Category Archives: Strategy

How Do You Negotiate Milestone Contracts? Three Suggestions

Situation:  A company’s contracts are based on milestones versus time and materials. This is common for their industry.  However, end products are poorly defined at project outset and product requirements frequently evolve and change, making milestones squishy. How do you negotiate milestone contracts and payment schedules?

Advice from the CEOs:

  • In addition to payment schedule, there are four elements to a project negotiation – specifications, schedule, project flow, and budget. Tell the client that to hit their budget target, they need to give you control of any two of the other three factors. This means that if they want to specify budget and schedule, then they have to yield you control of the specs and project flow. Any change to these means that they have to be willing to change budget and/or delivery date. Finally, to keep the project going on a timely basis, they must make milestone payments on time and on schedule.
  • Try to transform the project, as much as possible, to time and materials. Here’s your talk line:
    • To give you 100 hours of effort on a fixed bid basis, we have to budget 110. Time and materials, in the long run is less expensive because you only pay for what we need to deliver your product.
    • Your credibility to deliver on a time and materials basis will be based on past performance and the relationships that you have developed with your clients.
  • Milestone contracts are especially difficult in low margin industries because of project variability. One solution is to bid 130 hours cost for 100 hours work. The challenge is that this looks uncompetitive, especially compared with offshore resources. Therefore, an option is to develop offshore capability so that you can deliver your projects using a variety of resources with variable costs. Price everything based on domestic prices, but use offshore resources to improve your margins and your ability to cover project overruns without killing your profits.

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What’s the Best Way to Sell a Domain Name? Five Suggestions

Situation: A company has a domain name that they no longer use. They have been approached by a domain reseller that wants rights to sell the name for a percentage of the sale price. The reseller is talking big money for the name. What are the best options for selling a domain name?

Advice from the CEOs:

  • The offer may look interesting, but you want to compare it with other options. These include Godaddy.com or buydomains.com. Compare both the price for selling the name and the estimates of what the domain name is worth. Look at how each would market the name, and their record for selling names. Compare their responses with the offer from the reseller that contacted you.
  • Get an appraisal on the name. Valuate.com offers a free tool to appraise a domain name, or you can look at GoDaddy for assistance in valuing your domain name under their Support section.
  • Have a contract attorney look at the reseller’s contract for hidden traps.
  • Get references from this reseller and check them out before signing anything.
  • If you move forward, make sure that you choose the escrow company. One CEO recommends Escrow.com for domain name sales.

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How Do You Attract Interns from Top Schools? Six Guidelines

Situation: A company has hired interns in the past and wants to upgrade their intern program to attract more interns from top schools. How do you attract interns from top schools?

Advice from the CEOs:

  • Top schools want to build lasting relationships with the companies to whom they send interns. In addition, the ability of top schools to attract top students increasingly relies on the placement rate of the school, so this can be a win-win proposition for both company and school. Take the time to cultivate this relationship and let the school’s representatives know your intentions. Get to know the top professors in programs from which you wish to recruit interns.
  • Provide a high quality internship experience. Treat interns as though they were normal employees during internships. Give them a job, objectives and tell them that you will evaluate you as though they were FTEs. They will feel more like members of the team and will have a higher quality internship experience. They will likely tell their placement office and other students about their experience. Interns should understand that if all goes well, the company MAY have a job for them; no job is guaranteed.
  • If you want more applicants from top schools then view your internship program as an investment. Look at it as a recruiting tool, not as an expense.
  • Pay for interns may not be same as FTEs – frequently interns are paid less, and don’t get the same benefits as FTEs. Before you make an offer or hire, call the school from which the potential intern comes and check out the candidate’s representations as to expected salary, etc.
  • Hire more than one intern and compare their performance against each other.
  • The CEO of a technology company has hired many engineer interns. Many of these were subsequently hired as employees. Overall their success has been good, but not fantastic. Similar to a new employee, it takes time for an intern to get up to speed.

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What are Best Ways to Boost Cash Flow? Five Guidelines

Situation: A company is frequently short of cash at payroll time. It has good revenue and profitability, but timing of receipts can make it difficult to meet payroll. Are the CEO and CFO doing something wrong, and what changes should they look at to better manage cash flow needs? What are best ways to boost cash flow?

  • All financing begins with your cash flow pattern! Your ability to manage cash flow is the foundation of credit worthiness. It is both a reflection of past performance and specific future performance expectations.
    • What can you do to optimize your situation?
      • First – put your own house in order!
      • Review your business model and the aspects of the business model that are causing cash flow challenges. Based on what you find, fine-tune your business model and its cash flow capacity. If receipts are the challenge, work with your customers to focus on timely payments.
      • Understand your financing needs in their full context. What short-term financing options are available? Will your bank offer you better terms on your line of credit to keep your business.
    • Stop, think and analyze before you act.
      • Framing:  View the problem in its full context!
      • Alternatives:  Consider all relevant choices!
      • Trade-offs:  Get more than you are giving up!
  • It is important to fine tune your business model, not just in slack times when you have the time, but also in good times so that you are well-prepared for the next slack period.
  • When times are flush, set aside funds to invest in analysis of your business model.
  • Special thanks and in memory of Eric Helfert, PhD for his advice in this discussion.

How Do You Set Limits on Demand for your Time? Eight Tactics

Situation: A company’s CEO wants to segue from rainmaker-project manager to leader, with others taking the lead on projects. He has tried raising prices on his time, but clients are willing to pay the higher price so this hasn’t worked. How does the CEO set boundaries so that he is not involved in day-to-day project management?

Advice from the CEOs:

  • The most important question is: where’s the real battle – is it in the client’s or your own head? Is this really a client problem, or are you unwilling to let go? You need to answer this question before alternate strategies will work.
  • Look for the right project managers. You will change your hiring when the goal is for you to not be deeply involved.
  • Hire people who are better than you.
  • Gradually phase existing relationships to others.
  • In early work with a new client, set expectations so that your involvement is at the appropriate level and your team handles the heavy lifting.
  • Instead of attending meetings in person, use electronics – video conferencing. This saves the travel time for the meeting.
  • Don’t respond to client emails too quickly when you are copied – let others respond.
  • As one company grew, they invented new roles with high profiles but little work. These roles were figureheads for project leadership.
    • Project emails were set up so that all client emails went to the team, as well as the CEO, but the team would then respond to client questions.
    • Over time, the CEO was able to “just say no.”

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How Do You Manage Change? Four Perspectives

A company is experiencing change in both organizational complexity and culture as it grows. Employees feel that the company doesn’t have the same team atmosphere that it had when it was smaller. How do you manage change associated with growth and new opportunities?

Advice from the CEOs:

  • Change is an inevitable part of growth. Employees need to understand this simple fact. Change is tied to: age and stage of growth, changes in leadership, performance challenges, changes in customers and competition, and changes in the working environment. For example, the simple addition of Millennials to the employee pool will change the nature of a company.
  • What else do we know about change? That it is: an opportunity, filled with uncertainty, complex and disruptive.
  • Typical responses to change from staff are: denial, resistance, anger, fear, confusion, being divided about the impact of change, and chaos. It is important to understand this and to communicate to employees that their reactions are normal. They will also get over these reactions as they adapt to new conditions.
  • Denison Consulting has developed a model that represents four factors – Mission, Consistency, Involvement and Adaptability – with measures under each factor. The model provides a visual representation of how the organization currently measures up in each of the twelve factors, and provides a clear and understandable map of where the organization needs to focus to make the changes required to survive and thrive.
  • Special thanks to Paul Wright of Denison Consulting for his input to this discussion.

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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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