Thursday, November 26, 2009

Perfecting the Pitch

It must that time of the season! Over the past 2 weeks I have seen over thirty (30!) Investor Pitches - some over the plate and some clearly off in fowl territory. With Angel, Venture and Government programs gearing up for the end of the year and "In the spirit of giving" let's to summarize some of the keys in "Throwing the Strike".

The Deck - As cruel as it may sound, the initial investor pitch is scheduled for 8 to 10 minutes. Many CEO's find this tough to condense the years they have worked on their venture into something so concise. A crisp 10 charts will provide the Entrepreneur with a flexible template to work within the tight time frame. If the potential Investors really love the story, there will be lots of time for more PowerPoint charts and models. The Charts themselves should be Clean (uncluttered, "less is more"), Consistent (Logo, Font, Colours) and Visual (Pictures, Graphs, embedded Video).

The Story - Your pitch deck should tell a Concise story that takes the audience through a journey. The journey needs a Start (opening), the Middle (problem, solution, value proposition, financial model) and a Conclusion (Financial need, why invest in you, expected returns).

Strong Opening - It's proven that first impressions are lasting ones. With only 10 minutes on the podium it will be difficult to change perceptions if the first 30 seconds are cluttered, rambling or unfocused. Practice, but do not memorize your opening remarks - think about an interesting way to hook your audience such that they are "hungry" for the next chart in the deck.

Educate Me with Simplicity - Many investors that you are pitching to have limited knowledge of your Industry and Target markets. Provide us with a simplified version of your marketplace and value chains so that we can easily conceive how your products and services fit in.

Demo's - If you have a Demo as part of the pitch ensure that it has been "Canned" or "Burned" to a file that makes it Foolproof. Do not rely on the being able to connect to the net to access your demo. Be aware that presentation graphics built on Apple are not completely compatible when shown on a PC.

CEO Delivery - The CEO needs to be poised and articulate in the delivery of the key messages. Maintain excellent eye contact with your audience ensuring that your focus is scanning all aspects of the room. You are watching for body language and key hints that the messages are being appropriately received and translated. No "READING" of charts, No "BABBLING ON" in responding to questions and make No "EXCUSES" for the technology not working or the charts being too hard to read.

Strong Finish - Many CEO's forget to go for the CLOSE. "Tell Me what you plan on Telling Me (Opening), Tell Me (Middle) and then Tell Me what you Told Me (Close)." You need to ask for the order and have a convenient way of being contacted to negotiate your next steps.

'Tis the Season - Let's hope that these sound bites can improve your probability of throwing a strike into the the Batters Box.

Friday, November 6, 2009

Nose In / Fingers Out (NIFO) Governance

Governance is the system by which organizations are controlled and managed. Paramount to this system is the relationship of the Board of Directors to its CEO - specifically "How Active is the Board in the operation of the company?"

At one end of the scale (The "A" End), we have the Passive Board often referred to as the rubber "Stampers" - In this model, we usually have a very dominate and knowledgeable CEO who is setting and driving the strategic agenda of the corporation. Board members are friendly to the process and few tough questions or contrary opinions ever get tabled. With Management setting and controlling, Board etiquette is often in a constant state of "scramble". These Boards are typical of early stage organizations where the CEO is a knowledgeable, strong willed and passionate. Board members are usually hand-picked from a group of friends or acquaintances.

At the other end of the scale (The "Z" End), we have a very Active, all Controlling Board who often spend a lot of their time managing the "Minutiae". Here the Board is usually large, comprised of a number of sub-committees and has a detailed process of checks and controls. The Board in this case, digs deeper into day to day management issues influencing Marketing, Sales, IT and HR procedures. Boards appointments are less likely to be influenced by the CEO and their friends. Sometimes we often see an executive committee of the board which essentially amounts to a "Board within a Board". Boards at the "Z" end tend to be Public, Not for Profit or Co-Op. Sometimes in crises mode, the Board does have transform itself into the Minutiae. This often happens when the CEO is not performing or has asked for help in managing the complexity.

Boards operate between the "A" and "Z" ends of the spectrum. The factors affecting the operating model include: Historical roots, Stage of Development, Competence of CEO, Experience of individual Board members and Stakeholder influence to name a few. Board operating models are also known to evolve over time as factors in the internal and external environment change.

A more sustainable approach will be one of Moderate ("M") Board participation and consistent with the notion of "Nose In and Fingers out" (NIFO). A NIFO board is more in tune with the fact that the Board exists to "enhance the decision making capability of Management". Best Practices in Governance suggest that Boards at both ends of the spectrum need to migrate towards the NIFO middle. Boards in NIFO mode operate with fewer committees, less meetings and prioritize their efforts on results, strategy, risk and policy. "Day to Day" details are left for Management to execute.

A good exercise would be to profile your existing board on the "A" to "Z" scale. A good place to start would be to pull the Board Charter documentation and re-read the language. A open dialogue on the topic at your next strategic retreat would also be helpful in analysing your Board's Effectiveness in its current Governance model. Is your Board's model consistent with the stage of growth, source of capital and skill sets of your members and its CEO? Is your Governance model consistent with "acting in the best interests of the Stakeholders"?

Can you see the Power in operating in a manner more consistent with Nose In Fingers Out?

Mentors - Filling in the Experience Gaps

Fresh out of school I started my career at one of the icons of Canadian business - Bell Canada. Included in the icon group were other national brands such as IBM, Xerox, Petro Canada and Imperial Oil. At the time the world was still thinking about starting and finishing your working life with the same company. These organizations were legendary for Leadership Training, Skills Development and Coaching programs that included "a new job every 6 months".

On my first day on the job, I was given a team of 12 individuals who I had to coach, motivate and manage. To support my efforts, I was sent to leadership training courses every 6 months to fill in the gaps. In hindsight, I now realize how fortunate I was to be part of a New Graduate Training program - my education and practical on the job training has been part of my fabric ever since.

In today's world a lot has changed. Clearly, the concept of "employment for life" has a new time horizon and companies are spending less on their graduate programs. Company training and education services have also been severely cut back. Gone are the days where companies would hire you for your ability to learn and proceed to train you to fill in the gaps. Recruitment today is looking for the individuals who can do the job with their existing tool sets and hit the ground running.

Working with our new breed of Entrepreneurs has a different twist. A full 50% of entrepreneurs fall between the ages of 19 and 30. How and where do these individuals get their training and skills development in today's environment?

In a recent study conducted by OI Partners ( a number of key items were identified that were consistently lead to the failure of newly minted leaders. Five of these factors include:

  1. Leadership & Delegation - the ability to get results through others.

  2. Motivation - the ability to rally the troops to higher levels.

  3. Communication - the ability to provide clear and concise messages.

  4. Personal Skills - the ability to relate on an interpersonal level.

  5. Recognition - the wiliness to celebrate the successes no matter how small.
When you scan this list you conclude these factors can be "theoretically" studied, but the realty is that they have to be "experienced". So where do Entrepreneurs get the experience to fill the gap?

In a previous blog,we chatted about the importance of Advisory Boards and their impact on improving company success. These boards are helpful to gain traction in the marketplace - but today's young Entrepreneurs will need more. To supplement the experience & training gaps, a strong prescription of Mentorship from a seasoned "been there done it" Coach is clearly warranted.

Coaches will come in many forms and range from a "certified" professional, to a relative or simply a trusted friend. Often coaches are joined together in business forums, where the Entrepreneur can open up amongst a group of peers in a "risk free" environment. Regardless of the background or format, the coach will need to add value by identifying and filling critical experience gaps. Rounding out the theoretical with practical experience, will clearly enhance the probability of commercial success.