The following text is from a McGraw-Hill Book on Entrepreneurship published in 2005

The difference between the entrepreneurial and the managerial styles can be viewed from five key business dimensions—strategic orientation, commitment to opportunity, commitment of resources, control of resources, and management structure. Managerial styles are called the administrative domain.

Strategic Orientation
The entrepreneur’s strategic orientation depends on his or her perception of the opportunity. This orientation is most important when other opportunities have diminishing returns accompanied by rapid changes in technology, consumer economies, social values, or political rules. When the use of planning systems as well as measuring performance to control current resources is the strategic orientation, the administrative (managerial) domain is operant, as is the case with many large multinational organizations.

Commitment to Opportunity
In terms of the commitment to opportunity, the second key business dimension, the two domains vary greatly with respect to the length of this commitment. The entrepreneurial domain is pressured by the need for action, short decision windows, a willingness to assume risk, and few decision constituencies and has a short time span in terms of opportunity commitment. This administrative (managerial) domain is not only slow to act on an opportunity, but once action is taken, the commitment is usually for a long time span, too long in some instances. There are often no mechanisms set up in companies to stop and reevaluate an initial resource commitment once it is made—a major problem in the administrative (managerial) domain.

Commitment of Resources
An entrepreneur is used to having resources committed at periodic intervals that are often based on certain tasks or objectives being reached. These resources, often acquired from others, are usually difficult to obtain, forcing the entrepreneur to maximize any resources used. This multistage commitment allows the resource providers (such as venture capitalists or private investors) to have as small an exposure as possible at each stage of business development and to constantly monitor the track record being established. Even though the funding may also be implemented in stages in the administrative domain, the commitment of the recourses is for the total amount needed. Administratively oriented individuals respond to the source of the rewards offered and receive personal rewards by effectively administering the resources under their control.

Control of Resources
Control of the resources follows a similar pattern. Since the administrator (manager) is rewarded by effective resource administration, there is often a drive to own or accumulate as many resources as possible. The pressures of power, status, and financial rewards cause the administrator (manager) to avoid rental or other periodic use of the resource. The opposite is true for the entrepreneur who—under the pressure of limited resources, the risk of obsolescence, a need for flexibility, and the risks involved—strives to rent, or otherwise achieve periodic use of, the recourses on an as-needed basis.

Management Structure
The final business dimension, management structure, also differs significantly between the two domains. In the administrative domain, the organizational structure is formalized and hierarchical in nature, reflecting the need for clearly defined lines of authority and responsibility. The entrepreneur, true to his or her desire for independence employs a flat organizational structure with informal networks throughout.

Source: Hisrich, PhD, Robert D., Michael P. Peters, PhD and Dean A. Shepherd, PhD. Entrepreneurship. 6 ed. New York: McGraw-Hill Irwin, 2005.

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This is the Keynote I delivered at CeBIT 2009. In it I describe our business model against a backdrop of how media consumption is changing, which affects the content industry and the advertising business. The motto of this year’s CeBIT was “webciety”, which is why I use the term a few times.

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At next09 I had the pleasure of being the moderator of a meeting of the titans in social networking, with LinkedIn, XING, and StudiVZ. Conspicuously absent on the panel but present in the discussion were Facebook and Twitter.

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In addition to my keynote, I was interviewed by the host of the channel. What exactly are the Web 3.0 changes that lead to a “webciety”? Big questions, small answers: I tried to pinpoint how individuals get a chance to monetize their expertise or at least make it available to a larger crowd/audience.

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Reflecting on the current discussions, last at the Delphi Executive conference in Bonn, and at CeBIT which I both attended as a speaker, I recalled the very lively panel at DLD 09 around online video and social media. If you are interested in the topic, the video gives you insights with Brightcove, Endemol, sevenload and Termor Media and a great moderator, David Kirkpatrick from Fortune Magazine.

Feel free to comment! I also embed the video here:

About the specifics of how we perceive the value of recurring WebTV Content, please check my Interview at ETRE in Stockholm:

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Travelling through the US once again and hearing comments about the recession every day, I was struck by the elasticity of US business once again. As much as the business climate is intoxicating to the point of being hectic in boom times, as seen in 1999/2000 and once again in 2007, in bear times everything gets very gloomy.

I was riding in a cab in Las Vegas headed to CES and for once in the habit of European cab fares I forgot to tip the cab driver. He commented “You Europeans never tip, do you?”. After paying the due tip, I reflected on how dependent employees in all services industries were on tips for their regular income. I also noticed that tipping behavior on the part of Americans differed strongly from what I had experienced just 6 months ago on my last extended trip to California. People now, out of need or out of fashion, were downright stingy. Given that such large portions of the US economy are service based, I could not help but wonder how that had the same effect as a wage cut in many of these industries. At the very least, it shows that employers, who deflect part of the necessity of paying market wages to the culture of tipping and its encouragement in the policies of their businesses, thereby have an instrument to reduce and flexibilize their labor cost. In boom times employees earn more from tips and in bust times they earn less without the employer having to enforce wage cuts. This benefits the employer because he remains at his (low) wage cost basis, keeps his prices stable and lets the customer reduce tips if he feels he needs to. Since tips are part of the price structure of using a service, this means that lower tipping amounts to a deflation of service prices from the point of the customer. Thus, in a way, the business owner is leaving part of the pricing to the customer who can deflate the price he pays at will if his pockets are tied – as is the case in a recession.

Now while this, from a European perspective, could be perceived as an unfair advantage the business owner has in his relation to employees and customers, it could also be described as an “entrepreneurial risk” of the employee. Employees that commit particularly well to the service they are a part of and endear themselves to customers will invariably in good or bad times reap better tips from the customers. An employee who does well will probably convince a business owner to give him the responsibilities (assigned tables, assigned services) that will have the highest likelihood of earning him tips. One can already observe that some businesses compete on a labor market by installing policies that encourage tips.

A hamburger chain called Fat Burger places a small tip box next to a big tip box at the cash register and each time a larger tip is paid into the so called “fat tip box” the cashier yells out “FAT TIP!” and all other employees chime in yelling “FAT TIP!” as well.

As ludicrous as a discussion of the macroeconomic effect of tipping might seem at first glance, the impact on the US economy must be sizable. Considering the service industry is a 10s of billions of dollars segment of the economy and that average tipping is between 10 and 20 % of a purchase, tipping could well amount to several billion dollars in the economy. Adding or subtracting billions of dollars of volume to the price structure of the service industry could in turn have stronger than imagined effects on inflation and deflation, as well as on purchasing power in low income segments of the population.

As I am not an economist, I will leave the discussion at that, but I sure would find it interesting to know if this has ever been explored academically.

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In a recent post, emarketer quoted a study by Deloitte stating that TV was still the lead influencer of purchasing decisions by consumers, even in the US.

I beg to differ.

Studies on the share of TV in media consumption do not differentiate enough as to the level of attention that the medium is consumed with. So many households have TV running virtually all day with a minimum of attention as opposed to an online usage that is still predominantly active, targeted (in the sense of the user pursuing a search or e-commerce activity), or socially interactive, that the two types of consumption cannot be equated – it’s comparing apples and pears.

The is all the more true if we consider the demographics, with a larger portion of low-income households letting the TV running indiscriminately. Besides, if you discount the number of TVs running 12 hours a day in Bars and Restaurants, I would wager that in terms of full attention media consumption, online has already overtaken TV.

We lack a study that compares – from the vantage point of an advertiser – conversion rates on campaigns running on TV and non-display-ads online.

The trend will increase with the further roll-out of online video.

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This year, all Las Vegas was abuzz with the expectations of attendance to CES – and how they were not met. From cab drivers to convention exhibitors, everyone was touting the scale of the downturn.

To us, the convention presented a more mixed picture. As often is the case in downturns, in an overall downbeat environment, a few interesting developments could be observed:

1) The Slingbox by Slingmedia: offering some 14 Mil. subscribers of its parent company, a midsize cable operator in the US, the opportunity to access Web TV content through their cable content.

2) The advent of HD to TV and other screens, including a number of interesting personal camera devices.

3) The increasing dissemination of “cloud” (now there’s a buzzword) logic to the consumer world: first through “thin client” notebooks that are not much more than windows to web services, and second through a push towards homes servers, ranging from Windows solutions to proprietary home hifi systems. Its too early to name this a significant consumer trend, but slowly we are seeing the first applications for the “internet of things”, “cloud computing”, and “semantic web”.

Recession is the best time for entrepreneurs, Ken Morse (and others) says. Now is the time to see and grasp the potential of these new technologies as they slowly approach end consumer relevance.

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The “Gretchenfrage” most discussed in the advertising industry right now is whether we will have a full-fledged downturn in advertising spending across all media, or whether there are niches and segments of the advertising /media industry that could even benefit from the recession. This being the 2^nd downturn that I have experienced in my career, I am firmly convinced that the latter will happen.

I make this assumption based on several factors:

1. A new generation of marketing decision makers now has control over most large budgets. This generation understands the power of digital communication- even though in the past years it has underestimated the potential impact of Web 2.0 and has continued allocating a disproportionate amount of money to traditional media without measuring that performance.
2. Cutbacks in marketing and sales budgets are rather absurd when the real problem is crumbling sales, but this happens in every recession and it will happen this time around again. Since at the same time marketing performance will be measured more and more in terms of contribution to sales, marketing decision makers will focus on campaign tools and media that either directly or indirectly increase sales performance. Gone are the expensive TV commercials with bikini clad, young beauties on a tropical island, and in comes unsexy sales-driven below the line marketing. The past 2 ½ years have proven, however, that marketing in a Web 2.0 world need not be dreary at all even while contributing directly to sales lead generation.
3. Web 2.0 advertising formats and communication models have reached a level of maturity and a critical mass among users that allow them to have a measurable impact on brand communication and sales lead generation.

The coming year will see providers of Web 2.0 campaign solutions and media ad placements achieving disproportionate success considering the downturn and cutbacks of media budgets. This will happen for precisely the reason that in the past 1 ½ years many showcases of Social Marketing have been started that have proven or will prove to have been successful to an unexpected degree. After the Beacon disaster these showcases will turn the tide, much in the way keyword advertising established itself in 2002 – 2004.

Our best reference is http://bmw-web.tv, which generated considerable brand awareness for our client BMW. BMW itself doubled that success by creating, at the same time, a national web TV project that was equally successful called BMW TV which greatly enhanced traction to its own site. For confidentiality reasons I cannot give you figures, but trust me the impact was measurable.

Advertisers of the old school often argue that performance marketing or traditional lead generation marketing does not help the brand gain emotional traction and awareness. That dichotomy is of the past. Social relevance, rich media and video formats allow the digital sphere to create a branding experience that is as emotionally compelling as television and as measurably successful as search engine marketing. That has always been the holy grail of advertising, and we seem to have found it.

If you want more information or need help achieving that success, contact me.

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A lot is being said and has been written about how strategies and market mechanics determine the success or failure of ventures and large companies. But any entrepreneur will confirm that it usually is execution which decides the fate of the company, especially in venture companies. Thus, leadership capabilities may be the most important skill set of venture management.

Leadership, management, and the principles which guide how employees are motivated and directed in their tasks are usually treated either as a self help topic in management books or as the HR side of company organization.

It might be time to focus on leadership and HR capabilities in the strategic dimension they have for the company. This means to recognize that the best company strategy can be killed by the wrong leadership methods. Good leadership is not only an important requirement for management. It is the necessary condition for company success!

In the region of North Germany where part of my family comes from we say that a fish always stinks from the head, which in my opinion puts in a nutshell the essence of leadership. If your venture team is not motivated or doesn’t excel, start at the head.

Ted Levitt once said that

organizations exist to enable ordinary people to achieve extraordinary things,

which I believe is only a way to say that things happen only if people do them. The success of a company is only achieved if the employees and the managers of that company willingly take the necessary actions to enable that success.

That is certainly first and foremost a question of deciding which of the actions that are available in a given situation is chosen, but it is equally importantly a question of ensuring that every employee executes that strategy in the way that best ensures success, including feedback and adaptation of the strategy when problems arise.

Achieving this, however, is a question of leadership.

Since all dictatorships eventually fail, leadership cannot be reduced to the ability to bark orders. All great historic figures acclaimed for their leadership, from Julius Cesar to Napoleon, from Spartacus to Martin Luther King, are all admired for their ability to inspire, to motivate, and to convey a sense of purpose to a large number of people, i.e. to the organization that they led.

Inspiration however, is nothing without credibility. Credibility, in turn, is only achieved through authenticity. Authenticity is only achieved through honesty. Applied to the world of the 21^st century and the context of leadership in business organizations, this means that a truly successful leader needs to combine the ability to inspire others with a set of skills and principles that are tenets of credibility as a leader:

1. An inspiring sense of purpose.

2. A clear set of unflinching values. Shifty leaders command no respect.

3. Honesty at all costs.

4. The ability to communicate necessities and convey a sense of urgency to a team.

5. The ability to define the organization as a community serving a common goal.

6. The ability to honestly admit own mistakes and address the weaknesses of the organization.

7. Relentless commitment to the company goal, including the necessary ability to “punish underperformance”, without humiliating anyone in the organization.

8. The ability to lead by example, including in personal matters such as health or respect for others.

9. The discipline to pursue a strategy and tactics that belong to that strategy and to adapt these whenever necessary, not only “acting from the gut”.

10. The intelligence to always overestimate competition and underestimate your own position.

Most of these traits require a certain level of self-assurance, respect for others, and clear view of your own shortcomings that is incompatible with most managerial egos. But while there are enough cases of at least temporarily successful egomaniacs, in the long run only those entrepreneurs intelligent enough to value, respect, and reward their performing team members, and self-critical enough to recognize their own mistakes become truly great.

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