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I blame ‘software engineering’. When it was called ‘computer programming’ nobody except us nerds knew or cared what it was. To the uninitiated, it was a dark art best not talked about. But some of us weren’t happy with that and wanted to be considered ‘serious professionals’. This is why ‘software engineering’ was born. And this is where all of our troubles began…

Now, people who didn’t know anything about computer programming may hear the word ‘engineering’ and assume that’s about building houses or bridges. “I’ve had an extension built on my house, I know something about that,” they think. Before we knew it, the rot had set in.

THE CONFUSION

The problem is that, at a glance, writing software does look a lot like engineering. Enough so that you could be forgiven for mistaking the two. You create specifications which are like building floor plans and coding is often described as ‘building’ software. Maybe you have heard about ‘code reuse’ or ‘frameworks’? They sound suspiciously like the prefabricated components they build skyscrapers out of. It’s no wonder this brings about such confusion. 

WHY IS THIS A PROBLEM?

Unfortunately writing software only looks like engineering. For example, when building a house your floor plans lay the foundations - the rooms, doors and windows - all the features that you want. Then from these plans, the house is built. To the uninitiated, this is an attractive way of thinking about how software is made; it’s specification based, it’s predictable, its standardised, and it’s completely wrong. 

The guilty secret of ‘software engineering’ is that it’s incredibly messy, nothing fits together properly, nothing looks like its specification (assuming you had one), requirements are poorly understood and they change fast. And no two jobs are the same anyway - no matter how similar they look.

THE ROOT OF THE ISSUE

Let’s get to the real root of the issue. It’s because we’ve been living in houses for around 11,500 years and building software for only around 50. The user needs behind a ‘house’ are well understood and encoded into architectural patterns. Although needs can vary (extra rooms for the kids, somewhere to park the car etc.) they don’t vary enormously. Well known patterns are followed. 

This is the point where the metaphor breaks down: user needs are often one of the least understood aspects of building software. When a carpenter builds a door or window frame, while there may be a few new details, they are not typically re-inventing the notion of ‘window frame’. In software, on the other hand, it’s often the case that everything will get re-imagined.

Even when you are building something similar to a previous project there will be many small changes that inexorably ripple out through the design and create new problems, new complexities and new decisions. And these changes can happen right in the middle of the project - you may have started out building a 2-up 2-down only to find yourself adding a new floor, atrium, and wine cellar.

When you are building software the only certainty is uncertainty - the only constant is change.

IN SEARCH OF A BETTER METAPHOR 

A metaphor I’d like you to consider is a law suit. It’s likely to be expensive, risky, and conducted in a language you don’t understand. The facts of every case, however superficially similar, are always different and can have a strong bearing on the outcome and your case needs to reflect that.

To craft a good case you need expensive experts - lawyers - to build it for you. They are versed in the complex beast that is the law and use their knowledge and experience to make the best case out of the available evidence and precedent. They may specialise in an area of the law but still know that every case is different and has its own problems.

If you hire good lawyers, listened to their advice, and build a strong case then hopefully you win. But, if the situation arose again you’d likely think long and hard about the cost, the risk of failure, and how best to ensure you’ll get a good result.

It would be wise to apply the same approach to building software. Understand that it’s complicated, no two pieces of software are the same no matter how similar they look and it’s all done in a language you don’t understand.

There are many traps for the unwary - don’t get caught. Hire good people and listen to their advice.

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“Why should I pay attention to you?” you may be thinking. That’s not a bad starting point and, perhaps, you shouldn’t! Let’s see…

The people I am speaking to are running businesses where technology is a key component of what they do and, typically, they are making (or contemplating) significant investments in building software, where failure has serious consequences for their business.

If this isn’t you - that’s okay. Please do read on, as even though much of what I say isn’t written directly *for* you, it will still be of good use. 

It was in 1986 that I began to write software. In 1992 I turned professional. 2000 was the year that I joined my first startup and I continued working in the startup world until 2012. This means I have around 30 years of experience of building software commercially. At the risk of sounding like an old fogey - I’ve been around.

My startup experience is perhaps of most relevance and interest to you. Because every one of those software startups - including two of my own - failed.

In my early work as an advisor and mentor I’ve seen even more startups go on to fail in some sense: either going out of business or struggling to get anywhere near their objectives.

In short, I’ve seen a LOT of things go wrong.

I wish I could say that I learned the lessons immediately, but it actually took me more than 10 years of failing (over and over) and then another 2 years trying to help other companies before the penny dropped and I began to learn the lesson of my experiences. 

In almost every case, there was one or more of the following 5 critical failures at work:

• An inability to articulate a vision in a way that lead to a concrete plan of action which could either be followed or invalidated

• A team that were not able to align themselves to work properly together, either through miscommunication or subtly working at cross-purposes, if not outright sabotage!

• A value proposition that was as unclear to them as it was to their customers, nobody could perceive the value

• A product that didn’t meet the needs of customers enough to sell in sufficient quantity or at a price that made the business viable

• An inability to stick to a plan and to learn which tactics work and which do not, so that effort is wasted pursuing the wrong tactics

The end result of these kind of problems is usually that things begin to slow down, targets are not met, tension and unhappiness rises, money becomes a problem and the company either dies or becomes a zombie that will never achieve its lofty ambitions.

But it doesn’t have to be this way. We can learn from the mistakes of others (including mine). If we value turning vision into something concrete and measurable, use appropriate tools to keep the team aligned, test our assumptions and strengthen our value proposition, create strategy, and measure our tactics - we can do better.

Better yet, if we adopt a system - a programme of work designed to address the issues we are likely to face, we can do better and get luck on our side. Louis Pasteur is quoted as saying, “Chance favours only the prepared mind.” This is the kind of approach that I preach.

So, my reason for thinking you might want to listen to what I say is that I have experienced many of the ways that companies, startups and SME’s, can go astray. And I’m trying to translate my experience, the lessons I’ve learned the along the way, into a systematic approach to success in the software business. Trying to turn beautiful mistakes into hard-won learnings via The Art of Navigation. 

I still have a lot to learn, for sure. My approach is still being developed along the way but I hope that, like me, you will make it your ambition to try and make only new mistakes!!

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When we talk about raising seed investment, we are mostly talking about raising in the region of £150k-£350k from angel investors - perhaps as a first raise or perhaps after raising a pre-seed round from friends and family.

So, when you are raising investment from angels you need to understand the investor mindset. Too many people treat investors as ‘wealthy customers’ and don’t get into the psychographics of the investor, the mindsets behind them, and the decision drivers that are at work when they consider making an investment.

In this article we will consider:

1. Investor psychographics

2. The psychological drivers underlying investment decisions

So, why do angels invest? According to Bill Morrow, one of the founders of Angel’s Den and a man whose seen more of the UK angel investment landscape than almost anyone, the top reasons are:

1. I’m bored

2. I want to give something back

3. The money

4. Give me something interesting to talk about

Does it surprise you that money isn’t #1? It did me when I first heard it. But if you think about it, they already have money, and if money was their primary concern then property is a much safer bet.

The reality is that a lot of angels get bored. Being retired seems great but there’s only so much golf or tennis you can play. On average it takes less than two years before they realise it’s all a bit dull. But what can they do? They’re not crazy enough to to start a venture of their own, but if they find someone doing something interesting where there is an alignment of values - well, being an investor can make a lot of sense!

In London, many angels will have made money through property or finance. They may be angel investors but by no means are angelic. Investing in companies with a good mission is a way to give something back. Further, they may feel they have useful skills and experience and being able to mentor is another opportunity to give something back.

And then there’s money. As we’ve already discussed, money is not the primary reason to invest and it’s worth bearing in mind that serious angels are already wealthy; their relationship with money isn’t necessarily that of you or I. They’re not philanthropists, so they want financial success but they accept this may not happen. What they don’t want to see is their money being squandered foolishly.

So, having established some of the psychographics of the angel investor, let’s turn to the decision model for investing in any given business. Most investors are operating with three concerns in mind:

1. Value potential of the opportunity

2. Risk of wasting their money

3. FOMO

1. Some entrepreneurs make the mistake of thinking of investors as ‘big customers’. This can be the case but it’s rare. It’s not even likely that they will be interested in/knowledgeable about your space - you will need to persuade them. It seems obvious when you write it down, but I see a lot of people assume the investor will already be interested and it can doom them. You also need to persuade them that the opportunity your business represents has sufficient value to help drive their portfolio.

EXAMPLE

2. Angel investors may be wealthy but they also know that you don’t stay that way by investing foolishly. No investor wants to put their money into something daft. They want results - not a beautiful office of beanbags and exotic plants.

You need to spend on what you think is right, but it is key to prove to potential investors that you are a responsible custodian of their money and that you make good use of it. A great way of demonstrating this is through investing money in your own company. Angel investors like this. By putting your money where you mouth is, you show the investors that you are spending funds as precious to you as they are to them.

Now think about how you can demonstrate that you have been a wise and successful custodian of the money you’ve raised to date. What milestones did you predict and hit? How have you de-risked your project? What advantages have you created? And how you can present these to best advantage in front of a sceptical ex-accountant with £25k to give you.

EXAMPLE

3. The third factor you have to play upon is their fear of missing out. All investors face the fear of missing out on something good and this is largely because most investor business models are predicated on needing one or two break-out hits to make their portfolio return numbers work. An investors ability to predict the future is probably no better than average - this is a problem. And the fear of missing out is not only financial - ego comes into it too, of course.

EXAMPLE

It is therefore imperative that you are able to show how not investing in you will feed that fear. You need to articulate how your business model will exploit trends that can be credibly argued to be moving in a direction that will generate success for you.

A reliable model for understanding how to think about this is Rowan Gibson’s 4 Lenses of Innovation. I plan to cover this in more detail later, but in brief the lenses are:

• Understanding customer needs

• Challenging orthodoxies

• Harnessing trends

• Marshalling resources

Using a model like this, you can create a position in which the investor faces a risk of missing out on something good. Although investors do suffer from FOMO - good investors will still take a long-term view.

Your job, when thinking about things like a pitch deck or an executive summary, is to understand the investor mindset and balance the 3 forces to create something compelling.

What’s are your thoughts and experiences in raising investment? Feel free to comment below.

My special thanks to Bill Morrow for his help in refreshing my memory on some important points that really improved this post. All the mistakes… totally mine.

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Being a CEO is hard, and I’ve alluded to some of the reasons for that in prior posts about the curses of being an entrepreneur and mastering goal-setting. But today, I want to talk about something else that is very difficult. It particularly pertains to the problem of focus that I went into more detail on.

As the CEO, your role straddles two entirely different worlds. In one, which I will call the ‘world of the board’, your role is to be custodian of the vision and the strategy. You are primarily oriented towards the future - towards the opportunity - to ''imagining the factory after next, ” as my old mentor Mike used to teach me, cribbing from John Harvey-Jones. It’s all about keeping larger opportunities in the frame. The other one, which I will call the ‘world of the management’ is about today, reality, day-to-day operations, keeping the doors open and the cash flowing.

The problem is that both are important and are vital to a thriving business, but that they lie in entirely different directions and have different pressures. As CEO - you are the fulcrum, and nobody else cares.

I call problem 1 the ‘world of the board’, because typically we see it as the board’s role to be interested in, and custodian of, strategy. In fact, many boards are far too operational and not strategic enough - but that’s a post for another day. To the board, the CEO is their interface to reality and they challenge the CEO to ‘make it real’.

I call problem 2 the ‘world of management’, because we typically see it as the management teams’ role to be interested in, and custodian of, the operating plan. In fact, many management teams are swamped by challenge and just can’t see the wood for the trees.

Typically, this can be expressed in one of two ways. Sometimes the CEO can be distracted by future thinking when the strategy has been settled. The, “I’ve had a great idea!” syndrome. Sometimes its right and proper to talk strategy but there is no room for it. The CEO needs support but the the team has no bandwidth for anything beyond the problems of today.

And there you are as CEO, trapped in the middle, a foot in each world - born of neither - and trying desperately to balance the competing demands of each.

How do you do this?

1) Recognise that what you are doing is very hard and that we’re not looking for perfection, but simply something that can work.

2) Recognise that there no ‘balance’ so much as a moving, shifting balance that you will have to keep up with. The thing will move in waves. As you resolve some of your strategy it will inform operations, and as you develop operations it will create (or remove) strategic options.

3) You must be conscious and act with intent. Decide, in advance, how much of your time will be devoted to each realm, and stick to it. Yes, you will be driven off course. Pick yourself up and start again. The key is not to let todays fire obscure what makes tomorrow possible. (Or as Stephen Covey would put it - Quadrant 1 starves Quadrant 2).

4) In strategy, focus your efforts on diagnosing and addressing the ‘critical factors’ (for more on this try Good Strategy/Bad Strategy: The difference, and why it matters by Richard Rumelt). By paying attention to your activities here, you give yourself the best chance of resolving or side-stepping operational issues that have the capacity to strangle progress.

5) Get help. If your board does not apply itself properly to strategy - change it. Find a mentor or an advisor who can work with you to work with your board and help it to see what its real role should be.

Do these worlds and problems sound familiar? What are you doing to steer yourself in the right direction? 

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The vision statement. How many have you seen that are no more than bland drivel? How about these beauties:

‘We work hard every day to make X the world's most respected service brand.’

‘X’s mission is focused on six core aspirations the company continually strives to achieve.’

‘At X, our purpose is to build trust in society and solve important problems. It is this focus which informs the services we provide and the decisions we make.’

‘X’s business is to utilise crowdsourced technology that provide key differentiators between us and our competitors.’

Actually, I cheated. That last one was created using the Mission Statement Generator. But, let’s be honest - there’s not a lot in it.

I’m not sure why some companies bother with them; half-hearted, dull and meaningless vision statements are worse than useless and expensive (McKinsey don’t come cheap you know!) But a carefully created, powerful one is a very useful thing for a small business to have. 

As a small business, it is often the case that you don’t have the money for marketing or hiring to compete with the larger players. A good vision can help you connect with the people who work for you, the people you’d like to work for you, and the people you want to buy your product.

Because a good vision statement will resonate with people who agree with your vision. A good vision will move them to action.

So, how do you go about it?

The first thing you should do is recognise that your mission is about how you want to change the world; for some value of ‘change’ and ‘the world’. It should talk about what that end state looks like.

Let’s say you were making a smart fire alarm, your vision might be ‘Nobody dies due to fire or smoke inhalation in their home by 2028’. We’re not talking about excellence, our brand reputation or striving to achieve. We’re stating our purpose, what we’re about and why we exist.

Do you see how a vision like this can be powerful? Anyone who cares about fire safety, has had someone they care about affected by a home fire or is simply worried themselves, would have an emotional response to this message. A nod of the head, an “I want this” or, even, “This is my mission too.”

Many businesses struggle to find the right people and can’t afford to pay top rate in their industry. A powerful vision that really speaks to the people you want can act as an attractor and help tell them they are in the right place. That they want to go on this journey too.

Maybe this vision risks trying to boil the ocean, though. How would you tackle that? You might use something like:

‘Halve the number of UK deaths from home fires by 2028.’

This is slightly less powerful but perhaps more honestly achievable. Honesty is another incredibly valuable trait in such statements. There are around 325-397 domestic fire deaths per year, so you are talking about a major reduction and potentially saving thousands of lives. That’s still a worthy goal.

It is also a measurable one. In 2028 we can look at the number of people who died due to home fires and see if it halved or not. Better yet, every year we can see if we are making progress towards delivering on our vision.

A good vision is simple, clear, direct, and purposeful.

Some things to ask yourself when developing a great vision statement:

Does it say what impact we are going to have?
Can it be measured?
Is it worthy of our time and attention?
Are there people who will care?
Is it pithy?

A good vision statement will pass all these tests and be both enjoyable to read, meaningful, and - to the right people - inspiring.

What about your vision statement? Have you shared it with prospective customers or hires? What do they think?

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