A company is moving from sole focus on servicing a market to a split focus
including developing and marketing their own products. This is a significant
transition for the team. What is the best way to organize this effort? How do
you manage a business transition?
from the CEOs:
the company’s financials are great for their market, cashflow may be
insufficient to fully fund a development company.
development of new products can create conflicts if it creates competition for
resources between internal and external projects.
avoid this, create an independent company or entity – in a separate location.
Seek outside funding whether bank, angel or partner financing. The independent
entity can then buy resources from the primary entity at competitive rates.
years ago, another CEO utilized the strategy just described. The important
that venture is properly resourced.
that there is a balance between proven structure and creative application
best resources available at same rates that key customers pay.
free guidance but not free services – peer reviews are key.
third CEO had an opportunity to open a new business using the spin-off model.
allowed infrastructure sharing – with proper compensation and incentives
both entities were successful.
Properly implemented, this model works.
are four aspects to the challenge.
business plan for the new venture must address all four.
internally (vs. externally) creates natural conflict. Workers will tolerate change
in direction from clients better than they do from insiders.
Situation: A company has grown to five times the size that that were when they hired their last Vice President of Sales & Marketing, and are looking for a new VP of Sales & Marketing. What is your advice as they embark on this search? How do you recruit a VP of Sales & Marketing?
Advice from the CEOs:
Think coach as opposed to star player. You are a much larger company, and at this phase of growth you need an individual with good marketing skills combined with sales management skills. You need a brand builder.
Recently, another CEO went through a similar process. His mistake was hiring a person with deep domain experience, when what they really needed was a person with process/methodology experience in complex sales. In your case, consider an individual from a larger company in your industry, or an allied industry. Somebody with knowledge of similar technical sales processes to your company with similar complexity and similar lead flows.
Skip head hunters. Based on your knowledge of good companies in your industry use LinkedIn to find who’s who. You can look at three pools of candidates – those that you can hire away from these companies, those who have worked there but are out of work, and early retirees who have found that they now need to go back to work.
Research current salary ranges in your industry and plan to be competitive, both base and bonus target.
As this individual will be a doer-manager make bonus qualification a combination of personal quota and team performance (overall new sales growth vs. existing projects).
While another CEO agrees that you don’t need a head hunter, find someone who can organize the process – review resumes, perform screening interviews, schedule higher level interviews, follow-ups, etc. – and who will work on an hourly basis.
Have a job application and be sure to ask for the following:
Copies of last W-2s.
State on the application: falsehood is grounds for immediate termination.
Do or outsource formal background checks including verification of education and degrees.
Personally call references for your finalists. Ask these references who else knows this person and speak to them, as well.
Situation: To date, a company has performed a single set of services focused on collection and delivery of a stream of raw data to its clients. The CEO wants to add a consulting service based on the expertise that the company has developed over the years. The CEO seeks input on both how to position this new service, and how to organize it, either within or separately from the current business. How do you expand your business model?
Advice from the CEOs:
Consulting services can be offered at a premium to current services because the company will be offering analysis and recommendations for a solution, instead of just raw data. Intelligence is more valuable than raw data.
Offer the consulting service on a project rather than an hourly basis. For example, price a project at $10k for the consulting package instead of $200/hour for data collection and reporting.
To add weight to the consulting offering, provide final reports and recommendations as a professional, written document supplemented by a presentation.
Test the concept and early options for the consulting service with existing clients.
Create a new division for the consulting service so the customer sees it as an additional option and value that the company provides. This will change both the branding and image of the business.
To increase the opportunity for success, develop a full business plan for the consulting model.
Focus on the new consulting business with the same discipline as the current data business.