Dr Jeff Cornwall

Mark Cuban has some wise advice for start-ups at his blog called Blog Maverick. His first three rules for start-ups all deal with the power of passion and commitment:

1. Don’t start a company unless its an obsession and something you love.
2. If you have an exit strategy, its not an obsession.
3. Hire people who you think will love working there.

His commentary on exit strategies might stir a few feathers. I would say that to some degree he is right. If your only objective is a quick exit, you may end up being a unprepared if things don’t go the way your plan predicts (Imagine that!!).
It also reminds me of the advice that I received early in my health care business start-up. Remember that when you run a race your goal is never the finish line. Good runners will tell you that you that to win you must give everything you have for the entire distance of the race. To accomplish this you should imagine that the finish is well past the finish line on the track.
Businesses rarely follow the script of the business plan, especially when it comes to exits. You may end up running a company for a lot longer than you had planned. Make sure it is a business that you are passionate about and that you can commit to for the indefinite future.
(Thanks to Jon Beckmann for passing this along).

I started, but then deleted, several posts about Brett Favre’s retirement. Brian Leaf sent along a post by Jacqui Banaszynski about Brett from a journalist’s blog called Poynter Online. Although she takes a journalist/editor slant, the lessons she takes from Favre’s career aptly apply to anyone in a position of leadership, including entrepreneurs.
Here is a sample of just one of the leadership lessons from Banaszynski’s post:

Favre loved the job. He brought joy to work every day and let it show. He dared to grin on the field and whoop when whooping was called for and get knocked down and pop back up laughing. There was almost always a smile behind the bars of his helmet, even when he was losing.

This is what I call the “shock absorber roll” the entrepreneurial leader needs to take on. No matter how bad things get, the entrepreneur has to be the “keeper of the faith” for the venture. In an entrepreneurial venture, most of the employees know how bad things are. The business is too small to keep many secrets. They look to the entrepreneur to give them confidence that they can get through the tough times, no matter how dire things might seem.
At some point I hope to capture my own thoughts on what we can learn about leadership from Brett’s career. Thanks to Banaszynski for sharing hers.
Go Pack!!!

Rieva Lesonsky, Senior Vice President and Editorial Director of Entrepreneur magazine resigned this week. She told me that she is starting a new venture called SMB Connects. Its website askrieva.com should be live at the end of the month.

The flip side of the pricing post I wrote yesterday involves what I call apologizing to the market.
When we enter the market with prices well below the rest of the competitive landscape, we make a statement to the customer. “We are not as good as the rest, but hope our low price gets you to buy our product anyway.” “Our quality is not up to the competitors’ standards so we cannot ask the same price.”
Set a price that puts you where you want to be in the customers’ minds. “We are as good as the rest.” Or, “We are better than the rest.”
Once you position your product compared to the rest with your price, clearly offer them a temporary discount — through a sale, coupons, etc. Make it clear that the discount is to introduce the product so they give you a try.

Part of how we communicate about our products it through our pricing. A new study about placebos reinforces the psychological power of pricing. From Science Daily:

[Researchers] used a standard protocol for administering light electric shock to participants’ wrists to measure their subjective rating of pain. The 82 study subjects were tested before getting the placebo and after. Half the participants were given a brochure describing the pill as a newly-approved pain-killer which cost $2.50 per dose and half were given a brochure describing it as marked down to 10 cents, without saying why.
In the full-price group, 85 percent of subjects experienced a reduction in pain after taking the placebo. In the low-price group, 61 percent said the pain was less.

Why the significant difference in the power of the placebo with the higher price?
Customers use pricing as a cue for the quality of the product or service.
There is a great example that comes from the story of a psychiatrist who tried to use pricing to phase out his practice. He was getting ready to move toward retirement. So he decided to double his rate for any new clients, assuming that nobody would pay that much for his services. But, the opposite occurred. Referrals and new patients came in at the highest rate he had ever experienced in his long career in practice. So he raised his rates again hoping this would do the trick and keep away any more new patients. However, you guessed it — referrals increased even more.
It seems that when it is hard to objectively evaluate quality, such as the case with service businesses, consumers look to other ways to judge quality. And pricing can be one of the most powerful tools to communicate quality.

My column this week at the Tennessean is about the growing trend of social entrepreneurs in our culture:

There is a new breed of entrepreneur in America. Rather than using entrepreneurship as a path to wealth, they are using it as a means to create positive social change.
They are known as social entrepreneurs — a trend that can encompass any organization, profit or nonprofit, that has a social mission.
Social entrepreneurs are increasingly approaching social change in a different way than we’ve seen in the past. Rather than rely on fundraising and grants from foundations to grow large nonprofits, these young social entrepreneurs attempt to blend free market capitalism with their favorite social causes.

Belmont’s business program cracked the Top Undergraduate Business Programs in Business Week this year for the first time. We came in at 89th!
The reason for our emergence into this elite list of schools: “music and entrepreneurship programs win raves.”