Why the Ability to Read Data is Just as Important as the Ability to Read

Working with spreadsheets and analyzing data is no longer reserved only for those who crunch numbers. Today, all fields are relying more heavily on making data-driven decisions and utilizing spreadsheet modeling as a tool for growth. Donna Haeger, a Cornell professor of economics and management, sat down with eCornell’s Chris Wofford to discuss the growing impact spreadsheet modeling is having on business.

What follows is an abridged version of that conversation.

Wofford: How does spreadsheet modeling relate to business analytics? How do we distinguish the two?

Haeger: The spreadsheet modeling piece is really taking the unstructured data. We’re structuring it into an organized fashion. The business analytics piece is really the data-driven decision-making that we’re doing, so making the decisions on the model are what we’re doing when we’re performing business analytics. If we’re using optimization, we want the result of the model to tell us what we should do – how many of a particular product we should produce based on our criteria and our goals. We could also do predictive which is a forecast, like a simulation.

Wofford: What are some typical obstacles? For some people, this is very fresh and if you’re really starting to take your analytics and your modeling seriously, what are the typical obstacles that people run up against when they’re first starting to think about this as a strategy for their company?

Haeger: I think the biggest obstacle today is how much data we have. We’re drowning in data. I always tell my students data is not the problem. We have so much data that we don’t know what to do with it. Most of the startup companies that are working in data analytics are basically becoming specialists in spreadsheet modeling and other types of data modeling so that they can answer questions. And I like to say that every company that has data, which is every company at this point, they’re swimming in answers to questions they haven’t even begun to ask – and that’s a pretty amazing place to be.

Wofford: What is your experience as far as when you work with students? Can you just speak to that broadly about this as a career path or if somebody’s actually already established in a position, how might it benefit them to learn about this?

Haeger: That’s an interesting question and I get this all the time – things like what job titles am I looking for. I have not found a position, an internship or a permanent job, that does not involve data in the business realm as of late. And so that’s interesting because I like to say that this whole thing about data is ubiquitous, like it’s everywhere. There are very few jobs right now that do not relate to having some data literacy, so understanding how to take data and turn it from data to information, which is structuring the data and then analyzing it and turning it to some knowledge is it’s really hard to find a position where you don’t need to know how to do that.

In fact, we’re starting to hear that people are being encouraged to learn a programming language on top of being able to be working with the data.

Wofford: What is that?

Haeger: When you’re working with spreadsheet modeling, you have a lot of control over the data that you receive, however, it depends. Everyone has a choice. I call it a Venn diagram. We’ve gone from where we used to send an email to IT and say, “I need some data, please send it to me” and the business people would get the data from IT.

Wofford: I mean if we talk about data literacy across an organization, for example, there’s certainly a case to be made that everybody should be to literate in some way so we know what we’re talking about. Are visuals where it’s at?

Haeger: We all love pictures, right? I think most of us are visual and even if we’re not visual having the spreadsheet model – and when we say spreadsheet model, it could be a pivot table, table, columns, rows, a chart – when we turn it into a visualization, we’re answering a lot more questions in one image. When we illustrate it this way and if we do a good job with it, it’s much easier for people to answer their own questions and interact with the visual. We’re starting to actually create dashboards now where we’ll create several different pivot tables, pull out some visualizations, put them all on one tab and create slicers where the individual isn’t just looking at three or four images but also being able to hit the slicers and interact with the data. So now you’re answering thousands of questions by interacting with what you see on the dashboard.

Want to hear more? Watch the recorded live eCornell WebSeries event, Why the Ability to Read Data is Just as Important as the Ability to Read, and subscribe to future events.

 

How Entrepreneurs Think and Behave

“Entrepreneurial thinking is about imagining the end and creating the means.”

That’s the mantra of Neil Tarallo, a senior lecturer at The Hotel School at Cornell University and the director of Cornell’s Entrepreneurship Bootcamp for Veterans with Disabilities. Tarallo, who learned about entrepreneurship at the knees of his father and grandfather, says that the term ‘entrepreneurship’ has become too closely tied with startups when in reality entrepreneurship is not solely about starting a business. It is a way of looking at the world.

As part of eCornell’s Entrepreneurship webinar series, Tarallo spoke with Chris Wofford about the behavior traits of successful entrepreneurs and the foundation for entrepreneurial thinking. What follows is an abridged version of their conversation.

Wofford: Nice to see you again, Neil. The last time you were here we covered the business model canvas, (((link to previous transcript))) a great tool for entrepreneurs and managers. Today we’re going to be talking about how entrepreneurs think and behave. Why is this something we should look at? What can we hope to learn from today’s talk?

Tarallo: For me, having been an entrepreneur and then moving into an academic environment and teaching the subject, one of the things that became apparent is that entrepreneurship is less about starting businesses and more about how the people who start these businesses think and behave.

Over the past four or five years, there’s been some really great research into how entrepreneurs behave and documentation of the behaviors of expert entrepreneurs. For me as an academic, if we can teach those behaviors and help our students understand those processes, we can put them on a path to be much more successful in their endeavors.

Wofford: The obvious question here: What are those behaviors?

Tarallo: I think more than anything else, the behavior can be summed up as a level of comfort in moving forward without really understanding what the final goal will be or even which path you will take.

One of our Hotel School alum put it really well: “Most of the world needs to know every turn and every nuance in the path that they’re taking wherever they go. Entrepreneurs just need to get to the first turn. When they get there, they’ll look around and evaluate their environment and then they’ll make a decision on which way to go based on that information.”

To start a business or to create something new is very dynamic and it requires that we have a lot of information coming from the environment around us and that we can use that information to find the right direction to go.

Whenever I talk about this subject, I always like to define entrepreneurship because it’s really interesting to me that as I talk to people about what entrepreneurship is, there are a lot of different impressions.

While I wouldn’t say that anybody’s really wrong about how they define entrepreneurship, I like to make sure we’re on the same page. So I always start out by asking, “What is entrepreneurship and what does it mean?” Many of the definitions of entrepreneurship that you see involve some reference to starting businesses and honestly I’ve moved very far away from that. For me, entrepreneurship includes starting businesses but it’s not solely about starting businesses. I like to define entrepreneurship as the process of creating value by bringing together a unique package of resources to exploit an opportunity.

If you use this definition, you’ll see that entrepreneurship and entrepreneurial behavior can occur in many different contexts. As we remove the idea of a startup being the focal point of our definite measure of entrepreneurship, we find that it applies to corporate environments, social enterprises and nonprofits.

Wofford: So you’re saying that maybe people have actually exhibited entrepreneurial behavior but they might not think of it that way because the idea of being an entrepreneur is so closely related to having started a business?

Tarallo: That’s right, it’s really not just about starting businesses. The behavior aspect of it really winds up being an alternative way of thinking, and it’s a way that I approach my entire life and especially my work.

I think about entrepreneurship as being a capacity to perceive and act upon opportunities based on the environment around you and the ability to create and build something from practically nothing. That’s what really great entrepreneurs are able to do, and it involves putting things together in a way that other people haven’t thought of yet.

Wofford: We’ve got some questions coming through in the chat box here and I’m just going to throw one out at you and then let you respond: Do you think entrepreneurs are born or can we teach people to be entrepreneurs?

Tarallo: Well, I sure hope so because Cornell pays me to teach people about entrepreneurship! There is some research out there about how some people are born thinking effectually, meaning they think entrepreneurially. If you watch children playing together, you can see this really clearly. When you see little boys sitting down playing and they have a whole bunch of dump trucks but they need a firetruck, they don’t just say, “Oh geez, we don’t have a firetruck so therefore we can’t have a fire.” No way. What they say is, “Okay, you see this dump truck right here? From now on, that’s our firetruck.” And from then on out, any time one of them touches that firetruck, they’re making the siren noises and all that. That’s a form of effectual thinking.

What we’ve learned is that as people move through the education system in the United States, and I would argue in most other countries, they become less and less effectual in their thinking and they become more focused on how to get someplace and what is needed to accomplish something along that defined path. We work on changing that and it is something that I definitely think we can teach.

Wofford: How do you teach people to maintain or reclaim that effectual thinking?

Tarallo: When I came to the Hotel School at Cornell, my responsibility was to help hotels move their entrepreneurship programs forward. One of the first things we did was to separate the skills and tools that we can teach in the classroom – marketing, finance, those kinds of things – from the behavioral component of entrepreneurship.

The only real way to teach the behavioral part of entrepreneurship is to really immerse the students in the behaviors because that’s where you learn. I learned to be an entrepreneur at the knees of my father and my grandfather because they immersed me in that behavior. Teaching practical skills in a classroom is a very simple thing to do, but the behavioral part is a little bit more challenging.

But we do know that we can teach people to be entrepreneurial. Research shows that if you have had even one formal entrepreneurship course, your likelihood of succeeding as an entrepreneur increases exponentially. That’s because you start to become aware and you start to become conscious of these things as you go along.

Saras Sarasvathy, who has done some really great research at the University of Virginia into how entrepreneurs behave, has identified the two primary ways that people think as causal and effectual. Let’s break those down a little bit. Causal thinking is what we’re all accustomed to and what most of us do throughout the course of our day. In business schools, this might be characterized as a managerial way of thinking. Basically this is thinking about how to achieve a predetermined goal. This is when you say, “Okay, here is the challenge I have in front of me and this is what I am going to do to overcome it.”

The next level of thinking is called strategic thinking. In business schools, we sometimes equate this with creative thinking. This is about generating new means to achieve a predetermined goal.

When it comes to effectual thinking, and this is what Sarasvathy identifies as the way entrepreneurs think, it’s more about moving forward by understanding the means that are around you. Instead of saying, “This is the goal that I have”, what you’re saying as an entrepreneur is, “Here’s the problem I need to solve.” The goal is the solution to that problem but in effectual thinking you are not specific about what that solution might be.

Wofford: To oversimplify it, it’s sort of going with the flow, right? Reacting to what comes along?

Tarallo: Yeah, in a way. Sarasvathy also talks about not thinking about either the means or the end but just understanding the problem that needs to be solved and then kind of letting everything take you in that direction.

Entrepreneurs understand that we can’t control the future, nor do we want to. Because if we let the future unfold on its own, generally speaking it will be driven by our customers and therefore the solution that we create will be the solution that our customers desire. That’s why expert entrepreneurs tend to be more successful than others.

Wofford: Something I’ve heard a lot in the startup world is this idea of the agile methodology. I mean, in the end you’re trying to solve a problem and your solution might look very different than what you initially anticipated.

Tarallo: That’s absolutely true. You know, when anybody comes to me with a business idea and asks me what I think of it, I always tell them that it doesn’t really matter what I think. In fact, it doesn’t really matter what they think about it either. You can only present a product or a service; in the end it is only the customer’s opinion about it that matters.

As I evaluate whether or not someone has the potential to really be a successful entrepreneur, one of the things that I think about is how willing they are to be flexible with the solution that they’re creating. The problem we see with new and inexperienced entrepreneurs is they have this vision of what their company is going to look like and they follow that vision to the exception of all the information that’s around them. That leads to failure.

Wofford: Is this in part because they’ve put too much emotional stake into it?

Tarallo: Exactly. They get very personally attached. You have to be willing to let go. What’s interesting about some of the research into the behavior of expert entrepreneurs is that the only thing that matters to them is solving the problem. The thing that’s really compelling for them is that there’s a problem out there or a gap in the marketplace that needs to be filled. They don’t care they do it, they just care that it gets done.

I’ve created this little mantra: “Entrepreneurial thinking is about imagining the end and creating the means.”

To go back to Sarasvathy, she has something called “the lemonade principle”. This is about the old saying that if the world give you lemons, make lemonade. Entrepreneurs understand that when we have something happen to us, there are usually opportunities to be found. How do we take this worst case scenario and turn it into something that is a true opportunity? How do we move forward with it?

I have another little saying: “The world doesn’t happen to me but the world happens for me.” In other words, when bad things happen there’s generally an opportunity there for me to do something different and new. It’s the old silver lining in the cloud kind of thing.

Another one of Sarasvathy’s principles of entrepreneurial expertise is what’s called “the patchwork quilt”. This is about the fact that entrepreneurship is really messy. It never goes according to plan and things happen that force you to change what you do. So instead of looking at things like a puzzle, where we have very specific pieces that fit into very specific spaces, which is what most causal thinkers would do, for entrepreneurs it’s more like a patchwork quilt. It’s more about finding a piece of fabric and sticking it in, then finding another one and realizing you can fit it in over there if you squeeze it or stretch it out a little bit. No matter how I do it, at the end of the day it’s going to create a big quilt that will keep me warm. But I have no idea what that quilt will look like before I start down that path.

I’ve only touched on a few of Sarasvathy’s principles of entrepreneurial expertise, but I encourage everyone to look them up because they are all very interesting.

Wofford: Great. I can see that we are quickly running out of time. Do you want to leave us with some parting words?

Tarallo: I want to stress that entrepreneurship is not something you do, it’s a behavior. I’m really working hard personally to scrub entrepreneurship as a word that I use to describe a career, because it really is a behavior for me. It’s the way that I act, the way that I think.

Wofford: Neil, thank you once again for joining us. I know you are going to be coming back soon for a webinar that looks at innovation. I’m already looking forward to it.

Tarallo: Thanks, Chris. This was fun. See you next time.

Want to hear more? This interview is based on Neil Tarallo’s live eCornell WebSeries event, How Entrepreneurs Think and BehaveSubscribe now gain access to a recording of this event and other Entrepreneurship topics.

Adding It Up: Hidden Lifetime Costs of Sexual Assault and Misconduct

Victims of sexual assault, violence, and misconduct suffer in multiple ways following the crimes committed against them. Liz Karns, professor from Cornell’s ILR School, has been following the lifetime costs for victims of these sexual crimes. As both a lawyer and an epidemiologist, she is tackling the data from an interesting perspective and sat down with eCornell’s Chris Wofford to discuss the lasting effects for survivors both on campus and in the workplace.

What follows is an abridged version of their conversation.

Wofford: You are an epidemiologist and also a lawyer, so you’re coming at this from two very interesting angles that together make for a really compelling story, so tell me a little bit about when you started looking at this and your experience.

Karns: As an epidemiologist, I started thinking about it just in terms of the types of data we would have, right? But it wasn’t until I went to law school like 13 years after being an epidemiologist that I started applying it to sexual assault, and in that context, I treated, and I continue to treat those cases just as I would any type of medical malpractice case or environmental harm case. They are the exact same set of ways that we assess damage. We need the studies, we need the research, we need the experts, and, it’s been a while coming that we got all of those things together. But at this point, we have so much research, so much information that makes it quite clear that the cost is a lifetime cost, and that currently it is usually the person, the victim, who pays for that – and that’s my interest, is to shift that.

In 2015 we had like a banner year of doing lots of different studies, and these studies were all essentially asking the same, which was ‘Have you been sexually assaulted while in college?’ And, there was some slight difference in terms of the phrasing. This was a study that was done by Kaiser and the Washington Post, and we have 25% of people who were assaulted since starting college, 20% for women, 5% for men. We see pretty similar pattern across all the different places, right? It never varies in a big way. The one that says 27 AAU, this was a study that Cornell was part of. We had 27 different colleges that did the same survey, and it’s important to have this information because it’s consistent across studies. There’s so many people who will say, ‘Oh, but people just make that up or it was dependent on the respondents.’ There’s been a lot of reliability and validity testing on this and this is solid data. The sad thing is that this the exact same data that we had in 1987. The numbers are the same since 1987 – roughly 20% is a consistent thing and it has not changed with anything.

Part of the reason that we add this up is that money matters. Somehow when we start attaching a price tag, people become more accountable, and the different systems that we look at are the legal systems. We’ve got the criminal and the civil system, and the financial obligation that arises out of that. Let’s imagine that a perpetrator is found guilty, and under the criminal system, ordered to pay restitution. That means they have to pay the victim money, and that is a contract now. That cannot be discharged, under a personal bankruptcy, so it is something that will stay with that perpetrator forever until they’ve paid it off.

Wofford: Wow.

Karns: That would change the world.

Wofford: I would imagine.

Karns: This is the standard approach to all injuries. This is exactly what’s used in your car accidents, your slip and falls, medical malpractice, everything else, so it’s interesting that people don’t think of it when it comes to sexual assault. So it’s part of my job, to articulate it, and make people think about that. If we assign dollars, we’ll get societal change. I’m quite sure about this one. The person initially talks to the psychiatrist, and then talks about different situations that this arises in, to figure out how invasive it is in their life. I have had people who could not go to covered parking lots ever again in their lives, and that meant that they would drive 50 miles out of the way to go to a different train station because they didn’t wanna use that one that had the covered parking lot. That meant that she couldn’t take certain jobs, so it’s got this sort of ripple effect.

Wofford: Yes, exactly. So what I’m getting at, or where I was going with that was, linking this particular diagnosis to these behaviors, and I wonder often how that plays out legally.

Karns: Yeah, well, I mean it’s absolutely part of the case because you’ve got, first the initial injury, which is the assault itself, and that doesn’t have a huge amount of value, obviously, like in terms of money, but the ways that it impairs one’s life after that are what get documented. That is the job of the lawyer to go through and describe the day and the life – you bring in different experts to say, this person will have a very predictable set of problems when they have their own children, so that’s a cost that you should be thinking about.

So the expert is who ties this person’s diagnosis and situation and then projects it forward, and when I’ve worked on medical malpractice cases where we had something happening to an infant, we would do the same thing. We’d say this is what their life looks like in the future.

Wofford: Yeah. Okay, behavioral health, again, this is not a big surprise, that they are more likely to be using alcohol or hard drugs, and they’re aware that they need to cut down, so they are aware that they’re using it as a substitute for treatment, if you will. And then this is the one that the insurance company knows is that they continually use more healthcare than non-victims, so whenever somebody discusses, gosh, maybe we should decide this is a preexisting condition, you can see why the insurance company is interested in that ’cause these are very costly, they have higher costs, 20% higher.

Karns: So, when people start acknowledging that the assault occurred, and that’s a process in itself, and realizing that they need counseling, it’s not unusual to have a diagnosis come up from that. They don’t have to go and seek a diagnosis to say, ‘mmm, boom, I have it.’ It’s going to evolve, and you have this statute of limitations, so you have so many years afterwards, that depends on your state, to file this case, and so, you don’t have to seek it right away. If you’re gonna build a case, and you’re talking to your lawyer, right, a lawyer, then they will very much ask you, ‘Are you in counseling? Do you have a diagnosis?’ Most of us have health insurance that would cover some aspect of that so there’s some record of that as well.

Wofford: So you’re recommending that the damages are then directed to the perpetrator, legally. What is the state of the law, what’s happening out there, as far as cases like this? Is this line of thinking adapted?

Karns: Yeah.

Wofford: Okay, so this is nothing new.

Karns: This is not, nothing I’m doing is new. All I’m doing is calling attention to it in a different way, and the way that I check myself, if you will, is that I look at what are called default cases – these are cases where the perpetrator, who then became a defendant in civil court, never showed up and the plaintiff, the person who experienced the assault, has the right to make the argument of, ‘What are the costs?’ And then the judge assesses those costs and decides whether or not they’re warranted.

This is all about true economic loss.

But, compensation funds will actually pay for things like therapy, so you could get that immediate counseling that you need, it’s just onerous to get there. Second one is – I mentioned this before – criminal restitution. This is part of any court process, that the criminal court can order the perpetrator to pay the victim. And then finally, civil damages, and this is the one I think most of us are familiar with, where we undertake legal action. The plaintiff, the person who is the victim, brings the case against that defendant, and everything I’ve talked to today goes into that damages number, and then that number gets used all the way through the civil court process, so demand letter, complaint, arguments.

So shifting the burden is what we need to do. That is absolutely what we’ll have to do. So things we can change. One, sexual assault happens in schools quite a lot, and we need to address the fact that it interrupts their education, and we need to think about a student loan deferral on this. It’s absolutely mandatory. The legal ones, holding the perpetrators responsible. And then finally, support, engaging survivors in discussions about the economic impact.

Want to hear more? Watch an excerpt of the live eCornell WebSeries event, Adding It Up: Hidden Lifetime Costs of Sexual Assault and Misconduct, and subscribe to future events.

Empower Your Team Through Servant Leadership

Servant Leadership is fast-becoming a prominent leadership style, and for good reason: It tends to increase trust and collaboration among team members, helps to build coalitions and community, and promotes ethical business practices.

While many leaders use the power of their position to direct and control employees, the servant leader listens; her focus is on understanding employees to develop and support them. Servant leaders flip the traditional relationship between the employee and the leader, fostering a strong service culture by empowering and involving workers.

As part of the eCornell Entrepreneurship webinar series, Judi Brownell from Cornell’s School of Hotel Administration joined Chris Wofford for a interactive discussion on how servant leadership can transform your organization to one that is service-centered and culturally inclusive. An abridged version of their conversation follows.

Wofford: Judi, we previously had a great conversation about the art of listening as it relates to leadership (((link to previous transcript))). Today we’re going to be covering the concept of servant leadership. What is that? It sounds like a response to a top-down leadership style.

Brownell: Well, servant leadership is relatively recent. The term was coined at some point in the early 1970s, but it was only recently that it became a truly prominent leadership style. What happens in servant leadership is that the follower experience really changes. Instead of followers taking a backseat and looking to a leader as the one who knows everything, servant leadership really puts the power front and center.

A servant leader follows a philosophy of service. A servant leader needs to believe that his or her role is really to serve, and they get satisfaction and gratification out of that type of behavior.

Wofford: I don’t want to preempt something you plan to talk about later, but does gender figure into this?

Brownell: It’s fine to talk about it now. I’ve done a lot of work with women’s career development and I do believe that men and women have different sets of competencies that come naturally to them. There are some people who would disagree, but men tend to be more assertive and more readily authoritative. Women tend to be better listeners. Women tend to be more emphatic.

The servant leader has a lot of characteristics that have always been associated with women’s leadership style. The wonderful thing is that, where in the past these characteristics may have been associated with weakness or pointed to as reasons why women are less effective, now the pendulum has swung and these same characteristics fit perfectly with the philosophy of servant leadership.

Wofford: And what’s at the heart of that philosophy?

Brownell: Servant leadership empowers followers. Rather than telling them what to do, and giving them a little bit of training here and there, servant leadership is about really developing your employees, really sitting down with them and asking, “What is it that you need to do your job better?”

It’s about looking at each employee as individually as possible. I believe that the opportunity to do this exists in most organizations. It could be as simply as just sitting down with people and asking, “Are you happy at your job? What is it that I can do as a leader to help?”

A leader presumably has more access to more resources and can perhaps shift an employee to a better position or cross-train them or whatever it is that they need to be happier and more effective in their work.

Wofford: We’ve got a good question here from Karen. She writes: “Yes, the servant leadership style may be more like a ‘woman’s style’ but in my experience (and I think research backs this up) men’s style of leadership includes a mentoring skill, whereas it is harder to find women leaders who mentor other females up the ranks.” Judi, any thoughts on that?

Brownell: Yeah, I’ve got lot of thoughts on that. I did a lot of work on that particular problem, in fact. This is really digressing from our main topic, but it’s interesting. I did a study asking women coming out of an MBA program whether they thought they would be as effective as men in a leadership role. They all said yes.

Then I asked them if they would rather work for men or women, and almost 90 percent of the women said they would rather work for a man than work for a woman. When it comes to mentoring, women either are the very best team ever or they are in conflict with one another, particularly when they are in an organization with very few women and a lot of men.

We need women mentoring women and we need women being advocates for women. And I think there are a lot of women out there who are great mentors – we just need to expand that pool. I think if organizations can build women’s confidence, then they will do a lot more to mentor other women.

Wofford: You said that was a bit of a digression. Where were you planning to go?

Brownell: I wanted to talk about the importance of compassion in the workplace. If you’re a servant leader and you really listen well to your employees and to your colleagues, it really does start a very positive chain reaction. People will see you as a role model and then they too will begin to also listen and be more compassionate in the workplace. Satisfaction at work really escalates when people feel like they are friends. There was a time when employers didn’t want their workers to be their friends because they thought the employees wouldn’t be as productive, but actually we’re finding that almost the opposite is true. The feeling that you’re surrounded by people who care about you makes a huge difference in how we feel about the workplace.

Wofford: Still, from an employer’s standpoint it’s a lot harder to fire someone you’ve become friends with.

Brownell: Yeah, well that’s true. It is harder to fire a friend, for sure. But I’m not talking about friends in the sense that you go bowling together after work. I mean a friend more in the sense of caring about someone because you know a little about them and they know a little about you. But your point is really well taken because that leads to another really interesting area, which is how close can you be with people that work for you without creating perceptions of preferential treatment or favoritism.

Nevertheless, compassion, empathy and caring is really important for a leader. The servant leader feels that the organization is in their care, so they care about its people and everything in it in a way that’s somewhat different than a leader who feels like they own the organization and that they’re driving it in whatever direction they want.

Another thing that I think is really interesting that characterizes the servant leader is self knowledge. I think often we’re so caught up in the actual doing – do this, do that, have this meeting, manage that project – that to have someone who is able to sit back and be introspective is a real treat.

You know, people are taught to talk, talk, talk but no one ever teaches anyone to really listen. Yet, to make good decisions you really need to gather information. Listening is really important to servant leaders. Not only that they’re listening but that people are able to see that they’re listening. Empowering employees and caring about them means paying attention to them.

I think the things that the servant leader focuses on are a little bit different. It’s more people-centric. It’s not that servant leaders are weak. They’re not weak at all. They’re very courageous in how they are honest and caring in the organization.

Wofford: It’s much more about making the best decisions even when they very well might be unpopular, right? Ultimately, the idea is to serve your vocation, right?

Brownell: Right, and being forthright with the information – some good, some bad – about what was done and what decisions were made. I think the whole transparency theme in organizations is important, and I think the servant leader facilitates that.

Wofford: We’ve got another great question from Karen here: “What about when servant leadership bites you in the butt? I tried to practice servant leadership but it comes back to bite me sometimes. Too much empathy, in particular, bites me.” What do you say to that?

Brownell: Empathy should be about recognizing someone else’s position and feeling how it affects them, but the consequences still need to be there. You know, if a student comes to me and says, “Oh I was trying to print and my printer broke down and that is why I’m a day late.” That’s when I say, “I understand that this happened and I’m sorry, but I’m still not giving you credit.”

Empathy is just indicating to the individual that you have in fact heard them, you understand how it could happen and you appreciate that they came to you and explained. But you still have a goal to reach. You still have a policy to meet. So empathy does not mean allowing people to slack off.

Rather than telling people what to do, servant leaders use persuasion whenever possible. This gets people sincerely on board and fosters ethical practices. Ethics have been a real big concern of mine. Sometimes we assume that someone is unethical when actually they haven’t even recognized that there was an ethical issue or an ethical component to what they were doing. They haven’t necessarily considered how their decision affects other people. So modeling ethical practices and being vocal about them are other important aspects of servant leadership.

Wofford: This also ties in to the self-reflection you mentioned earlier, right?

Brownell: That’s right and I think that self-reflection is actually a neglected leadership behavior and yet, if you read about really powerful leaders in various types of industries, almost without exception they mention how important it is to just sit back and kind of think about yourself and your own goals and what’s important to you, what you value, your strengths and weaknesses.

One of the things that a leader needs to do is to have what we call behavioral integrity, which means behaving in a way that corresponds with what they say. If I say I value being healthy but the bowl of M&Ms on my desk is the only thing I have for lunch, that is not displaying behavioral integrity. I think leaders should reflect on whether their actions back up their words.

Another thing to explore is who you become as a leader. One of the transformative things that I’ve been taking a look at is what being a leader does to one’s sense of self. There is this view that power corrupts, and I think servant leadership really helps prevent that.

I think self-reflection, no matter what position you’re in, is really important in the end. Sometimes it may have been so long since you last gave yourself the freedom to really think in these terms that it can be hard to know where to begin. One way to begin is to take some key themes and write down your own self-perceptions and then have someone else tell you what they think about you in those areas.

Wofford: And the servant leader is not only providing this sort of self feedback, they are also providing supportive feedback to their employees, right?

Brownell: It’s really about empowerment. As you empower someone, it implies that you trust them because you’re taking the time to coach them and mentor them. You’re giving them feedback, which is a sign that you care about them and how they are doing. You’re observing and helping them perform even better.

That then increases trust because as a leader you are basically saying, “I’m sure you’re not going to do it exactly the way that I would do it, but I trust that you understand the values and the goals and I trust that you are doing the best you can on behalf of the organization.”

Employees really take off when they feel like someone’s supporting them and that they can be instrumental in the organization’s success.

Wofford: Judi, thank you so much for this introduction to servant leadership.

Brownell: Thank you, Chris. It was nice to join you again.

Want to hear more? This interview is based on Judi Brownell’s live eCornell WebSeries event, Empower Your Team Through Servant Leadership. Subscribe now to gain access to a recording of this event and other Hospitality topics.

How to Develop Your Personal Brand (And Live Up to It)

What adjectives would you use to describe yourself? Would your coworkers, friends and families use the same terms?

Pamela Stepp, who teaches leadership assessment at Cornell’s ILR School, joined eCornell’s Chris Wofford for a WebCast focusing on how to develop a personal leadership brand and ensure that you continue to live up it.

Wofford: I’m very excited to have you here with us, Pamela.

Stepp: Thank you Chris, and thanks to everyone who is tuning in. This is all about you.

I want to start by asking everyone watching to think about who you are as a professional and who you want to be.

I’m going to walk you through the steps to create your own personal leadership brand and then help you come up with a story that you can tell that will demonstrate that brand.

Wofford: That sounds great. I think our audience will really get something out of this. Where should we start?

Stepp: Power is very important to consider when you are developing your personal leadership brand. You need to think about how you present yourself powerfully in an organization and how to recognize if someone is powerful or powerless. A good way to start thinking about this is to choose a person—this could be anybody in the world—who you think is powerful. Think about the characteristics of that person and what helps them be powerful and write down this person’s leadership brand in one sentence.

Chris, let’s use you for an example. Who did you think of?

Wofford: The first person that came to my mind was Bob Dylan. And the adjectives I used to describe him were mysterious, direct, and honest.

Stepp: Isn’t that amazing how fast you could come up with these clear traits? Let’s turn to the audience members. Someone has chosen Oprah Winfrey, saying she is credible, empathetic, driven, and relatable. Does that sound like Oprah? I certainly think so. Another has chosen Barack Obama and described him as gentle, straightforward, and clear-speaking. So we can see that it’s quite easy to identify the personal brands of well-known leaders.

Now let’s move on to thinking about our own personal branding. What makes you different? What adjectives would you choose to describe this brand called “you”?

Wofford: Wow, the answers from our viewers are coming in very quickly. Maureen says she’s organized. Darius, passionate. Marcelo, accountable. Rebeka says she’s driven and has great attention to detail. Carol says she leads and inspires.

Stepp: I can see more results are still coming in, but now I want you to come up with your most noteworthy traits and values. It’s important to remember that your values change at different stages in your life, so I want you to come up with examples of your current value, either personal or professional.

Wofford: Some of the answers coming in include curiosity, family, integrity, honesty, kindness, empathy. These are great examples from our audience.

Stepp: Yes they are. Now I’m going to give you an example of two short descriptions of the leadership brand that I use. I teach at universities and business schools all over the world and one of the brands that I use—and I want people to let me know if I’m living up to this —is that I want to be known for being a knowledgeable and inclusive leadership educator who demonstrates her passion for the subject and genuinely cares about helping her participants or students to grow into the best leaders that they can be.

So that’s the personal brand I have when I’m giving these sorts of talks. I had a different brand when I was a full time businesswoman as the managing director at the Center for Advanced Human Resource Studies. There, I wanted to be known for being a knowledgeable and open-minded business leader who used her confidence, determination, and networking ability to help the center grow into a more global organization.

So that’s how I’ve used my values to create personal branding.

Wofford: Pamela, I’m just going to play devil’s advocate for a moment and ask what the point is in using these words to describe yourself. In your case, you say you’re inclusive, knowledgeable, and dedicated to making sure that people get results out of your talks. Isn’t this just an example of putting your best foot forward? Does it really help one’s leadership ability to go through this sort of exercise?

Stepp: It does, and that’s because once you’ve established your leadership brand, you want to live up to it. It helps keep things clear in your mind and remind you whether or not you’re living up to the way you’ve described yourself and the way you want others to see you. Does that answer your question?

Wofford: It does. You’re saying we’re always a work in progress and that developing a personal brand helps bring focus to our careers and our professional lives.

Stepp: That’s right. It helps us focus on the traits that we want to be known for. Some examples coming in from the audience include inspirational, politically savvy, collaborative, innovative, results driven, strategic.

Then you start to refine those and work toward finding your identity by combining those descriptors. For example, “I’m a strategic innovator who gets things done.” You want to construct your leadership brand statement by putting everything together, all those adjectives and values.

Then you need to start asking other people what they think your brand is because it will surprise you. Make your brand identity real by checking in with others around you. Are you living up to that brand? That’s the beauty of having a defined leadership brand. You can always check in to make sure you are living up to it.

Wofford: So is your recommendation to go to other people and ask them how they’d describe you?

Stepp: Absolutely. You’ve got to keep reminding yourself of your brand and keep asking others if you’re living up to it. For example, I teach undergrads at the university because I want to prepare 20 year olds for leadership and because I want to know that generation. I started writing about being an inclusive leader and when I get evaluations back at the end of the semester, I can see that inclusion is my highest score. That really inspires me to keep working on that and to make sure everybody participates, to make sure I’m including international students who maybe aren’t speaking English all that well, making sure that there aren’t gender imbalances in who I reach. The point is, you can gain confidence if you learn that you are living up to your brand. And if you’re not living up to it, you have to know that. My brand is the yardstick by which I measure myself.

Wofford: We invite you to take a minute and see if you can come up with your own personal brand statement. Don’t overthink it. This is just an exercise and something that hopefully you’ll continue to work on.

OK, we have some responses. Deborah says “I’m a mentor. Helping others is what I enjoy best.” Steve has a great one: “I’m an innovator who pushes the creative envelope by inspiring others to do the same.” Crystal says, “I’m an innovative, compassionate, and knowledgeable leader with a desire to help others become the best that they can possibly be.” I think people are getting there, right Pamela?

Stepp: Yes, you are all doing a great job. These are good examples of leadership brand statements. You can refine and change them, but they shouldn’t be long diatribes. It should just be a paragraph, so these are really well done.

Once you have that brand, it’s time to think about storytelling. It’s always helpful to demonstrate your brand through stories, whether you’re standing up in front of an audience or if you’re at a cocktail party or even just with your friends. When done well, a compelling story can inspire our beliefs and our motivation to reach a goal. So I recommend that you all think of a story that you enjoy telling and think about how you can use that in the workplace.

I also want you to think about nonverbal power. When you walk into a room, you want to stand up straight and have good eye contact.With nonverbal power, you want to express competence. You want to express trustworthiness, dynamism, energy. When you talk, you want to be sure to think about using a proper voice, making eye contact and scanning the whole room.

Another huge thing is that when you are speaking with someone, you need to take the effort to learn their name, maintain eye contact, and make them feel you are focused on them. I’ve always found that amongst the people that I admire, their leadership ability is to make you feel like you’re the only person in the room.

Wofford: Pamela, thanks so much for joining us. I’m excited to get my storytelling ability dialed in and I hope that those in the audience will start working on their personal leadership brand one-sentence mantras as well.

Stepp: Thanks so much for having me.

 

Want to hear more? This interview is based on Pamela Stepp’s live eCornell WebSeries event, How to Develop a Personal Leadership Brand. Subscribe now to gain access to a recording of this event and other Women in Leadership topics. 

Legal Issues That Can Affect the Value of Your Business

Laying proper legal groundwork might not be the sexiest aspect of a startup venture. But a failure to adequately address legal issues has real potential to negatively affect the value of your business down the road.

That’s why Rhonda Carniol, a partner at CSG Law, recommends getting a legal footing established for your company from the very outset.

As part of eCornell’s Entrepreneurship webinar series, Carniol joined Chris Wofford for a wide-ranging discussion of the legal issues that can affect startups. What follows is an abridged version of their conversation.

Wofford: Thanks for joining us, Rhonda. Could you start by telling us a bit about some of the work you do?

Carniol: Thanks, Chris. As a partner at CSG Law, I represent entrepreneurs from startup to exit. I find with my clients that it’s very important for their legal counsel to get an in-depth understanding of their business so they can advise them as to what sort of things they have to address that could really affect their business.

Wofford: Ideally you’d want to hit these people as they’re in the early phases of business development, right? Getting yourself legally established seems like kind of a no-brainer and maybe the first thing you should think about doing. On the other hand, it’s never too late, right?

Carniol: That’s so right. It’s never too late. The most important thing is to get yourself in great shape legally before you try to sell your business. It’s easier in the beginning, but even if you’ve been up and running for four or five years, I still think the things we’re going to discuss today are going to be helpful.

I’d like to start by talking about what makes a business valuable. For example, you’re solving a problem or you’re adding something new and innovative into the market. If you have something valuable, you need to protect your intellectual property. You also need to think about limiting your liability to your vendors or your customers. Additionally, you want to avoid disputes with your co-owners, your employees and your contractors. These conflicts take up time and energy.

The first thing to really talk about is protecting your personal assets. If you’re currently operating a business in your own name, you need to immediately stop. Why? Because your personal assets are at risk. But if you form a corporate entity, like a subchapter S corporation or an LLC, then your personal assets, in most instances, would not be at risk except for in fraud situations.

What type of entity should you form? Well, there are several choices. There’s a limited liability company, a subchapter S, a C corporation, and a benefit corporation. A limited liability corporation is usually what most people choose when doing a startup because it has the most flexibility. Owners of the company don’t have to be individuals and it’s easy to bring investors into the mix. It also has tax benefits because it’s a flow-through, unlike a C corporation.

Sometimes you might instead choose to form a subchapter S corporation. There are less expenses involved but it’s taxed the same way as an LLC. The hot new thing is a benefit corporation, in which you’re supposed to do something good for the community or for your customers or the environment. The problem with that is there are a lot of filing requirements and recordkeeping, so I find that most of my clients, although they may want to do good with their companies, don’t want to be bothered with that.

Wofford: How is a benefit corporation different from a 501(c)(3) nonprofit?

Carniol: Well, a benefit corporation is still being formed to make profits. But they can sacrifice some of those profits in order to do good. A nonprofit, of course, is not out to make a profit. So it’s a different type of entity.

Wofford: Okay, got it.

Carniol: What I really recommend is to get an agreement in place right away between the owners if there are multiple owners involved. As soon as possible. In an LLC, this would be called an operating agreement. In a corporation, it would be a shareholders agreement.

A lot of people say, “I don’t need an agreement. I worked with Tim for 20 years. We love each other.” Well, let me share a story. I recently represented someone who had worked with their co-owners for 10 years in various corporations. They waited a year and a half after they started a new business to do an agreement. They were almost ready to launch when they discovered that they had a lot of disagreements, even over how much of the business each person should own. So the cost to them was significantly higher than if they had sat down in the beginning and had the discussion initially. The thing that made them finally come to a decision was everyone’s worst nightmare, which was the creditors of the company coming forward and saying, “We’re going to put you in bankruptcy. You’re not paying your bills.” That’s not a situation I want to see anyone in. You need to sit down in the beginning, find out if you have any differences, find out if your visions are the same, and enter into an agreement.

I often see situations in which a company is about to be sold and it comes out that the assets of the company aren’t in the company’s name. Instead, they’re in the original owner’s name. This is a major problem. The assets then have to be transferred into the company and they may have significant value at this point and therefore pose tax issues.

Another messy situation can arise in a multi-owner deal. If one person owns the patent, for example, then that individual has considerable negotiating power going into any deal – much more than the other owners. The easiest way to avoid these things is to move your assets over to the company at the outset. If you’ve already started a business and your assets aren’t with the company, move them over now.

Wofford: This goes back to your earlier point about doing all you can to avoid disputes.

Carniol: Exactly. That’s also why I can’t stress enough the value of a contract.

You should also always have a contract with your independent contractors that includes enforceable ownership language and confidentiality protections. You want to protect your customer list, your contacts, your vendors, your unique processes and your way of providing products. If you don’t have a confidentiality agreement, these things could skip right out the door with an independent contractor or a departing employee.

Wofford: Are these contracts something that should be drawn up by individuals? Do they need to involve highly complex legal language? Would you craft an NDA, for instance, without legal counsel?

Carniol: I know there are templates online, but you should not have an NDA without legal counsel. This is a really inexpensive document for your lawyer to draft. They will draft it geared to what’s important for your business. I don’t suggest just doing it yourself because you just may not protect what you need to.

Ideally, you should have a separate agreement for your employees and another for your independent contractors. If you’re further along in the process – let’s say a private equity firm is starting to look at you – you will need a different type of confidentiality agreement. Sometimes you’re going to have confidentiality provisions even in your customer agreements. But they won’t be as big as what you put in your independent contractor agreement because you don’t want to scare the customer away.

There are some other things that you might think of putting in the independent contractor agreements. You might include indemnities. If you get sued by a third party because of something the independent contractor did, you want them to step up and indemnify you. Of course, there are things that are standard in the industry so you cannot be too far-reaching, or the vendor is going to tell you to go take a walk.

You may also want to think about including an anti-competition provision. Sometimes this is appropriate and sometimes it is just not. You cannot stop someone from running their business but in some situations, you may want to prohibit them from making the same product as you, at least for a short period. You just need to evaluate it and this is a good time to call a lawyer to find out what the standard in the industry is and what is reasonable.

Wofford: What about contracts and agreements with your own employees?

Carniol: Your employees will probably become your most valuable assets, so you need them to sign confidentiality and ownership agreements. Without an agreement, an employee who conceives of an invention typically owns the patent rights, not the company. So, think about how this is going to look when you try to sell your business or get an investor. The best way to deal with this is to put it in an agreement.

Depending on your particular business, you may also want to consider whether non-competes and non-solicitation agreements are needed with your employees. In some industries, requiring a non-compete would mean you could not successfully hire anyone, but you at least want to establish a non-solicitation of your customers and definitely a non-solicitation of your other employees because this will prevent a group of employees from leaving and forming a competing business.

Since your employees are such valuable assets, you may also want to consider allowing them to have a stake in the success of the company. Consider whether certain employees should have an ownership interest or a phantom interest in the business. This is also something you would definitely need to talk to an attorney about because a lot of it depends on how far along you are in the process of building your business.

Wofford: Obviously, giving employees ownership encourages them to work hard for your company and to remain loyal.

Carniol: Absolutely.

I’d like to now talk a little bit about customer agreements, which are often needed in the business-to-business market and even in the consumer market. In the consumer market, if you have a web platform up, you will usually see an acceptance agreement that most people click without reading. Even though most people won’t read it, you should have an agreement that people must accept in order to do business with you, in order to protect yourself. Of course, the type of agreement you are going to have depends on your product, industry standards and your customer base. It needs to be tailored to your business.

In the business-to-business market, let’s say you are providing software that another company is going to use to operate and it is integral to their business. You want to limit your liability, because one lawsuit could put you out of business before you have even started. You also want to make sure that it is clear that you own everything and you are not giving ownership to the other company.

Another thing that is really important is to clarify payment terms. You have to specify in these agreements when the customer has to pay you. You do not want to have to get into a lawsuit situation as a startup, so having these kinds of provisions is going to help you avoid disputes and litigation.

Wofford: What other legal angles are essential to consider?

Carniol: Once you have your agreements in place, the most important thing is to develop and protect your brand. This is what differentiates you and makes your business unique. The example I like to give is toothpaste because it’s so boring. Even so, most of us have a favorite brand of toothpaste. Everyone has brand loyalty and that’s why you have to take care of your brand. Trademark your name, your logos and your designs. Doing a trademark only costs about $2,000, and it’s money well spent. You don’t want to start operating your business and then have another company come in and say, “Hey, you can’t operate under this name because I’m using it in the same business.” One of the most important things at the outset of starting a business is avoiding disputes.

Wofford: But a $2,000 layout in the early stages might seem like a lot to people, right?

Carniol: Well, a trademark adds value to your business because you own the intellectual property. You now have a name when you go to sell your business or when you’re looking for investors.

If you have the opportunity to do trademarks to protect your business and your assets, it makes your company more valuable when you go to sell because you have something that makes you unique. Plus, if you have a good idea and you’ve got a patent or a copyright or a trade secret, it slows down anybody else who wants to copy your idea.

Of course, not every idea can be protected. Establishing a trade secret isn’t easy because, generally speaking, for a company to be considered the owner of a trade secret, it usually must be shown that the subject matter has economic value. On top of that, you’ve got to use reasonable precautions to maintain the privacy of it. One famous trade secret is the recipe for Coke and they’ve maintained the confidentiality of that forever.

But you can also use contracts to protect the disclosure of confidential information. Ask people to sign a confidentiality agreement. The only time that this is really a problem is when you approach potential investors and venture capital. Often, they will not sign a confidentiality agreement because they hear so many ideas. Once you’re an established company, it’s different. You can get investors in private equity to agree to limited confidentiality agreements.

Wofford: What about the process of establishing copyright?

Carniol: Filing for copyright allows you to seek statutory damages. However, filing copyrights all the time isn’t realistic. If your business is about updating content constantly or you have a lot of content, you’re just not going to do this. It’s going to slow you down. And not everything you create can be copyrighted.

For instance, facts can’t be copyrighted. If you’ve done a lot of research and you’ve accumulated a lot of facts and data, that’s great — but you can’t copyright it.

The next thing I want to talk about is patents. Getting a patent is the most expensive process — it costs more than getting a trademark or a copyright. But again, not every product can be patented. And for those that can, the patent office has to approve it and that is a long process. Even when you get the patent, you can face lawsuits trying to claim that your patent is invalid. In your filing to the Patent Office, you also have to have to publicly disclose much of your invention and a lot of times, you won’t want to do that. You could do that disclosure and not get the patent and then your secret sauce is out there.

Patents also have a limited life. They last between 18 and 20 years. Once the patent’s life is over, you can’t license what you patented anymore and get money for it.

Wofford: That’s a lot to consider.

Carniol: It is, and it all goes back to doing an initial analysis. What is the goal? Do you want your business to go on for 40 years with a product that you can continue to license or is it something you’re constantly going to be innovating and updating?

Wofford: As we wrap up, I want to ask how much legal stuff can be sorted out by individuals on their own or would you always advise people to seek legal counsel one way or another?

Carniol: Yes, I think you should seek legal advice. I’m sure people are going to walk away from this going, “Wow there’s a lot to do. This is going to cost me a fortune.” It’s actually not going to cost that much.

Even if you don’t hire a lawyer, there is a lot of free advice out there from universities and other organizations for startups. There are accelerator programs where you can get free legal advice. Of course I’m biased because I’m a lawyer but I think that when you start out, you should at least have an initial conversation with a lawyer and find out what is important and what isn’t. Then you can spend your dollars wisely and not waste money on things that aren’t important.

Wofford: I think this conversation was very useful to our audience. I appreciate it, Rhonda.

Carniol: Thanks, Chris.

Want to hear more? This article is based on Rhonda Carniol’s live eCornell WebSeries event, Six Legal Issues That Can Affect the Value of Your Business Subscribe now gain access to a recording of this event and other Entrepreneurship topics.

How to Successfully Pivot Your Startup

The fundraising and engagement platform GiveGab made waves in January 2018 by purchasing one of its biggest national competitors. With the acquisition of Kimbia, GiveGab is one step closer to becoming the biggest charitable software program out there.

But that success would not have happened if the company hadn’t decided to completely change direction from its original vision of being a social network connecting volunteers and nonprofits. In 2015, GiveGab pivoted to focusing on helping nonprofits attract and maintain donors rather than volunteers.

The company’s CEO and co-founder, Charlie Mulligan, spoke with eCornell’s Chris Wofford about his “painful” yet highly successful pivot decision and to share tips on how to decide when it’s the right time to change strategic direction. What follows is an abridged version of Mulligan’s presentation, delivered as part of eCornell’s Entrepreneurship webinar series.

Mulligan: I’ve met thousands of entrepreneurs at this point. I think almost all of them would describe themselves as having a vision of what they want to happen and being very persistent. While I agree that these are really important traits, they can also impact the challenges of pivoting. If you really pride yourself on what you are doing, it can be very hard to have to admit that your vision was wrong. When reality hits, it’s sometimes like you suddenly realize you’re climbing the wrong mountain. It’s not a matter of changing little tactics. You have to change your entire strategy. That’s what a pivot is to me.

When you are starting out, there is really no way to predict the future. Yeah, some people get lucky but for a lot of startups you’ll find that the reality is different than what you envisioned so you’ll have to decide what to do. You can quit or you can be flexible and make a different choice.

Wofford: How do you know when it’s the right time to change direction?

Mulligan: It could come at any stage. When you’re starting out, you have this idea of what the customer wants. Well, you better talk to as many customers as you can and you need to realize that oftentimes you will hear what you want to hear so you have to be very careful and make sure that you start to listen before you get too far down the road. You might have to pivot very early once you’ve assessed the demand and done the research.

The key thing about a startup is a lot of times you’re trying to create something new or completely different, but when you’re doing research, the research is about old products or old ways of thinking. So you won’t really know for sure whether your new way is going to be right.

Wofford I’m sure the audience would love to hear the details of your decision to switch tactics at GiveGab.

Mulligan GiveGab set out to be the social network for volunteers, which meant that we were a connection portal to help volunteers and nonprofits find each other. We interacted with a lot of nonprofits and they were really happy to talk about this. They loved the idea and then as we built our product they thought it was great. We had a free product so we had thousands of nonprofits and hundreds of universities sign on. We passed 100,000, things were growing and moving fast and we were getting great press and great feedback.

But it didn’t take us long to realize that there was really low engagement. Nonprofits would sign up but then only come back like every six months to do something. It was really challenging to get them to actually post volunteer opportunities.

When I first started I thought it was going to be really easy to get nonprofits to post volunteer opportunities because they were consistently telling us that they need more volunteers. But we couldn’t get nonprofits to actually sign in and create volunteer opportunities. That meant that we were having a hard time matching the volunteers who had signed up with opportunities in their area. You know, a volunteer in Montana and a nonprofit in Minnesota don’t really match up.

That’s why we decided to go after universities to help build an ecosystem because a lot of times they have volunteers and nonprofit partnerships. The problem we found there was that it was a super long sale because we were talking to low level employees. We should’ve noticed this problem earlier but if you want to know what a nonprofit really cares about, you need to go see what the executive directors are doing. What the directors are doing is looking for donors, not volunteers.

Raising money is really what mattered the most and we weren’t listening to that. So we decided to go down a new path. We sat down and really looked at what the nonprofits were using their volunteers for. Almost always, the volunteers were being used as a direct or indirect way to get donors. It’s really about money for nonprofits and volunteers are a way to get donors more engaged. One of the things we kept hearing all of the time – and the research backs this up – is that only 19 percent of first-time donors ever come back. Nonprofits spend all of this time getting donors and then four out of five of them are gone and never come back. We were skirting around the edges with volunteering but the core problem was how to get more donors and keep them coming back. So that’s now the problem that we decided to solve.

Wofford How big was your organization when you decided to make this pivot?

Mulligan We had 90 employees and we had a lot of funding. We had dozens of investors and so I had to go back to all of them and admit I was wrong. Then we had to let about half our company go. These were really good employees so that was a very painful day.

For a lot of people, ‘pivot’ is just a word, just a strategic choice. For me, it’s a painful memory. It was necessary and I’m really glad we did it, but it was painful.

We had to totally re-brand. We were the social network for volunteers so we were highlighting happy volunteers and like things like that, which makes no sense for a fundraising platform. So conceptually we had to change everything. Then we had to build it and go back to our development team and say, “Ok, we’re starting from scratch, let’s learn how to do this.”

There are also laws around fundraising so there was a lot of work in just making sure we were doing things the right way.

Wofford That sounds really challenging.

Mulligan It was, but one of the great things about pivoting is that if you’ve built a great team, as we had, then you’ve already figured out how to work well together. In our case, the employees we were left with were great, so we got a second shot at something and the second product looked a million times better than the first product because we really knew what we were doing by that point and we had a system in place.

There’s also a certain amount of incentive in a pivot situation because maybe you’ve run out of money, so you know that this could be your last lifeline. So you better make progress and you better make it quick. There is nothing like the gallows to give people focus.

As an entrepreneur, it can be very challenging because you have told a lot of people about your vision and you’ve been very persistent and then you have to go and tell them, “OK my vision sucks but now I have a new one.” You’re asking people to buy into this new idea even though your first was wrong.

Wofford That must take a certain humility.

Mulligan Sure, and you also have to make some super painful choices. Like I said, we had to let employees go. We had to go back and talk to investors and let them know that all of their investments just went backwards. Nothing about it is fun but you have to just face it head on, so I just owned it. I think that approach was super helpful.

You have to pick your new course of action and then you have to forget the past. Pick your new vision and just sell that like that was the only one you ever believed in. And of course you’ve got to somehow get everyone to buy into this one as much as they we’re into the first one. These are all way harder things than I think people realize.

Wofford It certainly sounds hard. Was it a challenge to keep morale up?

Mulligan Well, when you’ve just let half your workforce go, keeping morale up was already a challenge. People’s workloads had doubled and then it was like, “Now let’s do it over.” I think what helped us is that we spent a lot of time making sure that our new course of action was picked by everyone, not just me.

Wofford Everyone needs to be on board to make a pivot work.

Mulligan Right. We had conversations with the people that we were going to keep and said, “Look, if your heart’s not 100 percent in this, you need to let us know because there are people we are letting go whose hearts are 100 percent in this.” That wasn’t a threat, it was just the reality. I think people really appreciated the openness and transparency. When we let people go, we really supported them but we also sat everyone down and said, “OK guys, we’ve got to forget about it. There is a lot of pain here, but we need to just move forward.”

When we did our pivot in January 2015, we had five nonprofits raising money on GiveGab.
At the end of the year, we had 700. All paying customers, so we were making money off all of them. We are currently on pace to potentially have well over 20,000 nonprofits by this year. We also have 10 states using us as their statewide giving day platform later this year. So the pivot worked.

Wofford Wow, it’s very impressive. Congratulations.

Mulligan We’re really excited and of course relieved. We saw the bottom and that makes you appreciate it more when things are really working.

So much of the startup ethos is ‘vision and persistence’. I think you need vision and flexibility. You can also think about it in terms of the difference between persistence and resilience. Persistence is putting your head down and running into the wall. Resilience is putting your head down but looking around a little and realizing there’s a door over there and you can walk right through it.

Wofford Charlie, thank you so much for sharing your experience and giving such great advice about changing strategic direction.

Mulligan Thank you, Chris. I enjoyed being with you.

Want to hear more? This interview is based on Charlie Mulligan’s live eCornell WebSeries event,The Startup Pivot: Changing Strategic Direction. Subscribe now to gain access to a recording of this event and other Entrepreneurship topics.

Smart Food and Wine Pairing – How to Think Like a Sommelier

Anyone who eats knows that certain foods taste even better when we pair them with others—think salt and caramel, cookies and milk, or smoked sausage slathered with grilled sweet peppers and onions. Wine has the same power, and customers will spend more money in restaurants that offer exciting wine and food combinations that enhance their dining experience.

As part of the Hospitality webinar series hosted by eCornell, wine educator Cheryl Stanley from the Hotel School at Cornell University provided an overview of the basics of food and wine pairing, as well as ideas for creative non-traditional pairings that you can try at home or on a restaurant menu.

An abridged version of her conversation with eCornell’s Chris Wofford follows.

Wofford: Cheryl, it’s great to have you with us. Let’s get started.

Stanley: Today we are going to be discussing smart ways to pair wines with food. People tend to think that there’s some magic formula associated with food and wine pairing, but you really just need to start with the basics.

It helps to start by asking, what is wine? Wine is just fermented fruit juice. Yes, you have some alcohol in there, of course, but you also have acid, sugar, tannins and water. And what’s in food? You have acid and sugar, and you have tannins in some food products. You also have fat and flavor. So, with food and wine pairing, you’re just aiming to highlight or complement some of those basic similarities.

Wofford: Are there rules of thumb that we should generally follow? How do you start pairing?

Stanley: Before we get into talking about specific wines, the very basic rule of thumb is red wine with meat and white wine with fish.

There are other general concepts that one can follow. Some of them involve matching or complementing body. Kevin Zraly, the author of the Windows on the World wine book, has a great methodology for explaining body to someone. Body is like milk fat. A full-bodied wine is like cream, and a light body wine is like skim milk. Within that range, you also have two percent and whole milk. So if you’re having a food that is full-bodied, you can complement it with a full-bodied wine. There’s also contrasting, where instead of balancing, you’re actually kind of juxtaposing or using the wine to contrast something in the food.

Wofford: What’s a common example of that?

Stanley: Acid is a perfect example because acid cleanses. You can have a fatty dish like steak and an acidic wine would cleanse the palate. It actually refreshes the guest’s mouth to take the next bite.

Personally, I love complementing flavor with flavor too. If you have a particular flavor in a wine, like a grassy-ness in the Sauvignon blanc, you could match that flavor with the grassy-ness in a cheese. That ties into another concept which you’ll commonly hear in the sommelier world: “grows together, goes together.” That’s pairing food and wines from the same area.

Wofford: Can you tell us a bit more about how we can get to know different flavors? What do you recommend?

Stanley: The Flavor Bible is an amazing book because it goes through the ingredients in dishes. For example, under “mushrooms” it has all of the different ingredients and spices and cooking techniques that complement mushrooms. The authors worked alongside a lot of chefs, so it’s not just their own opinions about what makes that perfect pairing.

If you’re looking to do a food and wine pairing, you can consult that book and say, “Okay, well, these flavors are going to be in this dish and this is what’s complementary.” Then you can look at your wines and see what’s available that could complement some of those flavors.

Wofford: Is it important to have a common vocabulary when talking about this? Something like ‘flavor’ seems like it could be difficult to articulate.

Stanley: That’s right. Building a sort of Rolodex of these flavors and aromas can assist you in making pairings in the future. How often do we honestly stop to think about what’s in our food? How often do you actually taste the wine, and really smell it and think about what you’re getting from the glass, and what you’re getting from the dish?

Wofford: What are some different ways restaurants can present wine pairings with food from a menu standpoint to ultimately drive more sales and revenue?

Stanley: I always bring up a 2008 study done by Wine Spectator. About 18,000 people responded to the survey and 50 percent of them said they prefer to see the wine list organized by varietal. That can be helpful with food and wine pairing because if you have the varietal listed, you are adding another tidbit of information and it can decrease people’s anxiety. They might not know that Chablis is actually Chardonnay. Or they might know that they like New Zealand Sauvignon Blanc, and although you don’t have a New Zealand Sauvignon Blanc on your menu, the guest can see that you have a Sauvignon Blanc from France.

Wofford: I think the varietal thing is a really good idea because picking a wine is sometimes intimidating.

Stanley: It is. I teach my students varietal lists because they are so popular and you can see a lot of benefits from wine sales by designing your list by varietal. One thing I also recommend which ties into food and wine pairing is to list the wines by body. For example, having your Chardonnay section list the lightest bodied Chardonnay first and the fullest bodied Chardonnay at the bottom. This way, if a server is not confident in their wine knowledge and a guest says they would like a full-bodied Chardonnay, they know to recommend the wines at the bottom of that section.

Wofford: Do you have some basic words of wisdom for how to build a well-rounded wine list? Are there any trends you’re seeing?

Stanley: Guests are getting more knowledgeable about wine. In some ways that’s good and in some ways it’s bad. There are some wine blogs out there that provide misinformation. Like with anything else, you have to be very careful about where you get your information online.

In terms of building a wine list, there are certain wines that you need to have. You need a light-bodied white wine and a full-bodied white wine. You need to have a light-bodied red wine and a full-bodied red wine. Depending on your staff’s knowledge and your clientele, do you go crazy with those and do a Nebbiolo from the Langhe region in Piedmont from Italy? Or do you do a Napa Valley Cabernet Sauvignon that people would be more familiar with?

I see some young beverage directors who try these wines that are really esoteric. They can’t sell them because the staff doesn’t even know how to pronounce them. That’s another big thing – train your staff on pronunciation. If they can’t pronounce it, they won’t sell it.

Wofford: I’d like to turn to some questions from the audience. Parminder asks: “How does one pair wine with Indian cuisine?”

Stanley: I love off-dry wines with Indian food. This could be an off-dry German Riesling, or even an off-dry Riesling from here in the Finger Lakes. Indian cuisine is so delicious and flavorful that you’re not looking for a wine that will butt heads with all of those different flavors. You’re looking more for a wine to cleanse the palette and just refresh. Another idea is rosé, which is high acid but with a little bit of a bigger body. That can also be very complementary to Indian cuisine.

Wofford: We have a good question here from Alison: “I have a really hard time knowing what dry actually tastes like. When someone is looking for a nice dry red wine, what flavor profile or flavor characteristics am I looking for in particular?”

Stanley: When a guest wants dry, I always like to follow up by asking what wines they normally drink. Because every person can have a different definition of what dry is, especially with some of the red wines that they’re now producing with higher amounts of residual sugar. They’re still being marketed as dry but they’re not, they’re actually sweet. So some people perceive dry as having very little residual sugar. Others perceive it as high amounts of tannin. That’s why a safe bet is to always ask what they enjoy drinking at home, and then gauge off of that brand or style or region to pick up on their definition of dry.

Wofford: We’ve got another great question: “As the wine drinking public becomes more sophisticated, more interesting varietals and new countries of origin emerge. How much should you change your menu based on new trends?”

Stanley: Don’t let trends dictate what you have on your list because you really need to listen to your guests first. If you have guests that enjoy drinking a full-bodied California Chardonnay, then you better have a full-bodied Chardonnay on there. They say that Grenache Blanc is becoming the hot varietal to replace Chardonnay. Well, that’s great but you’re still gonna have guests wanting the Chardonnay. So keep it on, and then introduce the Grenache Blanc. Offer a taste. If you offer a taste, you’re educating your guests and you’re giving them an experience that they might not get at another restaurant, for a cost that’s miniscule to you.

Wofford: What are some pitfalls you see people do over and over when it comes to their wine pairings? What are some common mistakes that are easy to fix?

Stanley: One thing is having wines that people can’t pronounce by the glass. You need to have some good go-tos. I go back to Chardonnay, and I go back to Cabernet Sauvignon. Those are comfortable wines. People understand them. People are familiar with them.

But if you want to still have fun with a Chardonnay, don’t do Napa Valley, do Margaret River in Australia, or do Casablanca Valley. There are opportunities to still have fun by introducing new places to your guests and to your staff, but still with a varietal that people can be comfortable with. Then see how it goes — maybe you need to go back to Napa Valley, and maybe you don’t.

Another thing is just the importance of reading the table. If the guests are having a business meeting, they’re not going to want to spend a lot of time talking about wine. They’ll want to just pick it. But if it’s an anniversary or it’s kind of an first awkward date, then you might want to talk a little bit about wine as a server because that can start fostering conversation at the table.

Wofford: Any last thoughts to share? Other than encouraging viewers to check out the great Rieslings coming out of here in the Finger Lakes, of course!

Stanley: It’s interesting you say that, as I’m the faculty advisor to Cornell University’s blind wine competition team and we were at a competition at the L’Ecole Italia in Lucerne in June. There was a Swiss Wine Magazine that had an article that said the Finger Lakes would in the future be the main competitor to German Riesling. It was pretty incredible.

The last thing I want to say is also my biggest recommendation for food and wine pairing and that is to never judge the guest on what he or she wants to drink. If they’re drinking what they’re happy with, they’re going to have a great meal. If you push them into drinking something that you think is the best pairing and they don’t like it, you have just ruined the experience.

Wofford: That’s really great advice. On the one hand, you are kind of a tastemaker, so you should be able to offer pairings when asked. But on the other hand, it goes back to reading the table and dealing with the audience that you have and making them happy.

Stanley: Absolutely. Help them out if you can but ultimately you have to please your guest.

Wofford: Cheryl, this has been great. Thank you.

Stanley: Thank you, Chris.

Want to hear more? This interview is based on Cheryl Stanley’s live eCornell WebSeries event, A Perfect Pairing: Wines to Enhance Your Guest Experience and Bottom Line. Subscribe now gain access to a recording of this event and other Hospitality topics.

How to Recognize and Build Upon Your Talents

Worried that you’re just not cut out for entrepreneurship? Don’t be.

Gallup’s Entrepreneurial Profile 10 (EP10) assessment has outlined the top ten talents of entrepreneurs and each and every one of us has them within us.

As Mona Anita Olsen, an assistant professor of entrepreneurship at the School of Hotel Administration at Cornell University, puts it: “Entrepreneurship is for everyone.”

Olsen joined eCornell’s Chris Wofford to discuss the EP10 assessment and how it can be used to provide a better understanding of anyone’s entrepreneurial talents and how they can be put to use in any work setting. What follows is an abridged version of their conversation.

Olsen: At the School of Hotel Administration, we have been promoting entrepreneurship to students at all levels. That’s where the EP10 comes in.

We’ve provided the opportunity for all freshmen, transfers and masters students to take this assessment at no cost. They can then take the results and come to a session on how to actually analyze those results. The main motivation behind it is to plant a seed that entrepreneurship can be part of your journey no matter where you go – whether you’re trying to innovate within a corporation or starting your own venture.

Wofford: What exactly does the EP10 assess?

Olsen: When thinking about the EP10 and its application to entrepreneurship, I want to first make sure we’re on the same page about the word entrepreneurship. An entrepreneur organizes, manages and assumes risk. Entrepreneurship is the capacity and willingness to develop, organize and manage a business venture along with its risks in order to make a profit.

There are ten talents that the EP10 assesses: confidence, delegator, determination, disruptor, independence, knowledge, profitability, relationship, risk and selling.

This is an online assessment, not a test. It takes 20 to 30 minutes to complete and it costs $12, so it is not a huge investment in terms of time or money. You can take it anywhere and at the end you get an assessment of those ten talents and they will be ranked in order of your highest score. So this really helps you identify your greatest natural strengths.

Gallup has studied entrepreneurship for a long time and they came up with the unique talents that successful entrepreneurs possess. Remember, talents are different from personality traits and encompass attitudes, motives, cognition and values. Entrepreneurs have certain business outcomes that they’re trying to reach and Gallup tried to figure out how the talents impact those business outcomes.

Wofford: How did you first get involved with the EP10?

Olsen: I was in Omaha in December to get certified as an administrator for the EP10 and there was this question on the wall that really struck me: “What would happen if we studied what is right with people versus what is wrong with people?”

It really struck me that not only is strength-based education training really important, there are also a lot of links between happiness and and being more productive in the workforce. Leveraging your talents actually influences your performance.

Wofford: I’m curious about some of the terms. Take profitability, for instance. How do you assess that for someone who has not necessarily gone out and generated profits themselves? Similarly, a term like ‘risk’ can be perceived very differently.

Olsen: OK, let’s look at the talents and their definitions. Let’s start with confidence, which is defined as the ability to accurately know yourself and to understand others.

A delegator is someone who recognizes that they can’t do everything themselves. Personally, that’s something that I struggle with.

Determination is a term that people usually understand – you persevere through difficulties and seemingly insurmountable obstacles. You’ll note that entrepreneurs actually love obstacles. They love being able to get through those challenges.

A disruptor is someone who exhibits creativity and takes an idea or existing product and turns it into something better. A lot of people will use disruptor synonymously with innovator but they’re not the same. With a disruptor, we’re talking about the creativity to bring value to an existing idea or product.

Independence is doing whatever needs to be done to be successful in a venture. This is a talent that’s ranked highly for most entrepreneurs.

Knowledge means that you’re constantly searching for information that is relevant to growing your business. You see this in almost all of the students that take the assessment.

To your previous question, when we talk about profitability we’re talking about making decisions based on an observed or anticipated effect on profit. In other words, you’re always thinking about how your decisions are going to impact the bottom line.

Relationship is assessing social awareness and the ability to build beneficial relationships. Naturally connecting people.

Selling is the ability to be persuasive and really be a champion for pitching an idea.

Risk refers not to taking a risk, but rather how to manage risk. How to instinctively deal with high-risk situations.

Wofford: Most of those definitions are pretty intuitive, I guess.

Olsen: Yes, but you’re right that people might have their own definitions for these terms so it’s good to establish what they mean in this context.

Now, once you do the assessment you will essentially be given a top four. Your top four talents will be weighted and then it will basically align your results with one of three entrepreneurial styles.

So you’re either relational, strategic or activation oriented. The difference between those last two is that strategic is more about planning while activation is getting things done.

At the end of the assessment, you’ll get this full report that includes your top four talents and your entrepreneurial style. It goes through each of the different talents that you have and gives you scenarios in which you might actually use those talents in your work environment.

Wofford: If you don’t mind me asking, what were your results?

Olsen: In my case, I have the activation style. What’s great about the assessment is not just that it gives you your top four talents but that it also helps you identify some of the areas in which you are not as strong.

Wofford: OK, so let’s say I’ve just gotten back the results of my assessment. Now what?

Olsen: There are many different things you can do. The first thing I usually ask students to do is to map their talent. I ask them to draw an inner circle, where they put their top four talents. In the second circle, they identify the next three and then the bottom talents are put in the last outer circle.

Why is it important to do that? Well, first, it’s important to really look at yourself and sort of accept where you are before you decide what you might want to do with the results.

If you know your talents, when was the last time you used them? How many times do you use your top talents on any given day or week or month?

If you’re not using them, how would doing so impact your work? Would you be more effective in whatever role you’re in? If you are using these talents on a more routine basis, how can you consciously work toward putting these talents forward?

When you have your results, you can you ask yourself how you are going to use these talents in a team setting. Understanding yourself before getting into a group makes you a more effective group member and also enables you or the group leader to strategically think about how to use your talents.

Wofford: So this isn’t solely about self-improvement or self-understanding, there is a team benefit to this as well?

Olsen: Absolutely. You can actually use the results to make team maps, where you map out the top four talents of all your team members. This can be very helpful in a startup situation because you can look at the talents that are necessary to be successful as entrepreneurs and determine which ones your team is really strong at and how to take advantage of that. You can also identify areas that might prove to be blind spots for your team.

Wofford: If your team map results showed that nobody is prepared to delegate, that would obviously be a problem.

Olsen: Exactly. Going through these assessments can be a great team-building tool.

Wofford: A question from the audience came in that really jumped out at me. It asked whether you’re likely to see immediate changes in someone’s behavior after they’ve taken the assessment.

Olsen: I think it makes you more mindful of what you’re doing on a daily basis. In my case, I might think that maybe the reason someone responded to me in a certain way is because my risk tolerance is so high that I’m willing to push something forward even when I know there’s going to be pushback. It’s made me more mindful of how I come across to others.

Recognizing my talents also helps me to focus on the most effective ways for me to spend my time and how I can be the most productive by leveraging these very naturally-developed talents that I have.

Wofford: It must also help to expose some deficiencies so you know what sorts of things you need to improve upon.

Olsen: Absolutely. It’s only natural to spend some time thinking about the talent that you scored the lowest on, especially if the results were surprising. But it’s important to remember that it’s all relative. For example, you could actually be a very strong delegator but it’s just not as strong as the other nine talents. It’s human nature to focus on areas that need improvement. It is important to be aware of your weaknesses but you shouldn’t let them overshadow your strengths.

Wofford: We’re just about out of time – any parting words?

Olsen: First of all, if you haven’t taken the assessment yet, go to the Gallup site and take it. It’s only $12 and it will take you less than 30 minutes. Before you take it, I think it can be very helpful to predict your four top talents and then try to analyze how your assessment results either matched your expectations or surprised you.

My challenge for all of you is to think about how you can use your talents at least once every single day. If you do that consistently over a week or two, will you see any results in your productivity or in your happiness or just in feeling like you’re very effective with the talents that you bring to the table?

Wofford: Mona, thank you so much. I also want to thank the audience and again, if you haven’t taken the assessment, go out there and do it!

Olsen: Thanks, Chris.

Want to hear more? This interview is based on Mona Anita Olsen’s live eCornell WebSeries event,The Entrepreneurial Profile: Buidling On Your TalentsSubscribe now gain access to a recording of this event and other Entrepreneurship topics.

How to Make the Business Model Canvas Work For You

Neil Tarallo has more than two decades of entrepreneurial experience under his belt and is a senior lecturer at Cornell’s Hotel School as well as the director of the Cornell Entrepreneurship Bootcamp for Veterans with Disabilities.

But that doesn’t mean that he can simply come up with an idea and magically turn it into a successful startup. When Tarallo brainstorms ideas, he leans heavily on the Business Model Canvas. Created by Alexander Osterwalder, it is arguably the most important innovation in entrepreneurship and strategy in quite some time.

Tarallo joined eCornell’s Chris Wofford to discuss the Business Model Canvas as part of the Entrepreneurship webinar series. An abridged version of their conversation follows.

Tarallo: Entrepreneurs are problem solvers. We solve problems in a marketplace, and in doing so we create businesses. For us as entrepreneurs, it’s important to understand exactly who is feeling the pain, so to speak, that has been created by that problem. One of the nice things about the Business Model Canvas is it really helps us focus on that.

When I talk to entrepreneurs around the world about their businesses, one of the things they tend to miss is the value that their solution creates for their customers, and exactly what those customers think about that value.

People get a little upset with me sometimes when I say these things but products and services don’t create markets. Solving problems in markets, and creating value, allow us to create new markets. But in order to have a sustainable business, you have to solve real problems for real people and understand what that solution means to them.

It’s really not about your products or your cool technology or how great your food tastes. It’s always about how you create and capture value for your customers. So that’s what we want to focus on and I think one of the great things about the Business Model Canvas is it really helps us focus on that important element of our business.

There’s no shortage of new products. It’s not even cool anymore just to have a new product or new technology. There’s so many of them out there, but very few of them really bubble up to the top. That’s because the manufacturers misinterpret what it is that they’re trying to do. There’s that old adage: Build it and they will come. Whenever I hear that, I run as fast as I can and you should too because you need to do more than just build it. You need to make that connection and that’s really what the Business Model is about. It’s all about how a business captures and delivers value to the customers.

Wofford: Before we go much further, perhaps we better get into what the Business Model Canvas actually is and how it works.

Tarallo: OK. The Business Model was created by a guy named Alexander Osterwalder. He was doing his Ph.D. and his interest was in business models. What he discovered as he was doing his research is that when he would ask people about business models, no two people could define it the same way.

I give him a lot of credit for seeing that. I think it’s something that all of us who teach and talk about entrepreneurship over the last 15 or 20 years have encountered but we just never identified it.

Osterwalder wrote his dissertation, ‘The Business Model Ontology – a proposition in a design science approach’, about how we build and generate business models. His premise was that we need to have a common understanding of what a business model is and that we need sort of a shared language around it.

So he created this tool called the Business Model Canvas and that was followed shortly thereafter by another canvas called the Value Proposition Canvas. We won’t spend as much time on the Value Proposition Canvas today but it has also become a fundamental tool in innovation.

The Business Model Canvas has nine building blocks and we’re going to quickly go through each of those building blocks. In the very center of the canvas is the Value Proposition. This is where we articulate the problem that we’re solving as well as how we are solving it for our customers. It is the first building block and is at the dead center of the canvas because it is central to everything that we do.

All the way over to the right is Customer Segments. We need to understand, as specifically as we can, who the customers are. Who will be interested in our solution and what value do they see in what we propose for them? Continuing on, building block number three is Channels, and that’s how customers actually get and access our Value Proposition. It could be online, it could be in our store – there are a whole bunch of variations on how we do that.

Next, Customer Relationships, which is primarily the marketing component of what we do. Moving to the left on the canvas, we have Key Resources, what we need in order to deliver our value proposition. Above that is Key Activities, where you identify what activities your business engages in on a daily basis that deliver the Value Proposition.

All the way on the left is Key Partners and those are other organizations or people that we can work with to help us deliver our Value Proposition. An example there might be, if I sell coffee, coffee growers may be a key partner for me because I have to bring them on board.

The bottom of the campus is all about the financial aspects of our business. To the right, we see Revenue Streams, and that’s those unique products or services that generate revenue for our business. To left is Cost Structure, or what it costs us to deliver our Value Proposition.

Notice that when I talk about each of these building blocks, I’m always referencing the Value Proposition. The activities that happen within these building blocks are central to that. Everything I talk about on the Business Model Canvas focuses on that Value Proposition.

Wofford: Yes, I did notice that you were really driving that home.

Tarallo: Now, if you look at the layout of the canvas, what you really see on the right side is what we call front stage operations or what we call front of house in the hospitality industry. These are the forward-facing activities that customers see and feel and touch. On the left side of the canvas are what we call backstage or back of house operations and those are the things we do behind-the-scenes that customers don’t necessarily see that support the delivery of our value proposition.

My work with companies and with entrepreneurs tends to focus on that left side because it’s a much more difficult thing to do. I call the front stage operations low-hanging fruit: we get to talk to our customers, we get to do some research, we see what they value and what they don’t value. That’s all pretty easy to do. The interesting thing about backstage operations is that if we can figure out how to deliver value through our operations, we tend to create a competitive advantage that’s very difficult for our competitors to break into.

An example I always use for that is Disney World. It’s one of my favorite places to go because I learn so much about operations there. Disney really delivers value through their operations. They entertain you while you’re going through lines, they have a series of tunnels underneath the entire facility, so that they can get anywhere in the park in six minutes or less. Other parks can’t do that so they’re creating value through operations that really gives them a big advantage over their competitors.

Wofford: It’s fascinating, and for our viewers who are interested, just Google ‘Disney World front stage operations and backstage operations’. There’s so much stuff out there written about it.

Tarallo: Now, the lower part of the Business Model Canvas is what I call the economic model.
It’s how different elements of the cost and revenue structure of our business come into play and work together. So that’s the way I think about the model: right, left and lower side, with value being in the center of everything.

Wofford: So how does the canvas work?

Tarallo: As we build our Business Model Canvas, we really hypothesize and we’re guessing what we think is going to happen or could happen in each of these building blocks. Then our job is to go into the marketplace and test our hypotheses. We learn from those tests and we go back and we repeat this over and over again until we get it right.

Wofford: So following this model allows you to test your assumptions, right? That’s where you validate whether or not you do have unique value, whether you’ve got a competitive advantage and so on?

Tarallo: Exactly. You need to be objective. One of the big challenges for me in disseminating information about the canvas both to my students and entrepreneurs is that they’re very emotionally invested in their solution to the problem. For me, one of the measures that I use to determine whether I think somebody is in fact going to be successful as an entrepreneur is how flexible they’re willing to be in that solution.

Wofford: How do you know when you’ve got it right?

Tarallo: To be very candid with you, as much as we work on this and as much as we test, it will not be accurate. The day that we open our business is when we really find out whether it’s accurate or not. None of this is an absolute, but the canvas gets me on the right page. It gets me as close as I can so that when I have to make adjustment when I open my business, or as I’m running my business, I don’t have to take big leaps. I’m trying to mitigate risk and I think one of my favorite things about the Business Model Canvas is it lets me do that.

Entrepreneurs don’t like risk, contrary to what a lot of people believe. We understand risk. We understand it’s part of our lives and we work hard to mitigate that risk, but we don’t love risks.

Wofford: So you’re not rushing off to Vegas every chance you get?

Tarallo: Haha, no. When it comes to testing ideas we’re really trying to set up a series of controlled experiments that you can fail without jeopardizing your business. I always say that entrepreneurship is nothing more than a series of small failures. I’m very careful about how I say this though, because I think there is this belief out there that it’s good for entrepreneurs to fail big and fail fast. I’m not a fan of that. Failure is never a good thing. I want to try to control my failures so that I’m mitigating risk and I learn from my market in a way that’s not going to damage my brand or what I’m trying to accomplish.

It’s important to me to stress that in my opinion, the Business Model Canvas is not a replacement for a business plan. It’s not a replacement for a marketing plan or a strategic plan. It is an effective tool for understanding who your customers are, what they value and how you can create a solution for their problem.

One of the things that Steve Jobs was really good at with Apple was not even thinking about a product necessarily but going into the market and interfacing with the market and seeing what it is that they were struggling with. The iPod is a great example of that. He saw a problem that was happening in the marketplace and he really found it through observation and getting people to tell stories about how they get music and how they listen to music.

I contend that Apple’s business model as a whole is that they’re problem solvers. They find problems in the market that they can solve with their core competencies, which are design and technology. That’s how they come up with these really great innovative products.

I shouldn’t say this because you’re recording, but I think Apple is going to be out of the phone business before too long.

Wofford: Really? Why do you say that?

Tarallo: Because the problem is solved. It’s no longer compelling for them and for the first time ever we saw iPhone sales drop last year. If you think about the iPod, you can’t buy one of those on a store shelf anymore. Why not? Because the problem has been solved, so Apple no longer makes them. Our phones are now substitutes for iPods and I think you’ll see the same thing happen with the iPhone, perhaps sooner than a lot of people think.

Wofford: Well, if you’re right you’ll be glad we were recording this so you can pull up the video and say “told ya so”. Neil, this has been very interesting. Thank you for sharing your insights into the Business Model Canvas.

Tarallo: Thanks, Chris. I enjoyed it.

Want to hear more? This interview is based on Neil Tarallo’s live eCornell WebSeries event,Business Model Canvas: A Tool for Entrepreneurs and Managers. Subscribe now gain access to a recording of this event and other Entrepreneurship topics.