Gripevine To Civilize Angry Twitter Mobs With Its Customer Complaint Platform

by Erin Griffith
on April 6, 2012

We’ve seen what social media can do to a company’s reputation. One little slip-up, like a PayPal Ruins Christmas rant, or a Chapstick social media death spiral, can damage years of precious brand building. More importantly, it can kill a company’s stock price.

Take United Breaks Guitars, a YouTube video that musician Dave Carroll made after United Airlines refused to reimburse him for breaking the neck of his checked guitar. It’s up for debate, but some have argued that the video, which has been viewed more than 11 million times, caused the company’s stock price to drop 10% to the tune of $180 million.

That’s enough to get a CEO’s attention. It’s enough to get a VC’s attention, too.
Carroll of broken guitar fame has joined forces with Richard Hue, head of Harbour Capital Management Group and developer Chris Caple, to form Gripevine, a customer complaint platform that helps companies manage customer service to better serve their customers.

They’ve raised $1 million in seed funding from angel investors and Hue’s contacts to build it.
You’ve no doubt come across Twitter-stream complaints to airlines, hotels, or cable companies. And then there’s Yelp, where anyone with an Internet connection, money for a meal, and an engorged sense of entitlement can damage a small business’s reputation with one-star reviews.

The point is not to empower overly entitled customers — they’re more than likely already capable of causing a shitstorm on Twitter or Facebook just fine on their own. The point is to solve customer problems. You can’t post a gripe to Gripevine without including a desired outcome. The company actively deletes gripes that are just pointless rants that “Company X sucks.”

“Yelp is for people to bash a company. What we’re doing is more like, ‘I had a bad experience eating here and I want a credit,’” Carroll said. That’s a good idea, considering Yelp has been sued by small business owners multiple times. (Accusations of extorting small business owners to remove negative reviews have been dropped.) Meanwhile, Gripevine is better for customer service complaints than Twitter, Carroll argued to me, because the entire situation can be spelled out in one message rather than a back and forth.

Knowing the way the Internet works, I think it’ll be extremely challenging for Gripevine to keep its complaints reasonable and out of the “Company X sucks” weeds. But I think it’s an admirable goal. Gripevine is spending a lot of time educating companies that they won’t be victimized by the angry masses on the site, Carroll said.
Gripevine sends the complaints to the company in question, prompting the company to claim its page on the site and resolve the dispute. Notably, Gripevine doesn’t promise anyone’s complaints will be solved, it just tries to improve the process.

The company side is where Gripevine’s business model kicks in. Since CEOs know they have to monitor the social media-chattering masses, they pour thousands of dollars into CRM systems like those from Radian6 to ensure they handle customer complaints properly — before they turn into PR disasters. Gripevine competes with Radian6, but it provides more than just listening tools, Carroll said.

For the 100 companies that have claimed their profiles, Gripevine provides them a dashboard, which they can use to manage their CRM systems. It’s fully integrated with Twitter and Facebook, allowing CRM workers to communicate with each other, prioritize gripes, and follow up, which is helpful in the event of a shift change.

For six months, the enterprise product has been free for customers. It’ll charge a subscription fee after that. Since launching two months ago, companies like HP, Sprint, Verizon, and Walgreens are already on board. More than 3500 users have signed up and more than 800 complaints have been lodged.

Steve Jobs was right: Dropbox is a feature, not a product

by Farhad Manjoo/on February 26, 2012

I’ve always been a big fan and committed user of Dropbox. Over the last couple years the handy file-sync app has gotten me out of many scrapes—when I need to access six-month-old interview notes when I’m out of town, it’s always a thrill to find them in my Dropbox. Along with my sit/stand desk, my Livescribe pen, and my MacBook Air, Dropbox is one of the few genuinely delightful tools I use regularly, and I’m constantly recommending it to friends and family.

And yet I’m extremely skeptical about Dropbox’s business prospects, and totally puzzled by the high hopes that otherwise smart people have pinned on its success. Dropbox is a great little file-syncing app, and founder Drew Houston and crew are already making some nice money out of it. But is it a $40 billion company? I doubt it. And when I hear folks like Benchmark’s Bill Gurley suggesting that it might be, and calling Dropbox “a major disruption,” I wonder if they’ve simply been blinded by the thrill of using an obviously well-crafted utility.

Gurley argues that in a multi-platform world—where we’ll all be carrying more devices that are possibly running a variety of OSes—we’ll clamor for some kind of easy, invisible, automatic way to keep our stuff synced between gadgets.

He’s right about that. We will need something to organize our lives between gadgets. The trouble is, it will be difficult to make a perfect gadget-syncing service that is also a great standalone business. There are two reasons for this. First, the perfect syncing service needs to do more than simply store files. Second, the perfect syncing service should be unlimited and free, or as close to it as possible. Dropbox will have a hard time doing the first of these for technical reasons, and if it does the second, it won’t be a very good business.

In its current form, Dropbox is great at syncing stuff that I’ve saved to my filesystem, but there’s a lot more to device syncing than just what I’ve stored in data files. When I switch from my desktop to laptop to my phone to my tablet, I would really like my device’s “state” to follow me, not just my files.

Right now, I happen to be traveling from the Bay Area to Seattle. When I left home, I was typing this article in a Word document on my Windows 7 desktop. The Word window occupied one half of one of my two huge desktop monitors. Splashed across the rest of the screens were several tab-filled Chrome windows, a few IM windows, and my text-based notepad.

When I later opened up my MacBook Air, I could access the Word file and my text notepad through Dropbox. But I had to make my computer do so. In a perfect syncing scenario, my laptop would know what I had been doing on my desktop and would offer to open up the right windows for me, preferably in the identical places on the screen—but Dropdox doesn’t do that. Worse, Dropbox can’t sync my Chrome and IM activity in any way. If I want to get the same tabs that I had on my desktop here on my laptop, I have to rely on Chrome’s own (fantastic) syncing feature. (There’s no way, as far as I know, to keep my IM windows synced between devices.)

I can think of many other things that would be great to keep synced between devices: Desktop icons and images, peripheral drivers (so that when I connect a camera to my work computer, my home computer recognizes it too), and application preferences (I like my Word documents set to 180 percent zoom).

I’m not the only one who’s been asking for this sort of thing. The Verge’s Joshua Topolsky has been yearning for a “continuous client” for years now, since back when he ran Engadget. But I’m hot holding my breath that we’ll see such super syncing anytime soon. Syncing the state of devices rather than just your files presents many difficult conceptual problems: What does it mean to sync windows between two gadgets that might have different windowing paradigms (say an iPad, which runs everything full screen, and your Mac)? What happens when you rely on two different apps to do the same tasks on different devices—for example, how would you sync tabs between Chrome or IE on your Windows desktop and Mobile Safari on your iPad?

Someday, someone will figure out how to make this sort of thing work well, but I suspect it will most likely be one of the companies that makes a major operating system: Either Apple, Microsoft, or Google. Each of these firms has a file-storage and/or syncing solution that it’s pushing, and I expect that those efforts—iCloud, Skydrive, Google’s Chrome syncing and perhaps the mythical Gdrive—will gradually incorporate more and more of the features I’m looking for.

Dropbox is probably working to build many of these features as well. But as third-party app, it’s just not in a very good technical position to do so. In order to sync programs and window states, Dropbox would need access to some of the deeper parts of my various gadgets’ OSes. This is easy for some operating systems and impossible with others—including iOS and probably Amazon’s Kindle Fire. Apple could easily build a way to sync the current browser tabs between my Mac and my iPhone, so that I can switch from reading Pando on my couch to reading it on the train. Dropbox will need to go through incredible hacks to achieve the same functionality, and it probably won’t manage to do so even then.

In fact, even now, as just a simple file-syncing app, Dropbox is frequently stymied by OS- and application-level problems. It won’t sync Microsoft Office files until you exit the application you’re using—if you forget to close your Word file on your home computer, it won’t be in your Dropbox at work. That’s not Dropbox’s fault—it’s Office that locks files that you’re using. But it highlights what I’m talking about: There’s a lot going on your computer, but Dropbox only has control over a small part of it.

You might argue that I’m making too many demands of Dropbox. So what if it doesn’t satisfy all the features I want—won’t people still pay for it if it keeps getting incrementally better as a file-syncing service? Maybe, but remember that online storage is a commodity. Dropbox makes money by charging people for increased storage space. But the price of storage keeps plummeting. It’s tending toward free. With all the competition it faces from firms with huge data centers, Dropbox isn’t going to be able to get people to keep paying $10 a month for 50 GB of space for many more years to come. It needs to add extra capabilities, too.

In 2009, Steve Jobs wanted to pay more than a hundred million dollars for Dropbox. As Houston later told Forbes’ Victoria Barret, when he politely turned down his hero’s offer, Jobs declared that Dropbox was a feature, not a product. Jobs was right: To do what we all want it to do, syncing has to be baked in to all the gadgets we use today. OS companies are warming to that notion—and they don’t need Dropbox to do it.

“storytelling” as a cornerstone of what they’re doing to market online

How to bring videos, blogs, social media, live streaming  and technology to get people to engage with your brand and the products you sell? But the idea of storytelling as it applies to business isn’t about spinning a yarn or fairytale but it is about what role your business,  products and services play in helping people do what they want, how they fix their troubles, how they shoulder their burdens, how they overcome their fears and meet their needs. Think in those terms when producing customer stories, case studies, or client narratives—so that people can relate to them. In that way, your content is not about “storytelling,” it’s about telling a true story well.

What are my customers genuinely interested in knowing about

The job of marketers is to generate new ideas and pull compelling stories out of their organizations by figuring out what their audience is genuinely interested in seeing and reading or knowing about. Think about what you do, how to tell that story, and how to engage your customers through the stories you tell.  That’s critical especially for business-to-business companies, which often sell intangible products or services that aren’t intrinsically interesting, but the way people use them are interesting. At Virgin America, for example, the hallmarks of what the brand is known for—leather seats, mood lighting on its aircraft, wireless connectivity—expresses the story, in part, of how the airline goes beyond the ordinary.

Tell how your products or services live in the world
Actually—don’t just tell: Show. Uncover the real-life instances of how your product lives in the world by looking to your customers for inspiration.  Benchmark Brands incorporates customer stories of how its products help people into its marketing. If a shoe is meant to help someone with heel pain, Benchmark doesn’t just state that fact, “but we tell the story of someone for whom it made a difference,” says Trish Tobin, Chief Marketing Offier of Benchmark, which sells more than 2,500 styles of comfort, wellness and therapeutic footwear through its Footsmart brand.

Have their stories be your story. At Threadless, an artist receives $2,500 if his or her shirt is printed and sold in the Threadless store, and his or her inspiration for that design is woven into the site, and, more broadly, into the company’s brand. Tell the story of how your products came to be, or how your customers use them. Even if you’re making something less naturally prone to story than customer-designed T-shirts or therapeutic shoes, “your product can still be content,” Balzer says.

Nonprofit marketers have employed storytelling to “sell” their missions for some time. Their stories are always about the real people or conditions that donor money has helped to change. Since the addition of online tools, they’re actually at the forefront in social media, gaining followers, brand ambassadors, and participants in viral marketing campaigns. What hasn’t come quite yet is the fundraising revenue from this channel.

There has to be a great challenges/pain/need/issue/drama set up. That’s the key. The thing is.. it’s not easy to do. If you make that first part sing, you have a great hook and a captured audience. The solution/resolution part is even tougher to do, though. Those that make it really compelling (and uniquely mapped to those original challenges) are the masters. You see this with Hollywood movies. Many screen writers can get the hook part .. they do really good set-ups. But they fumble with acts 2-3.

I worked at non-profits and trained folks on storytelling after doing a lot of academic study on the topic. It was the most powerful way to connect with donors. Now in my work with social media and PR, I see how much work needs to be done in considering the audience and the context for storytelling

It’s exciting to see marketing take a turn for the more personal, more connected and (hopefully) more honest and engaging. It also helps make my transition from fiction to copy writing make more sense! Bring on the age of the story!!

I agree with you that ‘real life experiences’ connected to the actual creation or use of a product or service are compelling stories for customers and are good materials for developing ads. But you seem to imply that fiction stories have lesser value. However, I find these ‘creative fiction stories’ to be strongly compelling to customers and sometimes more so than real stories because they capture the imagination, produce excitement which people want to be part of, or draw out strong emotional reactions that the product or service stays in-front of people’s minds. Creativity (which we demand from marketers) make what is ‘real’ more visible.

It got people’s attention and helped with brand recall. Since people today are more knowledgeable about the health benefits of fish, it’s a better way of getting the consumers’ interest than going the traditional route of highlighting the health benefits of salmon/tuna as a great source for OMEGA-3 or for being good for the heart.

Geko was also good for making an insurance company more relatable or tangible. And maybe creative ads will be better for marketing services that do not have much differentiation.

I’m intrigued by storytelling as a tool for leaders when sharing about changes in the business. Thank you for expanding my mind on this invaluable ability for today and tomorrow’s leaders.

7 reasons why you need a brand journalist

I took this from "MarketingProfs" site.

Ann Handley

Brands now have the ability to bypass the traditional press and tell their own story in their own voice in a unique and compelling way. As I see it, good content isn’t about storytelling; it’s about telling a true story well.

Unfortunately, many businesses don’t tell their story well. In our recent survey of more than 1,000 B2B marketers (conducted with the Content Marketing Institute), we found that creating compelling content is the biggest pain point for businesses. Which is why I favor the idea of hiring or contracting content creators who function within your company as embedded brand or corporate journalists.

The phrase “brand journalism” was coined in 2004 by Larry Light, then McDonald’s Corp.’s chief marketing officer, who said in a speech at an industry event that McDonald’s has adopted it as a new marketing technique. The term has evolved since then, although the basic idea of customer-driven versus corporate-driven marketing remains fundamental.

A brand journalist or corporate reporter works inside the company, writing and producing videos, blog posts, photos, webinars, charts, graphs, e-books, podcasts, and other information that delivers value to your marketplace.

Such content creators will convey your company’s true story in a compelling way by uncovering the stories about your brand and how your customers are using your products and services; narrating them in a human, accessible way; and sparking conversation about your company, customers, or employees.

In other words, brand journalists bring a journalist’s sensibility to your content. They bring an editorial approach to building a brand.

Here’s why I like the idea of hiring brand journalists:

1. They know how to tell a story : Journalists are trained to tell a story using words, images, and audio, and they understand how to create content that draws readers in.
2. They put the audience first : Journalists are the only people, in my mind, who put the needs of the audience (vs. the company) first. Paradoxically, that serves a company’s needs far better—because the content they create is customer-driven vs. corporate-driven. Their innate understanding of audience means that every time they sit down at their desk to create content, there’s always a little voice in the back of their head reminding them, Nobody has to read this. That kind of pressure on your content-creation efforts can only benefit your brand.
3. They know how to simplify : Business—like life—can be complicated. Our products can be involved or seem impenetrable. But journalists excel in deconstructing the complex to make it easily understood. They excel at expressing the kind of nuance I first learned from my journalism professors: Assume the reader knows nothing. But don’t assume the reader is stupid.
4. They approach content with a Mind Like Water :  A lifetime ago, when I was covering town planning board meetings for a local newspaper, I arrived in the newsroom very late one night and told the night editor that there wasn’t a single thing to report on; no decisions had been reached by the Board. The editor—who I’m certain ate cigarettes for breakfast—schooled me thus: There’s always a story there, he said, even if it’s not the one you were expecting to write. So your boring technology product? Your services firm? Your regulated industry that precludes you from talking about certain specifics? The Mind Like Water content creator finds the crevices where the stories lie. (Also, whatever you sell can’t possibly be as dull as town planning board meetings, and I found plenty to say after that night.)
5. They tell the truth : The best corporate reporters care about accuracy and truth, whether they are creating content on behalf of your brand or a traditional publisher.
6. They quote sources : Journalists are trained in backing up opinions and assertions with research and facts, and attributing ideas to proper sources. That enhances your credibility as a voice in your industry.
7. They bring a journalist’s sensibility to building a brand : That enhances your integrity. This might be a good time to ask: But what about that integrity issue? Is a “brand journalist” really a “journalist”? In my mind, it is a kind of journalism, even if it’s clearly not impartial. (For example, a brand journalist wouldn’t produce anything negative about the company. A journalist working at a traditional publisher would.) Both have a role, and I’m not suggesting that brand journalists stand in for traditional news reporting. They are two different things. We need both in our world.

But, that said, I like the shorthand meaning that the phrase “brand journalist” affords, because I think it’s an easy thing for companies and others to grok at a glance. In other words, it immediately suggests what the role does… as well as what it doesn’t do.

When competitors pile high and sell cheap?

Sometimes consumers will put up with a lot to secure a good price. Just look at Ryanair, which is almost as famous for its tough no-frills approach to customer service as for its cheap airfares. As a business model it’s one that works: for much of 2009 and 2010 its market capitalization exceeded that of Lufthansa, despite the German airline’s revenues being more than seven times higher.

Other sectors have seen a similar rise in “good enough” businesses, from low-cost retailers such as Aldi and Lidl to “fashion” retailers like H&M and Zara. These companies do not offer a premium service – for example, Aldi offers shoppers little choice other than its own-brand products, while the fashions on sale at H&M are not generally made of high-end fabrics – but consumers do not mind. Who needs choice when the off-brand beans are cheap and tasty, and the checkout process fast? Who needs top-quality tailoring on a new shirt that will only be worn for one season?

Given the right market conditions, low-cost competitors can rise and challenge industry leaders very quickly. Vizio is a good example: in 2004 it was a small supplier of low-cost big-screen LCD televisions in the US, with sales in that year of $20 million. Over the next few years it exploited the emergence of new channels for its products at discount retailers such as Costco and Walmart; by 2007 it was the third-biggest manufacturer of large-screen LCD televisions in the US, and by 2009 it was the market leader, with a market share of almost 22 percent – just ahead of Samsung, but well ahead of Sony.

How, then, should premium companies facing competition from low-cost rivals react? The first step is to understand the three types of core value propositions (1) Price value. This is focused on providing “good enough” solutions and offering these standard products and services at an attractive price. This is the core value proposition of low-cost competitors such as Aldi, Ryanair and ING DIRECT Bank (2) Performance value. Companies that emphasize this offer their customers a combination of superior functionality, innovative features, an exceptional user experience, excellent quality and style, and fashion leadership. Examples include Apple and Bloomberg (3) Relational value. This tends to be particularly important to customers who have complex, diverse needs and see value in being able to buy an integrated solution from one supplier. Companies will try to provide customized offerings – if that is what the customer wants. Examples include GE Medical Systems, Cisco, and IBM Global Services.

The first option is to directly challenge low-cost competitors by moving into the lower tiers of the market and offering a “good enough” product or service that is competitive on price. Advantages to this approach including meeting a real market need, gaining additional economies of scale, creating sell-up opportunities, and helping to control low-end competition. However, while this approach seems quite simple in principle, it is difficult to implement successfully. Developing the core product or service is often the easy part – the real challenges are finding effective routes to market, pricing, manufacturing, and organizational structures. Other very real risks include the possibility that you will cannibalize your own higher margin business, damage your brand, and lose focus on your core business.
Another possibility is distancing your business from low-cost competitors by increasing performance value through superior quality, performance, and style. Companies as diverse as Intel, Research in Motion and Gillette have done this successfully for a period of time. However, in many cases it is increasingly difficult to get a good return on investment this from this strategy, particularly as the product category starts to mature. It can cost a lot to make what are, from the customer’s perspective, only marginal improvements, while useful improvements are often quickly matched by competitors. To increase performance value in ways that customers will be willing to pay for requires a deep understanding of their needs. The days when companies could simply try to “out-spec” a competitor and hope that the customer found something useful are long gone; R&D investments have to be much more focused if a company is to get a good return on these investments. In addition, more and more customers, particularly in B2B settings, are looking for proof that improved performance value will lead to improved financial results.

The third option, used by companies as diverse as P&G, Tesco, and Cisco, is to increase relational value. For example, Orica Mining Services – originally ICI Explosives – built more intimate relationships with many of its customers by moving from selling explosives to providing blasting services. It recognized that what mines and quarries wanted was rock on the ground that would meet the customer’s size specifications and facilitate further processing. To meet this need, Orica would take over the customer’s blasting activities and charge them for the rock on the quarry or mine floor that met the size specifications. As Orica developed more sophisticated models for blasting, it was able to deliver more and more of the rock in the specified size range, thus reducing waste and the need for additional processing of rocks that were too large. This created value for both the customer and Orica, and substantial barriers to entry for low cost competitors. But the journey to improved relational value is often long and difficult. Companies who take it have usually begun with a performance value proposition for their customers. In many cases, their emphasis has been on providing the best-performing, highest-quality, most reliable products. This is very different to focusing more on delivering truly integrated solutions, which requires deep and intimate relationships with customers.

Only the paranoid survive
In almost every market there is, or soon will be, customers looking for “good enough” solutions that are attractively priced. The low-cost competitors that emerge to meet this demand will eventually challenge the premium brands in the market. This threat may not be immediately apparent, but companies should not be arrogant enough to ignore it simply because initial losses are small. The sooner companies make the tough choices and start grappling with the implementation issues, the better their position will be in the long run.

Why Business Plans do not help start-ups?

It’s true that a good business plan can anchor an entrepreneurial venture. Once a company has been operational for some time, it has a well-defined value proposition, and it generates positive cash flow, a plan can help attract the necessary growth financing. The problem is that business plans are typically not helpful when ventures are in their early, formative stages. An anchor is designed to keep you in one place, which is precisely what an entrepreneur should not do. The usefulness of a business plan diminishes precipitously as an entrepreneur moves away from the original idea. In most cases, the plan is only valid when it is written.

Pierre Omydar, the founder of eBay, credits the fact he didn’t have a business plan for the success of the company. He said “eBay was open to organic growth – it could achieve a certain degree of self-organization. So I guess what I’m trying to tell you is: Whatever future you’re building … don’t try to program everything.”“Five-year plans never worked for the Soviet Union – in fact, if anything, central planning contributed to its fall. Chances are central planning won’t work any better for any of us.”

Surveys from the Inc. 500 suggest fewer than 25% of successful entrepreneurs create business plans at start-up. Those that do write them will generally stick to informal “back of the napkin” types of documents. Our own experience with high-tech founders over 15 years confirms this. But everyone from bankers and accountants to business professors and consultants say business plans are necessary. The fact is, you only need a business plan for one reason: to get financing. This brings up another important misconception. Financing is not typically a part of the early stage of a company’s creation. Banks fund assets, not ideas, and venture capitalists fund momentum and sales.

Unless you have a proven entrepreneurial track record, or you have created some kind of unique scientific breakthrough that has huge commercial potential, it will be difficult to secure financing outside a network of friends, family, and your own sweat equity.

There are numerous examples of ventures that start with minimal financing. Dell and Subway were both launched with less than $1,000. In fact, 98% of new ventures start with no venture capital or angel financing at all. Further, surveys from the Inc. 500 rank credit cards ahead of VC funding as a source of start-up capital.

All the millions that dot.com firms such as pets.com received in the early 2000s didn’t put them on the pathway to success. In fact, it probably hurt them. With money comes the temptation to spend it – on offices, people, advertising, and infrastructure – all of which takes an entrepreneur’s eyes off what is really important. Things like making sales, building networks, and improving product or services.

Business plans can be very useful in helping an entrepreneur think through the full implications of an idea. And they definitely come in handy when the time comes to pursue funding. But their negative potential as ‘anchors’ in a particular place and time mostly outstrips their benefit – particularly in the early stages.

Are great entrepreneurs born or built?

The process theoretically goes something like this: An entrepreneur has a brilliant idea, writes a business plan, gets start-up funding, puts together a team, creates a product or service, and sells out to a Fortune 500 firm. It sounds logical, but reality paints a different picture.

Let’s start with the brilliant idea. There are many stories floating around about entrepreneurs whose empires were sparked by blinding insights that occurred during some mundane activity, like waiting for a bus or taking a shower. We call this the myth of the epiphany, and the truth usually differs from the myth.

Most great ideas start out extremely rough and half-baked, and they are only chiselled into greatness over time. Howard Schultz’s flash of insight was to bring Italian coffee bistros to the United States, but in his original concept, customers stood or perched on stools (there were no chairs), listened to opera music, and were served by baristas wearing bow-ties – certainly not what a customer would expect to experience in today’s Starbucks.

Jeff Bezos had a good idea -- selling books online -- but his real insight was turning his store into a global marketplace for other people to sell their goods, even when they competed with Amazon.com’s products.

Ideas are important but they are not pivotal. We have conducted many brainstorming sessions in our classes, and the results have been intriguing. Teams of students and executives consistently come up with more than 100 start-up ideas in five or 10 minutes. Some of the ideas are absurd, but at least a dozen really good ones are generated each time we run the exercise. Ideas, as they say, are cheap.

Most great entrepreneurial ventures begin with a problem, which could be an unmet need, a bottleneck in a process, or an inconvenience. The idea is simply a solution for how to solve the problem. MIT Professor Eric von Hippel found that more new profitable lines of business came from customer complaints than from research and development departments.

A study by IMD Professor Stuart Read and colleagues suggested that it is more important to look at how successful entrepreneurs behave (what they do) than to look at their characteristics (who they are). According to this research, conducted at IMD, successful entrepreneurs consistently follow four basic principles:

1. They start with what they have: who they are, what they know, and who they know. They typically don’t worry about raising millions in seed capital or trying to figure out something new. They start close to home with something they already know and understand.
   
2. They set an affordable loss. This means that they are more concerned with how much they can afford to lose than they are with how much they can make. Most entrepreneurs only quit their day jobs after a venture has been in operation for longer than a year, sometimes much longer. In fact, surveys of the INC 500, the 500 fastest-growing private companies in the United States each year, suggest that 18 months is the typical length of time entrepreneurs take before they establish their first offices. We have personally seen this in our own interactions with hundreds of founding CEOs over the past 15 years.
   
3. They are great at taking advantage of unexpected situations. Most management textbooks regard surprises as anomalies that should be avoided or minimized. Successful entrepreneurs, by contrast, are able to adjust their strategies on the fly.
   
4. They are skilled at forming partnerships. Despite what you may think, successful entrepreneurs do not stay at home tinkering with their inventions all day long – they cannot generate sales this way. Instead, they spend a great deal of time developing and nurturing a steady stream of formal and informal partnerships.

The entrepreneurs in Professor Read’s study are  adaptive thinkers who are willing to adjust and modify their strategies based on constant feedback from a shifting set of partners. The entrepreneurs understand that failure is a part of building and developing ideas, and they are willing to switch gears when better opportunities arise.
This differs radically from the guidelines set out in most entrepreneurship textbooks. Good entrepreneurs are talented at recognizing problems, but their first ideas are usually not very good. Lucky for them, most are also tenacious – they don’t give up easily. Ideas get tested, prototyped, revised, stretched, shared, prototyped again, and then retested until they evolve into a workable form. This process is the central concept behind a new field of entrepreneurial research called effectuation, the core principles of which are about adapting your business model to opportunities as they evolve.