Posts Tagged ‘Strategy’

Drilling for Oil

06.09.2009 No comments

Services vs Product Business ModelsWest Texas Pumpjack

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)

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Before the Business Plan Gets Written

06.08.2009 No comments

A few steps before you write your next business plan

computer_keyboardThe other day a friend asked me if I had any business plan templates.  Of course I have many plans that could be used as a template and there some good websites with information on how to build a business plan.  Instead, however,  I invited him for a coffee to learn more about why he wanted to make a plan.  It turns out that my friend was entertaining the idea of starting a business.  Like many good entrepreneurs, he had several good ideas, he was not sure how they fit together, he was excited, and he was scared.  He had a potential partner, also good, and most of his business ideas could be done without external investment– perfect.

I then outlined a template to help form his ideas that looked like this for each idea:

  • What is the business need in the market that needs solving?
  • How are you (and your company) uniquely qualified to solve this?
  • How will you identify such customers and how will you make contact with them? Read more…

Smart and Dumb Data

22.06.2009 No comments

It is a tragedy when smart people create nothing more than smart

Years ago I worked for Honeywell making sensors used in steel production.  Our premium systems were the market leader in high speed, precise measurements.  My role at the time was manager of the “cost effective” product line.  One day, while visiting a customer using our equipment, I made a discovery: Our worst sensor was already five times faster than they needed! Their control systems connected to the sensors were so slow that any increase in data acquisition was just a waste.  Yes, at the same time,  our ‘most educated’ customers were pushing us to build faster sensors, our competitors were trying to build sensors as fast as ours, and we were proudly announcing our latest speed triumphs each year.  How could this be? Read more…

Moral Skill in Sales

04.06.2009 No comments

Barry Schwarz at TED talks

Barry Schwarz at TED talks

“Not just is it profitable, but is it right?” -Obama

I just listened to Psychologist Barry Schwartz  give a lecture on “virtue” at TED Talks.  If you have not heard of TEDTalks, they are Technology, Education, and Design talks,  a free-form gathering and speaking by some truly intelligent people.  I highly recommend it.  In this season’s speakers, Barry was a standout.  I also found his talk on moral intelligence and virtue particularly relevant to sales.

First off, we need to eliminate the “pusher” and “manipulator” salesmen as not “real” salesmen because the value of a true salesmen is that they connect need with ability to supply.  A true salesman knows that discovery is key:  “You probably did know we exist (or could do this) but….”   While this is a necessary part of selling, it is only the first, smallest, step. The real bulk of the work begins when the salesman has identified a customer with a need his company can fulfill.  After discovery, the salesman identifies an entire list of reasons why the customer will not make the obvious business engagement; They can’t decide;  the order process is too complex;  already committed to another (likely less good) supplier: we don’t trust your company;  we are scared and can’t decide…  There are also supplier side barriers that come into play:  We don’t know that they will pay; they want special treatment; we sold to them before and had a bad experience…. Read more…

Get the Fire Extinguishers

04.05.2009 No comments

“What doesn’t kill us makes us stronger.” -Friedrich Nietzsche

My corollary, similar to that famous quote is, “Risk of being killed can have positive consequences”.

Fire Extinguisher

Years ago when I was Director of Engineering for a division of Honeywell, I was curiously following a long-standing problem facing my colleague, Tom Armfield.  Tom was a seasoned manager who had just been promoted from field service manager to Director of Manufacturing.  (See “Production vs Prototype Sales” for more on Tom.)  The problem was with the work quality of the team that manufactured the electrical control cabinets was terrible and it was affecting the entire company. Read more…

Full Combat Business

16.04.2009 No comments

Business in an era when 1+1 = 2 (not 3)combat

Most articles that discuss a company’s mission, vision, strategy, or even marketing often cite Nike and their tag line “just do it”. It is also well known that during an earlier time Nike had a different internal slogan of a completely different sort:  “beat Adidas”. About the same time Nike had their aggressive slogan, the company I worked for had a similarly aggressive internal slogan of “kill Weston-Loral” (our geographically closest direct competitor).

Why is it that these old style, aggressive slogans, that target a competitor are now so rare? Why are aspirational slogans like “just do it” all the rage? What can we learn about the effectiveness of these slogans in their time? My thesis is that such slogans were the products of their market environments and that much of the same market environment has returned leading to the conclusion that slogans and their consequential real action need to change back to the old again. Read more…

Renting is the New Selling

31.03.2009 No comments

for RentWhen”Cash is King”,  be a Kingmaker for your customers

In several other blogs, I have talked about the ethics of needing to bring value to your customer and discussed various components of what this value might be.  I have also discussed negotiation theory where we try to find out what value is most valuable to the customer.

In today’s financial crisis (Q1-2009), I can be reasonably certain that your customer values cash management.  You also are likely faced with the same financial reality and also value cash management; consequently, this is either a conflict/deal breaker or an opportunity to investigate how not all cash is equal.  If cash is not the same to everyone, then we have the perfect opportunity for great negotiations. Read more…

Profitable Support Revenue

30.03.2009 No comments

Cameras and Software Licenses after-sales


Yesterday, I was talking with a friend of mine who imports high-end Japanese consumer optical goods. He was telling me about how call volumes were increasing but sales were decreasing. Much of these calls were around service. I asked him if service was a big profit center for him. I was surprised to hear that it was not a profit center after 10+ years in the business. The following applies to someone reselling cameras as much as it applies to the creator of software licenses.

When product companies (factories, distributors, and retail) start, they often focus on initial product sales. As they mature (and their industry matures), the value of their customer base needs to be used and they focus more on services, support, accessories, etc. This is exactly the stage my friend is in– much of his product line is sold at zero margin because of intense market pressure. Read more…

Before You Attack a New Market

20.01.2009 No comments

As you expand your business beyond your initial territory, anticipate an expensive launch.

I believe that sales in always best when done locally, but not for the reasons you might expect.  I am forever hearing customers and salesmen explain that “this market is completely different within our market”; however, I usually discover that the real differences are minor and few.  Yet, knowing these subtle differences is almost as important as knowing the industry/technology in general and therefore local sales is a necessity.  Why?  My theory is that people like to know that others cannot do their job better than they do it.  There is comfort in knowing that only “special” people can work in this market.  If they could use outside products/services, then they might also be replaceable.  They form a ‘club’ of insiders and create special terminology that exclude others.  (any organization that loves acronyms and otherwise naming things is likely this type) By understanding and highlighting these “special” features of their industry/market, you demonstrate that you are an insider that understands and respects their daily struggle.

Whenever I expand markets with an existing product(or service offering), I often think about the Silicon Valley cliche that “every problem is an opportunity”‘.  The problem is that you are walking into this new market without any credentials and  that everyone will view your first approach with suspicion.  Until you can get a few reference customers, it is going to be an expensive, slow battle.  You will need to exhibit at lots of events, employ lots of lead creation techniques (like cold calling) and be very patient.  Most recognize, but underestimate, this problem and nearly all miss the opportunity of a new market entry. So there is a problem with entering a new market, but is there an opportunity associated with being “undereducated and unknown”?  Answer– yes, you are a threat to no one.

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