Category Archives: Strategy

How Do You Justify Differential Pricing for the Same Services? Three Approaches

Situation:  The CEO of a company struggles with differential pricing. They want to be fair to clients but realize that a one-price policy limits growth. What tiered pricing models work, and how are they rationalized? How do you justify differential pricing for the same service?

Advice from the CEOs:

  • Differential pricing by client demand. For high value services, you must have a compelling value proposition. Research comparative premium pricing for similar value propositions and set prices accordingly. For price sensitive clients offer two alternatives: senior staff services at one price or associate services under supervision for a lower price. Let the client choose between price and quality?
  • Differential pricing by market risk. Early stage clients want high service levels but may not be able to pay bills. This justifies a premium price, as you are not assured of collecting for services. The differential is a risk premium that covers non-payment risk. Well-established clients are less risky and support lower pricing due to a lower risk of non-payment and are assigned a lower risk premium.
  • Differential pricing for bundled vs. non- bundled services. If a client purchases individual services, then there is a set cost for each service. However, if a client wants to purchase a bundle of services, then it is reasonable to discount the bundle. You are not necessarily charging less for the bundle because you have now received additional business at a lower acquisition cost. Your “discount” reflects the savings that you have enjoyed in reduced marketing and sales cost.

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How Do You Boost Short-term Cash to Finance Growth? Three Approaches

Situation: The CEO of a company is seeing an upswing in work and backlog, but doesn’t have cash on hand to support the work. The bank won’t increase their credit line. How can they increase cash flow and better position themselves with the bank? How do you boost short-term cash flow to finance growth?

Advice from the CEOs:

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How do you Maintain Morale in the Face of Uncertainty? Four Guidelines

Situation: Industry is changing and the CEO must adapt both the structure and focus of her company. Adaptation will include a 10% layoff of staff not aligned with the new focus. It is critical that this adaptation be executed in a way that is not disruptive to the remaining employees. How do you maintain morale in the face of uncertainty?

Advice from the CEOs:

  • Ask for employee input as to industry trends and what possible directions for the company. Employees are closer to the customer than the CEO and have valuable insights. Gather input in small group meetings to prompt discussion and ideas. Make this a research talk. Leverage the “wisdom of the crowd”.
  • Research other industries that have undergone similar changes. What strategies did the most successful companies pursue? Could these work for you? When faced with protracted uncertainty, what did others do while waiting for market clarity?
  • Conduct the layoffs in one day. Monday is better than Friday. The benefit of a Monday layoff is that you will see everyone on Tuesday and the team can continue to address their concerns. Do it early in the day. Give final checks the day of the layoff. Provide instructions for filing for unemployment assistance via the Internet. Hold a company meeting for remaining staff immediately after the layoffs. Focus your message on the future and positioning the company for the future. Prepare a brief summary of your message. Distribute it as a take-away from the meeting.
  • Be prepared for a grieving process following the layoff. Consider utilizing an expert on grieving to overview the process. Following the company meeting, have key employees conduct smaller group meetings to lead discussions and allay fears about the layoff. Fully prep these individuals about the situation with written responses to likely questions.

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Are Your Employees Living the Company’s Values? Four Recommendations

Advice from the CEOs:

Situation: An important tenet of a company’s CEO is that all decisions are made consistent with company values. However, some of the managers are asking for guidance on how to do this. How have other CEOs encouraged managers to make decisions consistent with company values? Are your employees living the company’s values?

  • Create cross-functional teams to address initiatives, solve problems and develop new processes consistent with company values. This builds understanding other departments’ perspectives and awareness of the impact of decisions on the company as a whole. It builds awareness of company values and fights unhealthy competition between functions.
  • One company created an employee task force to encourage living company values. Their solution includes: reviewing the company’s values and revising how they are stated for easy learning; involving employees in discussions of company values and how they are applied in their departments; creating a cross-functional employee task force to address inter-departmental conflicts and to suggest solutions in line with company values; and expecting everyone to know the company’s values, and occasionally testing them on these.
  • Build a vision of what the company looks like as an expression of its values. Make living this vision part of the CEO’s role. Include living and demonstrating company values as a formal responsibility of managers. Reward initiatives that transform company values into company efforts. Regularly review and discuss with your mangers their execution of company values.
  • Create “SMART” objectives around implementation of company values. Hold individuals accountable for achieving their objectives.

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How do you Prioritize Multiple Priorities? Seven Suggestions

Situation: A new CEO has just been promoted from COO. During the transition, this individual is responsible both for past and new duties. There is an extensive list of company priorities. How should the CEO prioritize this action list? How do you prioritize multiple priorities?

Advice from the CEOs:

  • Focus on the Executive Committee first – the roles of your leadership team. This is the team that will both manage the organization and oversee the work that is being done.
  • Select your leadership team carefully – the team that will implement your agenda. They will help you make key choices and implement changes and programs. It is essential that this team present a united front as you roll out any changes.
  • As CEO, you are now accountable for the success of the company. Put issues on the table. Gather input and advice from your team. With their input, make your decision on how to move forward. Delegate responsibility and accountability. Rally the team around your decisions. Follow-up to assure that things are getting done.
  • Be focused. If you only had the resources to do three things, what would these be? What will bring the greatest both short and long-term value to the company?
  • Avoid micromanaging assigned responsibilities.
  • Bring in a consultant to assist you in implementing organizational changes that are necessary for the company – defining new roles and responsibilities and correcting behavior of team members that does not benefit the team.
  • As soon as possible, promote or hire someone to take on your old roles. You will have your hands full as CEO.

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How Do You Open a New Branch Office? – Five Analyses

Situation: A company plans to open their first branch office. There are considering several possible locations as well as the details that they should consider while opening in the new location. What are the most important considerations as they prepare? How do you open a new branch office?

Advice from the CEOs:

  • Perform a ROI analysis for the planned office. How will the ROI for the branch office differ from your primary office? Look for potential economies of scale in your business model. This may prompt a rethinking of how you generate your products or services.
  • Simultaneously, look at the potential costs per location and the level of business required to (1) break even and (2) to match/exceed home office return in the new location. As you consider different geographical locations, compare costs and potential contribution of each against the others’.
  • Decide whether you need to build full operations in your branch office, or whether you can use a distributed services model, working from a central hub that performs some operations that needn’t be replicated in the branch office as well as future branch offices.
  • Once these three analyses are completed, perform a make/buy analysis to determine whether you get a better return from setting up your own office or purchasing a local company in the new location, if one exists.
  • Lower risk by starting with a relatively low cost operation – essentially a satellite office with minimal staff. As the new office develops initial business, they can be supported by your home office operations. They will serve as local feet on the street to evaluate the true potential and local barriers to entry within the new market.

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How Do You Work with an Off-Shore Business Partner? Six Recommendations

Situation:  A company has an off-shore business partner. Primary concerns of the CEO involve team performance, process documentation and anticipating sales/marketing problems before they become issues. What have others found effective to monitor these areas? How do you work with an off-shore business partner?

Advice from the CEOs:

  • At the executive level, keep things simple – identifying the major goals and pieces of projects that are make or break.
  • Simplify the high level summary and assure that all aspects of the supporting activity are aligned with and support key project or company goals. Some members manage projects with reviews and updates during weekly or bi-weekly meetings.
  • The benefit of keeping it simple in your own mind is that you can always return to this simplicity when dealing with detail level queries from the partner. It keeps you grounded and on track.
  • One company uses project timelines that clearly show each of the teams where they fit into the project and how important it is for them to complete their portion of the project on time and to spec. Keep everything simple and direct.
  • Sales tracking and management are different from development projects. Monitor forecasts, pipeline, and achievement of metrics that track with the forecasts.
  • In working with an off-shore partner, organize your presentations so that the key points of emphasis are readily visible. Have back-up slides to show detailed aspects of particular projects or initiatives, and be prepared to cover the details if needed. This will help to build confidence between you and your business partner.

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How Do You Retain Key Staff During a Merger or Sale? Five Suggestions

Situation: A company has either a merger with another company or sale of the company pending. While most direct staff will be retained, roughly half of the indirect staff may be at risk. The CEO’s objective is twofold: to retain key indirect talent before and during transition and to do right by those who have made strong contributions to the company. How do you retain key staff during a merger or sale?

Advice from the CEOs:

  • One member dealt with this a few years ago. The company set up a retention fund for important but potentially impacted employees in advance of the anticipated transaction. The longer the employee stayed with the company through the transition, the larger the payout for which they were eligible. In the case of no transaction, the funds were to be returned to the company.
  • An alternate version of the above option is to use insurance to fund a retention package for a group of key employees. This package may or may not be required depending upon the transition.
  • For potentially impacted employees, consider a retention package that rewards them for staying long enough to train the purchaser in their areas of expertise.
  • Look at outplacement services as part of the package for employees. Let employees know that this is part of the package if they are not retained post-transaction.
  • Seek outside consultant expertise to assist in the design and administration of a retention package. To compliment this look at your own network, and seek the advice of others who are well-versed with the technical aspects of employee transition.

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Do You have a Disaster Recovery Plan? Four Recommendations

Situation: A CEO wants to be prepared in case of emergencies including water, fire, earthquake, and the possibility that owners or employees may have difficulty communicating or traveling to their offices for an extended period. What have others done to create an emergency response plan? Do you have a disaster recovery plan?

Advice of the CEOs:

  • One company developed a disaster recovery plan, including: a communication plan; employees taking notebook computers home in the evening; and data back-up and server restoration capabilities. The plan was relatively easy to build and is summarized in a 4-page document in the possession of each employee.
  • What have others done to address emergency preparedness? Answers included daily systems back-ups; if you use a web-based CRM, check whether they have a disaster recovery program; and assuring that there are sufficient cash reserves to manage through 30 days with no invoicing or collections.
  • Drafting a full emergency plan is essential. Start simply: look at the obvious risks in your location, for each risk that you identify, develop a backup or contingency strategy and put it in place, let the list of contingencies grow over time as you recognize additional risks, and start this exercise now!
  • Once you have a plan, drill the plan. Make sure that employees know what to do in a variety of emergencies so that they are prepared. This can build the confidence that your employees will be able to handle emergencies.

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How Do You Differentiate Your Offering? Five Critical Steps

Situation:  A company has had success with a few large clients but wants to expand their customer base for long-term growth. The challenge is that their offering competes in what is commonly regarded as a commodity market. How do they avoid being perceived as a commodity? How do you differentiate your offering?

Advice of the CEOs:

  • One company created differentiation by getting to know everyone in the business. They built long-term relationships, based on reputation and trust. They took the time to understand the needs of customers that they wanted to develop. As opportunities arose, they built relationships and asked questions to clearly define and align with client needs. While this takes time and patience, the objective is to be able to say “We know your business” – with credibility. Here are the steps that they took:
  • Study the businesses, sector, and customers that you wish to serve.
  • Leverage your success with large customers. Talk about how you helped subunits within these large customers. This makes a big customer seem more like a collection of small customers similar to your prospects and makes your experience relevant.
  • Let prospective customers know that you are hungry and will go the extra mile for their business.
  • Learn who currently serves your prospective clientele. Study these competitors, their strengths and weaknesses. Talk to their customers – learn what they love about competitors’ service, and what they would like to see changed. Find the holes in what others provide and fill these holes with a better offer.
  • Look for and encourage repeat business and references to new business.

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