Here’s the test: Can you create 5 strategies and 5 tactics to achieve your goal?

In past weeks, we explored the need for a tangible goal and strategies that are measurable as steps toward achievement of your goal.  Today, we explore how to create tactics to accompany each strategy, and even suggest a number of tactics to consider for each strategy.

Tactics support strategies and are more short term and procedural than the strategies they support.  Tactics change frequently as achieved and may be updated or replaced during a year when achieved, unlike strategies which often span a number of years.

Five tactics to support each strategy seem a fair, even if arbitrary number.  Tactics direct each department in very specific ways.  Here are several examples of tactics from my recent experience with companies where I serve as board member.

Strategy Three: Expand into at least three new continents through new distribution channels.

[Email readers, continue here…]

  1. Sign one distributor by June of this year in each of three major geographic areas. EMEA, Asia, Latin America.  Each distributor should be capable of generating $1 million in business by year two.
  2. Assign our development manager to localize design and oversee the needed enhancements to our product and support materials for each new territory.
  3. Train and transfer technology to each new distributor within 90 days of signing.
  4. Assign one of our corporate employees to support sales and installation efforts by all distributors.
  5. Seed demand in each new territory with at least two corporate marketing events in partnership with each distributor.

Note that each of these tactics directly support the strategy, are measurable and assumed to be achievable, bought into by each department affected by the tactic.  Note that the strategy calls for cooperation between business development, sales, marketing, product development, installation and support.   This is a great way to unify departments that once may have competed for resources toward individual ends, now pointed toward a common goal supported by all levels of management up to the CEO.

Development of these important elements (goal, strategy, tactics) of the plan should be made using all the resources available, from your board of directors to your senior management to departmental management. Getting all to buy into each step may not be easy, but when accomplished, is a powerful and invigorating opportunity to celebrate, then to get to work as a functional unit of the whole.

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Think like a general! Create strategies and tactics now.

If you have been following the last several weeks of these postings, then now we’re getting organized.  There are many ways to express the road map for your enterprise.  One of the most popular was used by the U.S. Army late in World War II, and adopted by many high profile businesses such as Texas Instruments after the War.  The structure combined the listing of the goal with a series of strategies and then tactics, each designed to support each other, each measurable and made public throughout the organization.  The technique, “OST” (objective, strategies and tactics), is a very good way to organize your effort to find guideposts and then develop metrics to measure progress.

What is a strategy?  It is a medium range process involving senior management and departmental management as well, directing resources in ways that, as accomplished, lead the company toward the goal.  A typical small to medium, business finds five sweeping strategies for the current year, many cross-departmental, and some carried over from the previous year’s plan and even from years before that.  Here are some example strategies from some of my companies over the recent years.

  • Expand into at least three new continents through new distribution channels.
  • Penetrate the Fortune 500 with at least five active accounts within two years.
  • Create a hosted “software as a service” or “on demand” addition to our product line by end of (next) year.

[Email readers, continue here…]  Note that these are expansive “junior” goals that, if achieved, would certainly move the company forward toward a larger financial goal.  Yet each is measurable if achieved.  In fact, the degree of progress toward achievement can also be achieved, such as “We did establish and do business with two of the five Fortune 50 accounts this year.”

Measurement is the key to success.  Even at the strategic level.  Next week, we’ll look at the last major step in creating an OST plan for an entire organization.

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Please map your goal and USE that map!

It’s time to speak of some sort of business plan.  As a professional investor in early stage companies, I have long discounted long, detailed business plans in favor of a concise “executive summary” followed by a believable spreadsheet-based financial forecast projecting three to five years into the future.

Yes, everything does change between drafting that plan and its successful execution.  But flying without a map of some kind seems just plain too risky.

I once joined the board of a company that was growing slowly, running beyond break-even, but had not approved a plan for the current year, let alone attempted to develop one for the next.  So, the CEO had one of his own that he did not share, while the CFO had one for internal use that was never shown to the CEO or to the Board.  No wonder the Board members wanted to dig in and find who was communicating with whom, and who was in charge of the map to the goal.  By the way, there was no goal understood by all or agreed to by anyone.  How do you compensate executives and all levels for successful accomplishments if there are no established steps toward the goal?  And how do you measure a person’s contribution to an unnamed goal?

[Email readers, continue here…]   So, if you have not, create a concise map for your enterprise.  Start with a reasonable goal, usually expressed as a revenue number some number of years into the near future.  Assess your current resources and attempt to calculate the resources needed to accomplish the goal.  Do you need to raise money, focus spending upon only core projects that advance the company toward the goal, or bring in new management talent to make it happen?  Write these steps down in any form for now. We’ll explore a more organized approach in the next insights.

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How to use metrics and a dashboard

Have you ever driven a car that had no speedometer?  I had that thrill when a student at the Richard Petty Stock Car School of Driving at a motor speedway in California.  With a wide track, angled aggressively at the curves, and being told to hug the wall on the straightaways, there was little reference available to a novice driver as to speed.

I followed my instructor’s car closely, but still could not tell anything about my speed, so that I could neither compensate for lags behind the leader nor test my comfort zone at various points that matched the expectation of my instructor and my own increasing capabilities as a driver.  Upon conclusion of eight laps of this, after pulling into the alley and climbing through the window on the driver side (there are no doors in these cars), I was handed a sheet with my timings for each of the eight laps.  Only then, after when the information might have been useful, could I see how well I did.

That’s how you would feel if you ran your company without a dashboard containing relevant metrics that drive your company.  If you cannot relate to this, then you probably have been driving without a speedometer from the start and need to pay particular attention here.

[Email readers, continue here…]     Metrics should be created by you and your managers to measure near real time progress for your enterprise.  Those deemed critical to you and your managers should be combined into a single page on your desktop screen or in printed form and available or circulated as often as daily.  These measures of progress must be fresh and meaningful.  Yesterday’s sales and returns compared to same day last week and last year for retail businesses;  Units produced and units shipped compared to plan and same period last month for manufacturers;  Yesterday’s overtime hours by department;  Ratio of hours worked to units produced;  Backorders unshipped;  Customer service calls in cue or unresolved.

You can think of numerous critical measures for your business that must not be ignored, but often are neglected by senior management. It is not bad to manage by walking around, a term that became from another of the many business advice books of the ‘90’s.  But that method, although good for employee morale, is imprecise as a tool of measurement and should be relegated to a supporting role for you.  Financial information from last month compared to plan and same month last year is certainly relevant, but not part of a dashboard, since there is nothing you can do to fix a problem when numbers are as old as a week, let alone the typical several weeks required to prepare financial statements for review.

Finally, what good is the information contained in a great dashboard if you ignore it?  Show that you value the information by acting immediately upon variances, even if only to question the numbers.  Everyone down the line will become aware of your attention to their work, your interest in the outcomes and care for their success.  And you will drive revenue and better control costs and the customer experience with quick reaction to the variances within critical metrics that best describe your immediate situation.

Posted in Growth!, Protecting the business | 3 Comments

Have you set your life and business goals?

We’ve spent several weeks discussing your vision for success, and whether you could be the next Ford, Jobs or Musk.  Now it’s time to make this more tangible, more real – by attaching personal goals to this vision we’ve created together for you.

So, your vision tells the world what you want to be as you contemplate how you will change the world for the better.

But your goal is a tangible aiming point, one that should be achievable within several years if you accomplish your progressive steps planned between now and then.  You can express it in terms of money, market share, influence or other measure that reflects success.  Here’s a business example: “To be at a $25 million run rate by the end of our fifth year in business.”  That is measurable.  From it, you’ll be able to look backward to develop a set of steps (strategies) to achieve that goal.

[Email readers, continue here…]  Once achieved, a goal is meant to be overwritten with a newer one, set to even higher standards.  If achieved early, celebrate and set another goal earlier than planned.

The good thing about a goal is that it is measurable, and progress toward it can be measured as well. Unlike your vision, which can’t be measured, there is a satisfaction in each step toward achievement of your goal.  For business goals, your employees and investors will appreciate constant attention to the goal and reports of progress toward it.   A goal serves as a rallying point for all associated with your vision.

Make the goal realistic, achievable and public.  You’ll find others buying into the objective and even creating better ways to achieve it because they are invested in the dream and the measure of that dream – the mutual goal.

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Could you be the next Ford, Jobs or Musk?

Well, it’s a fair question. Note that none of these three famous innovators were inventors like Thomas Edison, but visionaries who find a new marketplace or niche – or how to reach the mass market in new ways.

Leaders and companies that innovate new products, services and methods of delivery are the ones that stand out in a crowded business world, especially when attempting to gain recognition among the throngs of competitors visible on the web.

Innovation is valued by our society, by investors and certainly by consumers.  It is the focus for state and federal governments worldwide, many finding ways to reward innovators with tax incentives or investors with tax credits to finance innovative new enterprises.

As a keynote speaker, I often start presentations that start with a short history of innovation in the United States, using the twist of examining innovation through the lens of 150 years of cyclic bursts of bubbles, leading to subsequent recessions and depressions.  It is not hard to find strands of gold in the carnage left by failed businesses lost when a bubble bursts, such as in 1857, 1902, 1929, 2001 and 2008.

[Email readers, continue here…] Innovators make use of golden strands of opportunity left when the unfinished vision of another cries for completion, or when a genuine new concept changes the very way people think about their lives.

Leonard Kleinrock and a few of his UCLA computer lab students worked to send the first several text characters from UCLA to Stanford in 1969 over a direct line established for the test.  They could send only the “LO” of “LOGON” before recording the very first crash of the Internet.  And I’m sure they had no idea what they were fathering with that effort which eventually became ARPANET, and then of course, the Internet itself.  They had no mantra, and a limited vision to connect mainframe computers to share academic information.

How many entrepreneurs used that new Internet infrastructure to create an expansive vision of what could be?  Tim Burners-Lee wanted to use it to create a friendlier “web” of pages, sharing data like the pages of a massive library of books extending throughout the world.  The result was the worldwide web, upon which Mark Andreeson and his crew in Chicago built the Mosiac browser with his vision to make this data more available to anyone.  Which in turn allowed innovators worldwide to create applications inside a browser, share detailed information previously locked inside libraries and corporations, and ultimately to change the world by making the exchange of information frictionless.

We can look back to Ford and other visionaries who were not inventors as well as Edison, Bell and Tesla who were inventors – as great innovators of their time.  And perhaps the most impressive invention of recent times is the result of hundreds of people, firms, and institutions, each adding a new brick to the building of the Internet.

Now we have the infrastructure for innovators to create applications with open source software – building innovations for mobile, artificial intelligence, virtual reality, augmented reality, blockchain and drones.  And millions of innovators are at work extending these capabilities.

So, could you be the next Ford, Jobs or Musk?  You don’t have to invent the next big thing, just see the place where you can fit a technology into a new, much larger environment.

And who said that “Everything that can be invented has been invented?”  Ah yes. That was Charles H. Duell, U.S. Commissioner of Patents in 1899.   Oops.

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Here are ten vision tests for your success

Your vision for success must be solid and flexible enough to pass several critical tests if it is to guide a business enterprise to greatness.  Here in brief are ten tests for your successful vision.  Try these on for size, and test yourself for attractiveness to the marketplace, to investors and to history.

Ten tests for your successful vision

  1. Is your market identifiable and accessible? Test yourself as to whether you can identify the size of your market niche, and whether you can overcome the many barriers to access customers within your niche.
  2. Where in industry life cycle? If your vision is for a product or service that fills a need in a mature industry, you may be flying against the prevailing winds as a market shrinks over time, taking your business with it.  Conversely, a fast-growing industry lifts most all good participants, making excellent companies excel even more and grow even faster, like a small plane flying at 150 knots with a 75-knot tailwind.
  3. How large a total market? If the total market for your niche is under $100 million per year, it is going to be difficult to build a $50 million business, even if not impossible. If the market is ten times that size, there is probably room for competitors to fight for dominance and still succeed if you are not number one.
  4. [ Email readers, continue here…]  Can you dominate that market? The dominant player in any niche controls pricing for all those under it, and often sets the risk profile for new entrants into the niche if the dominant player’s products or services fill the needs of customers at reasonable prices and quality.
  5. Have you created high barriers to entry? If your business is a “me too” entrant into any market niche, even the smallest success will soon attract competitors that will sap some degree of your potential growth. What can you prove as a barrier to entry for competitors?  Is it the advantage of time – years of development ahead of any competitor? A core patent or “thicket” of patents protecting your offering?  A strategic relationship with one or more of the largest customers?
  6. Are margins high enough? Some great ideas just can’t make money and ultimately die for lack of profit potential.  Profit margins are higher for unique products or services early in the life of an industry niche, or for products protected by patents that prevent others from undercutting you simply by releasing a cheaper product.  High profit margins are a sign of high barriers to entry and attract investors and ultimately good buyers for your business.
  7. Can this business grow to above $20MM to $50MM in annual revenues? This is a basic test for investors, separating your business from those with smaller visions.  There is nothing wrong with a vision for a smaller enterprise if not in need of professional investors to make it a reality.
  8. Do you have a world-class management team? The best way to protect against failure is to attract a team with members who have experienced success and failure and can recognize the ways to manage toward success and avoid the pitfalls previously experienced from past failures.  From a professional investor’s perspective, the team should be able to be flexible, coachable and experienced enough to get a business through breakeven and beyond the next level of outside investment, greatly reducing execution risk.
  9. Can you translate an idea into a compelling product? Some great ideas just cannot be made into a product at a reasonable enough price to attract customers.  And some attract early adopters but cannot pass into the mass market.  Sometimes, an idea is just too early for the available technology to make it attractive.  Early cell phones were large bricks that required a large carrying case and cost up to a dollar a minute to use.  As technology caught up, allowing miniaturization and light weight, mass adoption drove the price down and allowed the building of infrastructures everywhere to support the use of inexpensive minutes.  Do anything you can to develop compelling products or early prototypes as proof of ability to reduce technology risk.
  10. Is there an exit strategy for the investor(s) over time? There are many professional services businesses that make fine lifestyle opportunities for architects, doctors and dentists.   But these types of businesses are not attractive to potential buyers willing to pay a premium for businesses that are worth millions more than their asset value.  Building a great business to create wealth for the entrepreneur at exit, means thinking of the exit strategies from the beginning.  Who or what type of buyer would be attracted to this business if successful?   Great wealth is made from selling great businesses at immense profit for the entrepreneurs and investors who took the journey.
Posted in Ignition! Starting up, Positioning | 2 Comments

Vision for your future success is EVERYTHING!

I love absolute statements. And this is one of my favorites.  You’re at the ignition stage of your newest business venture.  Of course, you have a vision for what you will do to change the world.  Let’s stress test that vision and sharpen it further to help insure your success.

First, if your vision is limited and you will be happy with a successful local dry cleaning enterprise or small restaurant around the corner, you are not the target for this effort to help entrepreneurs build great businesses that change the world.  (Please take what you can from these weekly posts.  Many will apply directly to you.)

For the rest of you who want to change the world, let me repeat: vision is everything.  A great vision for a new enterprise drives innovation. It serves as the rallying cry for future employees, investors, customers and suppliers.  It sharpens the understanding for those new to the enterprise and moves them to follow and even to become unpaid advocates for the business.

[Email readers, continue here…]  Think of some of the great visions from the past that did change the world.  “Absolutely, positively overnight” made FedEx an indispensable name in supply chain management.  “A computer on every desk” made Microsoft a partner in the growth of most every business.   You can think of many more, visions expressed so clearly that the enterprise became critical to your own success.

There are other, less dramatic ways to express a vision.  “Be the largest supplier of laser toner in North America”, or “Make dining into a five-star experience.”

Years ago, as a panelist at an entrepreneurial seminar, I watched as over fifty aspiring young entrepreneurs filed past a microphone, each tasked with making a thirty second pitch to the panelists of professional investors.  About halfway through this painful exercise, one man walked up to the microphone and said, simply, “We move oil through the Internet” and then he moved on.  Immediately after the panel presentation, I found that one entrepreneur and began a conversation that led to my investing $100,000 in his vision of a supply chain enterprise based upon perfect knowledge of oil delivery systems, precise timing of delivery and coordination of resources to move oil from source to customer using the Internet as a frictionless tool for communication and coordination.

Although that business ultimately failed, I remained in contact with that entrepreneur as he used his experience in a new field, better off because of his learning experience.  I carry no rancor as a result of the loss, since I bought into the vision, helped as I could with the execution, and came to the realization along with the entrepreneurial team that the number of uncontrollable elements far exceeded those which could be controlled by any third party at that stage of development of the Internet.

Express your vision in just a few words – so that others will remember them and remember you, and hope that they get behind your excitement and singular focus for success.

Posted in Ignition! Starting up, Positioning | 1 Comment

How to protect your company lists and trade secrets

Most senior and middle level managers will understand when a subordinate comes to them to resign and begin a new business.  But all will immediately question whether the new business will compete in any way with their enterprise, and react to the future entrepreneur in either of two very distinct ways based upon those fears.

Even more suspicious is the action of an employee who resigns suddenly without notice or explanation.  It is natural to worry over whether that person is off on a journey to a competitor.

If the employee who is about to resign tells you that he or she is off to conquer the world in a completely new arena, there is almost always the unspoken sigh of relief and a cooperative attitude that flows from that point on in the conversation.

But if the departing employee is even a little bit reticent to tell of his or her plans, the result is the first stage of what could become an outright war between you and a newly separated past employee, sent away that day with an escort out the door.

[Email readers, continue here…]  You can expect to have the same attitude if a past employee resurfaces after a layoff, resignation or after being fired, with a plan for a competitive business – or as an employee of a competitor.  Most employers have all their employees sign non-disclosure and confidentiality agreements to protect the company’s trade secrets, customer lists and business plans.  Many states recognize the right of a former employee to work, even if in direct competition with a past employer.  But that right clearly stops when the entrepreneur uses any trade secret data from the past employer, especially customer lists for contacts and confidential business plans.

Anyone can be sued even if without merit, and responding to a suit can be traumatic in many ways – from expenditure of cash and valuable time to emotional drain from worry over a negative outcome, to loss of industry goodwill by an entrepreneur perceived to have stepped over the line.

This is especially true for someone who has sold a business only to surface later to compete in some way with the buyer.  Never underestimate the venomous response from such a threat.

So, here’s the obvious advice to give to departing employees.  “No matter what your circumstance, never, ever be guilty of using trade secret materials or ideas from your past employer, especially customer lists.”

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Fewer words, greater effect.

I have a good business friend, an experienced manager and teacher with a Harvard MBA, whose deep thinking creativity and intelligence are admired by many.  But he dilutes his effectiveness with wordy PowerPoint presentations.  It has become a long running joke between us, as I often remind him that most of us have a very limited attention span and ability to recall important points from a presentation.

Note the title and tone of these insights.  Short, to the point.

Mark Twain said, “I didn’t have time to write a short letter so I wrote a long one instead.”  He cogently encapsulated the problem.

It is more difficult to reduce your thoughts to a few core sentences, but that is what you should do for maximum effect.

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