Client Message And Your Message Collision

18.10.2011 No comments

When selling services to other companies, you need to re-consider your key website messages.

Recently I came across a »corner case« of web site design.  Two clients were providing services to other businesses (B2B), but in entirely different industries.  Both struggled to create websites and key clients gave negative indications.  The problem and the solution for both was the same….

Let’s imagine a simple outsourcing relationship to better understand the problem.  Outsourcing is likely to be promoted based on a critical knowledge, price, location, language, or other advantage that the supplier (“SmallCorp”) has over their client’s (“BigCorp”) internal resources.  However, BigCorp is selling to their customer’s with a message that they are uniquely qualified to solve a specific problem.  The SmallCorp’s message, if ever exposed, is completely incompatible with their cleint (BigCorp’s) message.  In an age where nearly anyone is potentially exposed to end customer-facing communications, it is high risk that an outsourced person could expose his name to an end client.  Once exposed, social networks (linkedin, facebook,etc) quickly expose SmallCorp – including  which company this person works for and what “priorities” his company has.  The result—client message collision.

The solution, is to… Read more…

Managing Salesmen

11.01.2011 Comments off

With salesmen, you pay for results through commission.  What is there to manage?

I made the transition to management while an engineer.  At that same time, my main outside activity, sailboat racing, also made a transition from racing crew with a small role to starting my boat and taking on captain responsibilities.  With both, I made lots of mistakes.  Later, I started to educate myself in less damaging ways through reading and classes.  One surprise, was that the problems I was facing on the job, were nearly the same that I was facing with my unpaid racing crew, and even more remarkable was that the management books would often describe the techniques that I discovered through painful trial and error.  Engineers and volunteer sailors are difficult groups of people to manage effectively, but far easier, in my experience, than managing salesmen.

We pay salesmen almost exclusively based on results (not effort), yet they do not control markets, don’t make the products they sell, and have few control points within the customer.   Read more…

Scaling down multi-company corproate structures

21.11.2010 No comments

Scaling Down Multi-Company Corporate Structures

I have noticed a relatively new trend within smaller companies in that they seem to be more willing to experiment with ever more complex ownership and legal structures.  I imagine that this is partly a fashion thing associated with the recent “Decade of the Banker”.  Another influence is the European tax optimization tradition that encourages more complex legal and cross boarder structures, and finally Silicon Valley stock options and shared ownership have been a model for how to motivate the latest generation technical talent.  The consequences of such complexity are often not felt until many years later.

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Transitioning Corporate Organizations

20.08.2010 No comments

Why good organizations don’t guarantee success, and sub optimal organizations can still deliver….

In a previous post, I discussed the three basic organization structures for most companies, but I did not discuss how to change to a more optimal structure.  The bad news, is that the change is almost always more damaging than the improvement of a more optimal organization.

Almost every study on reorganization suggests that there is an efficiency loss for at least six month, and often well more than a year.  While you can evaluate how the transition is progressing relatively quickly, you cannot determine if the overall new structure is indeed superior to the former for more than a year.   Another note is that the reduced efficiency starts the moment that rumors of the change emerge and that the 6 month period needed for stabilization only starts when the org changes stop.  In far too many companies, managers hope to minimize the transition by announcing the plan well in advance.  They also hope to improve the results by making a “mid course correction”.  Both are hugely damaging since they extend the inefficiency window. As a result, a reorganization is a major commitment for several years to come and managers need to take into consideration their ability to provide this critical settling period before they even open the discussion of change.

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The High Cost of Selling Software

04.07.2010 No comments

The cost of getting software into the hands of customers is typically 2 to 4 times more than the cost of developing the software…

During the current economic downturn, governments have looked to stimulate the economy, and have shown particular emphasis on the small businesses that are seen as the engine for creating jobs.  One common stimulus has been to promote new software and other technology R&D efforts that create Intellectual Property (IP).  From my way of thinking, they have it wrong in their stimulus target.  Many small businesses are able to create software IP through “sweat equity”, that is, labor that not directly compensated.  The cost of licenses and hardware need to create the software is usually very small and the typical small business entrepreneurs invest their time while remaining in their home offices close to family and friends.

Unfortunately, after making the sacrifice required to create the product, many of these entrepreneurs then face the very sad fact that this software development effort is usually only a quarter of the total cost of getting the product to the final consumer.  (Don’t believe me?  Look at annual reports of software companies and software divisions of publicly traded companies to see where their costs are: R&D is typically 15-35% of total revenue.)  Read more…

Surviving Corporate Acquisitions

22.05.2010 No comments

There is the right way, the wrong way, and the new company’s way….

Just Merged

Many years ago, a company I worked for was purchased by another company and then that company was purchased by Honeywell a year later .  One of my new colleagues (from the acquiring company of a year previous) explained the three rules of an acquisition:

Rule 1: Don’t forget who bought who.

Rule 2: There is no such thing as a merger.  Refer to Rule 1.

Rule 3: Don’t forget rules 1 & 2.

I have been through numerous acquisitions since — from both the buying side and selling side — and these three rules have served me well

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Corporate Organizations

05.04.2010 No comments

There are 3 basic organizational structures– each flawed in some way

Organization Structure

In almost every political campaign, the opponent runs on the theme that they can successfully attack the huge waste, fraud, and abuse that exists everywhere in the government. Many will even have some facts showing how great this problem is, yet even after multiple successive new governments with this as a priority, the improvement is marginal at best.  This is not conspiracy, but the symptom of a very hard problem that does not have an easy answer.

In my business world, I see two similar paradoxical hard problems that the simple answer never provides a meaningful solution.  The first is sales cross-selling and the second is the re-use of designs (aka IPR management). Combine these two with the ever-present general corporate waste through communication barriers and you have the three justifications we typically see used for most every corporate reorganization.  You also have the reason why almost no reorganization can solve the hard problems.

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What is your Core Business?

15.03.2010 No comments

“Do you want to sell sugar water for the rest of your life, or do you want to change the world?”— Steve Jobs, CEO Apple

I am a big fan of knowing what your company’s role in the marketplace is.  You can call this your Mission, Vision, USP (Unique Selling Point), Evangelist Role, Cult Mantra, or even your Entrepreneurial root story.  They are all variations on the same idea: your company exists to do something other than the dreary “increase shareholder value through retained profits” thing.  Now, hopefully you do increase shareholder value, but that is the byproduct of doing something else that is more fun and more meaningful.

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Is Marketing the Next Finance?

28.02.2010 No comments

Rory Sutherland at Ted Talks helps me understand the value and cost of customer loyalty

I recently discovered Rory Sutherland from one of my favorite podcasts: Ted Talks.  After rapidly devouring all the YouRoryAtTEDtaksTube videos and blogs on this Olgilvy “Ad Man”, I found myself stuck on one of his minor theses: “Is marketing the new finance?” (quoted from Guy Phillipson).  He argues that every new corporate initiative in the last ten years has created the all-important spreadsheet analysis that carefully laid out shareholder value, including an analysis of the perception of the company by the financial community.  How about using the same care in analyzing how the customers feel about the company and its products?   From Rory’s perspective, business is simple: Find something that customers want to buy and then remove the barriers that keep them from buying it.   I think he is on to something.   He proposed that this current financial emphasis should be replaced by a real solid marketing emphasis. Read more…

Importance of Coffee

22.01.2010 1 comment

Strategic Coffee

I truly enjoy taking my Slovene colleagues on business trips to the US and UK. Inevitably, a local business partner will invite us for a coffee and then proceed to lead us as we walk, talk, and drink our coffee. Walking and drinking coffee is a most ordinary activity in the US, but in much of Continental Europe, this borders on being an acrobatic exercise. The resulting business consequences are quite revealing. For many years I worked in a Slovenian office with two cafes in the building. We would refer to the lower cafe as the “Decision Center” as a partial joke when we walked new clients around the building on a tour. American customers would envy this “luxury” and soon we also began to see this as a luxury. As we expanded, our new buildings were made more efficient by replacing the cafes with machine equipped coffee areas. The theory was that employees should not have to waste company time getting coffee. Now, based on my observations on coffee in the corporate culture, I am prepared to make some bold conclusions on “optimal coffee behavior” in the workplace. Read more…