The Keiretsu Experiment

Yesterday, I invited 15 entrepreneurs to dinner.  The purpose was to explore an experiment in community based around the idea of the keiretsu, the Japanese concept of building an interlocking groups of companies that can become stronger through the connections. Below, I will talk about my rationale for starting this and what I hope we will be able to accomplish.  I plan to report back to you, my blog readers, about the progress of this experiment over time.

One of the things that interests me is the growth and development of entrepreneurial ventures. I have been involved in entrepreneurial activities for over 25 years now. For the past several years, I have been involved in mentoring entrepreneurs who are getting started. In some cases, I have invested time, others, contacts, in still others, money. In all, I hope that I have been useful to these individual business owners.

As I expand my thinking about my role in the entrepreneurial community, I have also started to expand my footprint. First it was just through DePaul, next it was outside companies, then teaching and this blog. I have come to appreciate the value of communities and wanted to try an experiment with a group of entrepreneurs that I feel comfortable with. Each of the entrepreneurs has specific strengths, weaknesses, contacts, products, services and issues. Some of them have not been in business before, others are pros. Some of them have a revenue generating product or service, others, not yet.

I believe that in this group, collectively there are a lot of assets. If we were to be able to utilize the group’s assets, it is my contention that all of the companies represented will have a better outcome than by going it alone.

What I am not proposing is another networking group. All of the entrepreneurs are or should be networking. But, if you ask me, networking will not really get you to where you want to be. You need to really understand and trust the companies that you deal with. In our current thinking, networking is more like speed dating. Get your business cards out and recite your elevator speech. 2 minutes and then find the next target. You are always looking for the next contact to give you what you need, whatever that is.

I am looking to turn networking on its head. In this group, I would like to see if we can bring to the table assets that we are good at or that we own or have access to. It could be anything — talents, relationships, resources. If anyone in the group can utilize the asset, we have the opportunity to try to find a way to work together to utilize the asset. Because we are a tight group, I don’t expect it to get much bigger and it could get smaller, each entrepreneur will have the opportunity to get to know the others and develop stronger relationships to engender the trust that will allow this to work.

This is not a new concept. The Japanese have long had business groups called Keiretsu – a set of companies with interlocking business relationships, and in Japan, interlocking ownership.  I am not advocating overlapping ownership, but sort of a first stage keiretsu, where we share non-financial assets.

What does this collaboration look like? I know that everyone in this experiment is an entrepreneur and has an idea that they are trying to execute. I am interested in exploring a community dynamic where the companies involved will have access to the assets of everyone on the team.  The hypothesis is that through the benefits imparted by the assets of the group, the collective revenue for this group of companies will rise.

So what is our goal? If I were to say that in this group, there is a combined 2009 revenue goal of $8 million dollars, then is it possible, through some focused effort through this community that we could see a 25% increase in revenues, that we would be able to recognize an overall $2 million raise? Would that be worthwhile? I think so and I think it is possible.

Let’s talk about three time frames.
Short term – Set up expectations to work together. I introduced everyone at the meeting to the group. After I gave my introduction, which included some key assets that I recognized that the person had, each person explained what their company did, where they felt their strong points were and how they would be willing to help the group. Everyone was able to take notes and ask questions.

Medium term – I will take on the responsibility of group moderator and will keep everyone current with what is going on and progress made. I expect that each of you will take the opportunity to meet with 3 other members of the group over the next 3 months to figure out ways that each can help the other. I will keep track of these meetings to make sure that we are maintaining our focus on creating strong connections.

Long term –  By the next meeting we will have a much better idea of how this is working and can make adjustments based on the first quarter results. Again, the long term goal (over the next year) is an overall 25% increase in revenues.

How many people can you support here? This is a volunteer group. Anyone can drop out at any time, no questions asked, no hard feelings.  We probably aren’t going to be adding people, unless there is a strong reason. Around 15 seems to be the right number for this group.

What does winning look like? Winning is simple – grow your business 25% through the relationships developed through this group.

Our meeting yesterday was successful.  Originally scheduled for 3 hours, there were people talking at the 5 hour mark. There were people who engaged others that I never would have introduced. I am excited to see if this will engage people to figure out ways to utilize their asset base. Over the next year, it will be interesting to see if the original thesis statement can be proved through this experiment — 25% revenue growth.

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