Category Archives: Strategy

How Do You Build Channel Sales? Three Key Points

Situation: A company has developed a disrupting technology that allows OEM manufacturers to produce high-end machines at a fraction of their current cost. The challenge is that the company does not possess the capacity to reach producers of high-end machines.  The CEO seeks advice on how to efficiently focus channel development. How do you build channel sales?

Advice from the CEOs:

  • The dilemma is having a major disrupting technology in a market with a strong division between OEMs servicing the low/medium-end market and those servicing the high-end market.
    • This technology collapses the division between the low/medium and the high-end markets.
    • This shift disrupts the current business models of either group of OEMs, as well as their technology development plans. This is the source of resistance.
  • Therefore, the most promising channel development partner is either:
    • A low/medium-end OEM who is also a disrupter and who has the capability to develop a high-end sales and marketing effort; or
    • A high-end OEM that knows the market but who’s current strategy is failing and needs an entirely different solution to revive their prospects.
  • The near-term task is to gain market capability – both manufacturing and marketing/sales – and to use this capability to gain early market acceptance.
    • If, over the next 12 months, the company can begin to impact the market shares of the high-end OEMs, this is the surest way to gain their attention. Once the company starts to gain share, a likely outcome is that one of the high-end OEMs will buy the company to lock up their IP.
  • Another company used a similar strategy several years ago.
    • They entered a new market by way of a business collaboration with a high-visibility partner.
    • In one year, they took 30% market share from the market leader through this collaboration.
    • As a result, the market leader bought them because “it was less expensive to buy you than to spend the marketing dollars that we would have had to spend to compete against you.”

How Do You Add More Discipline to Quotes and Pricing? Four Points

Situation: A CEO faces challenges with clients. The first is vague customer specs because they don’t understand the product. Second is misunderstandings as to timelines. Third is insistence on strict timelines while simultaneously demanding revisions to previous work. How do you add more discipline to quotes and pricing?

Advice from the CEOs:

  • Is the company’s technology strategy aligned with its capabilities? Currently the company is trying to build advanced solutions in multiple international markets with a small staff. There does not seem to be the technology or development discipline to convert current capabilities into a sustainable market advantage.
  • For near term focus, because of commitments and milestone payments due from the key customers, focus resources on finishing the last piece of these projects. Once this is done, step back. Look at options and determine the company’s technology strategy moving forward.
    • The key challenge is to define ONE beachhead on which the company will focus and which they can dominate. The objective is to leverage existing engineering creativity to create a sustainable competitive advantage.
    • As this exercise is designed, start with a clean slate. Don’t burden the process with a lot of restrictive assumptions. Consider using an outside facilitator to help facilitate this process.
    • Until this exercise is completed does it really make sense to seek additional work or to commit the company to the next phases with current customers?
  • Once the company has selected and committed to a technology strategy, the decision process becomes different.
    • The objective is to develop laser-like focus on the technology. Minimize distracting the team with other opportunities.
    • It may be OK to lose money on development projects if this work will significantly impact or accelerate the development of the company’s core technology.
  • How does the company justify asking for payment for development for future projects?
    • First, determine and clearly state the company’s technology strategy. Evaluate all future development projects and decisions in terms of their alignment with this strategy.
    • Second, if a particular project is completely aligned with the technology strategy, the company may waive the requirement of payment for development. This, ideally, will be the only exception.
    • Ask for a limited time/scope project to jump start and define new projects. This provides proof of company capabilities and establishes its credibility.
    • If is it necessary to negotiate or bid, start high and bargain down to but not below the best estimate of the cost of development.
    • Remember that deciding what NOT to do or quote is often harder, but just as critical, as deciding what to quote.

How Do You Transition to a New CEO? Four Strategies

Situation: A company founder was advised by her Board to help them hire a CEO with more experience to run the company. This new CEO is now in place. As the founder gains more experience, the Board has indicated its willing to consider her as CEO. How do you transition to a new CEO?

Advice from the CEOs:

  • Become the fire hose! Build a tight relationship with the new CEO and together build the future strategy that will enable you both to win.
    • Others will focus on past issues. Keep your approach and advice positive. Position yourself as a partner, not an adversary. Emphasize your supportive and collaborative capacities.
    • Become the new CEO’s go-to person: trustworthy, objective, knowledgeable, reliable. Nurture the development of chemistry with the new CEO.
    • When the new CEO asks what needs to be done, produce the plan. Leverage your knowledge and expertise to become his greatest resource.
  • Enlist the CEO’s support of one or more of the focused strategies that are already in play within the company. Build the support of the Board and focus on boosting company value to 2x sales. The Board won’t forget who produced the original initiatives.
  • You have more power than you imagine – both with the Board and the new CEO – due to your knowledge of the marketplace and the business. Use it wisely.
    • While there is a new CEO, the company has already been profitable and company operations are clean. The Board will remember this.
  • How do you boost the chances to eventually be named CEO by the Board?
    • Tie yourself very closely to the new CEO – be this person’s more important resource. Build and cement your position as his most important ally within the company. It will help you to gain his support for implementing your ideas.
    • Segue your relationship with the Board members to become the company’s next CEO.
    • At the same time, grow your successor within the company so that you will be ready to move up to CEO when the opportunity arises.

How Do You Expand Your Large Client Base? Six Strategies

Situation: The CEO of a service company sees that 20% of their business is serving large corporate customers. These accounts have proven to be more profitable than smaller clients. Their objective is to increase the large corporate client base from 20% to 60% of their business. How do you expand your large client base?

Advice from the CEOs:

  • Emphasize the differences and unique talents of the firm in comparison with the competition. Trust in the company’s abilities and act like a big-league firm.
  • Top shelf prices for services are not an issue for large clients; in fact, they expect quality firms to have high prices. Find the “clinch” price – where the client says, “you’re expensive, but because of your special talents you’re the firm that we will choose.” Compliment this with the firm’s ability to utilize lower cost outsourced services to offer an appealing overall cost of services. Clients will pay a premium for top shelf when they need it but will like the fact that routine needs can be met within their budgets.
  • Use the lessons from Blue Ocean Strategy to create advantages for the company’s services that existing firms don’t or can’t offer because of their structures and cultures.
  • Highlight the company’s high-touch culture, with great personal service. This provides a welcomed relief from the typical client experience with service firms.
  • Create buzz around the company’s leadership. Focus on speaking opportunities. Enhance the references to the company’s leadership on the company web site, including a listing of upcoming speaking engagements that are open to potential clients or individuals interested in the company’s expertise.
    • During speaking engagements to local groups on topics of high interest, build an educational library of edited flash content that hits the high points of the talks – not the full talk, but the most important 2-3 minutes on a given topic.
    • Add a library of these short videos on the company website.
  • By charging premium prices for select services, while sourcing research and expertise from personnel in lower cost geographies, the company will generate additional profit. Allocate some of these profits to community outreach to further enhance the company’s reputation and buzz. Be the firm that gives back.

Where Should You Focus for the Next Year? Three Points

Situation: A CEO has had to shift half of the company’s employees to part-time due to reduced business. This has hampered new product development. The situation has been exacerbated by slow payments from customers. Where should you focus for the next year?

Advice from the CEOs:

  • The company has a lot going on. Validate the company’s market potential for products in development, and start gearing up the marketing program so that it will impact this and next year’s sales.
    • Get a feel for how many customers want the new products in development. Invest in some market research to validate this.
    • The bottom line is that product development only pays if the company can sell a lot more product! The team needs to know whether customers for the new products exist, in what numbers, where and who they are, and their most critical needs. Without this market intelligence, the company is in no position to tell whether there is a market, nor is the company prepared to address it.
    • Assume that there is a market, that it can be quantified. Once the company knows who and where the customers are and knows their most critical needs, the next step is to prepare to attack this market. This is not something that is done in 1-2 months, after the product is ready to sell. The company needs to be starting now if marketing is to be initiated in 6-8 months.
  • Past practice has been to split R&D costs with the customer. The company has the expertise, the customer the money – this is close enough to 50/50. There is no need to show them the numbers. R&D should not be funded through future sales but should be making money now.
  • One project has been taking so much attention that it is hobbling the company. The company is so focused on getting this “just right” for the customer that sales and market development have been neglected.
    • For the next 3 months, focus on completing this project, getting it out the door, and getting the company’s focus back on growth. A sense of urgency is needed!

How Do You Mitigate Temporary Loss of Personnel? Five Points

Situation: The CEO of a small company is concerned that the loss of a key individual could seriously impact operations. Alternatives include adding an assistant to the affected department or cross training another individual who could serve as a short-term back-up in case of an absence of 2 weeks or more. How do you mitigate temporary loss of personnel?

Advice from the CEOs:

  • In cases like the current pandemic, planning for multi-week personnel absences is essential. Though systems are documented, subtleties of key jobs may not be documented. This is where cross-training becomes an important alternative.
  • Train another employee as a backup for the person in question and refresh the training every 2-3 months. If the company runs into an emergency due to short or longer-term loss of an individual, hire a replacement for the individual and have the individual who is cross-trained train the replacement.
  • Have the key individual and the individual who is cross training refine the ISO 9000 documentation as the key employee trains the back-up individual. This will assure that ISO 9000 documentation is being updated regularly.
  • Establish a plan with appropriate procedures that all positions must have a back-up. Include this within the company’s personnel procedures.
  • Rewarding the key individual with a bonus for selecting and training his or her back-up is the wrong thing to do. It’s both the wrong incentive and the wrong reward. Training a back-up is an essential part of each key employee’s job, not a special task that deserves separate recognition or reward.

How Do You Create a Chinese Wall Around a Product? Three Points

Situation: A company has a technology that was developed by but not of interest to a major corporation. The company continues to have significant business ties with the corporation, but the corporation wants to be assured that they are never connected to the technology in question. How do you create a Chinese wall around a product?

Advice from the CEOs:

  • The challenge facing the company is this: representatives of the large corporation don’t and can’t sell the services offered by the company, however exclusive clients of the corporation represent 25% of the available market for the services provided by the company. To date the large corporation has been unwilling either to reward the company for selling to these clients or to assist them in the sales process.
    • A solution: show the large corporation that the company provides a higher value or potential value to them than they receive on their existing products.
    • Show them the potential financial value to them of a symbiotic relationship.
  • Does the company develop the capabilities and value of the technology on their own, or do they partner with client companies in the market?
    • Many the potential clients in the market appreciate the technology and want to work with the company in some form so a partnership is possible.
    • The issue is that an open partnership might offend the large corporation who may then perceive the company as taking advantage of their clients.
  • How does the company establish a Chinese wall so that neither the large corporation nor the clients who purchase the company’s product are concerned about any activity that the company undertakes in the market?
    • Set up a separate entity and license the technology to this entity. The company would be an investor and would do some of the work but through a client/service relationship with the separate entity.
    • Get independent M&A advice on how to structure this entity.
    • Investigate other companies that have set up similar structures. Determine how they have addressed concerns such as conflict of interest, and what structures they have set up to avoid this.

How Do You Construct a Deal to Expand? Three Areas of Focus

Situation: A CEO has an opportunity to combine with another business to expand their market geographically. A lead to work with the current owner to manage the transition has been identified. A second option is to bring in a new manager from the outside to manage the transition and the expanded business. How do you construct a deal to expand?

Advice from the CEOs:

  • Basics that are needed prior to initiating negotiations:
    • Define what the seller wants – both financially from the sale and in terms of ongoing involvement in and support of the business.
      • Without a lengthy transition period, the value of the business is not significant. The value is in the current owner’s relationships – both with clients and his team. It is critical to retain both.
    • The other big question is what the seller wants personally.
      • Is it legacy? Is it the opportunity to transfer knowledge?
      • The seller knows the CEO’s company and approached them about a sale. Play on this.
    • Are there potential complications to the deal?
      • Do any non-compete clauses exist with other companies?
      • Do other agreements exist that impact the value of the acquisition?
  • What other aspects of the deal does the group recommend?
    • Within the new organization, put the current owner under the recommended lead. This gives the lead more prestige and demonstrates trust. It also raises the bar for the lead.
    • A bonus is that the current owner and the lead get along. This will facilitate the current owner’s mentoring of the lead – like the child that he wishes would have taken over the business.
    • The current owner is a savvy businessperson, and the existing relationship between the seller and the lead will facilitate his ability to pass this knowledge on to the lead.
    • The current owner’s key assets are his connections and knowledge of the business. This will include subtle aspects to the business of which only the current owner is aware.
  • The option to bring in an outside office manager potentially complicates the situation.
    • Bringing in an outside office manager to manage both the lead and the current owner is the worst case – the most likely to blow up.
    • This arrangement puts the current owner two reports away from the CEO.
    • With an additional person involved, the personal dynamics become more complex. Keep it simple.

How Do You Engage People in a New Offering? Eight Points

Situation: A founder has created a new social media offering. The concept is to attract individuals with complimentary interests and have them engage each other for mutual benefit as a better source of information and connections. Implied trust is an important component of these connections. How do you engage people in a new offering?

Advice from the CEOs:

  • People are willing to experiment with a new social media offering – in this case because they like to help others. It makes them feel good and they like the role of helping others.
  • People are always seeking good talent. If this does a better job helping them to find good talent, they will try it out.
  • Hiring managers prefer to pass on a resume of someone known to them because a bad referral could reflect badly on them. Strengthen this aspect of the offering through information gathered from participants.
  • A small pool is a negative. Broaden the pool to include those who are looking to step up their careers. Think of this as people-to-people direct hiring and use a social approach with broad appeal. This will increase the number of people willing to play.
  • Be the place where people can come to help others. Add additional tags – help to build confidence and get inspiration. Getting a job happens as a consequence.
  • The element of trust and relationship is important to many – 40% of early users of the current network express this. Assure that the value proposition is also attractive to the 60% who are not concerned about this.
  • The network will build on the energy from the emotional play.
  • Expand the options for how people can help. Investigate allowing trusted referral relationships within the system. Allow people to refer trusted people in their own networks. This can include people who “I would trust to refer good people.”

What is the Best Way to Roll out a Business Opportunity? Six Suggestions

Situation: A CEO is reviewing options for introducing a new offering. The target customers are small companies or projects within larger companies. The offering includes both an initial product and follow-on services. Education or training will be a component of the offering. What is the best way to roll out a business opportunity?

Advice from the CEOs:

  • It is best to position the offering as a straightforward proposition at launch and develop proof of concept. This will provide experience and an income stream to fund more complex offerings based on the initial model.
    • It will also provide insight on how to sell the product and service in different markets – manufacturing, service, and software.
    • Leverage this experience to pursue more complex models.
  • Build a portfolio of case studies before pitching to paying companies.
    • Use companies with whom relationships already exist as the proving base. These will become references for new clients.
    • Develop data to show actual cost savings from the use of the product and services.
  • Establish a relationship with an existing company for which the offering is complimentary and cross-offer products and services on an ad hoc basis.
    • Trial the product and service with one of their clients in return for a royalty or share of the profit.
    • Ask that company to make the introduction.
  • Target start-ups – offer an initial package for a low price. Offer the product to start-ups for free and get them hooked as long-term customers.
  • What would be needed to roll the offering through growth equity firms or venture capitalists?
    • This will require some proof that the offering increases the ROI to growth equity and VC portfolio companies and funds.
    • Note that the portfolio companies of growth equity firms are larger and farther up the growth curve
  • In current economy the key message to prospects may be that the offering will help them to “right size” their company.
    • Take a closer look at the offering and determine whether it is configured appropriately for the current environment.