Situation: A company is at a crossroads. They are no longer growing as they have in past years. The CEO is assessing alternatives including a merger, selling the company or restructuring. What are the essential questions to determine whether you merge, sell or revive a business?
Advice from the CEOs:
Do you really have the information to determine whether it makes sense to merge, sell or revive the business? The questions to ask are:
Is your core competency important?
Do you have the talent required to revive the business?
How much of your business is from repeat customers?
Is your platform still being used by a significant number of companies, and are they likely to shift their software soon?
If the answers are favorable, then the only remaining question is whether you have the energy and inclination to continue.
Having developed a profitable business model, why would you give up control or ownership?
Tighten up the business by focusing on the basics and turn the company around.
Identify where you can make money, and
Determine which portions of the business need to be restructured or eliminated.
Essential questions are:
Do you have a clear picture of where the profitability lies within the business?
Do you have a clear statement of your key competitive advantage – your “Main Thing”?
Can you establish a pricing strategy that pays you fairly for the value you provide?
Look at bench time among current employees.
Identify, and fully utilize the most important contributors, perhaps by giving them additional responsibilities in other areas.
See that all retained employees are fully utilized.
Eliminate those who are on the bench the most, or transform them into contractors so that you only pay for active time.
Utilize contractors to fill the “full service” slots that are important to your service offering but which do not contribute significantly to your bottom line.
Most importantly, reformat your role so that you are doing that which you truly enjoy. Your own enthusiasm and passion are the most important long-term drivers for your business, and will be the most important motivators to your staff.
Situation: A tech company competes in a rapidly changing marketplace. The companies they serve constantly evolve their platforms. The company must respond rapidly to assure compatibility with both hardware and software innovations. Users adapt to new platforms at different rates, and the company must address their needs, as well. With so much time spent tending these diverse needs, how do they plan for market evolution?
Advice from the CEOs:
In the market you serve you must constantly reinvent yourselves as technology changes. Some platforms make changes on a 5-year cycle, while mobile platforms are currently on a 6-month cycle. This may force choices as to which platforms to serve. You also may want to focus on platforms where what you bring to the table is most useful.
You have made the strategic choice to tie the future of your company to a few large companies that dominate their markets. It is imperative that you cultivate close relationships with the technology as well as strategic leadership of those companies. This will give you more advanced insight into their plans, and they may even involve you in discussions about how the market evolves. If so, you will have positioned yourself for that evolution. These relationships may also become your exit strategy.
Businesses run on cash, or access to cash. As you cultivate relationships with your key customer companies, look for opportunities to invest in developing markets on a subscription basis which will provide ongoing annuity revenue. Figuring out how to leverage advertising or positioning options into your offering offers an additional revenue stream.
Situation: A CEO is building a new company. She has a small, highly qualified team, and much of the work is hands-on. In addition, there is fund raising to support the venture. The CEO also makes time for exercise and keeping in shape. With all of this on her plate she is getting overwhelmed. How do you focus on priorities in an early stage company? How do you make time for priorities?
Advice from the CEOs:
Maintain your exercise and health – this makes everything else easier.
Decide on your strategic platform. This creates a larger conceptual framework and helps to clarify priorities.
Identify the gating items. Focus effort here and spend scarce resources strategically to push your goal.
Within your gating items, identify the factors that make you scalable. Focus most of your effort here.
Create a weekly focus.
Lay out your to-do list in a Covey quadrant – most and least important vs. urgent and not urgent. Review this weekly to eliminate or delegate less important priorities.
Operational issues are usually symptoms – identify the causes and fix them.
Daily, list what you’ve done. Look back every 1-2 weeks and assess how you spent your time. Eliminate time wasters.
Don’t let you passion be undermined by the drudgery.
As an early stage company, you have to react – understand and appreciate that some aspects of early stage company life will not be very strategic.
Fix things rather than adding people and complexity. This compliments Fisher’s Stages of Growth recommendations for a company of under 11 people.
Interview with Luosheng Peng, CEO & President, GageIn
Situation: A fast-growing company is working to engage new users on their platform. They are leveraging ease of use, demonstrated ROI, and fit within an existing ecosystem as their levers to attract and engage new users. What have you found effective to attract and engage new users in a new platform or service?
Advice from Luosheng Peng:
The most important factors to attract new users are ease of use and a demonstrable ROI. It is important to address a complex value proposition simply and easily.
You must know, ahead of time, the single most important value for your target user. Your examples must be clearly tied to your target user’s most important need.
Quick, simple, visual and verbal illustrations are effective. For example, we used short and fun videos like Tracker the dog to explain our products.
You must demonstrate a clear ROI and increased productivity. Your ROI must be real if you want to gain users attention – particularly if you want to gain viral levels of attention.
In business intelligence, finding information is not a problem. The challenge is finding the right information, filling the gaps in information from standard sources, and delivering it at the right time. We spent a great deal of development time getting this part of our product right.
To improve understanding of your ROI, engage early adopters and get their feedback on your current features and how to improve your platform. Early adopters are more analytical and passionate than other users. They want to be acknowledged so be responsive to them.
Offer a freemium model so that new users can try you out and test your value proposition. If they like what they experience, offer a low cost limited premium model with incrementally scaled pricing for additional features or functionality.
Manage your ecosystem. Building a new ecosystem takes a lot of effort and expense. Most small ventures will want to compliment or fit into an existing ecosystem.
Existing ecosystems may already be crowded. Small companies have to be able to break through the crowd and be seen. We completed major integrations with Yammer’s Enterprise Social Network and Salesforce.com’s CRM. Your platform will have the most success if you address a gap or unmet need within the existing ecosystem.
Situation: A membership association’s revenue is largely tied to its annual conference. The primary sponsor of the conference has decided to host their own annual conference. This will disrupt the association’s access to both conference attendees and vendors. The sponsor has offered terms of collaboration; however, the conditions are unfavorable to the association. What are the best alternatives available to the association and how should they pursue them?
Advice from the CEOs:
Are the association’s mission and vision are tied to or independent of the sponsor? If there is an ongoing reason for the association to continue without the sponsor then it is reasonable to pursue alternatives.
There are at least two options available to the association:
Accept the partner’s offer of collaboration, provided that this can be done under conditions that will allow the association to survive short-term. If the partner stumbles hosting its own conference this may allow the association to recover ownership of the annual conference. The danger is that this may lead to a slow death if the sponsor further cuts revenue to the association or a fast death if the sponsor decides to abandon the association.
Shift the focus of the conference and ancillary services under a new branding scheme. A survey of the membership indicates that the majority favor a mixed-platform solution, and may welcome a mixed-platform approach. You may need to rethink and rework your model but this may offer the best chance for ongoing survival.
What steps should be taken to pursue the second option?
Conduct a second survey of the membership to evaluate their preferences on platform focus, what they want to see in a multi-platform conference, and what platforms should be included.
Shift focus of the association to multi-platform as a response to members’ priorities and desires. Court the majority of the membership that favor a mixed-platform focus and de-emphasize those who favor the single platform solution.
Develop an alternate roster of sponsors including all competitive platforms. If this model succeeds, your current primary sponsor may find participation imperative.
Situation: Online communities offer the opportunity to leverage crowd sourcing to both solve problems and create new capabilities. How can these communities be leveraged to expand business models?
Advice from Vikas Sharan:
With the simultaneous explosion of digital devices and online communities, the concept of crowd sourcing will only increase. The ability to tap into the crowd sourcing ecosystem will differentiate high performers from everyone else.
If you can think through a problem strategically, and build crowd sourcing capability to scale, you can leapfrog the competition and change the game.
Take the example of ComplianceOnline (CO) from MetricStream.
○ MetricStream started as a company with an enterprise compliance platform. Their vision was to build information and best practices across multiple areas of compliance and vertical industries.
○ Since compliance is a very large area and spans thousands of industries and topics, MetricStream started with building best practices in a couple of compliance topics. To further their vision, they partnered with Regalix to create CO.
○ At CO, MetricStream and Regalix have created an ecosystem of over 20-30,000 experts on different compliance topics. These experts contribute training and best practices on thousands of compliance topics. Without adopting a crowd sourcing model, it would have been very difficult for MetricStream to build expertise across such a diverse range of compliance topics.
Here is the sequence of events that helped to build CO.
CO secured a collaboration with top regulatory officials across a handful of topics. These individuals brought not only credibility, but an initial list of advisers, peers and regulatory contacts to seed the new ecosystem.
From this seed, the ecosystem rapidly grew to a large community which submitted white papers, best practices and training programs.
Using the model first developed with the initial topics, CO has expanded their efforts to thousands of compliance verticals, with 20-30,000 experts contributing information to these verticals.
There are thousands of federal, state and international compliance verticals to which this model can be applied.
Situation: The rapid evolution of mobile devices creates new opportunities to build mobile enterprise application businesses. However for businesses there is no clear path to mobilizing business applications. How do you bridge the gap between supply and demand in mobile enterprise apps?
There are three legs to the stool of a successful SMB business model: developer platform, go to market strategy, and licensing and maintenance sales strategy. There is a consolidation play available for a small company that can generate traction in all three.
As to developer platforms, Microsoft originally got traction for Windows by being maniacal about building great developer relationships. Over time they leveraged this and just got better and better.
There are several platforms available that show promise, including Rhomobile, Mobile Nation HQ, and Appcelerator.
All are small now – in the $1-20 million revenue range. Their principal challenge is identifying a viable go to market strategy.
Another platform that shows promise is IBM’s Eclipse IDE.
Next is go to market strategies. Yahoo recently launched a search engine for mobile apps in Yahoo for Mobile. This is important to the creation of a viable market place for apps regardless of platform. If a viable platform developer can do a deal to generate a market for business apps this will go a long way to developing a successful go to market strategy.
The third leg, development of a long-term licensing and maintenance sales strategy, will most likely occur through acquisition of a company with the first two pieces. The lead would be an initial developer platform but could spin off to others.
Apple has started looking into this play with its iCloud strategy; the challenge for Apple will be making it enterprise-friendly.
Who else could do this? RIM and Microsoft both have a long history serving business customers, huge customer bases and and the marketing capabilities to support mobile business applications. The wild card may be HP – currently the largest hardware purveyor in the enterprise and consumer space, and with the new WebOs platform from their purchase of Palm
It will be fascinating to watch how this market develops.