Category Archives: Strategy

How Do Social Media Change Client Interactions? Six Ways

Situation: A company wants to upgrade its presence in social media to improve client interactions. Before engaging in this exercise, they are curious as to how others are successfully using social media as part of their overall marketing and client service strategies. From your experience, how do social media change client interactions?

Advice from the CEOs:

  • The Web and the emergence of social media have enabled a much broader range of communication and collaboration options with clients, vendors, and others in any marketplace. In contrast to classic “push marketing” the Web and social media enable interactive marketing tailored to the individual needs, likes and dislikes of individual customers.
  • One of the most important changes is the opportunity for customers to post feedback and opinions about a company’s products and services. In the new reality, if you don’t have a place where customers can post feedback – both positive and negative – they’ll find somewhere else to post it.
  • Web 2.0 is generally defined as interactive, dynamic web sites that get updated frequently. From a consumer standpoint we think of eBay and Amazon.com. However, this also includes web-enabled collaborations between company members or company and client, for example collaborative project management.
  • Using cameras and built-in microphones that now usually come built-in with new monitors and laptops you can communicate less expensively and with higher quality than with traditional telecommunications. Web-enabled team meetings are virtually the same as being in the same room.
  • Through your web site you can provide digital video content at different levels of sophistication to potential and, with password protection, verified customers.
  • An underutilized resource which is truly win-win is available through local colleges and universities that can provide state-of-the-art expertise in web enabled communications through student projects in internships.
  • Special thanks to Dean Lane of the Office of the CIO (http://www.oocio.com) for his insight and input to this discussion.

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How Do You Create a Family Charter? Four Guidelines

Situation: The spouse of a CEO works in the business but has conflicts with other employees. This creates personal tension for the CEO. The CEO wants to explore a different role for the spouse, and also wants to create more balance at home. The CEO believes that working with the spouse to create a simple family charter with common values, vision and mission will help the two of them to find common needs and goals both at work and at home. How do you create a family charter?

Advice from the CEOs:

  • As you build a family charter, consider both your individual and your common views. Once you have established common ground with your spouse, you can bring children into the process to reinforce values and share creation of the vision.
    • In preparation for this discussion, both you and your spouse should start by thinking about what you each want. Once you have done this, compare notes and look for commonalities where you agree on what is important. These commonalities will form the core of your shared values, vision and mission.
  • Have lunch with your spouse once a month, just the two of you. Why? Because you are telling your spouse that they take precedence over your second spouse – your job, and you are taking time and attention from work to spend time one-on-one with your spouse. Do this monthly, but not always on the same day – make it more spontaneous and special.
  • Reinforce your family charter with regular family or one-on-one meetings with your spouse and children.
  • When having a conversation, focus on listening and don’t try to “fix” things.

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What are the Keys to Successful Strategic Change? Six Foci

Situation: A company wants to execute a strategic shift in direction – taking it into a new business which will diversify its offering to customers. The CEO needs to assure that everyone is on-board to both speed the shift and minimize cost. What are the keys to successful strategic change?

Advice from the CEOs:

  • Be front and center with your vision. State the vision clearly, in terms that everyone will understand. Focus on the benefits of the change for the company and employees and be realistic about the challenges involved.
  • Be enthusiastic. This is critical to all change efforts. Be cheerleader as well as leader.
  • Plan ahead and begin to communicate well in advance of the anticipated change. Plant seeds and encourage the team to generate options or solutions. Give all levels of the organization the opportunity to become involved and participate in both design and implementation of the change.
  • Be consistent in messaging and support across the team. Don’t vacillate or promise what you can’t deliver. Employees will watch for the presence or absence of consistency. If it’s absent, they won’t join in.
  • Conduct scenario analyses. This enables you to try out different futures and implementation options.
    • Identify critical issues. Look at possible results – first consider the “most likely”, then “best” and “worst” possible outcomes. Considering best and worst generates new alternatives, and improves the perspective on the most likely outcome.
  • Conduct visioning exercises. Create a graphic vision of possible futures.
    • This increases group participation and sparks creativity.
    • It improves group function, thereby enhancing results.
    • Visual representation is more memorable than standard bullets and lists.
  • Special thanks to Jan Richards of J G Richards Consulting – jgrichardsresults.com – for her insight on this topic.

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How Do You Boost Shareholder Value and Liquidity? Five Ideas

Situation:  A company wants to create a liquidity event every 3-5 years. The objective is to increase shareholder value and also create opportunity for employees. How do you boost shareholder value and liquidity?

Advice from the CEOs:

  • What are the important considerations in evaluating different options?
    • Seek partners or investors with whom you have synergy and who will improve business prospects. There must be more than just their ability to provide cash.
    • What is the role of key management and employees post deal? For how long?
    • Are there timing aspects that help to maximize your own valuation? For example, if your business is cyclical, is there a time of the year when the financial picture is optimal?
    • As you evaluate alternative deals, evaluate the M&A fees around each option. Could these funds be used differently with greater impact on liquidity?
  • Technology spinoffs can increase liquidity while keeping the core company whole. Jack Stack describes this process in The Great Game of Business. This is also simpler and cleaner than many collaboration options.
  • Considering collaborating with or purchasing a complimentary company with an office in a desirable geography.
    • If an opportunity appears synergistic, dig to find the depth and value of the synergies.
    • Consider timing options. Are there prerequisites which will increase probability of success?
  • Roll-ups are doable but risky. It is hard to find examples that work. Challenges often come from of cultural issues and lack of compatibility.
  • Look at the experience of similar companies as benchmarks for what you might anticipate from various options.

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Do Balanced Scorecards Aid Decision-Making? Three Factors

Situation: A company is investigating Balanced Scorecards as a management tool.  They want to get the perspective of others who have used Balanced Scorecards on how these are used and where they are effective and ineffective. Do Balanced Scorecards aid decision-making?

Advice from the CEOs:

  • To make good decisions in times of uncertainty one needs readily available up-to-date information on the key drivers of the business. Balanced Scorecards answer four important questions:
    • How does the customer view us? (Customer metrics)
    • At what must we excel? (Key Performance Indicators and Internal Business Processes)
    • How do we continue to improve and create value? (Learning/Growth & HR metrics)
    • How do we look to our investors? (Financial metrics)
  • To effectively use Balanced Scorecards employees must be empowered to make necessary changes, and there must be an effective system for prioritizing efforts – so that when a company has multiple opportunities they can decide what to do first, second, and so on.
  • Empowering people to make a necessary change
    • To improve project estimating systems, identify those who are best at estimating project timelines and costs. Have them develop a template of their process, focusing on how they complete projects on schedule. Implement this template across your estimating function.
    • To improve project on-time completion, shift the development focus to calendar and, if necessary, narrow specs to hit the deadlines.
    • To focus scope of work issues, decide test procedures up-front then work on deliverables that will determine whether requirements have been met. From this, develop project assumptions and budgets. Create a template that focuses on internal best practices and clones these for other projects.
  • Queuing Systems & Priorities
    • Define the vision of success. Then drill down to what’s most important. Look at impact of different options on the organization and performance. Finally, force this issue – if we can only do three projects what will they be?

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What’s the Best Way to Develop a Partnership? Four Factors

Situation: A company has been approached by another company with complimentary technology concerning a partnership. The other company is young and rapidly growing, though at this time they are much smaller. The two companies are already collaborating on a project. There have been hints that this could develop into a merger. Under these circumstances, what’s the best way to develop a partnership?

Advice from the CEOs:

  • It’s always best to date and get to know the other party before exploring a deeper relationship. You are already collaborating with this company, so just continue on this path as you get to know them. See how the relationship and value of the partnership develops before exploring options that could result in loss of ownership and control.
  • Partnerships and moves beyond partnership are really about culture and values. Cultural fit is a huge question that is too often ignored when companies discuss partnerships and mergers. This requires more investigation than you’ve done to date. Wait until real challenges develop, and see how the two companies respond. Do they collaborate effectively to develop a solution or does the relationship become contentious. This will tell you whether a deeper relationship is worth exploring.
  • To be successful, relationships have to offer a win-win value that surpasses the cost of collaboration. There is always a cost to collaborating with another company if only in time and effort put into the relationship. Find a way to measure this cost so that you can compare it to the value received. The other company should be doing the same.
  • If you could buy the other company right now would you?
    • If you can’t tell the value of the company based on the information that you have, why would you consider a deeper relationship at this time?

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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.

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How Do You Eliminate a Them-Us Cultural Divide? Six Thoughts

Situation: A company acquired an office in a new geography at no cost – just a commitment to keep the office going. The immediate challenge is transferring the previous owner’s client base to the new owner’s service. The people in the distant location are OK, but it will take coaching for them to deliver the new owner’s level of service. However, these people are proud and resistant to change. How do you eliminate a them-us cultural divide?

Advice from the CEOs:

  • Involve the person who facilitated the acquisition in the integration process. Get his opinion of what is needed.
  • Your prime commitment is to the client base and past practices that built the client base. Maintain or surpass this level of service.  As long as the team meets this level of performance, they are serving your objectives.
    • You and the key manager of the newly acquired office should meet with their most important clients. Help the manager convert those clients for you.
  • Your other implied commitment is to the manager and employees that you inherited through this deal. Educate them on your approach – “we will do all that we can to create success for our clients.” Connect with the manager, understand how this person serves clients, and coach the individual.
  • Be fair – the fairest method of managing is a meritocracy.
  • Manage by results, not process – if the core values between the two sites are similar, allow for cultural differences in local practice.
  • If all this doesn’t work and you want for “them” to become “us” you will have to have someone from the home office move to the distant office and manage it.

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Which is Preferable C or S-Corp Status? Six Suggestions

Situation: A company’s accountant advises them to transition from a C Corporation to an S Corporation. Remaining a C Corp would force them into accrual accounting with significant tax consequences. The accountant also advises that it is easier to sell an S Corp to a buyer, and S Corp status would relieve problems with retained earnings. Which do you think is preferable, C or S Corp status?

Advice from the CEOs:

  • Accountants disagree. Get a second opinion. Also consult a tax or corporate lawyer who will provide another perspective.
  • Another company looked at S vs. C status and found two key factors:
    • S Corp status is great if you expect to lose money for a few years because of the benefit that it can offer to personal taxes. Over the long-term you should look at the difference between personal and corporate tax rates and set your strategy so that it makes the most sense.
    • An S Corp cannot have non-U.S. shareholders.
  • There is more flexibility with C Corp status in your ability to grant options, sell shares, etc. For a suitor, purchase of C Corp shares prior to a full acquisition is like a date before deciding on marriage.
  • C Corp status is good if you are building an empire. S Corp status is better if want to have employee ownership under an ESOP as an option for exit.
  • Since taxes are a significant part of this decision, think carefully before you shift from cash accounting.
    • Once you commit to accrual accounting you can’t go back to cash basis.
    • To the extent have an accrued tax liability you can extend payment of this liability over multiple years.
  • You also may want to consider a hybrid accounting method:
    • Accrual for sales
    • Cash for service
    • Look at whether there are tax advantages to a hybrid model.

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How Do You Reduce Risk in OEM Agreements? Four Guidelines

Situation: A company is introducing a new technology. They are evaluating an OEM licensing model. They have been advised that if they go forward independently they will be perceived as a threat by OEMs, and this may inhibit their ability to form key OEM partnerships. How do you reduce risk in OEM agreements?

Advice from the CEOs:

  • Consider moving forward with a mixed model – both seeking OEM relationships and also selling direct to the market. Because you will be actively entertaining OEM relationships the risk of threatening them will be reduced. In addition, this will help you convince OEMs that your market opportunity is real.
  • A purchaser of intellectual property (IP) will always try to go around your only offer is an IP license. They would rather own the IP than pay licensing fees. Therefore pursuing your own product applications makes sense to convince the market that you are more than just IP.
  • There is a risk to this strategy – being caught in the middle. You can end up seeking two clients, your own end users and the OEMs. They aren’t the same and don’t necessarily share common interests. Just be aware of this.
  • You must be able to succinctly explain your value proposition to client audiences, whether these are OEMS, end users or potential funding sources. In the case of the latter two, they also need to easily understand the critical value proposition to the end user, as well. This value proposition will be your 30 second elevator speech.

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