Calvin: You use the word “audacity” several times throughout The 90% Rule when you discuss entrepreneurial thinking. Is this similar to the risk-taking characteristic that many people think of when speaking about entrepreneurship?
Ken: The definition of audacity centers around the willingness to challenge assumptions and conventions. So, it is not about risk-taking; it is about refusing to accept “what is” as a given. I think that this is the essence of the entrepreneur, “pushing to create a new, better reality”. Without this essential quality of entrepreneurship, we’d be short more than a few of our modern trappings like cars, planes and, of course, Blackberries.
Calvin: In your book you recommend entrepreneurial thinking. To some that might imply a free-wheeling, wildcat type of approach. Yet you also state that firms should leverage low-risk, low-investment assets. How do you reconcile the creative process with conservative management practices?
Ken: I do not believe that entrepreneurs or entrepreneurial thinking are free-wheeling or wildcat. I believe that entrepreneurs are passionate, driven, resourceful and focused on innovative products or services that they can bring to market, and they pursue it with a vigor that few can appreciate. I think that every business, regardless of size, can benefit from passionate, driven and resourceful leaders and employees.
I also believe that the other word that I would use to describe entrepreneurs is conservative. Yes, conservative. You see, as an entrepreneur, we must succeed with very little financial capital at the outset of our businesses. We must rely on intellectual capital and really, really hard work. What this means is that we actually become risk-averse in the decisions that we make regarding the spending of our resources because when they are gone, there is no corporate HQ to go to ask for more money. Further, many entrepreneurs rely on family funds and so they live with knowing that one wrong move can produce a financial freefall for people that are close to them.
Calvin: You return to the concept that companies should “leverage the assets you already have.” Some people see entrepreneurship as using assets even if you don’t own them. Are you suggesting that external asset should be avoided?
Ken: I believe that companies should build on (or leverage) what they are 90% capable of; it’s a mindset, not a specific formula. In the book, I specifically deal with the notions of financial and operating leverage. My point is that we have become slaves to financial leverage and debt, and have seemingly forgotten the power of operating leverage — getting more out of the assets that you already have. While every business relies on both forms of leverage, and therefore needs to acquire additional assets, I believe that balance reduces risk. Let me give you an example from my personal experience as an entrepreneur. I successfully built and sold out of a company that manufactured natural personal care products (shampoo, bath foams etc). At the outset, the primary focus of the company was products for women. Over time, our product offer grew to include products for kids, teens, tweens, men, pets and house cleaning. As we moved from category-to-category, we knew that the incremental science, technology, equipment and inventory required would be manageable. By manageable, I mean that, if we failed, our downside wouldn’t kill the company. However, the upside of each new category was exponential. So, our expansion focused on assets (intellectual and physical) that we were already “90 capable or in possession of” but also incorporate a measured additional or use of external assets, too.
Calvin: In The 90% Rule you mention that entrepreneurs “have a knack for seeing the big opportunities and finding a way to make them happen no matter what the odds.” Entrepreneurs often seem confident and feel that the odds are in their favor. Do you think perceptions of the odds play a role in finding and acting on opportunities?
Ken: I don’t believe that it is perception of the odds so much as it is self-belief; I think that you would be hard pressed to find an entrepreneur who believes that the odds are truly stacked in the their favor. I do think that self-belief, alongside passion, is the primary quality necessary to succeed as an entrepreneur. Few people have vision and passion, and even fewer have the gumption to “pull it all on the line and go for it”. As entrepreneurs (or intrapreneurs) we must be able to get past the naysayers or the idea killers in the room. The (borrowed) quote we use at the beginning of our book sums it up best, “Leap and grow wings as they fall.”
Calvin: Your book seems to suggest incremental improvements work best. Do you think there is room for disruptive innovation? How do you see disruptive innovation fitting with a firm’s innovation strategy?
Ken: The paradox of the 90% Rule is that it actually embraces disruptive technology. The process begins by understanding your business at a very high level and by definition shuns “me too” thinking. The metaphor that we use is that “the best place from which to see that the world is round is to view it from the moon”. In everyday business practice, when you step back and understand opportunity from a very high level, the (incremental) steps to market or improvements become that much clearer and abundant. Let me give you an example of a teeth whitening company that we work with. Their highly disruptive technology is a toothbrush! They saw that the major companies in the teeth whitening category were asking customers to use messy trays and sticky strips, and they found this counter intuitive. Their delivery system is a dual-action foam system that you simply put onto your toothbrush twice a day. They have managed to move from idea to international distribution in less than a year. Disruptive, incremental, intuitive and customer-focused all at the same time … to me, that’s the essence of innovation as outlined by the 90% Rule.
Calvin: You provide frameworks for innovation and sustainable growth in The 90% Rule. To what extent do you think the innovation process can be structured and organized?
Ken: I believe that the process of innovation must become ingrained in a company’s psyche, culture and practice today for it to thrive. Most companies have sales and marketing meetings on a very regular basis but leave innovative, blue-sky thinking to their annual retreats. I like to say that that will ultimately lead to a retreat in sales! Why are we not blue-skying on a more regular basis? At the very least, we need to apportion a part of our marketing and sales meetings to discuss market insights (and not just from our market or category), identify new opportunities worth pursuing, assign opportunity champions to drive the new ideas and report back to an “innovation group” on a regular basis. We do it with all other functional groups in companies; we should be doing with our growth engine, innovation, too.
Calvin: You suggest the entrepreneur “hang out with the competition.” Do you think benchmarking is critical to the innovation process? Why?
Ken: I think that benchmarking is critical to innovation success because it provides you perspective. When I say “hang out with the competition”, it refers to the fact that you can’t innovate in a vacuum. You need to understand consumer wants and how (and to what degree) they are already being satisfied by the competition. It is this application of benchmarking that provides the true litmus test of whether what you are bring to market is innovative or simply, “same solution, new package”.
Calvin: You emphasize customer focus. Is there any time the customer could be wrong? Henry Ford is noted for saying, “If I had asked people what they wanted they would have said faster horses.”
Ken: If Henry Ford had asked people if they wanted a mode of transportation that was faster, warmer and dryer, I believe that they would have said yes. My point is that the customer always knows what they want, they just may not be aware of the fact that a new technology is available to provide the solution. To pull a quote from Chapter 10, which includes the discussion of research, “The market never lies; it will always tell you what to produce if you listen closely.”
Calvin: You cover the idea of converging opportunities in the book, but there is no discussion of diverging opportunities. Do you think diverging opportunities are worth pursuing?
Ken: I am a big believer in divergent thinking leading to convergent opportunities. You must blue sky first and then focus on the next, logical application or opportunities for your company. I do not believe that this is in any way limiting, so much as focusing. It begins by having a clear, broad understanding and perspective of the business that you are in. For example, define Apple as personal use technology provider and you can understand the progression from personal computers to music (entertainment devices) to phones to hopefully an intuitive in-car navigation system! I also believe that purely divergent opportunities end up as headline fodder, “CEO announces that they are selling off non-core assets.” Why did they move away from their core in the first place!
To that end, there is one point that I would like to leave everyone with before ending the interview. To build on logical, next steps, you need to have an acute understanding of your business core. Then, per the discussion in Chapter 11, establish criteria (dashboard, metric) with which to assess opportunities as they arise. We are often forced to assess opportunities “on the fly”, a set of criteria helps to focus and assess them more clearly to ensure that we are relevant, not rogue, innovators.
About Ken Tencer:
Ken Tencer is CEO of Spyder Works Inc. and a successful entrepreneur who has built international companies in manufacturing, product development, distribution and professional services.
Ken holds both a Bachelor of Commerce from Carleton University and a Masters of Science in International Management from Boston University in Brussels, Belgium. He began his career with a series of marketing firms, developing campaigns for financial service companies, manufacturers, retailers and not-for-profit organizations. Ken co-founded Nettlewoods, a manufacturer of private-label bath and body care products that grew internationally.
As CEO of Spyder Works, Ken has moved from communications to strategy: helping numerous organizations create more effective growth plans by focusing on what they do best. And he is now the developer and co-author of The 90% Rule, which is both a new book and a collaborative seminar. Hands-on experience has taught Ken that the greatest rewards in business come from focusing on those opportunities you are already 90% capable of achieving. He now delights in helping companies find the right growth track that lets them enjoy maximum growth, with minimum risk.