Situation: A company was launched on a single product with variations. Their R&D team has now developed several additional products which they are planning to launch. This will involve new product names and new customer segments. Having not done this before, the CEO seeks advice on managing multiple products, brands and market segments. How do you manage multiple products and segments?
Advice from the CEOs:
The most important element is the plan – write it carefully and build from a solid base.
When working with multiple products or market segments, match your segment strategy for each segment to your product strategy for that segment.
Build a grid that shows all products and all segments where you wish to sell them. In each cell, determine both the decision maker(s) and their top purchasing priorities. This will help you to build your Product/Segment strategy and optimize resource allocation while increasing sales and marketing effectiveness.
It may also help you to fire problem customers who cost you money and attention and reallocate these resources to more promising opportunities.
Analyze the customer’s decision-making process for each product and segment. Make sure that your marketing and sales effort makes sense within their decision process and focus on what is workable.
When introducing a new product or idea, focus first on smaller segments and test the fit of your product or idea. This is low risk if you fail, and you can leverage what you have learned if you win.
Build a one-page strategic plan that covers your full company strategy. Each department compliments the company strategy with its own departmental strategy to support the company strategy.
Special thanks to John Maver of Maver Management Group for his contribution to this discussion.
Situation: A CEO is involved in a number of outside Boards and organizations, both because this involvement helps the company, and for personal reasons. Recent changes in family demands are now prompting reconsideration of this level of involvement. How do you prioritize demands on your time?
Advice from the CEOs:
List all of your priorities – both business and personal – and the amount of time that they require on a weekly or monthly basis. For non-family activities, rate each in terms of importance both to your organization, and to your heart.
Decide how many outside Boards or organizations you are willing to participate in and how many hours of the week or month you are willing to allocate to this.
Reduce your involvement in outside boards and organizations so that you get the time commitment down to what you are willing to allocate. Thereafter, to maintain control of your time. If you add a new commitment, drop an existing commitment.
Where you have commitments that are important to the company, but lower priority in terms of your own passion, delegate representation to good people within your company. This both maintains company presence and enhances their professional growth.
Where you want to terminate involvement let the organization know of your plans in advance, and negotiate a phase out schedule and timeline. They will appreciate your working with them.
Consider putting someone between you and your calendar to communicate with those making new requests for your time. This person can say no more easily than you can.
Situation: A company allocates 10% of pre-tax profit to a Bonus Pool. Employees qualify for quarterly bonuses based on company and group performance, and for semiannual bonuses based on individual performance. Last year not all funds were paid out of the pool because some employees failed to hit performance targets. What’s the best and fairest way to allocate the excess funds in the pool?
Advice from the CEOs:
Why not let the pool be the pool? Employees will or will not qualify for bonus participation based on individual and group performance. The company determines who qualifies at each level and these individuals become the pool participants, splitting the full pool in proportion to their level of qualification and their salary.
Not all companies will do this based on pay and bonus level policies. For these companies there are options on what to do with unpaid bonus funds in the pool:
Leave the funds in the pool for future distribution;
Shift unpaid bonus to Retained Earnings; or
Retain a percent of the funds in the pool and shift the rest Retained Earnings.
Another consideration is whether to use discretionary or metric criteria to determine bonuses. Some companies use only or primarily metric criteria, others use discretionary criteria, and some use a blend of metrics for one portion of the bonus with the remaining portion discretionary. The rationale behind discretionary criteria is to give managers the opportunity to recognize extraordinary contributions that fall outside the normal metrics.