Everything changes from concept to release.

You can take this headline as a rule, not an exception.  You’ll recognize the truism, “No battle plan ever survives contact with the enemy” first stated by German Field Marshall von Moltke way back in the 19th century.

Our variant of the “battle plan” truism is important to internalize.  A product at the concept stage contains feature-functionality that customers may not want or be willing to pay for, or which just might not work well enough for release to the public.

Plan for change; sometimes at the last minute.  Allow for the cost and extra time for tweaks to the product or service.  Make the first release a limited, controlled one, so that changes and corrections can be made much more easily than if a general release all at once.

You may recall that Microsoft planned a new file system for Vista, but pulled the file system from the product before release, and has not released the WinFS file system yet as of this writing, years later.  It is interesting to note that not many of us even remember this “feature” let alone miss it.

And how do we protect ourselves against surprises that relate to feature-functionality as opposed to product quality upon release?  Early contact exposing friendly close customers to the product are critical to the development staff, marketing and even to the customer that feels closer to your enterprise because of the special treatment.  This is not to state that the customer tests a new product before we do internally, although many of us are surely guilty of that error.

[Email readers, continue here…] Back when I was developing early systems for the hotel industry, with the full cooperation of the owner and managers of a hotel in Tulsa, Oklahoma, I would fly in from Los Angeles on Friday evenings, install new releases that night and make fixes on the fly in a real 24-hour environment.  Sunday afternoon, just about departure time for my scheduled flight, the hotel manager would drive me to the airport barely in time to make the returning flight.

My excitement in having developed so many new and “somewhat tested” features over a sleepless weekend was exceeded only by the enthusiasm of the entire hotel staff for the new and wonderful capabilities left behind after the magic weekend of non-stop programming.  These trips were so common and their aftermath so predictable (a late-night emergency repair call waiting for me at home upon return Sunday evening) that the hotel owner created a mantra that stuck with me and caused quite a laugh at my expense for years.  He would be sure to remind his staff, shaking my hand goodbye as I left in a hurry to catch that Sunday evening flight: “Wheels up, system down.”

I am not advocating such brazen behavior today.  “Cowboy coding” is no longer common or permissible in the computer software industry, especially for enterprise systems.  But those were the days.

Posted in Finding your ideal niche, Positioning | Leave a comment

Don’t rest until you test!

So, you have a great new product or service that you and your associates love.  Early adopters should climb all over each other for a look.

But what have you done to test the concept against the realities of the marketplace?   Have you developed a prototype, alternate pricing schemes, even a PowerPoint mock-up to show to potential buyers?  I would be very, very nervous without testing the product in the market as early as possible, ready to make changes and enhancements before committing to production and release.

Even with a perfect product, is the market ready for this?  Will you have to be both the evangelist for the product and for its marketplace as well?  Few early stage companies have the resources to do both.

There are formal focus group organizations to help you, or you can attempt to test the market yourself by calling together a variety of potential users and asking a third party to facilitate a meeting where the product is exposed to the group and a conversation freely formed allowing the participants to agree with the premise or reject the product as useless to them, all without personalities getting in the way.

No matter how you plan to test, make that plan an integral part of the development cycle, as early as possible so changes will not be costly.  Do NOT rest until you test.

Posted in Growth!, Positioning | 1 Comment

Boy! If I had only learned this before spending a million!

Know your market and competition, or don’t spend a dime on anything else.

I love absolutes – statements with no wiggle room for gray-area responses.  Well, here is one of those, and it deals with market research first and foremost.

Let me tell you a short story at my own expense.  In 1994, (I know a long time ago), I invested over a million dollars into a company whose entrepreneurs had a vision that I bought into for many reasons, not the least of which was that I had industry experience and understood the need.

The first of several advanced products was a unique cell phone for hotel rooms, connected through a special “switch” in the hotel’s telephone room that was able to detect when a call was coming to the guest room phone and simultaneously ring the cell phone assigned to that room, no matter where it was at the moment.  A tent card beside the fully-charged phone greeted the guest entering the room for the first time, inviting the guest to pocket the cell phone for the duration of his stay.  The phone could be used for receiving incoming calls when in the restaurant, on the golf course or anywhere.  The guest could even make room-to-room or concierge calls as if dialing from the room itself.  These systems were not cheap as you might guess.

[Email readers, continue here…] Four and five star hotels loved the concept, which included redirecting outgoing calls from the cell phone by the guest to be sent through the hotel’s land line switch, making the hotel a miniature phone company with its attendant profits.

Here’s where some intelligent market research might have saved the company and my investment.  Fast forward just a few years to 1996.  Hotels were installing the system; guests were satisfied and the company was growing. There was even talk of some phone companies using the patented system for serving communities of guests, not just from a single hotel.  Back to 1996. That year, some of you will recall, the first digital cell phones were released to the market, smaller, cheaper and priced with roaming plans that made it no premium cost to carry these digital phones to cities far from home.  Overnight, guest use of the room cell phones dried up and hotels were left with expensive switches, phones and chargers unused.  Soon the company was drifting toward bankruptcy as the leases for the systems expired, one by one.

The lesson: I guarantee that there were tens of thousands of people in the country who knew long beforehand of the imminent arrival of the digital cell phone and could predict its effect upon usage, especially roaming use.  And yet the company was blindsided as it continued to invest in switch and specialized analog phone hardware, soon to be instantly obsolete.  Merely adapting the switches to new digital phones would not work, since guests no longer needed the service itself, being instantly self-sufficient.  People no longer called guests in their rooms but directly to their cell phones, even when the guests were on the road.

In this case, the competition was not from a company but a new technology.  In most cases, it is the competitor with a better product, lower price, faster service, better reputation that is the threat.

When I listen to a pitch from an enthusiastic entrepreneur or read the summary of a business plan, one of the first questions I ask is about the strength of the competition.  Surprisingly, many entrepreneurs immediately respond. “There is no competition.”  Now, there is a statement even Alexander Graham Bell could not make about the telephone (which he pitched to his investors as a device to aid the deaf).  Bell’s competition was the written message, doing nothing, the telegraph and old-fashioned word of mouth.  To state “there is no competition” is always the most-red of all flags to an investor.  For most brilliant new ideas and business plans, the competition is merely to do nothing. That response is quite different than one where competitors have paved the way and existing customers prove through use that the product or service is valued.

So, I lost over a million for lack of market research.  Bell was lucky, but the pace of technology was so much slower then.  Just to make a well-earned point now that you have heard my story: know your market and competition or don’t spend a dime on anything else.  Oh, how I wish I had taken my own advice.

Posted in Finding your ideal niche, Ignition! Starting up, Positioning | 2 Comments

Where is the best source of early stage investment?

If you have been following our recent insights, you’ll be up to speed knowing that professional investors negotiate tough terms, from provisions of control over asset acquisition, eventual sale of the company, future investments, forced co-sale when others attempt to sell their shares and more.  And yet, in an earlier post, we spoke of the problems that come when taking unstructured investments from friends and family.  So how does the statement above fit into this sandwich of alternatives?

Trusted, close resources include sophisticated relatives, friends and business associates who know how to structure a deal as a win-win for you and for them, while allowing you to retain control over your vision and execution.  Their investment should be structured with the help of a good attorney who understands the mutual goal of maximum leverage of funds with minimum interference in your business decisions.

Remember the admonition that investment from such close sources carries an additional burden for you – to protect your investors and their investment as if they were your alter egos, offering money as if from your own pocket.  Such money should never be taken without clear understanding of the terms, whether a loan with a reasonable interest rate and strict repayment terms, or an investment valuing the company at an amount considered reasonable by a third-party professional, even if as a sanity check as opposed to an appraisal.  This money is personal, an investment in you as much or more than in your company.  The degree of care you take increases with the reduced distance between you and your investor.

[Email readers, continue here…]  My very first investment as a professional angel was in a small startup where the entrepreneur’s vision fueled my imagination in the audio market niche where I had run a business in an earlier life.  I was so enthusiastic that I coached the entrepreneur to approach his mother, who invested $50,000 under the same terms as my investment.   A small venture firm and a few more angels rounded out the total investment.  As the company grew and became profitable, it became more visible to others in the market niche.  Two of us who invested served on the board of the company, advising the first-time entrepreneur with our business and industry experience.  Several years later, with the approval of the board and entrepreneur, I was able to engage a very well-known potential acquirer of the business who offered an attractive price for the still-young but successful enterprise.

After weeks of negotiation, the entrepreneur suddenly disengaged, claiming that he was no longer interested in a sale of his company.  The rest of us were shocked and disappointed that after weeks of work and a fair price, we were left with nothing but to follow his lead and disengage.  Shortly thereafter, in a board meeting, I brought up the issue of starting to pay board members for service in cash or in stock options, typical for outside board members but rarely for investors.  The entrepreneur was angry, abusive, in his negative reaction to even bringing the issue to the board for a discussion.  Five years had passed from my original investment in what I now clearly perceived as investment into a lifestyle business, one where the entrepreneur had no interest in selling or sharing.  I resigned from the board on the spot and negotiated a sale of my stock to the entrepreneur at five times the earlier investment, a fair return for both, since the company was by then worth much more.  It is now years later, and his mother along with other early investors are still in the passive game, not likely to see liquidity from this mistaken investment in an entrepreneur unwilling to take money in exchange for the eventual promise of liquidity.

Why tell this story at all?  Mother is surely satisfied as a passive investor who probably would have given her son the money without structure.  The other investors are probably in the unhappy never land of not being able to see liquidity after a decade and unable to write off the investment as a loss for tax purposes.   This story would probably have ended in a lawsuit if a larger professional investor had been involved, since the entrepreneur did not follow the rules and seems to have no desire to do so.

Trust works both ways.  Take money from close resources, but treat it as if the responsibility is even greater to protect the investors and their money than from a professional.   These investors trust that you will do the right thing for them if at all able.

Posted in General, Raising money | 7 Comments

Will tech kill your job?

Stop me if you’ve heard this story before. “My job as a (newspaper publisher telephone installer, stockbroker, travel agent, retail store manager) is safe as this economy continues to grow.”  Yup. Thought so.

We are in a decade of creative destruction that will affect most everybody.  And the prime motivators of this massive destruction are the same class of entrepreneurs and innovators that have done it before.  This time they are aided by tail winds brought on by the rapid spread of access to the Internet.  In 1995, thirty-five million people used the Internet. That is six-tenths of one percent of the world’s population.  And only one percent of these who had access also had mobile phones.

By 2024, ninety percent of the global population will have regular Internet access.  Add that to the rise of robotics, artificial intelligence, biotech, genetics, and several forms of virtual reality, and we will soon see wonders we could only imagine a decade ago.  Meanwhile, in the U.S., an estimated five million jobs will be lost to tech innovations in the next five years, with two million new jobs created in these fields alone.

Robots will perform half of all manufacturing jobs by 2025, up from ten percent today.  Since 1999, the U.S. manufacturing workforce is down twenty-eight percent, and the U.S. has lost 54,000 manufacturing businesses.  In 1980, it took twenty-five jobs to produce a million dollars in manufacturing output. Today, that can be done with fewer than seven jobs.

[Email readers, continue here…]  Yes, Amazon is partially to blame.  Last year, Amazon employed 145,800 workers. But Amazon displaced an estimated 300,000 retail jobs.  Just check your local store fronts.

Our current graduating class of college seniors reflect much of the past needs of our economic society, just as they did in the early 1970’s, when many bet that aerospace jobs would continue to be the hot job ticket.  The mismatch between what employers want today and graduating seniors majored in is striking.  For example, 81% of businesses hiring today want graduates with business or accounting degrees. But only 19% of seniors have majored in this.  Worse, 3.1% of seniors majored in computer science, while 65% of businesses looking to hire need these skills.

What general kinds of jobs will be lost to automation?  Almost eighty percent of jobs performing predictable physical work will be gone.  People in welding, soldering, working on assembly lines, food preparation or packaging of objects will be most at risk.  Then come the unpredictable physical workers.  Twenty-five percent of these will be gone, including jobs in construction, forestry and raising outdoor animals.

White- collar jobs most at risk to the rise of artificial intelligence and machine learning are those in middle management, commodity salespeople, journalists, report writers, and even doctors.

And the last jobs to be lost to automation and AI are, not surprisingly, K-12 teachers, professional athletes, politicians, judges, mental health professionals and coaches, advisors and motivators.

Tech entrepreneurs are out there in every corner of the world today finding ways to eradicate disease, provide clean water, change the way we deliver education, fight obesity and climate change, and reduce accidental deaths.  These heroes of the next generation are remaking our lives at hyper-speed.

So, will tech take your job, or your offspring’s job or your grandkid’s job?  Old jobs will be gone for sure.  But that same villain, tech, will prove to be a creator of jobs we can’t even imagine today, and will improve the quality of our lives immeasurably at the same time.

These are times to celebrate innovation and trust that, like many eras in the past, the world will be a better place in which to live and work because of their world-changing innovations.

Posted in Hedging against downturns, Protecting the business | 2 Comments

What do you give up when taking outside investors?

Taking in angel or venture money requires a setting of an entrepreneur’s expectations that may come as a shock at least at first.

From the moment such an investor looks seriously at your company, the investor or VC partner is thinking of the end game, the ultimate sale of the company or even of an eventual initial public offering.  There is no middle ground.

Taking money from these sources involves resetting priorities over time.  There is no such thing as a lifestyle business with outside investors. To protect against such an event, almost every professional investor includes a clause in the investment documents which allow the investor to “put” the stock back to the company after five years, requiring the company to pay back the investment plus dividends accrued during the term of the investment.  This sword hanging over the company is not often used, but is a constant reminder that an outside investor is serious about getting out, hopefully in less than five years, at a profit, usually from the sale of the company.  Many companies find themselves at the five-year point completely unprepared for a sale and without the cash resources to carry out such a repurchase of investor stock, making the clause moot.

[Email readers, continue here…]  There are also clauses in many such investor documents that allow the investor to override the founder and force a sale of the company if a proposed sale is attractive to an investor for liquidity, even if the founder feels that there is much more potential if the business is not sold at the present time.

Finally, it is an unfortunate fact that when a company needs money and has not met its original planned targets, the newest investor prices the round at a level below the last or last several rounds of financing, angering and frustrating previous investors who took what they perceive as the greatest risks by investing before the business proved itself.

The last money has the first say – in valuation and in sometimes forcing draconian terms that require prior investors to contribute a proportional new investment to retain a semblance of their original rights and avoid dilution or worse yet, involuntary conversion to a lower class of stock.  As the years progress with typical VC firms seeing lower returns than expected by their limited partner investors, such terms are more common in secondary rounds of financing, causing a real riff between angel investors and their former close allies, the VCs, with whom they had once coexisted as suppliers of deals at expectedly higher valuations at each stage of investment.

So be aware that professional investors are in your company for the eventual large profits at the liquidity event.  They are your friends only as long as you meet or exceed planned growth and value.  They tolerate you and your management when the numbers are a bit murky but with an explanation that is believable and correctable.  They act in their own best interests when things go south. That’s just the facts.

Posted in Depending upon others, Raising money | 1 Comment

Does your business need money? Read this!

The subject of raising money is critical to many businesses and a passing option to others, depending upon the capital efficiency of the enterprise.  Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale).  For you who fit that description, nice work.

For the rest of us desiring to build large, valuable enterprises quickly, the need for outside capital is high on our list of requirements and even the source for some sleepless nights as we worry over the availability and cost of capital.  It is for this group that we explore the implications implicit in raising money for growth.

It might be useful to list some of the ways in which you can raise money for growth with and without outside investors.

[Email readers, continue here…]   Bootstrapping:  This term describes your ability to start a business with little investment and grow it using internally-generated funds.  Certainly, bootstrapping is a preferred method of funding growth if it does not hold back the speed of growth or hobble the quality of product or service to the extent that better-funded competitors can overtake the business.  There is a lot to say about retaining control.  You will realize much more from the ultimate sale of your business even if at a considerably lower price than if splitting the proceeds with investors.  You will have more control over strategy and execution than with an outside board overseeing planning and performance.  But few businesses grow into the sweet spot of $20 million to $30 million in worth to an ultimate buyer without the injection of outside capital.

Friends, family and fools:  This term, although pejorative, describes the typical mix of early investors in a small, young growing business.  Money from these sources is relatively easy to come by, and most often comes with no strings as to oversight by a formal board

Dave’s book and ebook on raising money available on Amazon.com

composed of these investors and management.  However, most often, these funds are solicited by a well-meaning entrepreneur from investors who are not qualified as accredited investors under the law (currently requiring a proved income of $200,000 a year or $1 million in net worth for an individual investor).

I’ve arrived at a significant number of companies that were looking for additional growth capital after a “friends and family” round, and had to “clean up” the cap table more than a few times over the years.  Taking this kind of money has a number of pitfalls you should be aware of.  It is most common to greatly overprice such a round of financing, valuing the enterprise well above what it may be worth at the moment for friends or related investors who do not have the sophistication or willingness to challenge the valuation.

When professional investors look at such overvalued prior investments, they may refuse to become involved with a company, knowing that there will be, at the very least, universal disappointment and anger from prior investors when a new round is priced lower than the earlier friends and family round.   Sometimes this money is just too available and the risks seem so far away; so, an entrepreneur will take the money and put off the worry over the eventual consequences, all in the hope that no more investment will ever be needed and everyone will be richer for the effort.

Using your bank credit line and credit cards:  Even with the credit crunch signaled by the recent recession, many banks will issue business credit cards with a $50,000 limit if the entrepreneur is willing to personally guarantee the balance, and has the net worth to do so.   And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.  It’s an option, even though an expensive one.

Strategic partner” investors: If you can find a strategic partner willing to invest in your enterprise, consider it a blessing. Whether the partner is a supplier looking to gain a lock on your business as it grows or a customer looking to create a competitive barrier through use of your product, such an investment typically carries fewer restrictions than from a professional investor and less oversight.  Better yet, the valuation of your enterprise is often higher than if the same investment were taken from a professional investor.  Strategic investors validate a business, by their presence creating the very value they pay for with increased price per share purchased.  It is most often a win-win for both you and the strategic partner.

Professional angels:  This is the arena where I work and play.  This class of investor, once quite disorganized, has become much like the venture capital community, creating a process including due diligence (careful examination of a business before investment), terms of investment that match those of venture capitalists, and a process that often takes

More on raising money in BERKONOMICS book, also available on Amazon.com.

months from introduction to investment.  Yet, professional angels are usually willing to take active board seats in a young enterprise and act as cost-free consultants to the CEO-entrepreneur, giving freely of their individual and collective years of experience, often in the same industry as the investment target.

Do not expect grand valuations of your enterprise from these professional angels. They have been burned too badly during the last decade by overvaluing businesses and finding themselves like friends and family, “stuffed” into a down round of lower valuation when a company takes its next round of financing from the next step, venture capitalists.  Professional angels, often organized into groups, usually invest from $100,000 to $1 million in a young enterprise.

Accelerators: This relatively recent combination of coach and limited investor is available to some early stage businesses, usually in major cities, and requires that the entrepreneurs spend from weeks to months being coached by the accelerator team.  In return, the accelerator often invests $25,000 to $100,000 in the young enterprise and takes from five to ten percent of the equity in return.  At the conclusion of the acceleration period, the company participates in a “demo day” in which institutional investors are invited to review the company in a live pitch session.  Many accelerators have come and gone during these past five years.  Several are well-known and professional investors pay special attention to their graduates. These include Y-Combinator and TechStars, among others.

Venture, private equity and more:  Here we lump a large number investor classes into one.  Venture capital comes with a cost, and there are no bargains for the company when taking such an investment.  VC’s value an enterprise lower than others might at the same stage of investment, always aware of the need to create opportunities for “home run” profits at exit, since over fifty percent of their investments typically are lost when companies die before an opportunity to sell to others.  Further, as a class, VC’s have not done well for their own investors over the past decade with the exception of several first-tier entities, making it doubly important to fight for low valuations and high profits at exit.

VC’s do not even engage in discussion with most of those entrepreneurs seeking capital. By some estimates, 95% of contacts are ignored unless they come as referrals from trusted sources such as known lawyers, accountants or fellow VC’s.  And just for measure, VC’s fund less than 2% of all deals they do investigate.  Typical VC investments begin at $2 million and quickly rise to $5 million and above, depending upon the size of the fund and stage of investment.  Terms are much more restrictive than from strategic or angel investors, often requiring the entrepreneur to escrow his or her founder stock for a number of years to prevent the founder leaving, and restricting the sale of prior stock without the VC also being allowed to offer a share of its holdings in the same sale.

Micro-VC’s are a recent class of venture investors, often with smaller funds, and willing to invest from $1,000,000 to $2,000,000 on average, filling a gap between professional angels and VC’s.

Private equity investments are available from firms created for this later stage opportunity, but typically are available only for businesses that have achieved revenues well above $50 million.  Often private equity investors will want control of the business as well.

Bank lines of credit are often available to businesses that are profitable, most often personally guaranteed by the entrepreneur, but available at a cost in interest less than most any other source.  Small Business Administration (SBA) federally-guaranteed bank loans are becoming available again after years of limited activity.  With some restrictive provisions, these loans are favored by many banks as carrying much less risk than loans without the guarantee.

But it is the outside investor that validates a business, often influencing growth with shared relationships, experienced guidance and providing a gateway to needed resources.  In the next weeks, we will investigate several insights that relate to theses money resources, all to help you to determine what is right for you, and how to prepare and succeed in securing funds.

Posted in Growth!, Raising money | 1 Comment

Is your budget a forecast? When do you change mid-course?

Hold it! These are confusing terms. When does a budget become obsolete? Do we rely upon constant changes and call it a forecast?

So, let’s spend a few moments defining this sometimes-confusing set of terms.  A budget should be created each year after a series of negotiations between departmental managers and their superiors all he way up to the CEO, all in support of the next year’s tactics previously agreed upon (which in turn support the longer-term strategies leading to the next goal beyond).

Here is the punch line: a budget sets the limits upon spending for the next year – limits negotiated between the players.  An important part of the budget is expected revenue for the coming year, a critical factor in setting hiring and resource expectations for the year.

But during the year, if the forecast revenues fall short or are greatly exceeded, it is fair to revise the budget and rethink your hiring and resources.  Otherwise, it is the expectation of the board of directors of a company that each year’s budget be approved in advance and adhered to as long as revenue goals are met.

[Email readers, continue here…]  Note that I used the term “forecast” for revenues for the next year.  The term is also used when projecting revenues for succeeding years. The term “forecast” is a bit confusing, because it is also used by some as a measure of expected revenue and expenses to the end of the current year, found by taking actual performance year-to-date and adding best estimates of remaining revenues and expenses for the rest of the year to obtain an expected or “forecast” outcome at year end.  Both uses of the term are common.  Just be sure all who participate understand which use of the word is the current one.

The real point here is to create a financial plan to support the strategic plan, marrying them in harmony one with another.  Many entrepreneurs are impatient by nature, not the best of detailed planners.  Yet, with the assistance of those in support such as the CFO, everyone in management must be aligned in a single direction, with the budget reviewed and updated annually as accomplishments, the marketplace, and even the competitive landscape change.

Posted in Growth!, Protecting the business | 1 Comment

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.

Posted in Growth!, Positioning | Leave a comment

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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