Communications Lessons in the Prabowo Campaign

https://www.linkedin.com/today/post/article/20140623040357-3822607-communications-lessons-in-the-prabowo-campaign?trk=mp-edit-rr-posts&_mSplash=1

Norwin Mark Castro

Regional Manager - Southeast Asia at blueVisions

Right now the biggest opponent of Prabowo isn't Jokowi but himself.

His strong nationalistic rhetoric isn't resonating with the younger voters as they know that it isn't the foreign investors that's screwing the country but the elected and appointed officials.

"Corruptors will have no place in Indonesia," Prabowo yelled, while flanked by Suryadharma and Bakrie.

Isn't Suryadharma being pursued by the highly trusted KPK for his alleged role in the graft case of the haj funds?

And then there's Bakrie.

Prabowo recently attacked Jokowi saying: "We need to elect a leader who is not a puppet. A leader who cannot be bribed or influenced by foreign entities..."

Totally misplaced comms strat.

Jokowi was successful as a mayor with no taint of foreign influence. As a popular governor, the only allegation of graft is from the procurement of defective buses that's weak at best since it targets only the governor yet does not include the mayor, budget control management, planning and control team, which stands to reason why KPK isn't pursuing anything.

Where's the influence of foreign entity/entities?

If Prabowo continues to open this can of worms, what will be revealed are the accomplishments of Jokowi as a public servant while Prabowo shows how he's never held an elected position.

While Prabowo engages in high level speeches, Jokowi is out jogging with the masses.

How could Prabowo's team blow up their momentum so much?

Strategic Communication Tips

1. Avoid Mudslinging - If you don't have factual evidence, fact-checks, complete and sustainable plan, do not engage in mudslinging. A taint of veiled rumor can come from some quarters to instill doubt but it should never come from you unless you have credible data. The public will soon tire of baseless accusations and the cross-hair will be brought back to you.

2. Stick To The Message - All politicians are elected based on one premise: how to sell Hope. Your Action Plan may be well and good but if you can't simplify the message, reiterate the message, and reinforce it at all times, people will be confused where you stand. Look at tobacco industry, they've never veered away from their message that it's cool to smoke despite all the pronouncements that they will kill you. This is the reason why no government on earth has managed to beat them in delivering their message. And they hire professional advertisers, too, while governments continue to use their student council employees.

3. Optics - Like it or not, as a politician, you will be judged by a larger number of people based on your visual message rather than your rhetoric. Hitler, Mussolini, George W. Bush, Bill Clinton -- regardless whether or not you like them -- were able to sell to their countrymen their message that emanated from their perceived power. Hitler mesmerized his entire country to send their children to engage in horrific acts. Mussolini turned a small country into a fascist state. Bush sold to the world Weapons of Mass "Distraction", evil axis, and other jazzed up words. Clinton, well, "I did not have sexual relations with that woman." Let's admit it, how people see you is a message that you will continually either reinforce or change. How are you doing that?

Always do an internal check on the visual and verbal messages you are projecting or saying. Once you've identified it, stick with it and sell it. You can repackage it, rehash it, enhance it, but never veer away from it.

That's how you shape people's minds. That's how you win an election.

Rhenald Kasali: Cara Jokowi membangun kepercayaan

http://nasional.kontan.co.id/news/rhenald-kasali-cara-jokowi-membangun-kepercayaan?fb_action_ids=10201264594656977&fb_action_types=og.likes&fb_ref=single_news
Oleh Dikky Setiawan

Rhenald Kasali (Pakar Manajemen)

JAKARTA. Tak dapat dipungkiri, perubahan lebih mudah diucapkan daripada dilakukan. Dari ketika dijalankan, Anda bukan hanya berhadapan dengan kaum resisten, melainkan juga mereka yang bakal kalah pamor.

Ya, kalau Anda gigih dan berhasil menaklukkan resistensi, maka akan ada kelompok-kelompok lain yang menjadi terlihat “tidak bekerja”, “asal bunyi”, atau “provokator”. Seperti kata Geoge Carlin, mereka menggenggam ayat yang bunyinya begini: “Jika engkau tak bisa menaklukannya, buatlah orang lain membencinya.” Mereka berkampanye agar tidak percaya pada apa yang mereka lihat.

Jadi inti dari perubahan sebenarnya: Mendapatkan kepercayaan. Obat resistensi itu, pertama-tama adalah kepercayaan. Jujur dan berani adalah satu hal. Tapi ini tidak cukup bila pemimpin gagal memberikan hopemelalui kemenangan-kemenangan kecil di tahun pertamanya, Diperlukan pendekatan khusus untuk mendapatkan kepercayaan. Sebab, provokator juga hanya "mati" di tangan mereka yang sangat dipercaya publik.

Mengubah resistensi itu sendiri ibarat membuka hati manusia yang terluka. Kita tak bisa “menjebol batin” mereka yang terluka untuk membersihkan nanah-nanahnya, kecuali mereka mengizinkannya. Nah, "minta izin membuka hati" ini ada caranya: terlalu lembut tidak tembus, kekerasan hanya membuat mereka jatuh ke tangan para penyamun.

Demikian juga dalam merespons para penyamun yang menghalangi perubahan, selalu ada psikologinya. Nan S Russel, dalam Psychology Today (2012) memberikan tipsnya: tetap respek, hindari komunikasi membalas dengan menyalahkan, sadar diri, jauhkan arogansi, jaga kehormatan dan "go beyond yourself" (utamakan kontribusi pada publik).

Diplomasi makan malam
Jauh sebelum Jokowi memimpin Jakarta, saya pernah diberitahu pendekatan yang digunakan masyarakat Tionghoa dalam mengatasi berbagai masalah. Semua urusan bisa diselesaikan di meja makan. Dan kalau perut sudah disentuh, hati manusia akan adem. Tetapi, di Tokyo, ternyata juga sama. Bahkan pekerja-pekerja Jepang hingga larut malam masih menjinjing tas kerja dan jas hitamnya bersama atasan mereka di bar-bar di sepanjang daerah Ginza atau Shinjuku. Dalam ocehan yang terucap, mereka mengatakan “kita menanggung sama-sama.”

Saat diserang calo tanah dan warga yang tak mau pindah ke rumah susun yang telah disediakan (dari area waduk Ria-Rio), kita membaca, Jokowi ternyata juga melakukan cara yang sama. Prosesnya begitu cepat. Bahkan jauh lebih cepat dari yang ia lakukan di Solo saat memindahkan PKL dari tengah kota.

“Saat itu saya ajak PKL makan siang-makan malam 54 kali,” ujarnya. “Setelah itu baru saya sampaikan bahwa mereka akan dipindah. Dan mereka diam semua. Saya katakan, kalau begitu setuju yaaa...dan mereka menjawab, iya paak..."

Ia memberikan refleksinya sebagai berikut:

Pertama, PKL adalah businessman, sama seperti yang lainnya. Mereka itu pasti berhitung untung ruginya.

Kedua, pada awalnya, setiap diundang makan malam ke balai kota mereka tahu bahwa mereka akan digusur, karena itulah mereka datang dengan LSM dan advokat-advokat. "Karena itu saya tak bicara apa-apa, saya hanya mengajak mereka makan malam meski mereka kecewa tak ada omong-omong, " ujarnya.

Ketiga, mereka khawatir, di lokasi baru bisnis mereka akan rugi atau diperlakukan tidak adil.

Di Jakarta, saat menghadapi warga-warga yang tinggal di bawah waduk Ria-Rio, Jokowi mengatakan, “Saya tak ingin berhadap-hadapan dengan rakyat, rakyat tak boleh ditindas.” Itu sebabnya, ia memilih melayani mereka di meja makan, dan mereka pulang dengan enteng. Jokowi benar, jika perubahan membutuhkan koalisi perubahan, maka berkoalisilah dengan rakyat.

Diplomasi Sentuhan
Blusukan adalah satu hal, tetapi di balik branding Jokowi itu ada diplomasi sentuhan yang luput dari perhatian para elit. Jangan lupa setelah Gen C (Connected Generation), kita tengah menghadapi Gen T (Touch Generation).

Bila mesin saja baru terlihat smart kalau disentuh, apalagi hati manusia. Rakyat yang selalu menjadi korban dalam perubahan, merindukan pemimpin-pemimpin yang tak berjarak, yang bisa mereka sentuh. Saya ingin menceritakan kejadian ini.

Suatu ketika Fadel Muhammad bercerita saat ia menemani kandidat cagub DKI dari Partai Golkar yang datang ke sebuah masjid di daerah Kwitang dengan kawalan foreiders. Pedagang di jalan harus minggir, dan cagub bertemu Habib sebentar, lalu pergi. Setelah itu datanglah cagubincumbent. Kali ini bukan hanya foreiders, melainkan juga camat, lurah, dan hansip sehingga semua PKL tak bisa berjualan. Jalan raya tiba-tiba berubah menjadi lengang dan benar-benar bersih.

Lantas bagaimana saat Jokowi datang? Ia datang tanpa pengawal, menyalami pedagang dan peziarah di sepanjang jalan, sehingga agak lama baru sampai di pelataran masjid. Peziarah terkesima karena Jokowi sama seperti mereka, berpakaian seperti rakyat biasa, tak berjarak. Pemimpin yang tak berjarak menyentuh tangan dan pundak rakyatnya, sedangkan pemimpin yang berjarak justru menghindarinya. Bagi mereka blusukan hanyalah pencitraan, bukan sentuhan hati. Padahal di situ ada pertautan kepercayaan.

Jadi, kepercayaanlah dasar dari setiap karya perubahan. Dan pemimpin yang pandai akan memisahkan ilalang dari padi-padi yang harus dipelihara agar menghasilkan buah. Inilah tugas penting para pembuat perubahan di tengah-tengah “low trust” atau bahkan “a distrust society” .

Maka, daripada menjegal Jokowi, mengapa tidak bergabung saja dan salami dia sebagai role model. Kalau Anda cinta perubahan, orang-orang seperti ini justru harus diberi apresiasi. Seperti kata Jim Henson, "if you can not beat them, joint them." (Kompas.com)

Mengapa Manajemen "Blusukan" Menjadi Populer tetapi Disambut Sinis?

http://bisniskeuangan.kompas.com/read/2014/05/30/1355295/Mengapa.Manajemen.Blusukan.Menjadi.Populer.tapi.Disambut.Sinis.
@Rhenald_Kasali



Terinspirasi oleh berita-berita mengenai Jokowi, setahun belakangan ini banyak CEO yang memberi instruksi agar para manajer tidak asyik memimpin dari balik mejanya saja. Istilahblusukan seperti merasuk ke semua lini corporate leadership. Namun, mengapa di panggung politik, hal ini jadi gunjingan negatif?

Seorang pengusaha ritel dan properti malah membawa isublusukan dan rapat pimpinan nasionalnya. Dengan blusukan, ia mengaku mendapatkan banyak insight mengenai hambatan-hambatan di lini bawah. 

Di dunia internasional, dua tahun lalu, CEO Randall House, Ron Hunter, dalam presidential letter-nya  mengutip anjuran Tom Peter yang bukunya menjadi New York Times Best Seller, In Search of Excellence. Di situ Tom Peter memperkenalkan istilah MWBA:management by walking around. Apa lagi bahasa Indonesianya ya kalau bukan blusukan?

Karena itu pulalah, salah satu program TV dari CBS yang sangat menyentuh diberi judul Undercover Boss. Persis seperti Jokowi atau Ahok yang menegur kepala-kepala daerahnya, di situ ditunjukkan keberpihakan para bos terhadap “rakyat kecil” yang telah bekerja keras untuk perusahaan.

Program TV Undercover Boss belakangan juga ditiru di banyak negara, menggambarkan bagaimana para CEO turun sendiri ke bawah. Di CBS sendiri, acara ini sudah dibuat dalam lebih dari 60 episode (ratingnya 5,6-6,5/10), mulai dari bidang pengolahan sampah, hamburger, sampai American Online (AOL).

“Going undercover gives you the chance to really connect with your worker,” ujar CEO AOL.

Soeharto, Sumarlin, dan Gus Dur

Dulu, pada eranya, Pak Harto juga sesekali melakukan blusukan. Karena hanya ada TVRI, maka “turba” (istilahnya waktu itu "turun ke bawah") tidak banyak diikuti wartawan.

Dalam buku Pak Harto: The Untold Stories (Gramedia, Pustaka Utama, 2011) misalnya, bisa dibaca kisah blusukan-nya mengatasi penyakit kelaparan (HO) di Gunung Kidul (1972). Pada masa itu, pejabat-pejabat tinggi terbiasa membuat laporan ABS (asal bapak senang). "Tak ada HO, yang ada hanya KKM, kemungkinan kurang makan," begitulah laporan pejabat.

Namun, kisah blusukan paling menarik kala itu dilakukan secaraundercover oleh Menteri Penertiban dan Pendayagunaan Aparatur Negara Prof Sumarlin. Berpeci hitam seperti PNS golongan 1 A, Sumarlin menyamar sebagai Ahmad Sidik di depan meja pembayaran RSCM.

Dari blusukan itulah terungkap betapa kejinya perlakuan petugas Kantor Bendahara Negara terhadap pegawai rendahan. Untuk mencairkan gajinya yang sudah rendah, mereka dikenakan pungli (bisa dibaca dalam buku JB Sumarlin: Cabe Rawit yang Lahir Di Sawah, Penerbit Kompas, 2013).

Berkat metode itulah, para pemimpin mampu membaca persoalan-persoalan masyarakat. Maklum, kalau tak turun ke bawah, keputusan hanya dibentuk oleh informasi orang-orang kuat yang akhirnya justru bisa merugikan masyarakat. Maka dari itu, saya tak heran kalau banyak politisi yang mengejek cara yang ditempuh Jokowi belakangan ini.  

Namun, kisah blusukan yang paling ramai dibicarakan justru ada di era Gus Dur. Dalam 20 bulan pemerintahannya (1999-2001), Gus Dur blusukan keluar negeri sebanyak 80 kali. Mengapa ke luar negeri?

Ceritanya begini. Tak lama setelah beralih menjadi negeri demokrasi, Indonesia tak luput dari ancaman perpecahan, separatisme. Terlebih lagi, Timor Leste baru saja merdeka, sementara Aceh dan Papua terancam melepaskan diri.

Kepada saya, mendiang Gus Dur menegaskan bahwa blusukan-nya itu dilakukan untuk mencegah dukungan asing terhadap separatisme di Indonesia.

Jadi meski dikritik habis-habisan, saya kira kita patut bersyukur NKRI aman di tangan pemimpin yang bekerja keras dan teguh menjaga kerukunan dan kebinekaan. Harap maklum pula, blusukan bisa dilakukan dalam banyak bentuk. Bisa penyamaran ataupun terbuka, baik dengan maupun tanpa pers.

Namun, blusukan tidak dapat diwakilkan karena pemimpin butuhfirst hand information. Blusukan juga harus dilakukan secara spontan agar keadaan lapangan tidak direkayasa oleh bawahan.

Memang dalam beberapa hal terjadi kompromi, seperti kunjungan Gus Dur ke luar negeri, yang mau tak mau harus dipersiapkan protokolernya.

Kritik dan perbaikan

Sayang sekali, belakangan ini istilah blusukan seperti jadi bahan cemoohan dalam debat publik karena kepentingan politik. Saya sendiri tetap berpikir, siapa pun presidennya, mereka harus rajin turun ke bawah kalau benar-benar berpihak pada rakyat dan pegawai-pegawai kecil.

Tidak fair kalau pemimpin hanya blusukan saat kampanye, dan setelah itu hanya memimpin dari Bina Graha, lewat pidato yang gagah, dari depan kamera yang sejuk atau dari jet pribadinya yang tak pernah kena macet. Indonesia adalah sebuaharchipelago terbesar di dunia dan tak akan pernah habis untuk dikunjungi.

Bahwa blusukan saja tak bisa memecahkan masalah, itu sudah pasti. Pemimpin besar tak akan pernah bisa memecahkan masalahnya sendirian. Ia butuh tim yang solid, yang semuanya bekerja keras dan mau diperintah. Ia butuh strategi yang mampu memobilisasi kekuatan besar. Namun, apalah artinya strategi besar kalau eksekusinya buruk atau tak sampai ke bawah.

Itulah PR bagi para pemimpin. Jadi pemimpin itu jangan hanya memelototi harga saham, perubahan nilai aset, selisih kurs, atau inflasi belaka. Rezeki bangsa ini berasal dari lini bawah, yang kita sebut the bottom line....

Revolutionising retail

http://www.insideindonesia.org/current-edition/revolutionising-retail

In Jakarta, 7-Eleven found a loophole that allowed it to break into small-format retailing, transforming itself and contributing to a revolution in Indonesian retail in the process

George Martin Sirait and Michele Ford

The 7-Eleven revolution   Michele Ford

Jalan Kyai Haji Wahid Hasyim, in central Jakarta, is a busy street in the tourist district just off Jalan Thamrin, the city’s main drag. Lodged between the hotels and restaurants is a 7-Eleven convenience store. On a balmy evening, a five-man band is performing Indonesian pop for an audience relaxing in café chairs on an expanse of bitumen in front of the store. Passers-by – local and foreign – stop for a moment to listen, smiles on their faces. Every now and then, someone walks inside to buy a drink or a snack and take a seat.

World-wide, 7-Eleven is associated with late-night runs for milk, bread or junk-food. However, Jakarta’s 7-Elevens are 7-Elevens with a difference. Inside, the aisles are wider and the offerings a little more up-market than in the Japanese or Australian versions. But it is outside where the difference is most striking. The atmosphere in the improvised café setting is relaxed and friendly, much like that of a warung in a small Indonesian town. It is worlds away from the utilitarian feel normally associated with the franchise’s stores. 7-Eleven is also different from typical Indonesian minimarkets, which sell almost everything, in that it specialises in food and drink, including alcohol. To reach out a broader consumer base, 7-Eleven works with Go-Jek, a Jakarta-based motorcycle taxi company that offers a delivery service.

In a city where public space is limited, and open-air dining opportunities mostly either very up-market or confined to cramped roadside food-stalls, the 7-Eleven phenomenon heralds something of a revolution, offering one of the few modern café experiences available to the city’s lower middle class youth outside a food hall in a mall. But who would have thought that 7-Eleven would lead the charge? It turns out that the reasons behind the 7-Eleven revolution are not only complicated, but their consequences far-reaching, not only for this particular chain but also for other foreign investors in Indonesian retail.

Restrictions on foreign investment

Before 1998, there were no 7-Elevens – or Carrefours or Lotte Marts and the like – because government policy allowed for little foreign investment in Indonesian retail. But all that changed with the Asian financial crisis. In order to secure loans from the International Monetary Fund (IMF), the Indonesian government had to commit to a structural adjustment program. The IMF’s demands included provisions requiring the liberalization of wholesale and retail trade. In October 1997 Indonesia signed a Letter of Intent and Memorandum of Economic and Financial Policies with the IMF. In a more detailed memorandum signed three months later, it committed to lifting restrictions on foreign investment in the modern retail sector.

It wasn’t, however, to be a case of open slather. When the government implemented the IMF memorandum, it did so in a way that allowed foreign capital to directly invest in large format retailing but reserved smaller scale retail for domestic capital. A Presidential Decree issued in 1998 stipulated that medium and large firms, including those owned by foreign investors, were not to engage in informal trading formats, a category that included small shops. Their involvement was restricted to medium and larger scale modern retailing formats like malls, shopping centres, supermarkets and department stores.

This decree was complemented by other attempts to regulate the relationship between modern and traditional retailers. Initially, under a 1997 Joint Decree of the Minister of Trade and Industry and the Minister of Home Affairs, modern markets were only permitted within provincial capital cities. Ten years later, a Presidential Regulation allowed for the establishment of hypermarkets, shopping malls, supermarkets and department stores in other towns subject to local planning requirements. Under the regulation, hypermarkets and shopping centres could not be built in the inner city. They could only be built along arterial or collector road networks and supermarkets. Department stores, too, were prohibited on local road networks in an attempt to protect minimarkets and traditional markets, which were permitted in any part of the city and on any type of road.

Subverting the system

If foreign investment in small-scale retailing remains illegal, what is 7-Eleven doing in Indonesia in the first place? The Indonesian bureaucracy is famous for its capacity to bend the rules, but surely the entry of a high-profile foreign convenience store chain into a restricted market is a step too far?

After years of uncertainty as to whether it would or would be able to invest in Indonesia, 7-Eleven finally obtained permission to operate its convenience stores in Jakarta, which are operated under a franchising arrangement with Modern Putra Indonesia, the operator of the declining photography businesses under brand names such as Fuji Image Plaza. But not under the rules governing foreign investment in the retail sector. Having failed to obtain a license from the regional Office of Trade – the government institution authorized to issue permits in the retail sector – Modern Putra Indonesia hit upon a solution. Thinking laterally, it decided to exploit a regulation on restaurants and cafeterias, under which permits are granted by local Office of Tourism rather than the local Office of Trade. The tables and chairs set up at 7-Eleven outlets were a condition of being allowed to operate as a café.

One of the things that made this strategy possible was a 2004 regulation that shifted responsibility for the issuing of permits from the national Ministry of Trade and Industry to district heads or mayors and, in the case of the Special Region of Jakarta, to the governor. As a result of this change, every region now has its own provisions. For example, in 2006, the Governor of Jakarta imposed a moratorium on minimarket permits in an attempt to combat allegedly ‘illegal’ licenses issued by authorities at the municipal level. Four years later, the moratorium had been lifted but the government refused to issue new licences because local regulations were being revised. The other factor was competition between government agencies – in this case between the Office of Tourism and the Office of Trade. When combined, these elements generated the loophole that Modern Putra Indonesia identified and exploited.

The transformation of small-format retail

The success of 7-Eleven in penetrating the protected small retail market inspired other transnational retailers. Indeed, 7-Eleven’s ‘innovation’ was so successful that it has since been imitated by Lawsons, another Japanese convenience store brand operated in Indonesia by Midi Utama Indonesia, a subsidiary of Alfamart, one of largest minimarket operators in the country. The local Indomaret chain, under brand name Indomaret Point, has also copied the format.

The entry by stealth of foreign investors into small-format retailing is part of a much broader explosion fuelled by the relatively liberal regulatory environment for small retail. The market share of minimarkets and convenience stores skyrocketed from only 4 per cent in 2000 to 22 per cent in 2010, exceeding the combined growth of large retail formats. In the ten years to 2009, the number of stores in this category increased from just over 500 to over 10,000. The number of 7-Eleven stores, meanwhile, has nearly tripled in the three years to 2013 from 57 to 143.

The aggressive expansion of minimarkets turned on its head policy-makers’ assumption that supermarkets and hypermarkets, the formats associated with foreign capital, are the biggest threat to traditional retailers. Attempting to play catch-up, in 2012 the Minister for Trade issued the first regulation in Indonesia’s history to focus specifically on franchising in modern retail, which attempts to limit the spread of small-scale modern retailing by stipulating that holders of a master franchise may operate only up to 150 company-owned stores. This regulation is intended to prevent large-scale capital from further concentrating its control of small-scale retail by encouraging partnerships with smaller holdings. Importantly for the 7-Elevens of the world, the regulation doesn’t distinguish between the nationality of franchisors or franchisees, in effect relaxing the constraints on foreign investment in small retail formats, thus completing the retail revolution.

This new policy marks an important shift in the government’s approach to the retail sectors. Whereas it had previously focused heavily on protecting domestic investors by controlling foreign capital, it is now focused on regulating the size of retailers’ operations regardless of the nationality of their owners. Not only has 7-Eleven transformed itself in its efforts to work around regulatory obstacles, it has effected fundamental change in the regulatory environment itself – and in the process, democratising the modern café experience by making it available to Jakarta’s lower middle classes.

George Martin Sirait (martin.sirait@atmajaya.ac.id) teaches at Atma Jaya University in Jakarta and is a PhD candidate at the University of Sydney. Michele Ford (Michele.ford@sydney.edu.au) is director of the Sydney Southeast Asia Centre at the University of Sydney, where she researches Indonesian labour relations. Michele has recently stepped down from her role as a long-time coordinating editor and member of the board of Inside Indonesia.

10 Rules of Thumb for Startup Investment Valuation

http://blog.startupprofessionals.com/2012/11/10-rules-of-thumb-for-startup.html
MARTINZWILLING

Once you have a potential investor excited about your team, your product, and your company, the investor will inevitably ask “What is your company’s valuation?” Many entrepreneurs stumble at this point, losing the deal or most of their ownership, by having no answer, saying “make me an offer,” or quoting an exorbitant number.

I’ve written about this before, but it’s a mysterious subject, and I’m always learning more. This time I’ll use a hypothetical health-care web site company named NewCo as an example to illustrate the points.

Two founders have spent $200K of personal and family funds over a one year period to start the company, get a prototype site up and running, and have already generated some “buzz” in the Internet community. The founders now need a $1M Angel investment to do the marketing for a national NewCo rollout, build a team to manage the rollout, and maybe even pay themselves a salary.

How much is NewCo worth to investors at this point (pre-money valuation)? What percentage of NewCo does the investor own after the $1M infusion (post-money ownership percentage)? Well, if the parties agree to a pre-money valuation of $1M, then the post-money investor ownership is 50% (founders give up half interest, and lose control). On the other hand, if the pre-money valuation is $4M, the founders ownership remains at a healthy 80% level.

So what magic can the founders use to justify a $4M valuation (or even the $1M valuation) at this early stage? Here are the components and “rules of thumb” that I recommend to every startup:

1. Place a fair market value on all physical assets (asset approach). This is the most concrete valuation element, usually called the asset approach. New businesses normally have fewer assets, but it pays to look hard and count everything you have. NewCo might be able to pick up an initial $50K valuation on this item.
2. Assign real value to intellectual property. The value of patents and trademarks is not certifiable, especially if you are only at the provisional stage. NewCo has filed a patent on one of their software tool algorithms, which is very positive, and puts them several steps ahead of others who may be venturing into the same area. A “rule of thumb” often used by investors is that each patent filed can justify $1M increase in valuation, so they should claim that here.
3. All principals and employees add value. Assign value to all paid professionals, as their skills, training, and knowledge of your business technology is very valuable. Back in the “heyday of the dot.com startups,” it was not uncommon to see a valuation incremented by $1M or every paid full-time professional programmer, engineer, or designer. NewCo doesn’t have any of these yet.
4. Early customers and contracts in progress add value. Every customer contract and relationship needs to be monetized, even ones still in negotiation. Assign probabilities to active customer sales efforts, just as sales managers do in quantifying a salesman’s forecast. Particularly valuable are recurring revenues, like subscription amounts, that don’t have to be resold every period. This one doesn’t help NewCo just yet.
5. Discounted Cash Flow (DCF) on projections (income approach). In finance, the income approach describes a method of valuing a company using the concepts of the time value of money. The discount rate typically applied to startups may vary anywhere from 30% to 60%, depending on maturity and the level of credibility you can garner for the financial estimates. NewCo is projecting revenues of $25M in five years, even with a 40% discount rate, the NPV or current valuation comes out to about $3M.
6. Discretionary earnings multiple (earnings multiple approach). If you are still losing money, skip ahead to the cost approach. Otherwise, multiply earnings before interest, taxes, depreciation and amortization (EBITDA) by some multiple. A target multiple can be taken from industry average tables, or derived from scoring key factors of the business. If you have no better info, use 5x as the multiple.
7. Calculate replacement cost for key assets (cost approach). The cost approach attempts to measure the net value of the business today by calculating how much it could cost for a new effort to replace key assets. Since NewCo has developed 10 online tools and a fabulous web site over the past year, how much would it cost another company to create similar quality tools and web interfaces with a conventional software team? $500K might be a low estimate.
8. Look at the size of the market, and the growth projections for your sector. The bigger the market, and the higher the growth projections are from analysts, the more your startup is worth. For this to be a premium factor for you, your target market should be at least $500 million in potential sales if the company is asset-light, and $1 billion if it requires plenty of property, plants and equipment. Let’s not take any credit here for NewCo.
9. Assess the number of direct competitors and barriers to entry. Competitive market forces also can have a large impact on what valuation this company will garner from investors. If you can show a big lead on competitors, you should claim the “first mover” advantage. In the investment community, this premium factor is called “goodwill” (also applied for a premium management team, few competitors, high barriers to entry, etc.). Goodwill can easily account for a couple of million in valuation. For NewCo, the market is not new, but the management team is new, so I wouldn’t argue for much goodwill.
10. Find “comparables” who have received financing (market approach). Another popular method to establish valuation for any company is to search for similar companies that have recently received funding. This is often called the market approach, and is similar to the common real estate appraisal concept that values your house for sale by comparing it to similar homes recently sold in your area.

Remember that all the components, except the last, are cumulative. Even if a given investor excludes some of the components from consideration in your case, your credibility will be bolstered by the fact that you understand his interests as well as yours. In any case, the analysis will prepare you for the heavy negotiation to follow.

Precision is not the issue here – the task for the entrepreneur is to build a company that is worth at least $50M before thinking about an exit -- no investor wants to spend more than five minutes arguing the fine points of the last valuation dollar.

So what is a reasonable valuation for a company like NewCo? My advice for early-stage companies like this one is to target their valuation somewhere between $1.5M and $5M, justified from the elements above. A lower number suggests that the founders are giving away the company, while a much higher number may suggest hubris or lack of reality on the part of the owners.

Of course, we have all read about the “new” company with $100M valuation, but I haven’t met one yet.

Marty Zwilling

How Studying or Working Abroad Makes You Smarter

http://time.com/79937/how-studying-or-working-abroad-makes-you-smarter/
Annie Murphy Paul


Young woman at museum.Ryan Donnell—Getty Images/Aurora Creative

Research shows that experience in other countries makes us more flexible, 

creative, and complex thinkers.

How does studying or working abroad change you? You return with a photo album full of memories and a suitcase full of souvenirs, sure. But you may also come back from your time in another country with an ability to think more complexly and creatively—and you may be professionally more successful as a result.

These are the conclusions of a growing body of research on the effects of study- and work-abroad experiences. For example: A study led by William Maddux, an associate professor of organizational behavior at INSEAD, found that among students enrolled in an international MBA program, their “multicultural engagement”—the extent to which they adapted to and learned about new cultures—predicted how “integratively complex” their thinking became.

That is, students who adopted an open and adaptive attitude toward foreign cultures became more able to make connections among disparate ideas. The students’ multicultural engagement also predicted the number of job offers they received after the program ended.

More generally, writes Maddux, “People who have international experience or identify with more than one nationality are better problem solvers and display more creativity, our research suggests. What’s more, we found that people with this international experience are more likely to create new businesses and products and to be promoted.”

Angela Leung, an associate professor of psychology at Singapore Management University, is another researcher who has investigated the psychological effects of living abroad. She reports that people with more experiences of different cultures are better able to generate creative ideas and make unexpected links among concepts.

Like Maddux, Leung found that the advantages of living abroad accrue to those who are willing to adapt themselves to the ways of their host country: “The serendipitous creative benefits resulting from multicultural experiences,” she writes, “may depend on the extent to which individuals open themselves to foreign cultures.” This openness, she adds, includes a tolerance for ambiguity and open-endedness, a lack of closure and firm answers.

Could it be that people who choose to study or work in other countries are already more inclined to be complex and creative thinkers? David Therriault, associate professor of educational psychology at the University of Florida, anticipated this possibility. He and his coauthors administered creative thinking tasks to three groups of undergraduates: students who had studied abroad, students who were planning to study abroad, and students who had not and did not plan to study abroad. The students who had actually studied abroad outperformed the two other groups in creative thinking.

Studying or working in another country can make us better thinkers—more flexible, creative, and complex—if we’re willing to adapt and learn from other cultures. As the title of an article by William Maddux advises: “When in Rome . . . Learn Why the Romans Do What They Do.”

The Health-Care System [from the more insurance advance system]

The Health-Care System Is So Broken, It’s Time for Doctors to Strike

http://www.thedailybeast.com/articles/2014/04/29/the-health-care-system-is-so-broken-it-s-time-for-doctors-to-strike.html
By Daniela Drake

Doctors are miserable, patients are miserable, and there’s no end in sight. It’s time to revamp the health-care system from the ground up—starting with primary care.

Dr. Zubin Damania thinks physicians should go on strike. “Physicians go into medicine with the best intentions,” Damania said, “and then we find ourselves working in a system that’s abhorrent to us. But if we rose up together, this broken system wouldn’t stand long.”

Dr. Damania, founder of an innovative medical center in Las Vegas called Turntable Health, believes that the health-care system is so broken—and the proposed fixes so feeble—that doctors need to take matters into their own hands. “Practicing doctors on the front lines are the ones with the most skin in the game,” he told The Daily Beast. “We can make changes that work. No one wants it more than we do.”

What he means by “practicing physicians” is that they aren’t also consultants, insurance executives, policy experts, medical leadership, media doctors, or academics—the so-called “thought leaders.” Instead, the revolution must be led by over-worked, over-burdened, quasi-burnt-out physicians—82% of whom feel powerless to influence the profession.

It may not be as impossible as it sounds. Motivating demoralized doctors is something that Dr. Pamela Wible, a family physician in Oregon, has some experience with. As she describes in her Tedx talk, she was once so miserable as an employed physician that she went on strike, refusing to work in a place that didn’t give patients the time they needed.

A few months later, she opened her own practice. “It was simple. I went to my community to find out what they wanted in health care. I held nine town hall meetings,” Dr. Wible told The Daily Beast. “They wanted less technology and more humanity. I ended up creating an ideal clinic designed by my patients.” Her trick? She keeps her overhead so low she doesn’t even have any staff. That was nine years ago, and she’s still going strong.

Dr. Wible is part of the Ideal Medical Practice movement—with over 500 clinics across the country— that minimizes costs so doctors can spend time with patients, not paperwork. The goal is the happiness of both patient andphysician.  “Doctors are happiest taking care of patients,” Wible said. “When we love our work, we give the best care.”

For last three years she’s been hosting affordableworkshops to teach doctors how to open their own Ideal clinics. “At first doctors don’t believe they can do it, because they feel so powerless,” Wible explained. “By the time they leave, they have a vision and a plan. Some quit their jobs and open Ideal clinics a few months later.”

When asked if doctors should go on strike, Wible responded, “By boycotting inhumane workplaces… we free ourselves to be healers again. I’ve been practicing medicine this way for a decade. Imagine if all doctors did the same.”

But to get physicians to see they aren’t powerless, Dr. Wible believes they first need to be healed. So she hosts her workshops at a tranquil, forested retreat. “The trauma we experience in medicine so often disconnects us from our heart and soul,” she said. “When doctors lose connection with their purpose, some cope by becoming money-focused, power-hungry—some prey on other physicians.  But many become silenced, helpless victims.”

That sense of powerlessness is something that Dr. Damania can relate to. He was a hospitalist at Stanford University Medical Center in what “became a soul-crushing, lather-rinse-repeat” cycle of hospital medicine. Likening doctors to the “the undead” in his TedMed talk, “Are Zombie Doctors Taking Over America?,” he described himself as “a disconnected, burnt-out zombie with a stethoscope.”

So, in an act of rebellion, while still at Stanford, Damania began posting Youtube videos as ZDoggMD.  In a twist of events, his videos caught the eye of Zappos CEO Tony Hsieh. “Tony thought I was losing my mind,” Damania said, “but he thought maybe I was just nuts enough to come up with something out-of-the-box for health care.” So Hsieh hired Damania to create a health-care program for Las Vegas, where Hsieh has a downtown redevelopment project.

As a hospitalist, Damania thought a lot about why patients ended up in the emergency room. It wasn’t that the excellent Stanford community physicians needing to do more training, clicking, or charting. In fact, the breakdown stemmed from too much of that stuff. “Clinicians know best how to help their patients,” he said. “Anything that interferes with that relationship is part of the problem.”

The conclusion? Damania realized that traditional models of health insurance simply have no place in primary care.

Indeed, more than a decade ago, practicing physicians around the country had already figured that out. They developed a model called Direct Primary Care that charges a monthly membership fee—usually $50 to $100—so that doctors can focus on taking care of patients, not billing insurance—which can actually be a lotcheaper for patients.

Damania partnered with the direct-care group Iora Health in Massachusetts, which utilizes a nimble electronic medical record (EMR) designed by their own practicing physicians that allows patients to write in their charts—and tracks patients who need close follow-up. With less overhead, Iora provides preventive services that might be considered luxuries: health coaches, support groups for anxiety and depression management, alternative care like acupuncture, and classes in tai chi, cooking, and meditation. Understandably, patient satisfaction is high.

As a bonus for doctors, there are no ICD-9 codes to worry about. No worry thatMedicare will demand repayment. No threat of audits or accusations of fraud. No time wasted documenting irrelevancies. No administrator coming down from the fifth floor to demand increased productivity from a doctor who just coached a scared 18-year-old through her first Pap smear.

“For me, Turntable was more a mission to save providers than anything else. To give them a space where they’re free to practice in the way they always wished they could—and we have great outcomes,” Damania said. “I believe it’s because doctors can bring their innate passion to the job every day—they’re empowered here.”

Not surprisingly, direct-care groups are expanding across the country. And, like many other doctors, Damania believes direct care is the only way to fix primary care. “If we radically restructure primary care,” he said, “we’ll end up reforming the whole medical system from the ground up.”

“Trying to patch the current system is preposterous and destined for failure,” said Dr. Damania. “I always say you can’t polish a turd. That’s what most pundits and consultants are trying to do: hence the advent of the Accountable Care Organization (ACO) and ‘patient centered medical home’ constructs. These do nothing to address the culture. They simply impose more restrictions, mandates, and parameters on dangerously stretched physicians.”

But many careful observers believe that “dangerously stretched physicians” are actually what some people want. After all, dangerously stretched physicians can’t connect well with patients—hence the booming industry of patient satisfaction scores. Dangerously stretched physicians can’t keep up with the literature—hence the need for more frequent physician testing.  Dangerously stretched physiciansmake mistakes, which perpetually empowers those who string doctors up on the iron rack of contingencies in the first place.

What’s more, dangerously stretched physicians can’t refute the pernicious notion that patients want to be customers. “People don’t want a business transaction with their doctor,” said Dr. Wible. “They want to be patients again—they want that sacred relationship back.”

Fed-up doctors want that too—and many have begun to reclaim the covenant between doctor and patient. One doctor started a direct-care clinic and wrote an article titled A Year Into Direct Pay: It Doesn’t Suck to be a Doctor Anymore. Another started an “Ideal Clinic” in New York where volunteers help her do the billing. Physicians started humane direct-care groups, like Iora Health andQliance, that are now attracting investor dollars and expanding.

Dr. Damania sees a seismic shift coming. “Physicians need to see that doctors all over the country are beginning to flip the script—we aren’t powerless,” he said. “I’m really hopeful. I think we can fix this thing.”

A Doctor's Declaration of Independence

http://online.wsj.com/news/articles/SB10001424052702304279904579518273176775310?mod=trending_now_2

By  

DANIEL F. CRAVIOTTO JR.

It's time to defy health-care mandates issued by bureaucrats not in the healing profession.

In my 23 years as a practicing physician, I've learned that the only thing that matters is the doctor-patient relationship. How we interact and treat our patients is the practice of medicine. I acknowledge that there is a problem with the rising cost of health care, but there is also a problem when the individual physician in the trenches does not have a voice in the debate and is being told what to do and how to do it.

As a group, the nearly 880,000 licensed physicians in the U.S. are, for the most part, well-intentioned. We strive to do our best even while we sometimes contend with unrealistic expectations. The demands are great, and many of our families pay a huge price for our not being around. We do the things we do because it is right and our patients expect us to.

So when do we say damn the mandates and requirements from bureaucrats who are not in the healing profession? When do we stand up and say we are not going to take it any more?

The Centers for Medicare and Medicaid Services dictates that we must use an electronic health record (EHR) or be penalized with lower reimbursements in the future. There are "meaningful use" criteria whereby the Centers for Medicare and Medicaid Services tells us as physicians what we need to include in the electronic health record or we will not be subsidized the cost of converting to the electronic system and we will be penalized by lower reimbursements. Across the country, doctors waste precious time filling in unnecessary electronic-record fields just to satisfy a regulatory measure. I personally spend two hours a day dictating and documenting electronic health records just so I can be paid and not face a government audit. Is that the best use of time for a highly trained surgical specialist?

This is not a unique complaint. A study commissioned by the American Medical Association last year and conducted by the RAND Corp. found that "Poor EHR usability, time-consuming data entry, interference with face-to-face patient care, inefficient and less fulfilling work content, inability to exchange health information between EHR products, and degradation of clinical documentation were prominent sources of professional dissatisfaction."

In addition to the burden of mandated electronic-record entry, doctors also face board recertification in the various medical specialties that has become time-consuming, expensive, imposing and a convenient method for our specialty societies and boards to make money.

Meanwhile, our Medicare and Medicaid reimbursements have significantly declined, let alone kept up with inflation. In orthopedic surgery, for example, Medicare reimbursement for a total knee replacement decreased by about 68% between 1992 and 2010, based on the value of 1992 dollars. How can this be? Don't doctors have control over what they charge for their services? For the most part, no. Our medical documentation is pored over and insurers and government then determine the appropriate level of reimbursement.

I don't know about other physicians but I am tired—tired of the mandates, tired of outside interference, tired of anything that unnecessarily interferes with the way I practice medicine. No other profession would put up with this kind of scrutiny and coercion from outside forces. The legal profession would not. The labor unions would not. We as physicians continue to plod along and take care of our patients while those on the outside continue to intrude and interfere with the practice of medicine.

We could change the paradigm. We could as a group elect not to take any insurance, not to accept Medicare—many doctors are already taking these steps—and not to roll over time and time again. We have let nearly everyone trespass on the practice of medicine. Are we better for it? Has it improved quality? Do we have more of a voice at the table or less? Are we as physicians happier or more disgruntled then two years ago? Five years ago? Ten years ago?

At 58, I'll likely be retired in 10 years along with most physicians of my generation. Once we're gone, who will speak up for our profession and the individual physician in the trenches? The politicians? Our medical societies? Our hospital administrators? I think not. Now is the time for physicians to say enough is enough.

Dr. Craviotto is an orthopedic surgeon in Santa Barbara, Calif., and a fellow of the American Academy of Orthopedic Surgeons.