It was one of those sudden-realization moments for me.

I was talking to one of my favorite lawyers last night at a local startups event (smartups.org). He mentioned a person I’d sent to him a couple weeks ago. That person had asked me to recommend a small business lawyer, and I recommended him.

The realization was that she — the person I’d sent to him — felt like a friend. I feel like I know her, like her, and trust her. But I’ve never met her. I’ve never even talked to her on the telephone.

I’d met her on Twitter. She popped up with interesting comments in a chat I’d been in, so I followed her. I got to know her with the links she recommended via Twitter, and then her blog posts, and eventually email. I liked her writing and read her book that she recently published. And I’m glad to know her, and consider her a friend, even without ever talking to her.

Over time, at 150 characters per comment, plus reading blog posts, I can get to know a person and his or her work, and end up liking that person. Strange, but true.

And that, in a nutshell, is why I like the new world we’re calling “social media.”

Are you familiar with the phrase, “the fog of war?” You can get the idea from the image here, from a computer strategy game: the pieces in the center of the image can see the terrain for only a short distance, shown here as the brighter area. The rest is obscured by the fog of war.

Some days, bad days mostly, I think there’s something like this that goes on with most business research. They create the fog of research. It’s like the fog of war. Poor vision. Partial vision.

I think this happens all the time with focus groups and surveys. The research is almost always flawed because it’s almost impossible to get random people lists. Questions inadvertently distort results. People answer what they like to hear themselves or think of themselves answering, not the truth. Often they don’t know the truth. Surveys ask “would you buy this?” for example. “What price would you pay?” People often project who they want to be as they answer these questions. And focus groups: they depend on randomly chosen participants, but that almost never really happens. People can’t gather random people. And then one person — bad day, good day, some outside annoyance — can influence the whole group.

Then comes the problem of fog of research: once there is research in house, discussion gets fogged. People stop thinking fully, fairly, unwilling to question assumptions, and quick to devalue common sense. “After all, we have the research,” we say. “Let’s not ignore the research.”

I realize that this fog of research idea makes me seem to be against research, against analysis, and against study. I’m not, really; I’ve done a lot of research through the years.

What I do say is do the research, but don’t believe it blindly. Don’t lose your skepticism and common sense.

Special reminder: I’m doing my Global Entrepreneurship Week webinar today, free of course, at 11 am PST, titled: Develop Your Business, Not Just Your Business Plan. Click here now to register.

(Image credit: from classic.battle.net)

I’m still long-term frustrated with how many people lose the potential steering and management benefits of business planning because they focus on the plan as document instead of the planning as management. With that in mind, I’m doing a webinar tomorrow, Thursday Nov. 19, at 11. am PST on the theme in the title of this post. Please click here now to register for that webinar (and yes, it’s free, of course).

There’s an important point I’m trying to make. Don’t dismiss business planning as part of your business life just because you don’t want (or have) to do a formal business plan document. Most of us running businesses don’t have to do a formal document. We do, however, want to do our business as well as we can.

It doesn’t have to be the big formal plan you avoid because it sounds hard. Keep it simple, just big enough to manage and steer your business. Write it down so you can track progress and make course corrections. But maybe you never print it; just leave it on your computer.

Here are five main components:

1. Define success

Be realistic. And recognize that success is different for different people. Is it about getting financed, growing big, becoming rich? Or is it doing what you like to do, while making enough to get by? Independence? Wealth? It’s not nearly as simple and uniform as sales growth, profits, and cash flow. Start with that.

2. Focus

You can’t do everything. You can’t please everybody. Focus on your keys to success, and your core competence. Focus on a well defined target market, and know who isn’t in your market, and why not. Strategy is a lot about what you’re not doing.

3. Understand the steps

Break it down into the steps you’ll need to take. What has to happen? How do you get to that success? What will it take. Define some key points, milestones.

4. Put it into specifics

Think about metrics and measurement so you can track progress. Lots of numbers and dates. Task assignments, responsibilities.

5. Follow up and manage

Track your plan. Set regular review points, look at plan vs. actual results, and make course corrections.

So imagine yourself working on a few variations of a blog post headline when your editor says one of them, perhaps not your favorite, would be better for SEO (search engine optimization). That’s what we call a no brainer. Never say no to better SEO. Period.

I was in a conversation along those lines yesterday. It reminded me of one of my favorite little life-advice snippets has always been “never say no to an offer of a breath mint.” If you don’t immediately see why, think about it.

I asked around, got some help from friends, and came up with the following “never say no” list:

1. Never say no to better SEO. This is about websites and blog post headlines. If you’re not sure what’s going to give the best SEO, that’s one thing. But if you know, or somebody who has reason to know tells you, follow the SEO.
2. Never say no to free publicity (even the bad stuff generates interest).
3. Never say no to product or business or customer feedback. And, taking that to a broader scale, never say no to free advice. Digest it, analyze it, decide for yourself whether it’s good advice or not, and act on it or not. It’s your choice. But first, listen.
4. Never say no to your IT people. The computer you save may be your own (our IT guy suggested that one).
5. Never say no to an opportunity to learn something new and useful.

Honorable mentions: these last two are a bit off the small business and entrepreneurship setting as a target, but I decided to include them both, one because it’s good life advice and the other because, like its author says, “it’s in the manual.”

1. Never say no when your own child asks: “will you play with me?”
2. Never say no to a hostage taker. It’s in the manual.

This weekend I finished Greening Your Small Business, a well written and easily readable new book by Jennifer Kaplan, dealing with a lot of background and a lot of specifics about the idea of “greening” the business. Happily, she starts out by defining what “greening” means, in several practical contexts. Then she deals with greening as green marketing, green travel, green purchasing, and a good understanding of the underlying business rationale.

One thing I particularly liked about the book was its list of 50 easy ways to make your business greener. To my mind, the simple and easy-to-implement tips are by far the most valuable. Here are my 10 favorites, taken from those 50 (all of this is direct quote):

1. Make recycling easy by providing clearly marked bins throughout the workplace.
2. Turn off lights (and other equipment) when not in use (i.e. at night).
3. Turn off computers and monitors every night. Just shut them down.
4. Make use of scanners and PDF formatting to digitize hard copy data for future use and distribution.
5. If your copier permits it, set the default to double sided.
6. Add this message to your email signature: by not printing this email, you’ve helped save paper, ink, and trees.
7. Fax electronically–send and receive faxes directly from your computer(s); if you fax the old-fashioned way, eliminate cover sheets by sticking a post-it fax cover note on the first page.
8. Whenever possible, eliminate direct mail from your media mix.
9. Create electronic versions of materials such as media kits, reports, and other documents, and then post them to your website.
10. Eliminate disposable items in the workplace.

I’m afraid I can’t say that I do everything on this list. But I am trying as much as I can.

[disclosure: Jennifer sent me a review copy of her book.]

I want to start this with a story. I’m quoting Jason Cohen in his post Business advice plagued by survivor bias, with thanks to Alan Gleeson for tipping me off to this one. As you read this story, think of how it applies to business experts and business advice:

During World War II the English sent daily bombing raids into Germany. Many planes never returned; those that did were often riddled with bullet holes from anti-aircraft machine guns and German fighters.

Wanting to improve the odds of getting a crew home alive, English engineers studied the locations of the bullet holes. Where the planes were hit most, they reasoned, is where they should attach heavy armor plating. Sure enough, a pattern emerged: Bullets clustered on the wings, tail, and rear gunner’s station. Few bullets were found in the main cockpit or fuel tanks.

The logical conclusion is that they should add armor plating to the spots that get hit most often by bullets. But that’s wrong.

Planes with bullets in the cockpit or fuel tanks didn’t make it home; the bullet holes in returning planes were “found” in places that were by definition relatively benign. The real data is in the planes that were shot down, not the ones that survived.

Could there possibly be a better summary of survivor bias? Do you see how it matters with business research? I need to thank Steve King as well, because he focused on survivor bias recently in his post Don’t Quit Your Job Until You’ve Talked to a Small Business Failure. Steve points out, in that post, that if we only ask small business owners about risk, we only get opinions from the survivors. 

But if your goal is to find out how all small businesses owners think about risk, this approach is flawed.  This is because former small business owners – the folks that went bankrupt, lost their companies or were removed from their jobs – are no longer small business owners so they aren’t included in these surveys.  Because business failures are excluded, the survey results are biased towards successful small businesses. 

Do you see his point? You can’t get an accurate picture of a contest by asking only the winners. Sure, the winners are the right ones to ask for stories of what worked. But the losers have some insight too, like on what didn’t work. 

 (Image: Nick Schroedl/Shutterstock)

The other day I posted 5 Entrepreneurship Basics B-Schools Can Teach. It’s natural to follow that list here with the exact opposite: 5 other entrepreneurship basics the business schools can’t teach. But I couldn’t quite do it. I had to change can’t to don’t. That, to me, is a significant difference. So here they are  (things they don’t teach, not necessarily things they can’t teach):

1. Dealing with people

Sure, you can teach organizational management, and there are rules for employees, lots of advice on selling, buying, leadership, and all that. But can anybody really teach empathy? Do you learn how other people feel by sitting in a classroom, or by working with (and living with) them. I like the new network television show (Lie to Me — pictured here to the right) where they read physical signs like facial expressions to know who’s telling the truth and who’s lying. The rest of us need a lifetime to figure that out, and, let’s face it, we probably never do.

How about the basics of self interest, like starting every business communication with “you” and the benefits for the reader or listener? Or figuring out who’s likely to be a long-term ally, and who isn’t? Or figuring out that selling right is listening first, and solving people’s problems? Some business schools try to teach that stuff. Most fail.

2. Right and wrong

I know business schools are trying to teach business ethics, but it’s so hard because there are so many different views, and social and political constraints; and ethics means different things to different people.

My bias on this point is that businesses that act in ways that help the community, and their employees, and their customers, and the earth and the environment, and all that jazz, will do better over the long term. Things like fair play and, at the very least, doing no harm, are critical to long-term success.

Fairness is so important. No business deal or alliance will work over any useful time frame unless it offers benefits to both sides. Screwing people is not a successful business model. But can that be taught? I can’t even prove it, let alone teach it.

3. Having a life

With all the baloney we spread about entrepreneurship passion and perseverance and persistence and all, where in the curriculum do we teach putting business in the right order of priorities? Who teaches that it’s easier to find a new job, or build a new business, than a new spouse? Which class is that?

Business schools and business academics undervalue life as they (we) teach starting a business as the classic high-end getting financed and getting an exit. There’s way too little attention to what we (with a sneer, usually) call a “lifestyle” business, or, for that matter, starting up via bootstrapping instead of outside investment. And nobody teaches how to decide what to do when a crucial business meeting interferes with a kid’s soccer practice.

Every class in entrepreneurship should have at least one session with somebody who got so obsessed with the business that they lost the rest of their life. It happens a lot. It needs to show up in the classroom too.

4. Managing risk

I don’t mean the technical side of risk management. Business schools are generally excellent at teaching the numbers and analysis of risk, mathematical tools to evaluate the time value of money, for example, and formulas to compare technical investment risk like the internal rate of return (IRR).

I do mean living with risk. Not betting things you can’t afford to lose. How to sleep at night when your customers owe you enough to destroy you simply by failing to pay what they owe. How to figure out which spend is a reasonable risk for generating a future payback, and which isn’t. How it feels to take a second mortgage, or how it feels to tell a graduating high-school senior with a great record that there isn’t enough money for the college he or she has earned.

Don’t take risks if you can’t live with the downside consequences.

5. When to hold and when to fold

One of the hardest thing we do, in startups and small business, is figuring out when to stick to the plan and when to back up and try something else. There are no magic formulas, no software that can do that for us. It wraps up a combination of guessing the future, projecting different possible scenarios, understanding what’s at stake, and figuring out where assumptions were wrong, where sticking to the plan makes sense, and where it’s going to be like running your head against a brick wall over and over.

Reflection: teaching with stories

How do we teach any of this? The best hope, I think, is by telling stories: Stories of failures, stories of problems, challenges met, situations, and so on. We do deal with business cases in business schools, and cases, when done well, are a lot like stories. Of course the value depends on a couple of important factors, like the case itself (real business, or big business?) and the teacher. True stories, told by the people who lived them, can be better than business cases.

Final thought:

Am I wrong on this? Maybe my experience is out of date. If the business schools are getting better on this, I’d like to know. I’d be very happy to be proven wrong.

Five very interesting young businesses, five excellent presentations, six judges with questions, and all of it available as online video, where you can watch the whole thing and vote for the winners.

What I like best about the Forbes annual $100K Boost Your Business contest is that it is open to everybody. I love being a judge of that event. And I also love that you can be a judge too.

This is also a good opportunity to see good examples of the classic 10-minute slide pitch to investors.

I’ve already voted. Now it’s your turn. Here’s the link (or you can click on the image):

Boost Your Business Finalist Voting 2009

I’ve been asked a lot lately about business schools and entrepreneurship, which is why I did this post, last Friday, about one thing wrong in that area; and then this one yesterday, on whether business schools can teach entrepreneurship. That’s become a very interesting discussion. I expect to post on it again, if only just to summarize some of those comments.

So, in the meantime, looking at Twitter and comment reactions to yesterday’s post, I sat down today and thought about what you can learn about entrepreneurship in a classroom, that will help you be a successful entrepreneur. Not that you can’t also learn all of this from books, websites, mentors, and advisors too; but learning it in class might be more efficient.

1. Cash flow

Cash flow is critical but not intuitive. Cash isn’t profits. That ebb and flow of cash related to accounts receivable and inventory management, collection days and payment days. This one by itself justifies studying entrepreneurship. Studying this in the classroom is way better than learning it the hard way. One cash flow disaster (running out of money) in business can cost you more than two years in business school. Easily.

2. Business planning

Yes, I really like business planning. I’ve liked it since I was first exposed to it in the middle 1970s. Don’t get bogged down in the formal academic full business plan, necessarily; but business planning is a great way to see a whole business, from strategic focus to objectives to specific milestones, tasks, responsibilities, management, sales, marketing, and finance. And it’s a great tool for teaching.

3. General business fundamentals

Never underestimate the fundamentals of strategy, marketing, data gathering, finance, and analytical thinking. There’s a lot to be said for learning how to translate concepts to numbers and back to concepts. Not to mention vocabulary, and analytical frameworks, and methodologies for isolating problems and layout out solutions. Disciplines and methodologies are good to know. And hey, buzzwords don’t hurt.

4. Communication skills

Writing — clear, simple communication, in practical English sentences — is so important. It is so often underestimated. And presentation skills, focusing on what’s most important and communicating that to others. My experience is that good business schools teach that.

5. Skepticism

A good education can teach you what not to believe, and why not. Enthusiasm is great, and you hear so much about passion and persistence and all, but not without a basis for reviewing what makes sense and what doesn’t.

The question continues: study entrepreneurship, or just jump in? Does a degree help? Can anybody teach entrepreneurship in the classroom? Can anybody learn it?

You may have seen this post here from last week, about one problem with entrepreneurship education. That post was enhanced by John Wren’s comment there:

I haven’t seen any research that shows a connection between being a successful entrepreneur and having studied entrepreneurship, have you?

Interesting emphasis on research there. Can anything be true or false without research? Does a tree fall in the forest if there’s no rigorous research that says so? It would be hard to research this right, because entrepreneurship is a relatively new idea in university business schools. The idea has exploded in the last 10-20 years, but a lot of the all-stars didn’t really have a choice. That makes meaningful research less likely.

Research or not, education is good when it works; when it fits with life. Short cuts are good too. Knowledge is good. Wasting time is bad. All of that can be school.

Education in trade or business related subjects is about making things better, faster, and easier. If you can learn in a day in class what would take you a roller-coaster ride through the hard knocks, is that better? If Bill Gates did Microsoft without studying entrepreneurship, does that mean you don’t want to?

Things change. Shakespeare didn’t have a PhD in Literature. So how did he learn Shakespeare?

I think the value of studying entrepreneurship depends a lot on the specific case. Not that these are the only cases, or polar opposites, but:

• Start with the basic truth of studying what interests you. Don’t study business to get ahead in business; study business because you’re interested. Don’t study literature to get ahead, or science or math, either.
• If life gives you a valid choice, general education is better than business education. I’m really glad I studied Literature first, then Journalism, then business. I’m glad my children majored in education, history, psychology, and political science instead of business. First learn to think, analyze, read, and write, and you can learn business later. Not everybody gets that choice. Not everybody wants it. But if you can, that’s good.
• Entrepreneurship is the best of business. You have to get your head around the whole business, not some functional part. Studying entrepreneurship is the best way to study business.
• It’s not for nothing that I’ve spend a long time focused mainly on business planning. That’s also about getting around the whole business, not just parts. Strategy, operations, marketing, finance, they all come together in startups and small business. Which we call entrepreneurship.
• When it works out right for you it can be a big advantage, you’re already in school, and you’re interested in the subject, it’s a natural part of that time of life that people dedicate to learning, it can be a huge advantage. I did business school exactly at a career inflection point, jumping from business journalism to business, and it worked really well for me. Entrepreneurship would have been even better, but that wasn’t an option. Today, for you, it is.

Ultimately, there’s no formula here that works. You have to decide for yourself. I’m really glad for my two years in business school, even if they weren’t teaching entrepreneurship. That doesn’t mean I recommend it for everybody.