Category Archives: Strategy

How Do You Respond to a New Large Competitor? Five Suggestions

Situation: A mid-sized company has learned that a much larger company is entering their geography and market niche. This company is known to enter new markets with a low pricing strategy to “buy” market share. How do you respond to significant new competition?

Advice from the CEOs:

  • Accept the fact that you will lose some business; particularly from customers who driven more by price than quality and service. The flip side is that these customers are likely not your best customers.
  • Research the reputation and business practices of the new entrant in their traditional territory. What is their reputation? What are their weaknesses? Do your homework by networking with their current competitors and customers.
  • Take a lesson from those who have survived a move by Walmart into their territory:
    • Boutiques survive Walmart – especially those that focus on personal service. Upgrade your customer base based on personal service.
    • Use your knowledge of the marketplace and your long term relationships to your advantage – including your reputation with existing customers when going after new customers.
    • You may remain more profitable than the larger company, on a per transaction basis, based on your knowledge of the territory or business niche.
  • Don’t assume that all large companies are Walmarts. Walmart has a unique set of talents and a tightly controlled process. This may not translate to other markets – especially those involving personalized service.
  • If you are a family business, consider promoting your “old world skill” and established reputation and expertise.

Key Words: Competition, Geography, Market Niche, Walmart, Price, Personal Service, Reputation, Contacts, Boutique, Profitability, Family Business

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When Do You Focus on the Plan and When Do You Adjust? Four Guidelines

Interview with Phil Bookman, CEO, Assistyx

Situation: The dynamics of an early-stage business require balance between focus and opportunity. The challenge is in the balancing act. When do you focus on the plan, and when do you adjust?

Advice from Phil Bookman:

  • Never allow your friends to become statistics. We call our customers our friends. Our most loyal and vocal friends were our early adopters and got us where we are today. They remain important participants in the conversation and are always in our focus.
  • Along the same lines, when using social media to communicate to your audience, remember that this is a face-to-face conversation. This is a key point of focus.
    • Remove as much friction from online interactions as you can. Make it as easy as possible for people visiting your web site to buy. This requires both live interactions with users and attention to detail. If a question keeps coming up, answer it; put the answer right up front on your web site where it cannot be missed.
    • We’ve made hundreds of tweaks, each tiny. Each has removed a point of friction. As the company grows it is easy to lose sight of these details. Never lose sight of details.
  • Much of what we face in business is transitory. It is important to stay nimble so that you don’t get stuck fighting the last skirmish. For example, in 2009, we found that a subscription service was difficult for institutional users like purchasing departments in schools to understand. It isn’t now.
  • You must be careful not to chase bright shiny objects – opportunities that take you outside your principal market competence. Would you try to modify a hammer to put in screws?
    • Our principal product TapToTalk is a communication device for kids with verbal challenges. Some have suggested that it could also be a teaching device. Possibly in the future there will be room in our plan for a teaching device, but we will address this as its own market and application when we are large enough to diversify.

You can contact Phil Bookman at pbookman@assistyx.com

Key Words: Early Stage Business, Focus, Opportunity, Balance, Adjust, Early Adopter, Social Media, Friction, Detail, Nimble

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How do you Adapt Behavior as you Shift Focus? Five Points

Interview with Adam Kleinberg, CEO, Traction

Situation: The Company is shifting focus from project-based to relationship-based client interactions –from a short to a long-term perspective. This is a challenge. How do you adapt employee behavior to a new strategic focus?

Advice:

  • Assume the best intentions.
    • Everyone wants to do a good job. The challenge is making sure everyone knows what constitutes a good job.
    • Be clear on objectives, and why they are important. Be clear on the new roles.
    • This is most difficult when the shift is counter to a well-established company culture.
  • You have to have the right people.
    • Avoid smart people with no role, or a role for which they are ill-suited.
    • The organization IS the people. There must be absolute commitment to assigning the right talent on any job, and the right people to the right team.
    • Players must fit in terms of skill set and culture. The company is who, not what!
  • Focus efforts and objectives on the long-term vs. the short-term.
    • Paint the end state – the vision. Add tangible steps to guide people to the right path.
    • Don’t micromanage. Set direction and initial moves, but let staff blaze the path.
    • Provide feedback and recognition.
    • Negative feedback is always difficult, but best when delivered directly and quickly.
    • Recognize success and contributions both 1-on-1 and in all-hands meetings.
  • We hired an experienced manager with a strong track record. Initially this created discomfort; however discomfort was quickly resolved as this person produced positive impact.
    • We cited the wins in all-hands meetings to support the shift.
  • Make people feel that their opinions are heard, and their solutions.
    • Be clear on objectives and rationale. Assure that your perspective as leader is grounded in a credible reality that you can communicate to the team.
    • Conduct workshops which focus on the practical steps that will produce the desired result.
    • Listen to feedback from team members, and include what you hear in the agenda for future discussions. Involve the team in developing the solution. Delegate and recognize!

You can contact Adam Kleinberg at adam@tractionco.com or Twitter at well@adamkleinberg

Key Words: Focus, Client Interaction, Behavior, Role, Objective, Rationale, Right People, Culture, Feedback, Recognition, Workshop, Involvement

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What Are The Key Factors to Negotiating an IP Acquisition? Six Considerations

Situation:  The Company is interested in acquiring either the intellectual property (IP) of another company or the company itself. The target is a minor division of a larger parent company. The CEO contacted the parent and confirmed their interest in a deal. What are the key factors to negotiating an IP acquisition?

Advice from the CEOs:

  • You need to assure your rights to both current IP and future enhancements. This applies whether you or the parent is the final holder of the IP.
    • Look for clear language as to what constitutes base IP, derivative IP and extensions of the IP. You want to preserve your interest in future derivatives and extensions that you create.
  • There is a material difference between your position and the parent’s.
    • If the parent retains the IP, they also gain certain rights to IP extensions based on the current IP. If you own the IP, their potential rights to future IP are lost.
    • If the parent feels that the IP has strategic value – whether or not they are currently taking advantage of it – this will be one of the more difficult aspects to the negotiation.
  • What options are there besides acquiring the company?
    • The parent can grant a fully paid license to the technology, with access to the people and assets, waiving residual rights to future IP extensions, and no restrictions on transfer.
    • Another option could be a one-time royalty fee that is a perpetual license.
  • Within your due diligence, try to get a sense of the parent’s motivations and concerns for entertaining your interest in the acquisition. This will help you to frame a deal that works for both parties.
  • If the parent has been an active licensor or seller of IP, look for lawyers who know the company. Try to secure one of these as counsel for your negotiation.
  • From a liability standpoint, it is better to buy or license the IP and technology than the company. Liability travels with the company. Part of your negotiation will be who inherits any carry-over liability.

Key Words: Intellectual Property, IP, Acquisition, Rights, Enhancement, Derivative, Negotiation, License, Royalty, Legal Counsel, Liability

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How Do You Maintain The Focus to Stick With Your Plan? Five Suggestions

Situation: The Company has both an annual and a 5-year plan. These are discussed in both company meetings and in 1-on-1s with managers. The CEO fears that he’s starting to sound like a broken record. How do you maintain the focus to stick with your plan?

Advice from the CEOs:

  • Break the 1-year plan into quarterly objectives. Don’t just divide annual objectives by four. Vary objectives for each quarter so that the total sums to the annual plan.
  • Divide your broad plan into a series of milestones. Celebrate the achievement of each milestone. This helps to maintain momentum and keeps everyone engaged.
  • Establish metrics to assess your progress against the plan. These will enable you to evaluate progress against plan and the degree to which you are above or below plan. It will also help you to evaluate whether underperformance is a matter of externalities or a flaw in the plan itself. If there is a flaw, fix it as soon as you find it.
  • Evaluate your “worst case” scenario so that you know the implications. This enables you to compare current performance against “worst case.”
  • In his book “Good to Great,” Jim Collins found that an important difference between G2G and non-G2G companies was the ability of the G2G companies to maintain faith and to slowly build momentum regardless of the apparent obstacles faced. This allowed good companies to establish the momentum that eventually made them great. Non-G2G companies continually changed direction and never built sustainable momentum.

Key Words: Plan, Annual, Long-Term, Objectives, Milestones, Celebrate, Momentum, Engaged, Underperformance, Worst Case, Good to Great

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How Do You Reset Pricing When The Game Changes? Five Parameters

Situation: The Company sells customized products and pricing has been per product/per customer. A large client has proposed to purchase product rights across a number of products and uses. The technology is early in its expected 5-year life span. How should the Company set pricing to this customer?

Advice from the CEOs:

  • Start with a series of questions:
    • What is the value of your technology to the customer?
    • How much competition do you face?
    • What other solutions are available to the customer?
  • Based on this framework, ask contacts within the customer company open-ended questions that will reveal what is important to them including:
    • Licensing objectives,
    • Planned use of the technology, and
    • Any protections that they seek.
    • You need to understand these before you can make decisions on pricing.
  • There are several pricing scenarios:
    • Set up a scale with a declining pricing driven by volume.
    • A large lump sum payment now, non-transferable if the customer is acquired by another company.
    • A large annual fee to cover a preset number of uses and volumes, with small increments for additional purchases.
    • The final arrangement will depend on the priorities of the customer.
  • Find out what the customer is willing to pay, but you set the terms.
  • Ask what guarantees they desire to protect their position. This includes:
    • The customer’s key risk factors.
    • Whether they want exclusive or usage rights. Exclusive is worth more.

Key Words: Pricing, Custom, Technology, Life-span, Value, Competition, Licensing, Objectives, Protection, Scenario, Scale, Lump-sum, Annual Fee, Guarantee, Exclusive, Usage  [like]

How Do You Respond to Pressure to Cut Prices? Six Guidelines

Situation: One client represents a majority of a company’s revenue. They have multiple contracts with this client. A new purchasing agent is on a mission to reduce purchasing costs, and claims that other suppliers cost less. What’s the best response?

Advice from the CEOs:

  • Spend time with your true client – the employees and managers who have chosen your product. These people stand to gain the most from an ongoing relationship with you and may be able to reduce the pressure from purchasing.
  • Assemble testimonials and metrics from the client to show that you produce a better result at lower cost than they can get from other suppliers.
  • Simultaneously, reduce your overhead so that if you must cut prices to retain the business, you can afford it.
  • If you must cut prices, you have other options:
    • Reduce the cost of resources producing the product and service. Let your client contacts know that you are being forced to do this. This may prompt them to argue that they need more senior experience from your team at the higher rate.
    • Offer lower prices in exchange for higher volume and longer term purchasing commitments. This can lock out the competition by reducing the frequency of contract renewals.
  • Remember that the job of the purchasing agent is to reduce costs. The agent who is hounding you is hounding other suppliers as well. If they can negotiate savings from 30% of the suppliers, it’s a big win. Get your ducks in line so that you aren’t in that 30%.

Key Words: Purchasing, Contract, Purchasing Agent, Cost, Client, Customer, Metrics, Cutting Prices, Purchase Commitment  [like]

Can You Increase Value in Social Network Discussions? Four Thoughts

Interview with Kenneth Vogt, CEO, Crooner Labs, Inc.

Situation: Individuals participate in social networking sites for several reasons – to network, to promote their businesses, products or services, and to gain insight through crowd sourcing. For these audiences, what are the best ways to increase the value in your discussions?

Advice:

  • Encourage participants to move from a short-term to a medium-term focus. Short term focus is about lead generation, immediate results and “Buy, Buy, Buy Now.” Think of the man in the flashy sports coat selling cars on late night television. It may generate a “sale” but with low engagement and commitment. If focus you instead on engagement, you start to build growth which is more sustainable – which will stay alive with more momentum.
  • Clarify your objectives. Are you interested in sales or influence today, or this quarter? How much effort do you want to put into it and what payback do you seek?
  • Be patient. Take the time to develop quality content. This time is an investment which pays back both medium and long-term.
  • Stop treating people as though they are stupid and can be manipulated into buying from you. There is a karmic cost to this approach. Look instead at the potential benefit that you can provide that will attract people to your content. Think in terms of reciprocity – give first and let others decide how they will respond.
  • Some time ago I tried an experiment. I proposed a simple question: “What do you want?” I asked the question three times, each time with a different thought in mind – first annoyance, then confusion, and finally empathy. But rather than speak the questions, I sent them via instant message one after the other. The words on the page were exactly the same each time, “What do you want?” Yet without tone of voice, expression or body language, the receivers could instantly tell me what I was thinking in each case. The same works in social networking. People can read where you are coming from based on how you position your content. So if you want to increase the value of what you have to say or offer, offer it openly and invite your audience to respond.

You can contact Kenneth Vogt at kvogt@croonerlabs.com

Key Words: Social Network, Discussion, Focus, Objectives, Value  [like]

How do you Maintain Focus on your Core while Expanding? Six Considerations

Interview with Clark Avery, President & CEO, Aesyntix Health

Situation: We’ve established a strong core business and it is time to diversity. Our principal growth opportunity is complimentary to but a different business model from our core. What are best practices for maintaining focus on core business while developing a new opportunity?

Advice:

  • First and foremost, be emotionally and strategically ready to make the bet and commit to action.  In doing so you must “know thyself.” Specifically, taking a long look to determine whether you tend to overanalyze or are too quick to pull the trigger. Understanding your tendencies will help in the steps below.
  • Establish the prerequisites for pulling the trigger. For us we had to determine the:
    • Level of operating stability for the core business that will allow you to split focus.
    • Level of financial stability and predictability that will support both core and expansion efforts.
    • Level of organizational and process stability that will allow you to take on the new opportunity.
  • Understand and define the differences between the old game and the new game.
    • What are the financials of the growth opportunity? How do they differ from your core business? Are there conflicts that must be resolved?
    • Can you launch an innovative solution to differentiate the new offering?
  • Gather enough understanding of market need that you will satisfy with the new opportunity so as to be able to address it effectively.
  • Establish a sound execution strategy and timeframe for launching the new business.
    • Some/many of your decisions will be wrong. You need the resources to tolerate a learning curve while running fast towards your goal.
  • Draft a leadership development plan of both the core and new business before you start. This plan must define the skill sets and growth needs of each business.

You can contact Clark Avery at cavery@aesyntix.com

Key Words: Diversify, Opportunity, Focus, Stability, Market Needs, Execution, Leadership Development   [like]

How Do You Communicate Your Solution to Potential Clients? Eight Recommendations

Interview with Eric Bauswell, President, SurfaceInk

Situation: For a domestic engineering solutions company, one of the challenges is engaging potential customers with the idea that a domestic solution can cost-effectively meet their needs. If you can combine a manufacturing solution to the service solution, this helps. What have you done to effectively communicate your solution to potential clients?

Advice:

  • Know your clients. Clients have expertise of their own. However, they may lack expertise in all the disciplines necessary to create a full product. How will you fill the gap?
  • Know your strengths.
    • Design is an iterative development process. If you increase process efficiency you can complete more process cycles in a given timeframe, advancing to final product more quickly.
    • Identify your key differentiators. Target clients for whom your differentiator is a critical need. For example, we do not encourage all of our clients to manufacture overseas, but if they insist and lack experience managing overseas vendors, we can handle this for them.
    • Consistency of personnel across the life of a project is important, particularly the core team.
    • “Invention & Innovation” require a plan to mitigate the risk they represent.  Develop the design along parallel paths, stage higher risk components or pieces of the design that represent critical path inventions such that they are proven prior to moving forward, or even take that feature out of the current design in order to develop it to a production ready solution for the next product on the client roadmap.  Sometimes an invention or innovation is THE reason for the new product.  In these cases the key is managing the client’s expectations regarding the significantly elevated risks that come with invention and proceeding with the understanding that the phase gates and even the production dates will slide according to the progress against developing that critical path invention or innovation.
    • Expertise in material selection and understanding what can be done with materials in the manufacturing process is non-trivial, as is vendor qualification, particularly with new materials.
  • Know your competitors. How do they handle similar challenges to those that you face?
  • Know your vendors. “Right-sizing” your contract manufacturer to your client’s product is important. Things will go wrong, and you must assure that the contract manufacturer will give you the priority to get things back on track to meet your launch date.

You can contact Eric Bauswell at bauswell@surfaceink.com

Key Words: Engineering Services, Domestic, Outsource Partner, Strengths, Differentiators, Materials, Prototype, Parallel Path, Vendor Selection

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