Situation: A company has just learned that a new, much larger competitor is moving into their market. They are concerned that this may severely impact their growth and even their existence. How do you respond to new competition in your market niche from a much larger new entrant, particularly if the new player comes in with a low pricing strategy to buy market share?
Advice from the CEOs:
Take a lesson from those who survive a move by Walmart into their territory:
Boutiques and high service specialty stores survive Walmart – especially those that focus on personal service. Walmart does not provide the level of service that you find in one of these stores and doesn’t know their customers as individuals. Boutiques may lose some price conscious customers, but these are not the customers that provide good margin to them.
Use your personal knowledge of the marketplace and your long term relationships to your advantage – including your reputation with existing customers when going after new customers.
You may remain more profitable than the larger company, especially on a per transaction basis, based on your knowledge of the territory or business niche. Walmart can’t tell you the best product to perform a home repair.
Focus on your strengths in the market, and don’t assume that all large companies are Walmarts. Walmart has a unique set of talents and a tightly controlled process. This may not translate to other markets – especially services which are very personal.
Research the reputation and business practices of the new entrant in their other territories. What are they known for, and what are their weaknesses? You may be able to learn this by networking with their current competitors and customers.
If you are a multi-generation family business, consider promoting your “old world skill” and established reputation and expertise.
Situation: A company’s leadership is wrestling with how to handle an accusation of employee theft. In the case presented, the accuser lacks credibility, but the charge is serious. The leadership team wants to deal fairly and equitably with the case, but doesn’t want to send the message that pilferage is acceptable. How do you handle allegations of employee theft?
Advice from the CEOs:
To assure fairness and equity, determine a way to substantiate, with objective or third party information, whether charges of pilferage are valid.
Express your seriousness about the situation, and ask the accuser what evidence they can provide to substantiate the allegations.
In a warehouse or stock room situation, install inexpensive video equipment to record and verify pilferage.
To assure that messages to employees are clear, revise employee manuals to specify serious repercussions for pilferage as well as measures being taken to prevent it. This will demonstrate awareness of the issue as well as the company’s determination to discourage pilferage.
If you can verify the allegation, either through objective or third party evidence, face the employees involved. The choices are simple:
Either the behavior stops and the estimated damages repaid to the company by the employee, or
The employee is fired.
Do not think that this is something that will go away on its own. If there has been pilferage and the situation proceeds unchecked, it will damage you both financially and in terms of employee respect and morale. Employees will be watching your response closely.
To protect yourself, once you determine a course of action be sure to document everything.
Situation: A company that has been in business for several generations has been approached by a government official with an unexpected regulatory requirement and a stringent timeline for compliance. This was completely unexpected and it will be disruptive to comply. How do you respond to a regulatory wild card?
Approach the agency and negotiate an extension of the deadline, or a series of steps that will bring you into compliance but under conditions so that compliance does not disrupt your business and workload.
Dig to determine the ultimate reason behind this development. Is it a neighborhood evolution issue where new neighbors want you or your business out of the way? If so, is there a win-win alternative that gives you a new or better location in exchange for moving.
Seek legal assistance – local lawyers may be knowledgeable of the officials involved or their superiors, and will know the language to use to ask for the leeway that you require.
Circle the problem from every angle – look for other city contacts that can assist.
Trade a tax concession for compliance – particularly if the issue is a long-standing situation that has just now been brought forward.
Look for a way to turn the problem into an opportunity by solving the problem uniquely in a way that favors you.
Consider asking them to help solve the problem.
Do NOT respond with an attack. Local officials can be in place for a long time and may hold a grudge.
Situation: A company is resource constrained and faced with a serious trade-off: do they focus on short term cash needs – immediate product improvements that will speed new product iterations to boost sales; or longer term strategic concerns – assuring that they have good IP protection on their technology before they launch new versions? When you are resource constrained, does it make more sense to focus on initiatives that will quickly produce cash or strategic concerns that will protect your future?
Advice from the CEOs:
Build two timelines – one for shoring up the patent portfolio so that you can safely build and launch new IP-protected versions of your technology and one for quickly completing product improvements to speed development of new product iterations which will generate cash. Assess both the energy requirements and the dollar risks and implications of each timeline. If you do not have the resources to do both in parallel, this analysis will help you to determine your best course of action. The risk analysis of each timeline should take into account what would happen if another company were to duplicate your technology and get to market with improvements before you do.
As a compliment to the above exercise, ask what happens if I don’t do either A or B? Do a SWOT and investment analysis on both. Which is the greater risk – launching with insufficiently protected IP or risking not being first to market?
These analyses will help you assess whether it may be feasible to accomplish part or all of either task with dollars in lieu of your own resources.
Situation: A company was recently acquired. The acquirer wants to merge benefit structures between the two entities. Both contribute a similar amount toward benefits; however the distribution of benefits between retirement and health plans, and other benefits varies considerably. How do you approach the staff to communicate changes in benefits following an acquisition?
Advice from the CEOs:
Ideally, you want to gather employee input on what benefits are important to them before the overall package is finalized. This will help you to negotiate in your employees’ interest.
Make sure that the acquiring entity is aware of state regulatory requirements that may force them to retain state-specific benefits.
National companies often employ a cafeteria benefit strategy that allows the employees to make choices among benefit options, and fund these choices either at a company-paid base level or allow employees to supplement their choices through pre- or post-tax payroll deductions. There are numerous providers who offer cafeteria plans.
What’s the best way to have a conversation with employees once the new benefit package has been finalized?
Emphasize that the company is offering and funding this benefit and specify the amount that the company is funding as a percent of salary.
Create a grid mapping the full program:
Amount of company contribution
Old Program and benefits
New Program and benefits
Changes in allocation and changes in the total value of benefits offered.
If you have access to industry or regional comparisons for like-sized companies, and those comparisons put your company in a favorable light, share these as part of the communications package.
If you know that a highly valued benefit is being reduced, consider a short-term subsidy to ease the shift.
Be sure that you are clear and concise in your communications of the new plan and changes to the employees. You may want to have an outside consultant on hand to cover specific questions.
Be sure that any decisions your employees must make in the new program are fully and clearly explained.