Situation: A CEO is concerned that her #2 is being challenged by others in the company. An option is to hire a technical project manager; someone who carries the CEO’s authority and who can get things done. What are the obstacles to achieving this? How do you boost company morale?
Advice from the CEOs:
The technical project manager must have a non-threatening role – they shouldn’t challenge the technical skills of the developers. The role is to oversee schedules, progress, and to resolve barriers – both technical and personal. The job is to get things back into shape.
While the business involves highly technical software, operationally it is people centered, not software centered. People centered means a team that collaborates and supports one-another. The important questions are:
Where do the needed people skills come from?
How do the model and reality transition to a people centered business?
Look for someone who can nurture talent. People skills are more important for this role than technical skills, with the caveat that individual must be able to understand technical challenges.
An option is a 3rd party within company to straighten this out.
“COO” Responsible for Technical Direction – title is important because it conveys respect.
The CEO’s voice and ears.
Run weekly meetings and is the go-to person when the CEO us traveling.
The focus is to manage the primadonnas and keep them focused on their jobs instead of on interpersonal conflicts.
This role focuses inwardly on company vs. the CEO who focuses outward on the broader vision, key stakeholders, etc.
The bottom line – this is your company, your vision. Make it work. The task is teaching maturity – learning to give rather than worrying about making a name for themselves.
Have regular lunches with each of the developers and have frank conversations with them. What’s up and what’s wrong? Listen and let them air their concerns. Talk them through these concerns, but make sure that they understand that the CEO sets the direction both for the company and the boundaries of acceptable and unacceptable behavior within the company.
Situation: A service company has developed the capacity to produce and sell a product. The CEO is considering two options for this new opportunity: create a separate entity for the new business or run the businesses in parallel under the current umbrella. How do you best exploit a new opportunity?
Advice from the CEOs:
Option 1: Create separate entity for the new business while the existing business continues in parallel.
How big is the potential win? The current company competes successfully for about 10% of the market. The new capability would allow the company to potentially compete for 100% of a larger market.
How different are the two opportunities? The current business requires specialized talent – it is a low volume, high margin business. The new opportunity is the reverse – high potential volume but lower margin. It is a more generic market with fewer specialized needs.
The separate entity option provides the most flexibility. The current model already functions well. A spin-off provides an additional option without losing what already exists.
Bring in another individual to develop and run the new entity. It’s a different game and requires a different focus. However, it will be a great opportunity for the right person.
The spin-off model will be more sustainable under separate management than under the current company.
Option 2: Operate both businesses under a single entity.
This option looks like a double compromise – it alters both the company’s current strengths and the fundamental business model.
A long-term alternative is to look for a financial acquisition for the current company. It produces good net margins, has good cash flow, a and spins off cash. This can be valuable to a financial buyer.
Situation: An early stage company has assembled an impressive team and has a solid service offering. The immediate challenge is bringing in clients to fuel growth. The team has the capacity but needs some creative ideas on where they should focus their efforts. How do you fuel early stage growth?
Advice from the CEOs:
Fully utilize the team’s talents. Team members with established expertise can offer clinics featuring the company’s service offering at local colleges, business organizations and other venues to target audiences. Think about business organizations with members who would benefit from the company’s services. Also reach out to venture capitalists and the entrepreneurial market.
Develop a strong value proposition:
Eyeballs on the market
Links to highly qualified resources
Demonstrated expertise in your space
Claims tied to the top priorities of target clients
For start-up and entrepreneur client targets:
Offer a packaged set of services for a fixed fee. Be open to creative payment options to fit the financial needs of entrepreneurs.
Start developing a full suite of services. Start by assessing the need and developing a target list of early clients. VC portfolio companies can be a great target.
Build a good web-based communications interface for client use. Think of what is needed to create an attractive menu and let this drive service development.
Develop a separate brand for ancillary services that will complement the current offering, but which is outside of the current offering. Look at markets which would benefit from the service, including medical and nursing providers.
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: The CEO of a business that has been in place for several generations is frustrated by the challenges of working with family members. Relatives are involved in top positions, but frequently place personal concerns above the priorities of the business. This leads to tense situations where other family members, not in the business, will intervene to support their close relatives without appreciating the conditions facing the business. Must a family business always be “family”?
Advice from the CEOs:
For the business to thrive, you must match skills and talent to available positions – not just the “best” family member fit for the position.
Understanding that it is difficult for one family member to communicate negative news to another family member, consider hiring a consultant or HR company to evaluate and be the go-between in determining best family fit, or family/non-family choices for open positions.
If the company involved unionized employees, and some family member employees are union members, this may complicate your choices. Seek outside non-union counsel to help you evaluate situations and navigate solutions.
Hire a professional facilitator to assist in running company planning meetings which involve family members. A facilitator can approach the situation from a neutral standpoint, and does not carry the personal history of brother-sister or close relationships within the company. Choose an individual with experience with family-owned companies who can build a company vision that goes beyond personal relationships and concerns. This individual can also help navigate the operational situations facing the company.
Look at both your organization and ownership structure versus applicable regulations and licensing requirements. This may present new alternatives for you to consider.
Situation: A company has built a very successful single site business, and wants to expand geographically. They are investigating where it makes sense to duplicate operations in new sites and where it makes sense to consolidate operations. The company’s secret sauce is in their system and procedures. How do you plan for business expansion?
Advice from the CEOs:
Look at the shared services piece and the cost/benefit tradeoffs. What services are best centralized, and what are the critical on-site services that you want duplicate in remote sites?
Other companies use remote offices for field personnel, but centralize all shared services. Centralized shared services include invoicing and collections, financial reporting, telemarketing, anything dealing with trade names and print or trade-marked collateral, and an array of other services which would be too expensive for individual sites to duplicate, or where leaving things to the individual sites might result in inconsistency of service and erosion of the brand.
How do you replicate key talent? Consider whether key talent can be retained in the shared services side of the business, not the cloneable service delivery sites. Typical franchise operations have people who are difficult to replace or replicate so most do not try to include these roles in the service delivery operations.
You will need to provide for a sales role in your remote offices as business development will be critical to early success of new sites.
In the transition from “successful small” to “successful large” most businesses find that the medium stage is the most difficult. Issues to consider include:
Does your direction match your expertise – do you have support of individuals knowledgeable about franchising?
What are the margin differentials within the business? Do you want to clone the high or low-margin areas of the business? Develop profitability models for your central and remote sites, and assure that the sites will have sufficient profitability to assure their short-term success. This will make it easier to proliferate the remote sites.
Situation: Start-ups and early-stage enterprises are typically both resource and talent constrained. The CEO of a start-up asks how others successfully outsourced infrastructure cost effectively and when they were early-stage so that they could focus on critical success factors and improve their opportunity to succeed. How do small companies outsource infrastructure?
Advice from the CEOs:
In the early stages of company development, outsource everything possible and focus our efforts only on the key functions.
In order to focus on the most important things first, decide what must be accomplished and when. Set priorities, establish key milestones and create a timeline to measure achievement. Celebrate your successes!
Identify the most important strategic foci within your business model and outsource everything else.
For example, use outside data centers instead of developing these yourself.
With the increase in Cloud-based options, early stage companies can do without the IT infrastructure that they used to need. Just be careful to safeguard your intellectual property!
Attend relevant meetings and functions to learn about existing and available capabilities. Look for local networking opportunities relevant to your market.
Incubator sites have developed in a number of high tech centers. These are designed to cover infrastructure needs at a reasonable cost so that founders can focus on product and service development.
Hire a virtual assistant – you can find these locally using a Google search.
Take advantage of lower cost labor and enlist younger, less experienced labor to manage databases and clean records.
Set up a wiki for information. This exchange is free and you can tailor it to your needs. It is permission-based; you can find it at pbwiki.com.
Situation: A company needs a strong pool of engineers in their market niche to stay ahead of the competition. Their niche is specialized with little transferability from other engineering specialties. They struggle to find local talent and relocation expenses are high. How have you recruited hard-to-find talent?
Advice from the CEOs:
If you want a mix of fresh and experienced talent and need to add 3 to 5 new engineers per year to keep up with growth and turnover, you will be hiring a new engineer every 2-3 months so you need a standardized, repeatable process that is ongoing. If you don’t have either in-house or reliable outsourced HR capabilities, you need to secure this as soon as possible.
Consider establishing a satellite office in a geographic area which has an available talent pool.
Look for areas with a top university engineering program in your field.
Look at your key competitors’ locations and see whether they are in areas with both the educational and industrial-technology base to be a candidate location.
As you develop a new geography, forge strong relationships with the university programs that can feed you the younger talent that you need. This is a win-win relationship, because universities are focused on their placement statistics and corporate support.
Get to know the professors in your specialty and explore establishing a center of study or excellence within the engineering programs.
One company works closely with Santa Clara University and developed a program that offers financial rewards for the best technical papers produced by students in their specialty. This has created a buzz around the company, helped to establish a study program in their specialty, and enables them to attract the best and brightest graduates.
As you establish a reputation for attracting the best younger talent, this can help you to attract seasoned talent that wants to work with the brightest young talent in the field.
Another option is to find 2-3 key experienced engineers who are willing to relocate for the opportunity to build a new team.
Interview with Anju Bajaj, CEO, Zuna Infotech, Inc.
Situation: The US economy is slowly trying to get back on its feet, but many potential obstacles remain. In the mid-west, there is good talent with deep enterprise-level IT experience, and lots of new young talent looking for positions. How can private business help to retool the workforce and boost employment?
Advice from Anju Bajaj:
Working in IT services to provide end-to-end technology solutions, we have found highly skilled talent in the American Midwest. In recent years, many seasoned IT professionals have lost their jobs as Midwestern companies downsized. These individuals have deep enterprise level IT skills, but may not be up to speed with the latest technologies. There are also many brilliant young people available who have good web-based technology skills, but no experience in legacy systems or the working of complex enterprises. Our focus is on cross-training both groups as they collaborate to build IT solutions for our customers.
We have found that by organizing these two groups into small teams, guided by a lead who knows both web-based and legacy systems, we can leverage their individual strengths to cross-train each other. It turns out that both sets of workers are smart, capable and, in live project settings, collaborate and acquire technical skills and domain knowledge relatively quickly.
The bigger and more subtle challenge is teaching younger workers about business processes. Each process must fit the workflow so that a process change in one area doesn’t produce difficulties in other areas. For this, you need to have people with deep expertise in functional and domain disciplines as well as technical experts. By teaming talent, we can produce functional experts who understand all areas. We have found that in three to six months of working together, about 25% of team members reach almost guru status; while the remaining 75% have become quite skilled.
Like most leading service providers, we at Zuna Infotech also build capability through our Centers of Excellence. We focus on developing practices within different industry verticals. With this comes knowledge and structure which we can then pass on through train-the-trainer programs.
We have been inspired by the desire to help keep US workers working while retooling their skills. The results that we’ve found to date have been very encouraging. We hope that this can provide a model for other companies.
Situation: A company wants to grow by acquiring companies in similar verticals that have different but complimentary offerings. The targets will most likely be boutique operations. How should they target and prospect candidates?
Advice from the CEOs:
Before you think about either targeting or prospecting an acquisition do your internal homework. Establish your strategic plan, including strategic capabilities that you want to develop. Look for synergies within your plan, and assure that any new capabilities complement these synergies.
Will current customers be interested in the new strategic capabilities, or will you have to build or buy access to new customer segments?
Determine the leveraging factors. How much incremental business can you expect to gain compared to current business? Look at both top and bottom line impact.
Do a build/buy analysis to determine whether the capability is more effectively built using your own resources or purchased.
Leverage both internal and external resources to develop a target list. Ask what current employees may be knowledgeable of potential candidates.
Use your industry network to identify and gather information about candidates.
Retain a firm to assist you in identifying candidates. They can approach candidates from a neutral position to assess interest in acquisition.
It is critical to negotiate a deal that retains key talent. Founders and key staff of the acquired company must see the combination as a means to facilitate and expand their own vision. In many successful acquisitions you will see the following traits.
The acquiring company did not change management, accounting methods, or operational procedures of the acquired company.
They acted as a bank to facilitate pursuit of the acquired company’s dreams and already successful strategies.
They took a “hands-off” approach with the acquired company and did not try to force cultural change.