Hire for your core. Partner for the rest.

A trend for businesses large and small

There is a major trend shaping up that is worldwide, already identified by hundreds of thousands of startup and small business CEO’s.  By carefully recognizing and focusing upon the very core of the business, these CEO’s are allocating their scarce cash resources to hire the best talent they can find to support that core business, and then reaching out to partners, independent contractors, and other small businesses to provide all other functions.

What is your core competency?

There is much to reinforce in such behavior.  By definition, your core is your intellectual property foundation, the thing that makes your business most valuable to customers, investors and perhaps someday to potential buyers of the business.  Every business has an intellectual foundation where the CEO’s knowledge and vision create a barrier to entry that deflects some or much of the potential competition.

Patents, branding, marketing and more

In the patent world, we protect this intellectual core with what we call a “patent thicket,” aptly describing the attempt to surround the core patent with other patents that defend the core and further prevent competitors from attacking the central component of the business.

[Email readers, continue here…]   Sometimes we protect our core with effective branding and marketing.  Or we do so with brilliant research and development, highly trained sales forces, large advertising campaigns, or secret processes.

Using your scarce capital and other resources

Using this focused approach to hiring, companies can stretch their limited capital further, assure better protection of corporate secrets, and make use of the core skills of partners that are attractive and beyond the reach of a small company’s abilities.  In this new environment of cheap communication worldwide, it is only reasonable to leverage these advantages through partnering with those whose core complements yours.

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Posted in Growth!, Protecting the business, Surrounding yourself with talent | Leave a comment

Are you a remote manager? A good one?

Are you a virtual manager?

Can you be effective if you are a “virtual” manager, commuting from home or a home office and being with your employees only part time?

Measuring your performance

In a virtual environment, people measure you mostly by your actions, and remember only the most recent good work you’ve done for them and for the organization.

The typical scenario for a virtual manager

Today, many companies hire great managerial talent who commute from a remote home location. Often, such senior managers start with a four-days-here, one-day-from-home plan that slowly degrades to two then sometimes three days operating remotely.  And some senior managers are quite successful at driving innovation, vision and excellence from a distance.  Some companies are operated entirely virtually and there is no other way to manage.

Does your performance need to be better if virtual?

[Email readers, continue here…]  I’d suggest that the quality of a senior manager who must control from a distance must be higher than one always on the spot in front of middle management and staff. And I’d think that not every such remote manager is able to rise to the occasion, constantly creating a sense of urgency and a push for excellence in his or her absence.  One thing is for sure. The risk of failure is higher when a manager is often absent from the scene of the problem, no matter how strong the person’s skills at delegation and no matter how competent your employees are, one level down the ladder.

Hone your skills of delegation

If you find yourself having to share your time between a distant location and home base, whether because of constant travel or living in a remote spot, you should redouble your energy – focusing your people at all levels toward being able to make decisions with skill and confidence.  You should hone your skills of delegation with accountability and practice your communication skills so that short communications count more than ever.

Ways to make virtual management work

And you should find ways to focus your people upon your vision of excellence without seeming to merely be a cheerleader encouraging from the sidelines.  Some great managers do this by keeping a mental or physical list of several, perhaps three, key performance indicators for each direct report, and quizzing about progress in regular planned or chance meetings.  Others keep a dashboard that alerts them to excursions from expectation and permits more management by exception.

How can you leave yourself behind when absent?

It’s all about your performance, especially when you’re physically absent some or much of the time.  Take a few minutes to think about ways in which you can creatively leave yourself behind when you are absent, encouraging others to feel your sense of urgency directed toward achievement of your vision, even in your absence.

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Posted in Surrounding yourself with talent | 5 Comments

Can you name the two most powerful words for business?

Here’s a puzzle where the answer come first.

“Help me.”

Over the years I have heard many stories from entrepreneurs, students, news reporters, even my children, all telling me that they could not get someone’s attention they wanted or needed until they used the words, “Help me.”   The simple request is disarming, enlarging the object of the request to a status of importance in respect to the questioner that is difficult to ignore.

The teacher in all of us

There is a bit of the teacher in all of us, and a request for help is a natural trigger to bring this out.  And there should be an equal – if not stronger – bit of a student in each of us as well, allowing us to drop our egos a notch and ask for help when we need it.  There is no shame in admitting ignorance in even the most unusual of circumstances.  Yes, this is true, even when we may think we know the answer in advance.

Use in negotiations

[Email users, continue here…]    One of the many important tactics in negotiation is the strategic use of the words, “Help me,” when attempting to understand the position of an adversary.  Suddenly that person feels it reasonable to explain the reasons behind a position, or facts that may not have been available to you, all in order to support his or her position.  Armed with those new facts, a good negotiator can often craft a solution that addresses those concerns and achieves the goals of both parties.

Use in fact-finding

Reporters and students learn this early when they attempt to get the attention of a busy CEO or politician. “I am a student studying your industry for a term report.  Could you help me understand your issues so I can be sure to cover them in my research?”  There are an untold number of doors opened and hours spent by very busy people in response to such simple outreaches asking, “Help me.”

Reducing the emotion in a confrontation

Instead of hiding your ignorance about an issue in a discussion, a term used by someone on the other side of the table, a position taken by an emotional employee, stop and ask, “Help me to understand.”   I’ll bet that nearly every time, the other person will pause and spend time teaching that would have been spent in persuasion.

Filling in your personal knowledge

How about asking for help when you do not know a process, the kind of help that might take hours or days of training, not just minutes of explanation?  A busy person hearing this kind of request may respond with: “I know of a book” or “Here is a resource,” or “Sure, you can sit in on our next training class.”  I have never heard an “I can’t do that for you” in response to a “Help me” request.

And far beyond a simple technique in negotiation or attempt to access a busy executive, these two words are the key to lifelong learning.  Who among us can’t use that?

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Posted in Depending upon others, Surrounding yourself with talent | 1 Comment

Do you take those loyal, key customers for granted?

OK.  We know that an executive’s job is not easy. Nor is there much time in a typical day for outreach of any kind. Especially in your growing company, you are drawn into daily process issues by all of your direct reports, often responding to questions and problems, leaving little time for strategic thought.

That’s bad behavior!

And that behavior results in leaving little time for outreach to the most critical component in your chain – your key customers. During CEO roundtables which I attend regularly, fellow CEO’s analyze a compatriot’s use of time during the once-a-year personal presentations each makes in turn.  If the presenting CEO is honest in the analysis of actual time spent each week, it is often revealing to all to see how many hours are spent turning inward toward meetings, operational management, or responding to emails or texts sent by others.

Then, what is a benchmark for customer outreach?

As a group, we set a bar of fifteen percent as the minimum amount of time each week that a good CEO should spend reaching out to the company’s key customers in a proactive attempt to find issues, trends, unmet product needs, and of course create bonds that make their jumping to a competitor more difficult.

But, do your customer know that they want?

[Email readers, continue here…]   We all remember the story of FedEx, where future customers didn’t know they wanted “absolutely, positively overnight” until they saw what that could do to make their businesses more competitive.

Find the pain

Do customers know what they want from their suppliers for future products?  We often ask our sales people to “find the pain” and show how our product solves that pain problem.  But it was Henry Ford who famously said, “If I’d asked my customers what they wanted, they would have said ‘a faster horse’.”   Some new products arrive with no frame of reference.  FedEx, the automobile, the Internet, and many more examples, prove that there can be a significant market for ground-breaking ideas.

Show them a prototype

Do customers know what they like when they see it?  Of course, they do. So why not show a prototype, asking for input to improve it or adapt it to the needs of the customer?   With that kind of interaction, the customer becomes a partner in development, tied to the success of its outcome and much more willing to purchase it when completed.

Build relationships from the top

Is business built upon good relationships?  Of course, it is.  And who is best to create closer relationships at the top than two CEO’s speaking personally without distraction?   I have won deals after forming such trusting relationships and have lost deals to those who have beaten me to the opportunity.

The challenge is also the opportunity.  A good CEO spends time with critical customers and values the feedback and relationships that result.

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Posted in Growth! | 2 Comments

How much do you spend on R&D? Is it enough?

Why do profitable, mature businesses die away?

One of the most obvious reasons mature businesses die away – when we look in the rear view mirror – is that they did not spend to renew their product or service when newer entrants into the business arrived with better products and services built upon newer technology.

Should be an easy fix for companies making annual net profit. Right?  Not so much, as our rear view mirror makes obvious.

The life cycle of any product

There is a life cycle for any product, and it is much shorter on average today than five years ago, especially in the technology world.

Companies that are successful with their first product must begin thinking about the costs of additional products or of that product’s replacement well before any evidence of a peak in sales is noticed.

The R&D “tax”

[Email readers, continue here…]   There are rules of thumb for various industries in creating a reserve for research and development.  To attempt to find an average number, companies should “tax” themselves by reserving some percentage – say ten percent of their net revenues or two percent of sales – for research and new product development.

Obsolete yourself!

Wouldn’t you rather obsolete yourself than watch helplessly as someone else does that for you?

It is a certainty that even with patent protection, a successful product will be challenged, duplicated, even exceeded by competitors, and within increasingly shortened time periods.  It is a difficult concept, but a necessity of the modern age, to plan to obsolete your own successful products before someone else does that for you.

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

Should a leader support constant change?

The worrying that always precedes a change

When a new CEO or manager is hired into a company, for a while lots of energy flows from the top and new ideas seem to be generated daily.  It is one reason not to fear the unknown when upper level management long in place turns over, often leaving most everyone worrying over how they’ll ever do without their lost leader.

Reversion to the mean: Momentum lost?

The problem seems to come after everyone settles back into some sort of normalcy and the new senior manager becomes comfortable in his or her position.  There is a natural momentum in most companies, one that is usually slow and deliberate.  New ideas are vetted carefully, run by a number of departments, considered from many angles and implemented with deliberation. The temporary enthusiasm for cutting through the old way of doing things calms employees into an acceptance that little has changed over time.

New leadership in a well-oiled machine

The real opportunity for a leader to raise the bar is in the consistency of his or her vision and willingness to accept change for the benefit of the organization.  This is true especially when the company is making its numbers and problems are few.  There is nothing wrong with consistency. It brings a normalcy to everyone’s jobs that most people welcome.  But that normalcy often comes inside a creative vacuum.  Competitors often jump into holes created by slowing innovation.

Story about a leader unwilling to accept complacency

[Email readers, continue here…]   I’ve told the story about Bill Conlin before, but it is worth repeating.  Bill was the CEO of CalComp, a Lockheed company.  Most every Monday morning as he drove to work, he’d force himself to think: “What if this was my first day on the job, and I could make changes without worrying over the past?”  Bill’s managers feared those Mondays they say, because that hard-driving enthusiasm for change, for excellence, was like a lightning bolt upsetting the old way on occasion and bringing fresh ideas to the front for consideration and execution.

The comfort of routine – a management trap

How many of us fall into the comfortable routines of management, thinking that we have this job down to a science, with the operation running smoothly and without need for much intervention?  How many of us have fallen a few notches on the excellence scale over time, accepting our environment as of the last change, happy with ourselves for past achievements toward upping the enterprise?

Accept the “Conlin” challenge: Disrupt yourself

What would you do if you were new at the job and had no restriction upon the changes you could make for the good of the company?  Is there redundancy in levels of management that you’ve tolerated too long?  Has the product or service not gained ground against its competitors of late?  Are you sure of your marketing and pricing positioning? What about the training and competency of your operational staff?

Want to reinvigorate yourself in your job?  Make next Monday morning’s drive a creative thinking exercise in upping your game in your personal fight for excellence.

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Posted in Growth!, Protecting the business | 3 Comments

Reinvent your business!

Businesses that forgot to reinvent

If only newspaper publishers, book publishers, record companies, and movie producers would have had the vision to see their future as we now see it, we might have become a digital society with much less disruption and loss of jobs than we have experienced these past years – and continue to experience.

Seeing the future of frictionless commerce

Did the proprietor of the neighborhood bookstore or national rental chain not see this coming?  Frictionless distribution through moving bits of information is so much cheaper for all but those making their living in the middle of the supply chain.  Money always flows to the most inexpensive solution that meets the needs of a buyer.

It should have been obvious to all in those niches and others like it that digital distribution would supplant product manufacture, inventories, physical distribution systems, warehouses, and limited retail shelf space, as soon as the infrastructure allowed it to do so.

It is human nature to avoid change

And yet, as we have explored in past insights, it is human nature to protect the business, the existing product and the existing revenue stream – and against human nature to displace one’s own product when it is still generating good income.

Some thoughts on how to reinvent a product-based business

[Email readers, continue here…]   There are many ways businesses can reinvent themselves, even if a product must be manufactured and put into the hands of the user in physical form.  Product marketing materials, user manuals, service manuals, sales guides, and catalogs all must migrate to the web to cut the use of paper and make them more accessible over time and distance.

Reinvent the core of your business

But even more important to the future of your company is the deliberate reinvention of how the essence of the company’s core is delivered.

Can a consultant be as effective when half or more of the meetings held are using Skype or telepresence?   Can a software product be delivered as a service “on demand,” saving hardware and human error in updates?   Is there a way to speed to the user a product, such as a new music release, to gain instant gratification and lesser cost at the same time?

Disrupting the supply chain with or without you

Everywhere we look the supply chain is being disrupted by companies finding ways to deliver bits of information or entertainment instead of atoms of paper, DVDs or hardware.

Strategic thinking about the digital transformation

In your strategic planning, do you consider ways to obsolete one or more of your products or services by delivering it in bits not atoms? Digitally rather than with any form of “hardware” product?  Recurring service rather than single sale?  Lease rather than sell?  There are a million ways to disrupt yourself before someone else does.  Are you thinking of this as a top of mind strategic opportunity?  Or are you just protecting the status quo because it is making money now and there seems no reason to change?

 

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Posted in Growth!, Positioning, Protecting the business | 1 Comment

Can you create a great customer case study?

Attention spans are growing shorter by the second

Studies have shown that attention spans for engaging a reader or listener have fallen from eleven seconds to eight seconds on average.  Eight seconds to reach someone in most any medium.  Ouch!

Growing weary of paid advertisements

We have grown more than a bit weary of most advertising, no matter in what form.  We are constantly bombarded by ads in multiple types of media, to the extent that we most often tune them out unless particularly entertaining from the first moment (eight seconds.)

Entering the “age of recommendation.”

In my keynotes on trends in technology, I often lead into one of the trends with the proposition that we have left the information age and are solidly within the age of recommendation, pointing to the fact that 69 percent of us research major purchases online before buying; 62 percent look at online peer reviews and 39 percent of us compare prices across outlets.  I make the point that this is good for consumers, because it creates an environment where there is much more consumer pull – and less producer push – in our new world of connectivity and transparency.

How do you reach this hyper -conscious audience?

[Email readers, continue here…]  How do you reach an audience that pays less attention to advertising then at any time in the past one hundred years?  Given the statistics quoted above, you must find ways to have your consumers endorse your product publicly, and in a form that is divorced from looking like an advertisement.

Using new tools in a social age

There are several ways to do this effectively, including the use of social networks to create buzz, seeding product acceptance through early adopters or celebrities, or by creating a small niche market that shows unusual acceptance and more.  People are more trusting of unknown third parties endorsing your product that they are of direct ads touting the benefits of the product in large, clear type.

The case study: the best way to reach your target

And the best way to do this is with the placement of a case study, a story told about and by a satisfied customer with something to say about how your product solved their problem or pain. That story can be in print or in multimedia form.  But it must be told about and by the customer, with your product as the tool of solution, not the focus of the story.  A good case study quickly lays out the pain, the players, the search, the solution, and the pain-reliving effect after implementing the solution.

All of us can identify with a successful solution to a painful problem. And some number of readers will identify directly with the problem as their own and be moved to act.  The only named solution will have been yours.  And that’s delivering power at the right moment to the right recipient.

Advertising money moves to the most rewarding media

Over the years, advertising money is being moved from display ads in magazines and newspapers to social network sites where people with eyeballs have migrated.  But people still read, hear and see stories they can identify with, and content providers still need content.  Where content providers or publishers push back when seeing a press release, many will embrace a good story demonstrating a painful problem and a happy ending.  And as a result, more money is flowing into story-telling.

Particularly for companies with limited marketing budgets, case studies are perhaps the most effective marketing tool available for the cost – other than just lucky or skillfully-ignited buzz.

 

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Posted in General, Positioning | Leave a comment

What’s your story? Did someone else create it?

It is an old warning in the entertainment industry.  Define your persona the way you want others to view you – before someone else defines you by comparing you to someone not as flattering as you would like.

Sometimes you win when others define your story

I have a friend in the music business who worked hard to gain introductions to, and become mentored by, several known names in the business.  One well known informal mentor called him the “Stevie Wonder of Hip Hop.”  That description stuck, and it is helping the young artist to define himself through instant branding and a positive image.

Sometimes it is best that you do it first

If you are proud of the fact that you were first to market with a product or service, you might define yourself as the “first and best”. If you are the largest company in your niche, you might want to define yourself by relative size, which connotes success and staying power.  If you are the quirkiest of suppliers in your niche, you could create a campaign around your company’s counterculture.

Use a word picture or mantra to make it memorable

[Email readers, continue here…]  One great way to define your story is with a word picture in which you associate yourself with a person or company that is recognized in a positive way and helps you tell your story more easily.  For example, if you have a bicycle courier service that you want to be known as speedy and reliable, define yourself as “the FedEx of urban couriers.”   (See “Manage Your Mantra” two weeks earlier in this blog.)  Your failure to do this early in the life of the company may come back to haunt you when others refer to you as just another street currier.

Sometimes you reduce your market to increase your positioning

How do you define yourself?  A mantra, tag line, motto, or logo with your unique brand definition is a good start.  Press releases and PowerPoint presentations with a uniform use of the mantra or phrase will reinforce your effort.  Back your story up with a statistic if possible. “There may be forty companies that do what we do, but we’re the first, largest and used by more Fortune 500 companies in our area than all the others combined.” (You can tell that story by limiting your market to the lower east side of town, where you are all those things.)

Create the story and spread it so you define yourself

Teaching your associates and employees to use the phrase each time they introduce the company to another social or business contact helps spread the word.  There is no one who will ever be as passionate about telling your story as you.  It is worth the time and effort to work on telling it well and in a memorable way.

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Posted in Positioning | 3 Comments

Five ways to make your company stand out.

There must be at least several companies out there right now positioning to compete with you.  If you’re large enough, you may be the target, and if smaller, you are the minnow not the shark – and need to be agile and creative.

The five strategies:  Picking one to emphasize

So, how do you position yourself to be a stand out? There are five  strategic positioning areas for you to consider. That’s our subject this week. There are five niches you can chose when defining your positioning strategy:  price, quality, service, innovation, and elegance.

And although many positioning efforts cross the lines between these, great companies play to the strength of just one.  And within that slice of differentiation, to make any sort of impact and lasting company, the difference between you and your competitor cannot be incremental.  “Me too” positioning is lost in the noise of today’s targeted marketing and corporate reach through inexpensive, but effective, use of Internet marketing.

Pricing strategies differentiate your business

First, and easiest to understand, is creating differentiation by price. Certainly Walmart, Target and others have gotten the attention of their potential customers using price as the primary leader to drive sales.  Walmart succeeds because it has changed the game with its suppliers, actually partnering with them to help drive costs down so that prices can truly be lower at the store level.  Since that capability is far beyond most every other retailer, there is great risk in competing by price alone.  Most anyone else can meet or beat your price any time they wish.  And their motive may have little to do with short term profit, a most frustrating finding when you finally realize that it is impossible to compete with such driven opposites.

Using price creatively

[Email readers, continue here…]   Price can become a competitive tool by creative companies where they can change the game, reducing the number of parts for example to lower manufacturing costs, or reducing the time to install a product, lowering after-sale costs.  But, for the most part, competing on price alone is not a good strategy for the long run.  Success is not rewarded appropriately by continued dominance of a niche when price alone built that niche.

Quality can be, and is, an important differentiation.

Ford recently returned from the land of the nearly-dead to become not only profitable but a desirable alternative to the dominant Japanese cars by emphasizing quality at competitive prices.  And some brands are built principally upon quality even at increased price, including Mercedes, Tesla and Audi, to name a few auto brands that have successfully been able to charge more for quality than just the added features above their lower-priced competitors.

Service is a remarkable differentiation.

Those who shop constantly at Nordstrom’s are knowingly paying more for personalized service that has proved endearing and able to withstand the competition for decades of continued high standards, not compromised by the need for profit first, service second.  Internet hosting providers, ISPs, are often distinguished by their potential customers by the level of up-time which equates to quality of service, even at incrementally higher hosting cost.

Innovation, technology, and early adapters

Innovation certainly defines a number of companies catering to early adopters and the mass audiences that follow.  Apple stands out as the first name on most minds when thinking of innovation, even though Apple originated none of its dominant product lines, choosing instead to come to market with innovative adaptations of existing products.  The iPad created an entirely new market segment from what was for over a decade a sleepy niche computer tablet market dominated by a few small-selling products aimed at niche markets.

And finally, elegance

Elegance serves as a major differentiation for those who are willing to add quality and service into a brand that is priced well above reach of the masses.  Coach, Bentley, Patek Philippe, and Chanel are brands defined by elegance, not feature-functionality and certainly not by being the low-priced competitor.  The great benefit of reaching for differentiation outside of low price is that the public you court is the public loyal to you over time because of your brand and your brand recognition, and the least likely to abandon you for another when their price is lower by increments.

Increase your margins and brand awareness

Branding, price strategy, and positioning are related as differentiation’s that help you to increase margins and drive profits when competitors fail with inferior strategies.

So, consider your core competencies and pick one or two of these positioning strategies to drive your company’s growth and profitability.  You’ll be ahead of many of your competitors who often don’t think strategically when positioning their companies in your niche.

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