Why Business Leaders Should Think Like A Venture Capitalist

The book, The Venture Mindset, is all about how to make smarter bets and achieve extraordinary growth. The authors, Ilya Strebulaev and Alex Dang, explain that if any company wants to win big in competitive times, they need to think differently. They need to think like a venture capitalist (VC).

“This book teaches you to spot new opportunities, nurture the right talent, foster a culture of innovation, and take calculated risks,” say Strebulaev and Dang.

In their book, the authors share nine distinct principles inspired by the unique way VC’s think:

Home Runs Matter, Strikeouts Don’t
Get Outside the Four Walls
Prepare Your Mind
Say No 100 Times
Bet on the Jockey
Agree to Disagree
Double Down or Quit
Make the Pie Bigger
Great Things Take Time

These nine principles drive VC’s unique behaviors that have flourished in an ecosystem of thousands of startups, some of which went on to disrupt or create entirely new industries, according to the authors.

They add that “some of the lessons offered by the Venture Mindset are easy to implement, with immediate results; others are less so. But each lesson offers a powerful opportunity to change how you think and act within your own organization.”

As you read the book, you will find a Mindset Check at the end of each chapter. Use these to answer questions about your organization and think about what you may need to do differently to achieve a Venture Mindset.

Some of the questions include:
Is your organization positioned for making many small bets with the understanding that many of those will fail?
How open are your culture and organization to unexpected ideas coming from outsiders?
Do you regularly interact directly with entrepreneurs, executives, and experts to deepen your insights on developments in your industry?
Are your meetings designed to promote debate and open to disagreements?

Some of my favorite takeaways from among the nine principles include:

Pick your battleground.
Don’t get too skeptical too early.
Reward boldness.
Look beyond short-term gains.
Ignore temporary swings.

The authors share these additional insights:

Question: Of the nine Venture Mindset principles, which one is typically the most challenging for a business leader and his/her organization to master, and why?

Dang & Strebulaev: We work a lot with large organizations, and the single principle that is hardest to integrate into strategic decision-making is the idea that home runs matter and strikeouts don't.

The risk of failure is often exaggerated, and established organizations easily ignore missed opportunities until the next Google or Amazon gets big enough to disrupt their business.

Too often, everything inside a large and established organization is designed against launching new, risky ventures, with senior executives avoiding them as minefields. This is what makes Silicon Valley tech companies so unique — they continue to invent, experiment, take risks, and serve as innovation factories. More importantly, every Fortune 500 company can do the same. However, this requires a mindset change.

Question: Are the nine principles to be learned sequentially?

Dang & Strebulaev: No, each principle itself significantly improves the ability of a decision-maker to find and fund innovative ideas. It's not all about luck; there is a method to the madness.

Everyone and every organization can improve by dialing up the risk-tolerance level but in a smart way. However, mastering all of the Venture Mindset principles is important.

Without a large funnel of ideas, the effort is futile. Without killing your darlings (or less successful ventures), the organization would spread itself too thin. Without long-term commitment, you may give up too early.

So, to truly benefit from the Venture Mindset, adopting all nine principles is important. However, a journey of a thousand miles begins with a single step. To rephrase one VCs. When is the best time to start? It was yesterday!

Question: How long does it take for a business leader and his/her organization to master the nine principles and fully transform their entity to one operating with the Venture Mindset?

Dang & Strebulaev: We've seen how leaders change their behavior right after learning about some of the principles. For example, the principle of getting outside of the four walls can be immediately implemented, allowing leaders to discover many new ideas right away. However, seeing the benefits of the prepared mind principle takes more time. We've noticed that both of us have also significantly changed our behaviors. We experiment more and test our ideas rather than debating endlessly about who is right.

Transforming an organization to become venture-minded takes time. It may take 2-3 years to make it a part of the DNA of the organization. The challenge? It's not just about the leaders; it's about the leadership team and key employees who often participate in our workshops and become a team of intrapreneurs, initiating the venture mindset movement.

Thank you to the book’s publisher for sending me an advance copy of the book.

Comments

Best Reasons For Doing Employee Exit Interviews

Don't be the guy in the picture when an employee leaves your company. Instead, conduct exit interviews and surveys. Leigh Branham explains in his book, The 7 Hidden Reasons Employees Leave , what the most favorable conditions are for conducting the interviews and surveys. And, if you need convincing to read the book, take a look at these 11 best reasons for listening and gathering the data when an employee leaves : Bringing any "push-factor" root-cause reasons for leaving to the surface. Alerting the organization to specific issues to be addressed. Giving the employee a chance to vent and gain a sense of closure. Giving the employee the opportunity to provide information that may help colleagues left behind. Providing information about competitors and their practices. Comparing information given with the results of past surveys and employee data. Detecting patterns and changes by year or by quarter. Obtaining information to help improve recruiting. Possibly heading off ...

Seven Ways To Stay Motivated

To learn how to stay motivated, read High-Profit Prospecting , by Mark Hunter . It's a powerful read that includes counterintuitive advice and cutting-edge best practices for sales prospecting in today's business world. Today, I share one of my favorite sections of the book where Hunter describes his seven things motivated people do to stay motivated : Motivated people ignore voices in their lives . These might be people in the office and friends who have bad attitudes. They're out there, and if you're not careful, they'll control you, too. Motivated people associate with highly motivated people . Just as there are negative people in the world, there are also positive people. Your job is to make sure you spend as much time with the positive people as possible. Motivated people simply look for the positive in things . Positive people count it an honor to live each day, learn from others, and impact positively those they meet. Positive people take...

Why Your Middle Managers Are So Important

The book, Power To The Middle , shows how managers are the crucial link between a company’s ground floor and top brass. “Too often company leaders view middle managers in a negative light as expendable employees who can slow down productivity and overall strategy,” explain the book’s authors and McKinsey partners Bill Schaninger , Bryan Hancock , and Emily Field . “However, new KcKinsey research reveals that this outdated perspective needs to change and that well-developed managers are the strategy that companies must prioritize to succeed today,” they add. Most importantly, by the end of their book, the authors sum up their insights and provide a playbook that will help senior leaders let go of the command-and-control mindset that has hobbled their managers for so long. The authors define middle managers as the people who are at least once removed from the front line and at least a layer below the senior lead...

Chick-fil-A Serves Up 11 Leaders On May 6

On May 6 , the quick-service chicken restaurant chain, Chick-fil-A will serve up more than chicken. Because, that's the day when the chain's President and COO Dan Cathy brings together 10 influential leaders during a one-day leadership " Leadercast " available at hundreds of locations around the U.S. and overseas. "We desire to influence leaders at every level within an organziation. Whether you are leading a team of 2,000 or just yourself, the Chick-fil-A Leadercast is designed to help you use your voice to create positive change," explains the organization. I am a big fan of Chick-fil-A because of its customer service. It is also known as a company that has built its success on core values and its focus on developing leaders . I also like that employees respond with "my pleasure" instead of "no problem" when customers say "thank you." Chick-fil-A says leaders can express themselves with five voices (described below i...

10 Quotes From The 5 Levels Of Leadership -- John C. Maxwell

Soon I'll post my full review of John C. Maxwell's latest book, The 5 Levels of Leadership . In the meantime, here are some of my favorites quotes from the book that I believe should become a must-read book by any workplace/organizational leader: Good leadership isn't about advancing yourself. It's about advancing your team. Leaders become great, not because of their power, but because of their ability to empower others. Leadership is action, not position. When people feel liked, cared for, included, valued, and trusted, they begin to work together with their leader and each other. If you have integrity with people, you develop trust. The more trust you develop, the stronger the relationship becomes. In times of difficulty, relationships are a shelter. In times of opportunity, they are a launching pad. Good leaders must embrace both care and candor. People buy into the leader, then the vision. Bringing out the best in a person is often a catal...

Effective Listening: Do's And Don'ts

Here are some great tips from Michelle Tillis Lederman's book, The 11 Laws of Likability . They are all about: what to do and what not to do to be a leader who's an effective listener : Do : Maintain eye contact Limit your talking Focus on the speaker Ask questions Manage your emotions Listen with your eyes and ears Listen for ideas and opportunities Remain open to the conversation Confirm understanding, paraphrase Give nonverbal messages that you are listening (nod, smile) Ignore distractions Don't : Interrupt Show signs of impatience Judge or argue mentally Multitask during a conversation Project your ideas Think about what to say next Have expectations or preconceived ideas Become defensive or assume you are being attacked Use condescending, aggressive, or closed body language Listen with biases or closed to new ideas Jump to conclusions or finish someone's sentences

Important Questions To Ask Your New Hires

In Paul Falcone ’s book, 75 Ways For Managers To Hire, Develop And Keep Great Employees , he recommends asking new employees the following questions 30, 60 and 90 days after they were hired: 30-Day One-on-One Follow-Up Questions Why do you think we selected you as an employee? What do you like about the job and the organization so far? What’s been going well? What are the highlights of your experiences so far? Why? Tell me what you don’t understand about your job and about our organization now that you’ve had a month to roll up your sleeves and get your hands dirty. Have you faced any unforeseen surprises since joining us that you weren’t expecting? 60-Day One-on-One Follow-Up Questions Do you have enough, too much or too little time to do your work? Do you have access to the appropriate tools and resources? Do you feel you have been sufficiently trained in all aspects of your job to perform at a high level? How do you see your job relating to the organi...

How to Be a Leader – 9 Principles from Dale Carnegie

Today, I welcome thought-leader Nathan Magnuson as guest blogger... Nathan writes : This is it, your first day in a formal leadership role. You’ve worked hard as an individual contributor at one or possibly several organizations. Now management has finally seen fit to promote you into a position as one of their own: a supervisor. You don’t care if your new team is only one person or ten, you’re just excited that now – finally – you will be in charge! Unfortunately the euphoria is short-lived. Almost immediately, you are not only overwhelmed with the responsibilities of a team, but you quickly find that your team members are not as experienced or adroit as you. Some aren’t even as committed. You find yourself having to repeat yourself, send their work back for corrections, and staying late to fill the gap. If something doesn’t change soon, you might just run yourself into the ground. How did something that looked so easy ...

Coach Campbell's Leadership Principles And Winning Approach

Trillion Dollar Coach is about Bill Campbell , someone you likely never heard of, who coached several of the biggest names in Silicon Valley during a 16-year tenure, and who’s behind-the-scene wisdom helped created over a trillion dollars in market value. Authored by Eric Schmidt , Jonathan Rosenberg , and Alan Eagle , they share that from Steve Jobs and Dick Costolo to Larry Page and Sundar Pichai, these big names in Silicon Valley give credit to Campbell for much of their success. Campbell, who died in 2016, started his career as a football coach at Boston College and Columbia then switched to business in 1979. As leaders at Google for more than a decade, Schmidt, Rosenberg, and Eagle had the benefit of experiencing Campbell’s executive coaching firsthand. In addition, for the book, the authors interviewed over 80 people with whom Campbell also worked. Through stories from those interviews, Trillion Dollar Coach features specific strategies and action ste...

The Ten Golden Rules Of Leadership

A few months ago brought the release of the new book, The Ten Golden Rules of Leadership: Classical Wisdom for Modern Leaders . As you dig in, you'll step back in time to learn philosophies of the past and how to apply them today. Authors M. A. Soupios and Panos Mourdoukoutas offer a fresh approach to becoming a great leader by learning from antiquity's great thinkers, such as Aristotle, Hesiod, Sophocles, Heraclitus, and others. Each chapter in the book is devoted to one philosophy of leadership that equate to ten simple rules : Know Thyself Office Shows the Person Nurture Community at the Workplace Do Not Waste Energy on things You Cannot Change Always Embrace the Truth Live Life by a Higher Code Always Evaluate Information with a Critical Eye Never Underestimate the Power of Personal Integrity Character is Destiny You'll learn how to take each idea and apply it to the challenges of the modern workplace. According to ...

Eric Jacobson On Management And Leadership

Search This Blog