Archive
Client Message And Your Message Collision
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
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
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.
Transitioning Corporate Organizations
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.
Surviving Corporate Acquisitions
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
Corporate Organizations
There are 3 basic organizational structures– each flawed in some way
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.
The Falacy of the Total Addressable Markets
The Chinese Market fallacy in business planning….
Most every guide to a business planning process includes a section that describes the need for identifying the potential market size, sometimes called the total addressable market. The exercise usually starts with some governmental or Gartner-like information source to identify a global or regional segment. The planner is then instructed to make some assumptions that better restricts the addressable market, but typically the remaining market is still huge. Based on this information, inexperienced (or deceiving) business champions will compare their first few years cost against some percentage of this huge market as justification for proceeding with the business plan which I believe results in the common market penetration mistake I call “Chinese Marketing”. This is a term that I intend to push into the business vocabulary: “Chinese Marketing” is the fallacy that you can create a successful business based on getting a very small percentage of a huge market. Read more…
Practical Sales Outsourcing
When you have a great idea, but the world will not come to you…
I was recently invited as a guest speaker and panelists for an entrepreneur development group. My fellow panelist, Charles Leadbeater (a recognized proponent of innovation and Web2.0 thinking) started with a call for more collaboration and cited amazing successes and fantastic creativity. While I agreed with his thesis, I could not help but recount the many initial business (tech initiatives) failures caused by an improper reliance on collaborators for their sales channel. Charles was right to highlight a new paradigm of collaboration as a significant opportunity for small entrepreneurs, but for the sake of the technical entrepreneurs in the audience, I found myself taking a contrary position and highlighting the limitations of collaboration.
- Author Charles Leadbeater
Engineers have a serious defect– they cannot resist solving a problem. The reason I call this a defect is that it keeps getting in the way of sensible business. For the most naive, they normally worry about things like manufacturing, on-line order taking systems, and future developments, but dismiss the challenges of path to market by either assuming customers will come on their own (once they recognize the brilliance) or they assume that they will outsource sales through resellers. The truth is that many people have very successful businesses using resellers and OEM relationships, but this will not be possible at the same time as you are just entering the market. (See earlier, related blog post “Production vs Prototype Sales“). I wish it were possible to simply outsource initial sales the same way you can outsource initial manufacturing– in truth, I am a “recovering engineer” (an addictive and life long disease) and would likely have stayed a happy engineer if it were not for this unfortunate truth.
Selling Risk Management
Definition of Experience: A rich history of the many horrible mistakes one never wants to repeat
I touched on this subject in “Lawyer Rant No. 1” — Get paid for the risks you know you are better able to manage or at least are perceived to be better able to manage. Let’s break this down a bit more and see what insights it brings.
In a market-based economy we sell products and services to willing buyers. These could be as simple as an apple by a street vendor or as complex as an enterprise-wide information system. But in its elemental form, I suggest that you can only sell a combination of five basic things:
- Raw materials such as iron and oil mineral rights
- Labor
- Expertise as in intellectual property and knowledge transfer
- Economies of scale
- Management of risk.
The first three are obvious and the fourth, as it applies to the first three, is also obvious. Let’s consider the last two in their pure forms. Read more…
Drilling for Oil
Services vs Product Business Models
It always struck me that there are very few companies that are equally as strong in products as they are in services. This is in sharp contrast to the number of companies that have moved from their core to embrace the other side. Companies like Cap Gemini quickly abandoned the idea of becoming a product company and we see HP struggle with services by now trying to jump start it through the acquisition of EDS. IBM might be held as a contra-example with both products and services, but I would submit that they have switched from being a product company to the current service company that they are today (e.g., selling the laptop division to Lenovo and printer division to Lexmark)