Introduction

Maps for Modern Magellans: Charts for Captains of Commerce By Roger Anderson Ph.D. Copyright © 2007, Modern Magellans Media 4502 Granada Drive Yorba Linda, CA 92886 www.modernmagellans.com All rights reserved, including the right of reproduction of any portion of this publication or transmission in any from or means without the expressed written permission of the author or copyright holder. Brief quotations and extracts may be used for review or editorial purposes without written permission. Quotations without attribution are by Roger Anderson All brand names and Trademarks mentioned in this publication are the property of their respective owners. All trademark names and designations were capitalized to assist in the recognition of such. No endorsements were received for inclusion in this work nor are any endorsements of other products or publications are to be inferred from their inclusion in this publication. Cover Design: Brett Anderson Book Layout and Illustrations: Brett Anderson Editors: Becky Clines, Liz Kylin, Lorrie Winter, & Lloyd Porter Special corporate editions can be made available which can include a foreword by a company executive or selected individual. Special editions for distribution to employees or customers can also have the corporate logo on the cover. For information regarding special corporate editions or bulk sales discounts please contact Modern Magellans Media directly by: E-mail: orders@modernmagellans.com Phone: 714-779-1095 FAX: 309-418-6304 Library of Congress Cataloging-in-Publication information available upon request. ISBN 13; 978-0-9794789-0-1 (For the full paperback book)

Acknowledgements:
There are so many people to thank and I will undoubtedly omit important names. Fortunately, there will be other editions and books in this series. I need to thank, in no particular order Alan Stanford, John Halff, David Landsberger, Paul Seliskar, Dan Rime, and John Baldeschweiler for mentoring through the development of my first company. To my friends and colleagues at Anderson Unicom Group, I thank you for your patience while an eager but inexperienced entrepreneur learned the ropes. I am better for it and much of what I know, I know because we all learned it together. It was not always easy but it was a great time to ride the wave. Over 30 people read or listened to all or parts of this book as it developed. I thank them for their input, understanding, and encouragement. The list of readers includes: Larry Daines, Chris Kendig, Dane Shank, Drew Hansen, Jack Cassidy, Mark Prebe, Kevin Weigler, Tiana Fatutalia, Ken “KC” Clement, Craig Winter, Stan Klein, Bart Greenburg, Matt Holt, J. “Jay” Brown, Louise Dalton, Sally van Haitsma, Ron Ralston, Steve Clark, Dan Rime, James Obermeyer, Tersia d’Elgin, John Halff, and Alan Stanford. A special thanks to those who read with the intent to fix the grammar, flow, and clarity: Chris Anderson, Phyllis Helton, Ryan Anderson, Lorrie Winter, Becky Clines, Lloyd Porter, and Liz Kylin. An extra special thanks goes to my son Brett who took my scribbled drawings or amateur diagrams and made them into the works of art you see in this book and on the website. One final thank you to my great friend Charlie Graham. He was always there for me when I needed anything. We had many late nights bowling and talking. He left this world much too soon for everyone who ever met him, including me.

What Do You Need to Sail the World?

Introduction What Do You Need to Sail the World?
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No one told you to. You just knew you had to, to set sail, to be the

captain of your own ship. You started a business and charged out into the open waters. Are you in shape for the demands of this voyage? It turns out that sailing is not as easy as experienced sailors make it look. At first, you learned what you needed to make it through the day. Now it seems there is no time to learn, to read, or to get help sailing the ship. There are too many demands. You have to keep on sailing to keep making money. The format of the Maps for Modern Magellan series will make it easy for you to slip in a quick lesson once a day that will help improve your business and your life. Learning each map will make it easier to keep sailing along and improve the journey. Each of the chapters can be read on its own. It only takes about 30 minutes to read a chapter. Just looking at a map is enough to start improving your journey. Every concept is a tool to ease the operation of your ship. Every new skill improves your voyage. Every map makes it easier to plot your course.

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This book is a great gift for bosses, not too many words, and lots of pictures!

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Charts for Captains of Commerce home and not take the risk. Magellan is better known than many of the other explorers because he succeeded. Magellan, and others who dared to explore the uncharted seas, changed the world forever. Entrepreneurs do the same thing every year by providing innovative answers to the needs of the continually changing world we live in. People who start or run a business are like those early explorers. Willingness to take risks is one of the reasons why a person starts a business. Sailors know that a ship needs a good captain and that it is unwise to sail alone. Every business needs a capable leader and reliable employees to make the business succeed. Captains build loyalty by teaching their crew what they need to know to sail on their own. Likewise, successful business people improve the skills of their staff by teaching from their experiences, failures, and achievements. Sailors who venture out on the open waters see the beautiful sunsets. Mountain climbers who climb know the joy of overcoming adversity. Business owners who work hard at improving themselves see the biggest rewards along the journey. There is risk in every activity and not all risk is rewarded. Having great maps and wellcrafted plans provides a better chance of positive rewards and minimized risk.

A Sailor Must Know The Sea
Over one million new companies are started every year in the United States. Let me repeat that: Over one million new companies are formed in the U.S.A. every year. Every year! If one million new companies are created each year, and the population of the United States exceeded 300 million in 2006, then one out of every 300 people in the U.S. will try to start a new business this year. Since most of us live in communities 2

What Do You Need to Sail the World? larger than 1,000 people, you probably know, or live near, at least three people who will start a business very soon. One of these three people may even be you. Unfortunately, close to 80% of these new companies fail within the first five years of operation. Currently close to 50% of new businesses cease in the first two years. These failures devour potential, excitement, and enthusiasm, not to mention money. Think of all of the invested time, resources, and emotion, which resulted in few tangible or profitable results. Why do so many of these start-up companies disappear? This question will be answered as you read about and learn to recognize many of the mistakes that most people make. According to the United States Economic Census 2002, Survey of Business Owners (SBO)1, there are over 5.5 million business firms with paid employees. The total number of all firms, as indicated in the SBO data, is 22.9 million. This total includes people with parttime businesses and people who have more than one business. Two thirds of the business owners who responded listed their company as their primary source of income. According to the survey, almost 25% of business owners with employees had a high school degree or less when they started their business. With over 5 million companies that have paid employees in the US, and so many people running them who have not received much formal business training, it is a safe bet that there are many lost captains. In addition to the previous observation, the number of businesses started every year indicates that there are probably others trying to run a business just like yours. Therefore, every business needs all the legitimate advantages it can have. The tools in each of the following chapters provide some great advantages.
1

Can be viewed online or downloaded at http://www.census.gov/csd/sbo/ A more comprehensive survey than the traditional population census which only counts “employers”

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Charts for Captains of Commerce People, all too often, ignore facts they do not want to hear. This puts business owners at risk of losing everything they have worked so hard to create. The concepts in this book can be applied to everyone at almost every level of a business operation. Any company will improve if it applies these concepts. Some of the ideas may be familiar, but everyone can still benefit from the new way they are presented.

Sailing Requires Maps and Charts
In every company there are individuals and groups that are lost. Those wayward sailors need maps, directions, and a large amount of help. For the purposes of this series, a map is defined as something that shows the lay of the land and indicates various routes to take. The maps and figures are tools and guides for business captains that deal with the issues common to most businesses. Some of the examples may tend towards certain market sectors, but they can easily be extended to other business areas. While running my first software company, I covered the walls of the office with large flowcharts. These charts helped the team discuss, design, and develop routines or programs. The diagrams in the following chapters provide the same function. After gaining a better understanding of these principles and by using the unique maps you will be able to better explain the very important points to others who will also benefit from them. The maps are for those in business as well as those thinking about starting a business. If 80% of the 1 million new companies started each year fail in the first 5 years, then approximately 800,000 companies are failing every year. This could well be the normal rate of attrition, or it could be the casualties of competition. More than likely, it means somebody is not operating as well as they should, or they never knew 4

What Do You Need to Sail the World? how to do it right in the first place. Many basic principles have been included in the following chapters to be certain that everyone is on the same page and to set a foundation for any complicated material. The observations in these chapters are supported with real-life examples and lessons whenever possible. The maps, diagrams, charts, and images will help you to: • • • • Better plot a successful, forward-looking course Better understand your business in a larger context Better recall concepts that help to grow a business Better manage your team and business

Using these tools, diagrams, and tables you can then navigate your way and know what supplies you will need to succeed1. Despite what you may have heard, and paraphrasing the father of microbiology, Louis Pasteur, fortune favors the prepared more than the lucky. Most captains would not think of attempting a journey without a complete set of charts, maps, and today, a GPS (Global Positioning System) device.

A Captain Is a Teacher
The maps of each chapter are meant to be simple enough that they can be drawn on a white board for use in meetings or training. Whether they are drawn by hand, downloaded, or purchased2 as posters, they give people a framework, or common reference on which to hang

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The analogy for this book and particularly for this chapter deals more with navigation than repair tools. Visit http://www.coastalsailing.net/Cruising/DIY/ DIYRealLife.html to take the analogy farther. Daria and Alex Blackwell have created a wonderful site for sailors to discuss and share resources about sailing. 2 Color posters of the diagrams, and downloadable versions of the charts are available at the website for this book – www.mapsformodernmagellans.com

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Charts for Captains of Commerce concepts being presented. The symbols and pictures used in each chapter will reinforce the key ideas. One objective of this series is to increase business analysis and to inspire the creation of diagrams that help owners and operators more accurately plot their success. Most business concepts and ideas can be diagrammed or plotted. This is particularly useful for people who are more visual than textual in their understanding. There are many ways to present things and the intention here is not only to convey the concept, but to also make it memorable and useful to those who run a business.

A Ship Needs an Anchor
An anchor in business, like that of a boat, holds it in place and keeps it from drifting. Goals, objectives, and milestones are destinations not anchors. A captain has to determine the condition and position of the ship before sailing. During the inspection, and any required repair time, a ship could drift and possibly suffer great damage if it were not anchored in some way. Clear instructions, a simple well-constructed mission statement, and proper training are great examples of business anchors. Most people reading this book do not have time to sit at anchor pondering how they could improve their business. The maps and techniques described in the following chapters were crafted to be straightforward and direct. A chapter can be read at lunch and the concept put into practice right away. Course corrections, repairs, and training can be done immediately. Most business owners need something they can understand and apply now. They do not have time to read 400 page self-help books to learn one concept. An in depth study of each map and concept is 6

What Do You Need to Sail the World? a good idea but since there may not be time for that in the rush of the day, set time aside for extra study or to go beyond the first principles when you are ready.

Sailors Need Quality Ropes: candid, honest, and open discussion
Lack of honesty and integrity is like having worn and fraying ropes; they do not hold together well under stress. It is always very important to be honest with one’s self. Truth must be a primary element of all discussions when applying these concepts. In both of their coauthored books, Larry Bossidy and Ram Charan 1 repeatedly stress honesty as one of the most important components of building and maintaining a successful company. Total and objective honesty is so important that the need for it will be repeated for emphasis. There will not be a great amount of specific situational advice in the following chapters; rather the intent is to give a person tools to use to better run a business, and as a bonus, life. The concepts discussed are meant to encourage thinking of a business as a separate entity. This entity is to be managed with intelligent intent and deliberate design. You will also see that your life is a business that should be managed, and not just endured. A business is to be controlled, not controlling. Michael Gerber 2 has a great point to ponder: Most people make the mistake of working in their business, not on their business.

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Larry Bossidy and Ram Charan, “Execution: The Discipline of Getting Things Done”, Crown Business, (2002) and its sequel “Confronting Reality”, Crown Business (2004) 2 Michael Gerber, “The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It”, Collins; Updated edition (1995)

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Charts for Captains of Commerce

Chapter Close
Giacomo Rizzolatti1 in Italy and his collaborators at UCLA in the U.S. have demonstrated a very interesting feature of our wonderful brains. When we see an object, see an action, hear sounds that remind us of an action, or if we even hear that action described, nerves in our motor cortex which Rizzolatti calls mirror neurons, fire as if they were going through the motions of that action. When we see a baseball bat, we swing it in our minds. One reason the maps in this book will be so valuable is that when you see them, or their shapes, it will remind you of the concept and the action that needs to be taken and your mirror cortex will process it automatically! Each chapter begins with a story that introduces the concept for that section. Too often, business leaders are aware of important ideas but awareness is not converted into application. The maps assist in the application of the concepts by increasing the presence in the forefront of the mind. Every map is an original creation. Each chapter will have one main concept and one map. Some chapters will have additional diagrams, charts, or images that help explain the concept. The point of each chapter is to convey an understanding of how to use the map in business and life. When these maps are used again it will reinforce the point or plan that it created. Use these to determine where you were, where you are now, and where you want to go.
All of the chapters use images, diagrams, or charts that are meant

to be clear, appealing, and understandable. Some of the diagrams or charts may be similar to illustrations you have seen in the past. Some maps are images or pictures intended to convey a concept of which you should try to be continually reminded. It may take some time to
1

Jonah Lehrer, “How We Know”, Posted at seedmagazine.com July 19, 2006 12:32 AM, published in Seed magazine, September 2006

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What Do You Need to Sail the World? grasp the full value of some of the diagrams. With practice, you will decide how to make them work for you. Change them, improve them, or enlarge them. The maps have their greatest value when they work for you personally. All of the supporting material in each chapter is intended to help you make the best use of the maps, charts, and diagrams to better navigate that ever-changing sea of commerce. Am I in shape? I’m in shape. Round is a shape. -- Roy Valle

A Brief List of Requirements For Sailing:
(What they are analogous to is open for discussion on the book website)
• • • • • • • • • • • Map Compass GPS Radio Computer Fabric Ropes Velcro Saw Hammer Screwdriver • • • • • • • • • • • Food Water Anchor Knife Duct Tape Mirror Oil Wood Flare Satellite Phone Clothes

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Charts for Captains of Commerce Volume I

Chapter Map
(Table of Contents)

Introduction - What Do You Need to Sail the World? Chapter 1 – Mapmaking; Not Just Cartography
Map 1 - The Seven Steps of Mapmaking - 14

1

11

Chapter 2 - Minding Your Own Business
Map 2 - The Question Dice - 29

27

Chapter 3 - Where Are You On the Curve? (Curves Part I)
Map 3 - Trajectories - 66

57
$2,000,000 $1,500,000 $1,000,000 $500,000

Chapter 4 - Which Curve To Follow? (Curves Part II)
Map 4 - The Total Cash Curve - 104
0

Major Inflection Point
6 12 18 24 30 36 42 48 54 60 66 72 78 84

$(500,000) $(1,000,000) Revenue

Point of Profitability

83

Cumulative Cash (Retained Earnings)

Chapter 5 - The 5-Fold Way
Map 5 - The 5-Fold Way - 113

111

Chapter 6 – Who Wants More?
Map 6 - The More Cycle - 155

139

Chapter 7 - Diffusion
Map 7 - The Lighthouse - 175

173

Chapter 8 - Three Steps to a Sale
Map 8 - The Marketing and Sales Compass - 203

195

Conclusion - Success

221

Charts for Captains of Commerce Volume I

Bibliography – Selected Books cited in this publication
Anderson, Chris “The Long Tail”, Hyperion (July 2006) Ansoff, I. Strategies for Diversification, ‘Harvard Business Review’ (September-October 1957) Bossidy, Larry and Charan, Ram “Execution”, Crown Business, (2002) Bossidy, Larry and Charan, Ram “Confronting Reality”, Crown Business, (2004) Buckingham, Marcus “The One Thing You Need to Know“, Free Press, (2005) Christensen, Clayton M. “The Innovator’s Dilemma”, HarperBusiness; May 2000 Collins, Jim and Porras, Jerry I. “Built To Last”, HarperCollins Publishers, (1994) Collins, Jim “Good to Great”, HarperCollins Publishers, (2001) Covey, Stephen “The 7 Habits of Highly Successful People”, Free Press, (1990) Covey, Stephen “The 8th Habit; From Effectiveness to Greatness”, Free Press, (2005) Covey, Merrill, & Merrill, “First Things First ”, New York: Fireside; Simon & Schuster, 1994 Diamond, Jared “Guns, Germs, and Steel”, W. W. Norton & Company (1999) Gerber, Michael “The E-Myth Revisited”, Collins; Updated edition (1995) Gladwell, Malcolm “The Tipping Point”, Little, Brown (2000) Gladwell, Malcolm “Blink: The Power of Thinking Without Thinking”, Little, Brown (2005) Glauser, Michael J. “Glorious Accidents” Deseret Book Company (1998) Godin, Seth “Purple Cow”, Portfolio Hardcover (2003) Grove, Andrew “Only the Paranoid Survive” Currency; (1996) Kaplan, Robert S. & Norton, David P. “The Balanced Scorecard”, Harvard B-School Press, (1996) Kawasaki, Guy “The Art of the Start”, Portfolio (1995) Kotter, John P. “Leading Change”, Harvard Business School Press; (1996) Kotter, John P. &. Cohen, Dan S “The Heart of Change”, Harvard Business School Press; (2002) Lehrer, Jonah “How We Know”, published in Seed magazine, September 2006 Machiavelli, Nicolò “The Prince“ Written c. 1505, Translated by W. K. Marriott 1908 Maslow, A. & Lowery, R., “Toward a Psychology of Being”, New York, Wiley & Sons, 1998 Moore, G. A. “Crossing the Chasm”, Harper Business, (1991) Moore, G. A. “Inside the Tornado”, Harper Business, (1995) Rogers, Everett “Diffusion of Innovations“, The Free Press. New York, 1962 Siebel, Thomas M. & House, Pat “Cyber Rules” Currency; 1st edition (1999) Stern, Jane and Michael “The Encyclopedia of Pop Culture”, Harper Perennial Press, (1992) Schwartz, Barry “The Paradox of Choice: Why More Is Less “ Ecco (2004) Woolf, & Johnson, PhD, “The Break-Even Point:”, Ann. Fam. Med, Nov 2005; 3: 545 - 552.

Volume II - Chapter Map
(Table of Contents) Introduction - Volume II Chapter 9 – Waves, Riding the Waves - Crisis Immunity
Map 9 - The Parts of a Wave

Chapter 10 - Change
Map 10 - The Changing Forms of Water

Chapter 11 - Knowing is Half the Battle or Maybe Less
Map 11 - Knowledge Iceberg

Chapter 12 - Doing is the Other Half and Maybe More
Map 12 - The Project Curve

Chapter 13 - Why Things Don’t Happen As Expected
Map 13 - The Field of Rocks

Chapter 14 – The Bubble Diagram
Map 14 - The Bubble Diagram

Chapter 15 - Leadership Pedigree
Map 15 - Leadership Pedigree Chart

Chapter 16 - Putting the Pieces Together
Map 16 - The Business Pursuit Wheel

Conclusion - Success Part II

Watch for it in Fall 2007

Maps for Modern Magellans

About the Author: Roger Anderson Ph.D.
Dr. Anderson received his Ph.D. in Molecular Biology from Caltech in 1996. After leaving Caltech, he has been on the business side of science. He has experience in large corporations and start-ups, twice serving as CEO. Dr. Anderson has also served as a consultant to dozens of companies in the laboratory reagents and diagnostics markets. Dr. Anderson concentrates on the focus of the executive team, business transformation, industry relationship development, fund-raising, investor management, and developing collaborations or acquisitions. The entrepreneurial urge hit early in his career and has never left. During graduate school, he compared offerings from various suppliers to find the best item at the best price for the lab he worked in. That led to the concept of a database driven website online purchasing system for life science products and Anderson Unicom Group (AUG). Under his leadership, AUG grew from a concept to a full-fledged business, competing with much larger companies.

About the Series

Maps for Modern Magellans
The Maps for Modern Magellans series is written for people who feel frustrated after starting a business and realizing that they need help, but believe they do not have time to read a business book to get that help. The series is written for everyone that wants to start a business but is afraid they may not know what to do once they get going. This series is for those people who feel stuck in their present work situation and want to make a change. Every chapter of this series stands on its own. Each topic is a vitally important concept for business leaders to master. The maps, charts, and diagrams are designed to help business owners, operators, managers, and those who want to be leaders better grasp and communicate important business principles. The original illustrations are memorable and easy to use. A reader can immediately share their new insight with others and enable greater business communication. Leadership training and management development will be improved using this series as a key part of your process. Maps for Modern Magellans books are written by experienced business leaders. Each volume is a collection of diagrams and information developed to successfully illustrate and teach business concepts. There are 25 million businesses in the U.S.; 5.5 million with one or more employees. According to the 2002 Survey of U.S. Business Owners, 25% had no college training when they started. A leader does not want to receive an Idiot’s or Dummies’ Guide. A business owner is a ship’s captain and deserves respect. They are Modern Magellans who need good maps and then a clear path to transform their business. Business Transformation is the key to improving your business success.

For more information about Dr. Roger Anderson, this book, or other products from Modern Magellans Media please visit our website at:

www.mapsformodernmagellans.com
On the site you will find: • Individual book chapter activity pages where you can download tables, forms, and spreadsheets. • Access to video and audio presentations • Links to websites mentioned in the chapters. • A complete bibliography and links to many of the books mentioned in this book series. • Areas for continued discussion and comment. • News about future releases, book-signings, and speaking engagements. • How to purchase additional books, posters, calendars, and desk ornaments.
For information about speaking engagements, books, online learning materials or contact Modern Magellan Media at: 4502 Granada Drive Yorba Linda, CA 92886 W: (714) 779- 1095 F: (309) 418- 6304 drrogera@modernmagellans.com