Tag Archives: Services

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 Monetize Your Business Model? Five Suggestions

Situation: The CEO of a start-up software company focuses on connecting potential parties to business opportunities. Early signs are that this offering has legs and potential parties have responded positively. The critical question for the CEO is how best to turn interest into revenue. How to you monetize your business model?

Advice from the CEOs:

  • The first step is to segment the audience and determine both the potential for each segment to both benefit from and fund the service that they receive.
    • Individual contributors may not have a lot of financial resources but may be interested in participating as employees or providers of expertise or services. They also may know others and can spread the word.
    • Collaborating organizations may be able to offer both funding and services to help build and sustain momentum.
    • Companies have funds to support the effort provided they see value to their bottom lines as a result.
  • Suggest a fee or contribution for services from companies who will benefit. Provide guidelines or a sliding scale of fees depending upon duration of services provided to the company. Make it clear that moneys earned will be reinvested to increase the range and depth of services offered.
  • Suggest a sliding fee scale for individual contributors based on the financial benefit that they receive.
  • For companies and collaborating organizations offer levels of membership or recognition for support based on benefit received.
  • For all segments – start with small, timed fees and increase these as the model proves its benefit to them.

How Do You Transition from Doer to Leader? Four Suggestions

Situation: The Founding CEO of a professional services company has always been deeply involved as a service provider and rainmaker in addition to his role as CEO. As the company has grown he sees the need to spend more time as leader of the company instead of being a doer. What can be done to facilitate this transition, and what expectations need to be created? How do you transition from doer to leader?

Advice from the CEOs:

  • Another CEO removed himself from day to day business development activity by bringing in a new rainmaker. These were the adjustments made to facilitate the process.
    • During the first year he worked with the new individual in a team or partnership role.
    • Compensation was results-based. Discussion of equity consideration was deferred until the individual proved herself.
    • The CEO moved himself out of the individual contributor role except as needed to support the new rainmaker’s efforts.
    • All of this was accompanied with clear communication to clients: “this adjustment will provide better service to you; here’s my number if you need help.”
    • Rainmakers are a different personality type. To be most effective, they must be able to say “my team.” Allowing this will ease the transition and improve the relationship.
  • Create teams to deliver solutions that have traditionally been provided by the founder.
    • Identify skill sets behind the roles that are being delegated.
    • Build an organization that will fill these roles.
    • Participate in team meetings, but as an advisor rather than as principal decision-maker.
    • Adapt role and behavior in phases to ease the pressure of the change on both the CEO and the team.
  • How does the CEO manage his own expectations as well as those of the company as he makes this transition?
    • Delegation initially takes more time and effort than doing the work yourself. Be patient and let the investment pay off.
  • Larry E. Greiner of USC was an expert on the study of organizational crisis in growth. Per Greiner’s model, the company is currently at stage one – moving from principal and founder to initial delegator. It may be a useful to study this model.

How Do You Expand Internationally? Five Suggestions

Situation: An early-stage software company is expanding internationally, both offering services to international companies from their Silicon Valley base, and building a presence overseas. What land mines should they avoid? How do you expand internationally?

Advice from the CEOs:

  • Be more strategic than opportunistic. Europe is very interested in start-ups. Investigate potential locations thoroughly. For example, Luxembourg and Spain are not the most reliable markets or locations for basing a business.
  • There are already good networks in Europe that you can plug into so that you don’t have to build everything yourself.
    • There is a European organization called Open Coffee Club that attracts high tech and social media start-ups. You might consider either partnering with them or buying into their network.
  • You can set up a corporation in Cyprus to leverage tax advantages and build a network covering Europe.
    • To have geographic reach across Europe, you probably want two locations in Europe and one in Russia. Look at Ireland and Romania.
    • Many Russian oligarchs have their investments in Cyprus and may provide a source of investment funds.
  • Investigate the European Investment Fund and their sub-funds like the JEREMIE Holding Fund. This is a large government-funded investment pool focused on technology, innovation and start-ups.
  • Foreign companies are attracted to the US because we have the right ecosystem for technology development. However, a bridge strategy for European companies who want access to US funding is tricky. The key issue is visas which have limited duration and may be difficult to renew. Also, immigration frowns on foreign business people who visit the US too frequently.
    • Have you considered helping start-ups build through their early stages – reducing risk of early failure – before helping them come to the US?

 

How Do You Test a New Service Delivery Model? Seven Thoughts

Situation: A company targets mid-sized clients with pricing that is similar to its competitors. They believe that their principal differentiation is their relationship with their clients. The problem is that this is also what all of their competitors claim. They are considering testing a new pricing concept – a monthly fixed fee that will provide a pre-negotiated set of services at a favorable discount, with a weekly presence in their clients’ offices. How to you test a new service delivery model?

Advice from the CEOs:

  • This looks like an appealing concept. With this arrangement there is no clock ticking and the client may view your various services as a more open menu of options available to them.
  • Another company has a similar relationship with their CPA firm and have both enjoyed this and are using more services from this firm.
  • Just a regular presence in the office is worth the retainer.
  • Another appeal is that this allows regular participation in management and Board meetings.
  • Another CEO offers a similar program for her professional service company’s clients and have found it successful.
  • Since there appears to be strong support for this model within the group, what is the best way to implement this new offer?
    • Negotiate an initial monthly rate for a set level of services as a retainer without a clock.
    • Agree to a periodic review and adjustment of services and pricing – perhaps quarterly – based on the time and services that have been provided during the preceding period.
  • How do you sell this program to those within your own company who are skeptical?
    • Try the program with three clients on a limited trial basis and measure it.

Do LEAN and Six-Sigma Work for Services? Three Thoughts

Situation: A professional service company is intrigued by LEAN and Six-Sigma approaches to increasing production efficiency and reducing costs. Most of the examples that they see of LEAN and Six-Sigma in action are in production or manufacturing settings. Do LEAN or Six-Sigma programs apply to processes in a professional services environment?

Advice from the CEOs:

  • LEAN and Six-Sigma are heads-down approaches to process improvement.  In a customized solution environment, standardization of processes has less pay-off. As an alternative, consider Agile Development and similar heads-up process solutions.
  • Agile Development is both a philosophy and a process. Steps to introducing Agile Development to a professional services environment include:
    • Identifying high risk areas of individual project plans,
    • Double resourcing high risk areas to increase the likelihood of fast, satisfactory solution outcomes,
    • Looking for collaborative synergies and scenarios,
    • Scheduling regular team meetings to enhance collaboration,
    • Working opportunistically rather than systematically to increase efficiency, and
    • Using project post-mortems to refine systems and processes.
  • One professional services company which has adopted Agile Development assigns Senior Engineers as outside consultants on projects. These individuals bring a more experienced perspective, and can identify more efficient ways to find solutions and produce a more cost effective and timely result.

How Can You Best Reduce Costs? Six Points

Situation: A company wants to reduce their cost of engineering. They are considering outsource options, both domestic and overseas, as well as remote offices in lower cost regions domestically. How can you best reduce costs?

Advice from the CEOs:

  • An emphasis on cost may be misplaced. Consider instead of where you can offer the best value to your customers or clients. Focus on and compete in best part of your market – the place where you possess the strongest advantage; then worry about cost.
  • Outsource companies can be dangerous partners. Assume you only profit from the first job that you give them and that they may be your competitor the next time around.
  • We’ve learned from the last decade of experience in Asia that cost advantages are often temporary. Salaries for top talent in India and China now approach those in the US. This experience is likely to be repeated in Southeast Asia.
  • Focus on high dollar services and opportunities.
    • There are limitations to offshore talent – especially in complex, multi-step development projects. Keep high dollar projects in-house because they justify higher prices and margins.
    • When you outsource, negotiate retainer contracts with additional charges for work above and beyond the scope specified in the retainer.
  • What do you want to be? Consider your options:
    • Become a project management company and outsource development.
    • Be a development company and just look for cost effective sources of labor.
    • Start your own outsource company – a split-off staffed by your own employees – and feed them work.
  • Before you invest substantial time or money, do a test.