened at your business, who would be responsible for notifying each person who works there? Ensure phone and email contact lists are up to date and that the people responsible for contacting others have printed lists as all technology fails sooner or later and usually at the most inconvenient time. Also decide who will be responsible for communicating with the public and how (press releases, signs in the windows, radio announcements etc.)

Sometimes conflict can be good: it can often be a change agent and draw out the more creative ideas. In the case of the West Coast ports, each cog in the wheel, each moving part, each stakeholder, each player, had a different communication brief to communicate and plan to execute. This often brought them into conflict, and several layers of overlap risk in overall message.

Since its overall reactive was more like a confederation of leadership levels and competing organizational values, alignment becomes increasingly difficult, across the entire value chain, and so it seems, interferes with national security policy. Which leads us finally, to…

7. Availability of Resources is almost as important as the resource itself. Strong teams, with a willingness to find an exit, that are able to communicate policy and procedure is critical. Are they able to execute the plan? But they are not the only resource.

As stated earlier, ensuring that a back-up plan is available if a first plan isn’t appropriate or the conditions warrant a new look or assessment. Vendors, back-up suppliers, and all the other essential components to prevent business loss are all resources that can be quantified.

A person and a team, and the appropriate budget for each threat can then be applied and a policy and procedure applied. Vital records needing to be protected? No problem, the back-up server in San Francisco may have it covered. Need new office space? Has it been sourced months or perhaps years in advance? Production facilities closed due to a natural disaster? Is inventory including raw materials, finished goods and goods in production protected adequately, or is there a back-up supply?

In closing, while I don’t think the assessment for the majority of small businesses and start-ups, need to be over thought, there is a business case for planning any risk that may arise.

We have to count on it. They will.

What I Learned Mentoring Undergraduate Scientist Entrepreneurs

Last week I had the privilege and honor of helping to mentor six Cal State college entrepreneurial teams that were being judged on the merit of their discoveries for a grant from the National Science Foundation. Each team had four, but some teams had three and others two. The event was part of a larger symposium on Biotechnology within the CSU system.

The program was supported by the California State University systems CSUPERB program, and utilized the i-Corps program, with the Lean Start-up model advanced by such business luminaries as Steve Blank and Eric Ries. This uses a “business canvas model” to help validate key components of a start-up project, to get to a ‘minimum viable product’, test the proof-of-concept using a hypothesis (readily known to the science students), then creating a course correction (also known as a ‘pivot’) to differentiate and achieve the best probable customer validation and unique value proposition.

To be sure: These were more than just student projects. These students are part of supervised lab research, and many other students were present presenting their papers in posters and oral presentations – this is very real science. This is a carefully crafted program which joins elements of STEM/STEAM  - used for create and innovate discovery – and Linked Leaning initiatives – to bring the lab space to industry by presenting scientist entrepreneurs to commercialization.

I was part of a team of mentors and evaluators with one of the student cohorts, which included Manmeet Singh (a student at Sacramento State University in Biotechnology, and previous participant in a winning entry to the i-Corps challenge) and Tommy Martindale (Patent Attorney at the SDSU Tech Transfer office). We had six and 5 presented at the final on Saturday evening.



They all did exceptionally well and there was much to be proud. Firstly, there are literally tons of research projects going on at the CSU system: good, solid research with possible product discoveries coming from quite a number of labs. For a person like me that concentrates their time in commercializing discoveries, this is a boon. That there are so many hidden possibilities within the CalState schools, is one thing, but that a great pool of scientists are being graduated from these institutions should be satisfying.

Take for example in two of the poster paper presentations I met Arnold and Luis – both in suits and bow ties, both from East LA and first from their families to attend university. Both were also from my alma mater CalStateLA. They had investigated ‘anti-freeze’ proteins in plants and insects, with implications for the agriculture industry (http://web.calstatela.edu/dept/chem/wen/research.php#newroles). Further, this project was co-located at Caltech in Pasadena, which as we’re all aware has serious research credibility.

Secondly, the teams were passionate about their discoveries and many of them were either in the process of patenting or considering that avenue. Some students had working prototypes. This is great for technology transfer and good for the economy, not to mention the relief of Parkinson’s patients, drought amelioration, those dealing with the symptoms of statin side-effects, and a host of other “pain points”. Nothing substitutes quite as much as passion.


Thirdly: Just like in the real world, building a business model around a product can be time consuming and cumbersome, and then creating a value proposition around that, satisfying customer expectations, is grueling. Yet it was these students that could frequently pitch and articulate their idea more succinctly than most other start-ups I have worked with, that have much larger budgets, a half a dozen consultants and product on the market. These students pivoted early, and they pivoted often, refining their value proposition until they got it right. Start-ups (all start-ups) should really be letting the market define their product, rather than is so frequently the case, the other way around.

Finally, and this is more of a reflection of how humble and willing to learn (and get better at things generally, with respect to inquiry and engagement) these student entrepreneurs were, and more so than many mature and sophisticated client companies I have engaged with as a consultant, the students listened to advice and made appropriate changes to their products and discoveries as a result which made their presentations better. In fact, they asked for advice and went after all the industry mentors and panelists for their input into their products.

I would like this opportunity to thank the CSUPERB team: Susan Baxter, Stanley Moloy, and the SDSU team, including Shannon, Pam, and James. For the other mentoring team and industry leaders: Cathy, Tommy, Manmeet, Mark, Larry, Steve, Luanne, Karen Berg (Kansas State), David (UCSC) Sandra, Anna and Nola. It was great to be rubbing shoulders with such a distinguished group. And what can I say: I’m such an unapologetic booster for the CSU, for the teams I was able to help mentor late on Friday night: Safe Scope (Sacramento State), Poly Potable (Cal Poly Pomona), SRSP (Sonoma State), PD Analytics (Sonoma State), Akia (San Jose State) and Allen Team (San Jose State). Congratulations to you all. Go change the world!  It’s all yours!

Oh, and one of my groups got the special mention for the Tech Group: PD Analytics (Picture below):


Freelancers: Give The Gift of ‘You”

Freelancers, consultants and sole-proprietors: Probably the greatest gift you can give yourself and your clients this New Year, is the gift of you. Ok, now I know I sound a bit like Dr. Phil, but hear me out.

By now we have probably returned to our jobs after the long holiday period. Once again the freeways are full and the commute is long. Every work day we rise to meet the challenges and expectations of our job, work, career – waged or salaried. We haul ourselves from bed, shower, dress and face th daily grind. Work can sometimes be a mixture of passion, obligation and exhaustion. For another group it is more than just a passion, but a lifestyle, and the holidays were filled prepping for the coming year.

Freelancers, consultants, sole proprietors, self-employed, single entrepreneur, individually run businesses and the small businessperson often do not get chances to take long breaks to recharge. They create opportunities to advance their role throughout the holidays and use the ‘down time’ to square away any loose ends from the year and gear up for the next. This is not just their job or career, but their livelihood – their mantra is ‘eat-what-you-kill’ – and it applies equally to aerospace engineering consultants as it does for real-estate agents.

As the freelance or sole-proprietor name implies, these individuals must do more than just be good at their field. According to the SBA, nearly 70% of the US economy – about 35 million free-agents – is made up for sole-proprietors, and various other agents operating on their own to create a job or career. They contribute $450 million annually. Indeed many freelancers have more than one job!

The sole proprietorship is the easiest business structure, but in many cases the hardest to maintain, and this is its very weakness: flexibility. Their are no cumbersome boards of directors to consult, and no business partner(s) to negotiate with. Since their is little or no distinction between the person and the business, the role and responsibility of the work gets murky and the barrier and balance between work and life blurs. On one hand, a sole proprietor gets all the profits from their work, but are responsible for all the debt, taxes and liability. The challenge for many is the ability to maintain, despite the shadow of risk and loss.

However, this flexibility and level of autonomy is key to the freelancer, sole-proprietor or single businessperson. It’s what drives and motivates them, it’s what makes them tick!

They have to be all-things-to-all-people. They sometimes have to operate without the complicated business infrastructure many others do. Sometimes just a desk at a local Starbucks Coffee will suffice as an office, somewhere to put their laptop or tablet computer, and the work can begin.

They have to be constantly aware of the changing environment, and the economies of daily life, and are making constant adjustments to their work, as the need, occasion and trends prevail.

They have to be marketing person, blogger, public relations expert, accountant, receptionist and administrative assistant, all-in-one. When a computer crashes or the email goes down (which happened to this author briefly after Thanksgiving), the freelancer must also be his/her own ‘IT guy’. They have every role and fit every shoe, in their career. They are the jacks-of-all-trades, and their are required to be the master of many or all. Where they cannot, they have to delegate to others, usually outsourcing other freelancers they know or trust. They have to be everyone in the organization of one.

Many times, a freelancer or sole-proprietor must wake earlier than everyone else, and often go to bed when everyone else can quietly say to themselves, “it can wait until the morning”. Problems have to be solved now, or yesterday. Issues need to be dealt with immediately. You have to always be “on”.

So my message to fellow freelancers, as we return to work, and the new work year begins: your gift of the holidays is You. You are responsible for the destiny of your organization and so your resolution must be, to be a better YOU in 2015. YOU are the best gift you can receive, and give.

So go out their and knock-’em-out.

Lessons from Five Great Battles, Applied to Business

In the 80′s, around the time the movie, “Wall Street” came out, everyone in the business world were touting the wisdom in the classical work from antiquity on military strategy, “The Art of War” by Sun Tzu. After the movies release, the book was being read by a vast majority of business leaders, not least the mavericks of Wall Street. Readers and advocates figured, that, since business was about tactics and strategy, surely business was a ‘war’ and reading about how to wage war gave one a better accomplishment at business affairs.

Now I would be one of the first to recommend Sun Tzu. But not just for business reading. I think the work is useful for many, and for varied applications. But for Sun Tzu, while dictating many maxims, his works don’t really provide any real world practical examples of how battles actually shape strategy, and the movie Wall Street didn’t really give practical examples about how those principles apply to the business world.

So here are five battles where we assess the outcomes, which have real world business applications, and give practical, and provide real world parallels for business. You might say that these are ‘battle-tested’.

1. The Battle of Gaugamela
In 331BCE, Alexander the Great’s Macedonian army amassed against the might of the Persians, united under Darius III. After, as was customary at the time, a series of negotiations hoping to avoid bloodshed, the two sides faced off at Tel Gomel, a site not far from modern day Mosul in Iraq. Several events and battles led up to this point. This battle was to shape the fate of the Persian Empire, and the outcomes of much of the history of the Central Core.

Alexander was outnumbered 3:1 and Darius also had the benefit of flexibility in the kinds of forces employed on the battlefield, having archers, slingmen, chariots, cavalry and various kinds of infantry at his disposal, including Greek hoplite mercenaries. However, the Persian army was a centralized unit, taking orders from the center of the line, commanded by the king, Darius himself and with all the ego that went with it. Alexander opening the engagement with an echelon formation, with a yielding left flank. Darius could not resist the flat, open ground, excellent for chariots, presented on the left and launched his main attack against Alexander’s yielding flank, which was under the command of Alexander’s general Parmenio. Alexander kept a force engaged in the center to prevent Darius from splitting his lines then began a flanking maneuver to the right using the cavalry under its commander, Aretas. This drew out Darius’ right-side cavalry, creating a gap in the center of Darius’ main line. The Macedonians, after Darius attacked the center of Alexander’s formation, exploited this by doubling back into the gap.

Business Lesson: I believe there are two fundamental lessons from this battle of antiquity. One: that superior tactics effect your next move, winning despite overwhelming odds, and by looking at how you can turn a competitors strengths and dominance into their greatest liability.

Secondly: allow your charges to use their initiative after handing them sufficient delegated power to get the job done. In other words, tactical ability is only as good as the organizations ability to execute. Perhaps one of Alexander’s greatest triumphs was that he mobilized well trained and experienced units under the command of veteran generals. His decentralized mentality, good unit cohesion and organization, meant he was able to exploit the reverse in his enemy.

Looking at Microsofts acquisition of Skype as a good example of this: a company with a good product, creates a critical mass of customers, before being able to dictate the acquisition price to the giant, Microsoft. As for organization, FedEx’s use of field-feedback, allows for greater initiative. Whole Foods stores ability to stock items outside of central distribution, allows it to keep up with regional customer demand.

2. The Battle of Cannae
After Carthaginian leader, Hannibal, marched his men over the alps into the boot of Italy, handing defeat several times along the way to a retreating Roman Army, he sought to control the center of Roman power itself: the countryside. After losing two other battles, at Trebia and Trasimene (218-219 BCE), the Roman army under the consuls, Gaius Varro and Lucius Paullus, engaged Hannibal in 216 BCE.

Despite that the Roman army was twice the size of the exhausted Carthaginians, according to the Roman historian Polybius, the Romans opened the engagement with the standard rows and maniples which shaped the Roman Legion’s battle tactics. Hannibal had considerable flexibility amongst his troops, with allied Italian states, Celtic horsemen, Spanish skermishers and archers, as well as elephants, and heavy infantry from the Carthaginian Empire.

The Romans were routed! Hannibal was able to completely outflank and encircle the Roman army and they were annihilated. However, while Rome wasn’t able to recover immediately from this major defeat at the hands of the Carthaginians, Hannibal failed to win sufficient Italian allies. Hannibal thought that many more provinces would join him against Rome, and while Philip V of Macedon pledged his support, he could not march into Rome, even at the urging of his Numidian cavalry commander, Maharbal who correctly asserted to seize the opportunity to make Romes defeat total, “Of a truth the gods have not bestowed all things upon the same person. You know how to conquer, Hannibal; but you do not know how to make use of your victory”. Hannibal however disagreed whether he didn’t feel he could use the psychological victory over the Roman allies at Cannae and deemed it pointless, or whether he wrongly asserted that his force wasn’t strong enough to enter the Roman capital. Hannibal sent delegations to the Romans seeking settlement, but Rome was able to exploit Hannibals misdirection. Rome raised another army which collectively was larger than the Carthaginians, and with Hannibals dwindling support amongst defected Italian allies, retreated. His failure to exploit his win, failed in its strategic objectives to sack and take Rome.

Business lesson: Losing sight of the big picture; forgetting the larger strategic objective; and failure to win-over stake-holders. Sometimes winning the battle does not always give you strategic victory, or as once was coined by the ‘Desert Fox’, Erwin Rommel, “Don’t fight a battle if you don’t gain anything by winning”. Hannibal lost sight of his strategic objectives by not fostering the Italian countryside. I’ve seen client businesses experience great gains in the market, only to not take strategic advantage of the market landscape, and are unable to hold their ground against the competition arrayed against them.

3. The Battle of Midway
About 6 months after Japan’s raid at Pearl Harbor, Japan sought to finish the task it had originally set for itself at Pearl – the destruction of America’s ability to project power: sinking the aircraft carriers of the US Pacific Fleet.

The Imperial Japanese Navy taskgroup, with four aircraft carriers, under the command of Admirals Nagumo and Yamamoto was intercepted in early June 1942 heading for the Midway islands after the US fleet was alerted to their presence by favorable intelligence analysis.

The Japanese were the first to strike the airfield on Midway, but US aircraft had spotted the Japanese carrier fleet and launched four attack waves, eventually sinking all four Japanese carriers, for only the loss of the abandoned USS Yorktown. The remainder of the Japanese fleet retreated to the safety of Japanese waters.

However, largely due to the efforts of allied codebreakers, the Japanese defeat at Midway, created a gap in Japan’s shipbuilding, and pilot training programs were unable to keep pace in replacing their losses, while the U.S. steadily increased its output in both areas. The Japanese were never able to recover.

Business lesson: Intelligence is both vital and valuable, in understanding customers, market dynamics, and your competition. Underestimating a market or not taking sight of gaps in offering, differentiation, customer behavior or the competition, can lead to disaster, just like on the battlefield. Market research is essential!

4. The Battle of Borodino
In the spring of 1812, Napoleon assembled his ‘La Grande Armée’ in eastern Poland – around 700,000 men. Personally leading the central force, numbering around 286,000 men, Napoleon sought to engage and defeat Count Michael Barclay de Tolly’s main Russian army. Napoleon’s Russian Campaign began in June 1812, when the French penetrated Russian territory, heading towards Moscow. At the beginning, the Russians had avoided a direct encounter with the French as they pulled back, following a scorched earth policy. However, the Russian commander finally decided to set up a defensive line at Borodino, and the Battle of Borodino began on the early morning of September 7, with a French cavalry attack on the Russian lines. Both French and Russian fought ferociously. Having withstood several waves of French cavalry charge, the Russian left wing began to collapse as Russian General, Mikhail Kutuzov ordered a retreat.

The fighting at Borodino cost Napoleon around 30,000-35,000 casualties, while the Russians suffered around 39,000-45,000. With the Russians retreating in two columns towards Semolino, Napoleon was free to advance and capture Moscow on September 14. Entering the city, he expected the tsar to offer his surrender. This was not forthcoming and Kutuzov’s army remained in the field. Possessing an empty city and lacking supplies, Napoleon was forced to begin his long and costly retreat west that October. Returning to friendly soil with around 23,000 men, Napoleon’s massive army had effectively been destroyed in the course of the campaign. The French army never fully recovered from the losses suffered in Russia.

Business lesson: Lack of a contingency plan; not enough risk analysis done; overconfidence and ignoring valued business principles.

Don’t become over-confident, especially after many successes, and never attempt an unpopular endeavor in isolation. Always remember the basic project management principles, and make your planning and risk analysis commensurate with the size of your market. Finally, stop and think, and assess your market by listening to others: find out about alternatives.

I once had a potential client (they decided it was too expensive to take a consultants advice) that shipped perishable product from New Zealand and it was caught at the Port of Long Beach for several days, causing $140,000 in loss, due to poor and incomplete paperwork, a failure on the part of the company to work up an alternate plan and believing that no additional follow-up was necessary with the receiver.

5. The Battle of El Alemein
The Battle of El Alamein, fought in the deserts of North Africa in 1942, is seen as one of the decisive victories of World War Two. The Battle of El Alamein was primarily fought between two of the outstanding commanders of World War Two: Bernard Montgomery and Erwin Rommel. Due to Rommels victories in the North African desert, the Allies believed him and his army to be invincible.

Montgomery’s great assets were his meticulous planning and his immense self-confidence. His analysis of the situation at Alamein was perfect. Montgomery pulled all of the troops up forward, to a strong defensive position offered by a ridge south-east of El Alamein: a natural bottle-neck between the Qattara Depression — which tanks could not cross — and the sea. Rommel would have to pass through this gap if he was to drive east towards Egypt, the Suez Canal and the oilfields of the Middle East. His plan was to let Rommel attack Alam El Halfa while building up his forces for a strong counter-attack using a strong Commonwealth contingent and the new American Sherman tank. Rommel attacked on October 23 and again the following day but could make no headway, and withdrew, mainly due to heavy tank losses suffered by the beleaguered German and Italian armies, lack of sufficient fuel supplies and insufficient air cover.

The Allied victory at El Alamein lead to the retreat of the Afrika Korps and the German surrender in North Africa in May 1943.

Business lesson: ‘Changing tempo’ is one of the most challenging problems that a leader of any organisation can face. Successful organisations start off with enthusiasm, driven by the vision of the founders and the early management teams. Sadly this often fades over successive generations of management, and teams begin to see only problems, not solutions. People stop believing that they can succeed.

Defeatism in an organisation can be contagious: a team that does not believe that they can succeed never will. While challenging, transforming tempo and mood in an organization is essential. Teams that have faith in clear, well-presented strategies in which they are confident, will succeed unconditionally.

Funding Your Start-up: 5 Step Plan

It has been an interesting couple of weeks for start-ups in Los Angeles. Along with the myriad of events to attend around innovation in the city, there has been a record amount of capital and venture money handed out to start-ups in the Greater Los Angeles Area. This last quarter has seen $811M funding record for LA tech, and projections for Q4 is looking even better.

Recently I sat down at a roundtable with about 30 venture funders, bankers and investors – it was an assortment of the who-is-who in Los Angeles investment. There was a small four-member panel giving advice based on their experience as serial start-up investors.

There were several key take-aways from the event which resonated (and which should continue to resonate with start-ups) amongst the group.

1. LA Investment is getting more sophisticated and mature. The Los Angeles venture capital and investor community is divided on how they should fund certain stage start-ups, which has created a new kind of investor, the one that wants to attract those start-ups that are looking for less than half a million, but aren’t quite a seed or angel investment. This has opened up alternative forms of funding, including bank loans, more and better crowdfunding options and peer-to-peer lending. Looking for options is better for start-ups.

If you are seeking less than a million but more than $700K, you are generally going to be too small for VC, but you are too big for angel, and should seek funding from a specialist investor, or an alternative funding stream. This means you will need to modify your pitch, and articulate in that how you will acquire any shortfall.

2. A VC might not always be the best or ideal funder for your start-up. Given the kinds of options available in the market now, the VC should be the last on your list. Best advice from the panel was to be so good that it motivates the VC to step in. Further, seek a VC when there is possible sale, liquidity option or M&A.

Alternative funding does exist but requires calculated risk assessment, and some savvy pitching. One investor relayed the story of vendor financed start-up. This is where a start-up extends their 30-day payment out for inventory, and some manufacturers can be convinced to defer payment until goods are sold. Combinations of funding, some overlapping, are becoming more commonplace among good start-ups, and bootstrapping can sometimes not be good enough in the hot investor climate.

3. Due diligence is needed against investors.  The first question a start-up should ask is “Is this investor right for me?” If the answer is ‘yes’, then the start-up should find as much as they can about that investor: what they have invested in, in the past, how much they have invested, their success rates and their criteria for investment. Any pitch should aim at those strong points.

4. Investors want to see a plan. Good investors what a minimum of a few things: they want to know what they will get out of investing, they want a clear business case, they want an exit strategy and they want to know a start-ups expectation (which may vary wildly). Coherence is key – an investor, even a bank issuing a bank loan, want to see on paper what you are aiming for.

5. Team. Has your start-up have the team necessary to execute the aforementioned plan? It should. That is the bottom line. You team should be strategically oriented and mission driven. It’s really is that simple.

7 Steps for Getting Past the Pitch


About half of all the companies I do work for, or work with, are early stage start-ups, particularly in the agritech, bioscience, technology, specialist manufacturing, aerospace or clean/greentech sectors. Many of these seek funding either through an investor, or a grant. In both of these cases, they are required to formulate a pitch and deliver it. Typically if a company approaches me before they pitch, I will assist them in the formulation and delivery aspects, so they are better polished.

Recently the Los Angeles area was abuzz (as it will again soon with TechWeek) with events around the Innovate Pasadena and Innovation Week in Los Angeles events – with loads of networking and pitching opportunities for young companies. It created a lot of energy within the start-up community, and mingling with investors, influencers and other innovators gave untold opportunity and direction to start-up decision makers.

During the events I was approached by several companies to assist them in their endeavors to get funding. I also approached others I saw during their pitch presentations, where I saw they needed some help in getting a better presentation and slide deck.

By any measurement, getting in front of investors is a great thing and a success that should be celebrated. However, if you’re doing multiple presentations a week and you’re measuring your success in volume of investors you’ve pitched to, there may be a disconnect. “We’ve pitched to six investors this week alone, and have averaged about 3 per week for the last three months” was a typical story. It’s awesome, sure, but have you landed a deal? Have you been asked back? Have these investors even called or emailed and asked for additional information? In all these cases the answer was a resounding, no. If the net effect of pitching is to score an investment deal, then clearly something isn’t happening. There are no brownie points for accumulating the most numbers of investor pitches.


If you haven’t gotten past the pitch, one of the following may be happening:

1. Are you asking the right investor? “Horses for courses” the saying goes, and so it is for investors. Merely getting in front of any investor just to deliver a pitch is not the way to find investment. Further, be discerning: find an investor that is going to work well with you.

2. Have you asked for the right amount? Should I ask for a lot, or ask for small amounts? I suggest looking at your needs and working backwards. Even better if you can elaborate the purpose you will be using the investment for, and the speed with which you will grow, the scale and overall performance based on clear goals and benchmarks.

3. Have you listened to the feedback given to you? Listen to the advice given by the last investors you pitched to, and make the appropriate changes to your presentation. It may be obvious and sage advice, but take the advice, talk it over with the team and your consultants, and make the changes you need to re-pitch.

4. Are you ‘ready’? This may seem like a no-brainer, but many companies, while they have a good technology and it has emerged from the lab with a good solid foundational IP around it, may not be in a stage to be ‘investor ready’. There may be something missing: management team, aspects of market research not accounted for, gaps in customer validation or a weak competitor profile. These need to be sorted through, and only a mature enough company will know the difference. If in doubt, ask.

5. How strong is your business case? Unfortunately, market opportunity does not always translate into market potential, and how you explain how you will raise money, and sustain that, is just about the most important piece you will need, to grab the attention of a potential investor, in your company.

6. Have you sorted through your ‘housekeeping’ issues? The right IP regime, the right go-to-market strategy, the right kind of business structure and even the team you have assembled, can all make a difference to the relative strength of a pitch and successful presentation. Anticipate: Be ready and able to answer any and all investor questions.

7. Have you raised what is important to investors in your pitch? Finding out what is important and salient to the interests of an investor is part of the capture. Articulating it with the kind of economy and brevity of language you have in 15 minutes can be difficult, but overcome. If an investor wants to find out how much money you have, or how many current sales, don’t dance around it, tell them the truth.

Remember, you only have moments to get your pitch across (maybe 15 mins), and capturing investors from the start is key. Build on that capture throughout your presentation, so you hold them waiting for the next big thing in your presentation.


Warehousing and Logistics – Site Selection

As many of you that know me, or follow me on social media are aware, I assist companies and businesses from Australia, New Zealand, China and South Korea, understand the US market. Frequently this help extends to concierge type services for my clients and that includes finding a warehouse, 3PL, multimodal or distribution center from where their products leave to other parts of the country.


When I was putting together this post, my initial thoughts were about writing on efficient supply-chains, drayage, taxes and duty, and the benefits of having a good customs broker that can fulfill paperwork and counter any problems with manifests and dockside issues. Don’t get me wrong, these are common problems associated with international shipping, and can delay goods from the dock, and may sometimes be subject to search and seizure, and these issues are very important to manufacturers and importers. But this week I was talking to an Australian company that had recently learned some valuable mistakes when they took on a deal with a storage facility about 8 months ago, and it didn’t work out. So concerned they were, that they didn’t want this happening to other businesses – so I thought it may be a better topic. The Australian business has a product that was subject to returns, and that’s when they started running into trouble…


Firstly, while word-of-mouth may be a good indicator of quality, due diligence is required when entering into any business transaction, and no business should make arrangements based solely on how well a logistics or freight company managed a friends’ business. It is fine to put that logistics or freight company into a long list of potentials, but ultimately they have to be a “good fit” and support your business goals and needs.


Consider Making an Early Choice: When a company is considering moving goods overseas, it may be best to first find out what the costs associated with those goods being in another country will be. For those companies seeking FOB, this is increasingly becoming a harder option to obtain, given the way retailers negotiate returns and their requirements for shipping. FOB makes it easy for an exporter, but it is becoming less frequent. Given then, that FOB is taken out of the logistics equation for all but a few, the supply-chain just got a little more expensive: you will have to warehouse. The earlier then that a company consider the factors around distribution, the better able they are to manage costs and design a process by which there is less disruption, and one that suits the value of your customers. Logistics should be mission driven and strategic at its very core.

Services – Get it in Writing: Many warehouses offer a variety of services to cater to manufacturers and distributors. Whether you need picking-and-packing services, inventory control, local transportation, or ongoing maintenance and quality control, a contract warehouse can usually offer these services. Even larger warehouses offer fulfillment and customer relationship services. For many business owners, that means they can completely outsource operations so they can focus on building their business in the export destination country. A 3PL is ideal in this instance. Most can even handle returns and RFP’s. You have to negotiate these services up-front. Without a contract specifically stating a service they are under no obligation to return your product to a warehouse shelf. A good warehouse, 3PL or DC will sell their services to you and inform you of their obligation in writing.

Any additional fees, or carry-over costs should be made clear to you, including late payment fees or any other ‘overages’ should be handled in writing, and you should ask the logistics company to do that for you. keep good and accurate records.

Fees – Negotiate on Costs: Lessees are required to pay storage fees, and loading and unloading fees anytime they ship goods. Services can be maintained at lower costs, and 3Pl’s can often work with you to find the right combination of services to fit your budget and your needs. Just like goods, all services should have a manifest you are clear about, and the price for each clearly listed, whether on an invoice or part of the contract of ongoing services. Essentially a business wants to have some reduction and management of freight and inventory costs, so make your business case known to the 3PL at the time of negotiation. If that company isn’t a good fit: go elsewhere.

Control – Choose an Option Right For your Business: On the spectrum of warehouses, private facilities offer complete control with a the highest cost, similar to buying a house. A public warehouse is more like leasing an apartment, giving you little control. The contract warehouse serves up the perfect compromise between control and cost. This allows many small businesses to outsource their inventory holding and product fulfillment costs, so they can focus on generating more revenue and other business critical tasks.

Further, some companies that have seasonal fluctuation in volume often lose money by maintaining large inventory. 3PL’s mitigate this by helping you control and manage this through low and peak demand.

Compliance Issues: A good 3PL will stay ahead of compliance issues and regulations. This intimately effects your business as it determines your risk in the market place and mitigates it. The staffing, training and experience required to properly stay up to speed on international compliance issues, transportation & economic regulations, and supply chain conditions makes 3PL’s a better option for many and have tons of experience in dealing with the rapidly-changing international documentation and customs rules and regulations.

Secondly on the issue of compliance, it is ideal to make sure that the 3PL, warehouse or DC has all the bases covered when it comes to issues like, say, the Bio Terrorism Act and are able to take your import at all. Again, ideally a in-house customs broker to cover all bases is a great value.

Do they Handle returns?: Reverse Logistics is a thing. Some companies, whether it is a stroller, a piece of machinery, or a technology related device that occasionally needs to be shipped back to the manufacturer for replacement, end-of-life, or refurbishment. Select a location that is able to handle this request if you need it as part of your value proposition. It only gets tricky when you have to take someone to court over lost or discarded goods, when simply writing it into a contract is necessary. Further, make sure they have the capability to track the in-bound return – reverse logistics software, an inventory control system or some other means of tracking the return package or shipment.

Location: Location is a prime factor when determining what warehouse facility to opt for. Where your warehouse is based will determine how easy it is for you to distribute and receive goods. Therefore, it is important your warehouse is situated in a location that is convenient for shipping goods to your customers. That means, if your are a smaller, local business, then it will be wise to have a warehouse situated close to where your business is based. Also, regional factors such as population density and facility costs determine where and how businesses store and distribute inventory, like the shortest transit time due to density and distance of distribution lanes, volume and optimizing a service strategy with attention to cost.

Make Sure they are Reputable: In Greater Los Angeles there are literally thousands of DC’s and 3PL establishments. Do your homework! Make sure they are not going to go ‘belly-up’ and take your multimillion dollar inventory with it.

Beyond Price and Location: Some of the most critical elements for selecting a warehouse are not price-sensitive at all. How about layout, warehouse flow, size of the space needed and cubic capacity, a staging area, or even a handling area for potentially hazardous materials? Have you even considered truck access or turning lanes? All of these can mitigate your risk in the market. And future demand; have you considered future demand for your products? These are all important things when evaluating a site for selection.

Make a List and Check it Twice: Finally, short list your favorites and revisit each one to make sure you make the right decision that is goal or mission driven. Logistics should serve you and your goods, and should be a part of how you determine value in your business.


Guest Blog by Rick Rossignol: Human Resource Tips

At Conscientia Research we like to bring you all kinds of ideas and tips across a wide range of topics. This weeks blog is a guest blog by an HR Consultant and friend of Conscientia Research, Rick Rossignol, at RTR Consulting. Rick has had 25+ years in HR and brings his leadership and knowledge to our blog pages too! Thanks Rick!


RTR LOGO 300dpi.jpg

As a business owner, you know your product, service, market, and customers. But sometimes one of the most challenging aspects of operating a business is employees. What keeps most employers up at night is employees. How do I keep them, how do I get them to perform, how do I terminate the bad hire? Can I hire them as independent contractors and not have to worry about the employment relationship?

What the employer needs to do is develop HR infrastructure.  Most employers start hiring without having a strategy for Human Resources. They are focused on developing their business. Developing your talent management strategy before hiring the first employee protects the employer. Here are some suggestions for your talent management.

1.  Strong Human Resource Management: is crucial for growing companies studies show that HR issues are those most likely to keep CEOs up at night. Companies are always struggling with the question of when to consider outsourcing the many functions of an HR department. Mishandling such a strategic decision can prove costly.

The cost of not getting Human Resources right can bankrupt your business. Getting expert human resources advice is critical to developing your organization. Your organization needs an employment brand… You need a strategy for attracting and retaining your talent.  The strategy connects the performance and engagement of the company. Your employees are your competitive advantage. They represent how you compete in your market. Your talent strategy is critical to your ability to grow and execute your business plan.

You need HR Expertise to navigate, the challenges of managing employees, being in compliance, and developing the HR programs that will keep your talent.”

2. Pay Employees Properly: Not getting employee’s paycheck right leads to employee lawsuits and Fair Labor Standards Act violation.  Knowing which pay practices apply to your organization are critical to compliance. It is very common for employers to go to the department of labor and follow laws that do not apply to them. For example, California employment law is more employee friendly and this law is the rule employers have to follow. It is also becoming trend for cities to pass strict employment laws that are more favorable to employees. San Francisco has a minimum wage of $10.75 mandatory medical coverage, sick pay, and just added transportation subsidy.

3. Recordkeeping: The employer is the keeper of the record. Collecting and maintaining records is essential for employers. There are many agencies that enforce employment law, FEHA, FSLA, OSHA, ADEA, IRCA, & EEOC. Employers need to have records that show hours worked, meal breaks, overtime paid. Usually employers not having accurate records results in employers losing lawsuits.

4. Developing Employer Strategy for Talent: Talent is the face of the business, and the employers success is being able to attract talent and keep talent. This requires knowing where your critical talent is and who you compete with for talent. Why does someone want to work for you? How are you going to help them with their career?

5. Worker Misclassification: Employee or independent contractor? On the surface, the question seems rather simple, but it represents one the “stickiest issues” for business owners. “Employers who improperly classify workers can run into serious penalties with regards to taxes, withholdings and overtime wages.” A common mistake is the misclassification of workers as exempt from the FSLA and not paying them overtime and keeping records. To be exempt the worker must meet strict rules of the exemption. There is a salary test, as well as duties tests.

6. Handbooks: From a Human Resources point of view are necessary regardless of size. The Handbook provides the employer with a set of rules and policies that all employees need to follow. It tells employees that the company does not tolerate discrimination or harassment. It provides an open door policy for employees to resolve differences. It clearly explains that employment is at will! This is an important reference for different situations that may arise. The handbook should be updated as the number of employee increases and the rules change based on the number of employees.

7.  Awesome Culture: Providing awesome culture is a good way to start! Tech companies have changed the traditional workplace. Employees spend a lot of time at work and want to have a campus type environment. Work-life balance includes providing employees with perks such as fully stocked kitchens, game rooms, lunches, training, the opportunity to work  from home, and flexible working hours. Developing an awesome culture helps employers attract and retain talent. Employees do not want to be thought of as an expense… Treat them like a asset!

logo Rick T Rossignol , RTR CONSULTING, The HR Experts 

Tel: 805 493-2136 Mobile: 805 368-7128

rick.rossignol@experthrconsulting.com |www.Experthrconsulting.com

The Ikea Effect: Or How I Stopped Worrying and Learned to Love Consultants


In the last two blog posts I have spent time discussing the importance of planning, and for that planning to be rigorous, with a result that a business succeed. Here I discuss again, this importance.

I think I have lost count of how many business plans, commercialization plans and export planning documents I have read. It might very well be in the hundreds. Most of these have been created by the businesses, that now find themselves coming to me for various kinds of advice, from inserting some portion of market research, validating their assumptions about market channels, or understanding their value proposition vis-à-vis, their competitors, barriers to growth or a regulatory issue.

Another one came across my desk about three weeks ago, from a seemingly (on paper at least) intelligent business with leading authorities on this kind of work – a Stanford MBA as a co-owner, a UCLA Anderson School graduate as the other co-owner, and a team of very smart, young and enthusiastic individuals. Certainly very capable and highly educated – so what did they forget to do? This start-up was in the ‘click-revenue’ business. The click-revenue style business is fairly well established in the internet world and there are a few business models in use. They articulated very well, verbally, how their business was to run. But they needed to get an SBA loan to cover some additional costs, especially on the sales and marketing side. It was this marketing model, outside of the traditional click-revenue strategy, that they wanted to employ.

Their problem was three fold: no where was this mentioned in their business plan, and they wanted to merely satisfy generating a business planning document to fulfill getting funding, and not to use the plan as a way of establishing their businesses and projecting it in the direction of profitability. Lastly they didn’t make a case for how they were going to generate profits at all, not even how they were going to spend the loan money – they believed that profits would come irrespective of the plan; a plan they believed was outstanding and that in 11 pages captured everything they needed to guarantee a loan.

Uh oh…

 “Now I’ve been to one world fair, a picnic and a rodeo and that’s the stupidest thing I’ve ever read in a business plan!”

I could guess what they had done, which was later confirmed in a discussion with an employee (let’s call him…”Bob”) I was passed off to, to get the information I needed to “tighten up” the plan. Bob informed me that he was instructed to download a sample and template and to work off that, getting input from relevant other coworkers, and final review by one of the co-owners, who made a few changes (I was informed) and sent off to the bank, via the local SBA office. It was sent back. I was called.

Ikea. It’s all very easy. Too easy sometimes. They have memorable (and funny) Scandinavian product names. You either go to the Ikea store or shop online, collect your goods at the pick-up area, load into your car and then take it home to assemble. In the box is a direction sheet with stylized drawings of how the assembled masterpiece should connect. Business planning templates are much the same. You Google to find appropriate links to download a template, a guide and you get started – you don’t even need an Allen key to put on together. The result can often be mediocre at best and there have been disastrous results from DIY business planning. THEY think their plan is great!

“I thinks it’s great!” (“Bob” – not his real name)

But wait! Fortunately there is a cognitive bias that explains everything. It’s called “The IKEA Effect”. It is named after the same Swedish company that sells furniture that requires assembly.

Proposed by Economist Dan Ariely (the James B Duke Professor of Psychology and Behavioral Economics at Duke University and lover of all things Burning Man), and the author of several books related to behavioral economics, along with Michael Norton at Harvard School of Business, it posits that people view and value their own creations more than those of experts, even if their creations are not very good. The theory further suggests that destroying ones own creation or incomplete creations, lessen the bias effects. This explains everything! Sometimes even businesses further devote time, resources and energy to failing projects because they have sunk and invested their labor already, and are reluctant to move to bigger and possibly better things.

Businesses must hold allegiance to their customers. This means they must not only be successful, but delivery of their product or service imperative to that mission. Bob should have been asking his company presidents how their business plan translates to the customer…

“Perhaps it might be betterMr. President, if you were more concerned with your customers”

Business planning is part of that mission, backed up with sound research and the best accounting. Business planning and commercialization should be an investment, and it sometimes costs money to achieve something good. But it’s worth it. Inherent in business is risk, and planning mitigates that risk.

Here is what I suggest to businesses seeking a business plan:

  1. Consult with an expert: consultants and expert professionals seek to eliminate bias from your reporting, and want you to do well. They will give sound advice based on expertise, knowledge and experience. Businesses should listen to them and consider what they have to offer in planning, modeling and commercialization. They will know what is important to include.
  2. Set aside a budget for planning: Your business is an investment, and planning is part of that investment to eliminate unnecessary risk exposure.  In the world of business planning, you unfortunately get-what-you-pay-for, and in sophisticated and mature markets, *free* just wont cut it. Don’t know how much to set aside for an expert? I suggest looking on Elance to see reasonable and “going rates”.
  3. Update plans as the market changes: Markets change very quickly, and your product may be “cool” or “novel”, but do customers need or want it? Do you research, or get a market research business to give you a better understanding about market forces and dynamics. Revisit your plan often, and make changes…which brings me to my next point…
  4. Use your business plan: A business plan doesn’t just satisfy a craving for funding, or a business loan. You should be using your business plan to make sure you are keeping up with benchmarks, standards within your company, following your marketing plan and keeping up with revenue, spending and margins.
  5. Reevaluate business planning each cycle: Your customers tastes change, there are new regulatory regimes to understand, demographics shift and some disruptive company is now chewing away at your market share. A business plan allows you to keep up with it all, in a written format, and to reevaluate how to make the next step in the business – discarding a business line, introducing a new suite of products or even moving to a new location. Reduce time to market, stay ahead of competitors and play withing the rules of the market. It doesn’t have to be a drastic shift, but you should still stay ahead of any wave.

‘Bob’, his team, and his businesses owners were lucky. I “tightened” up their plan for $500 and we will reevaluate the document in 6-months – a small price to pay for a higher result. They have an updated market research section, in which we added two new substitute markets complete with channel analysis, a marginal cost analysis, a competitive analysis paragraph, including two new graphs, a marketing plan (which also includes a ‘who-is-doing-what’) and a much improved profit-and-loss statement, which will all go towards a much better value-proposition and reduce their level of risk exposure. Don’t worry, consultants help. Now, one last picture:

Update: Ikea recently took part in a “Time Travel Hypnosis” experiment. You can see it here

Death by Infographic! Why Businesses Need Good Information, Analysis and Data

You’ve all seen them. Maybe you’ve posted a couple to your LinkedIn and Facebook profiles or your Twitter feed. Yes, it’s the Infographic. The concept of the infographic has been around for decades, but have proliferated, to the point of ubiquity, since the rise of social media, where grabbing a readers attention and keeping it, may only take seconds. Once only for the business leaders, infographics have a wide audience, and acceptance, across different segments of populations. Access to data has been democratized.

Infographics are a type of visual representation of data, information or knowledge. It is supposed to show this information in a way that is quick and simple to interpret, and utilize the ability of individuals to see patterns and trends visually in the data, and therefore improve the cognition and awareness of the viewer. Modern use of visual data representation grew out of Tufte’s ground breaking book, The Visual Display of Quantitative Information” in 1983. We may blame Tufte for the birth of the modern infographic, but Twitter, Facebook and Pinterest is responsible for it becoming overwhelming.

*Some more of Tufte’s work can be found here.

However, merely because of their popularity, doesn’t mean they are right or relevant to today’s complex business environment. Some infographics over simplify an issue, and sometimes this is done to sway an audience, with a particular angle on how the data is interpreted by the viewer. Infographics can very useful, so there is a utility and place for them, but I would caution relying on infographics for use in business plans, presentations, and for understanding complex insights. Businesses, especially small businesses, need to navigate the business environment, and may find themselves lacking, with few problems solved, and more questions about their markets.

And this is not to mention the design-deficiencies in most of the representations I’ve seen used by businesses – many crammed with data in vertical format, and with poor clip art and drawings – many are just plain pointless, or satisfy ‘link-craving’ and ‘site-traffic’ for SEO marketers. Here at Design You Way they have a great blog post that elucidates the visualization problems bad infographics can project.

This is certainly not a case against data visualization: no one wants to read a pile of words and there is nothing wrong with line charts, but a mix of good analysis (interpretation) and validating the case (argument) made by the graphic should be essential elements if data is needed beyond the snapshot…

…But we’ll get to that in a sec.

I have seen numerous infographics used in business planning and commercialization documents over the last three years. Many of these infographics didn’t tell the reader how a particular set of data was going to improve the bottom line of the business, or create a business case. In fact many infographics borrowed or created by small businesses force the business owner into acceptance of the data at face value or push them to a conclusion which may be an assumption (post hoc ergo propter hoc and correlation does not imply causality). Many businesses adopt “the-data-speaks-for-itself” argument, without telling the reader, which could be an important investor, how the data will grow their business.

Look at this for 10 seconds…

“I somehow feel smarter and very dumb at the same time. My head hurts” 

They don’t need to be complex, in fact they can be very simple (have you heard of the data-to-ink ratio? Neither had I until a year ago! – see gif image below). They just have to relate to your business case and story.

Most of the data I use in reports for my clients are done with the purpose of presenting the data I have for them in a dispassionate way, eliminating as much bias as possible, and allowing them to decide their best course of action based on the current situation of the market. markets don’t lie. I use pie and line charts, Gantt charts, and other simple graphs to show data. It becomes cumbersome, when together with 40-some-odd pages of analysis is distilled along with it, to interpret that data and graphs – anything further would be outside the scope of my reporting. To overcome this, businesses often put this data into infographics for charting on presentations and the like.

I often draw conclusions based on this data, but I also make suggestions, possible next steps and give recommendations. It is reasoned and considered so that they can make the best decisions based on the information at hand – I don’t try to sway them to a viewpoint as that can often be counter-productive to a businesses best interests: managing risk in the marketplace.

I have seen too many businesses utilize data visualization that is borrowed from a website or DIY. I’m not a graphic designer, but I know some good ones and if businesses want to go the infographic route, I’d be happy to put them in touch with a great graphic designer. Businesses should be looking to create in their visual designs, their brand and their business model, and it should stand out. Businesses should be looking at data as part of their brand, and investing in good research and the tools to highlight that information – even if it is presented in infographic format. If going the infographic route, it should be concise and back up the business case. Therefore, utilizing the services of a designer that is able to present the data in your business plans and presentations is an investment. I can’t stress this enough. If the aim is to draw viewership, then it needs to have content that reinforces the business case and differentiates you from your competitors – a business case created though good research, competitive analysis and data points.