How Do You Manage a Company Outside of Your Expertise? Three Foci

Situation: The CEO came into a company as a engineering consultant. Three years later the Board asked him to take on the CEO role. This created a credibility issue with staff because the CEO is a duck out of water, though a duck with better business sense than most others within the company. How do you manage a company outside of your technical expertise?

Advice from the CEOs:

  • The staff credibility issue may just be one of self-confidence. You have already demonstrated competence in revising company processes and improving profitability. In fact, your non-industry perspective may have contributed to your success to date.
  • Near term, in what areas should you focus?
    • Focus on building bridges which will give you more leverage to address key barriers, particularly within the more entrenched groups in the company.
    • Look at how the company communicates and exchanges information with clients. One thing that customers want is more self-service options and access to data. You have the opportunity to develop Web 2.0 capabilities which will to set the company apart in what is historically a very conservative and paper-oriented client culture.
    • These actions will help you to increase your credibility as an effective leader and CEO.
  • Longer term, what should be the plan?
    • Keep the ship running smoothly. This by itself will help to build appreciation for your talents.
    • Use any free time to create business plans of your vision for the future. Share these interactively with key staff members and incorporate their input into the plan. Involve them in disseminating the plan within the company.
    • As you develop your vision and plan, look for opportunities to attribute success to others. This will be a breath of fresh air to staff and will strengthen the bridges that you have worked to build. They will start to see you as a key ally who shares credit instead of hoarding it.

[like]

How Do You Reach High-end Users? Three Thoughts

Situation: A company has developed a disrupting technology that will allow OEMs to produce high-end circuits at a fraction of their current cost. A non-exclusive OEM partner is using this technology but doesn’t have a channel to high-end users, and the company is too small to reach these customers themselves.  How do you reach high-end users?

Advice from the CEOs:

  • Your dilemma is having a disrupting technology in a market with a strong division between OEMs servicing the low/medium-end market and those servicing the high-end market.
    • Your technology collapses the division between the low/medium and the high-end markets and OEMs and proposes a full-scale technical shift.
    • This shift disrupts the current business models of either group of OEMs, as well as their technology development plans. This is why you are finding resistance.
  • Therefore, you need a channel partner that is either:
    • A low/medium-end OEM who is just as much a disrupter as you are – highly promising but not yet well-established – and who is capability of developing a high-end sales and marketing effort; or
    • A high-end OEM that knows the market but is collapsing under their current strategy and needs an entirely different solution to revive their prospects.
  • Your near-term task is to simply gain market capability – both manufacturing and marketing/sales – and to use this capability to gain early market acceptance.
    • Your investors want to see early “Blue Chip” partners, but given market realities, this may not be the wisest strategy.
    • If, over the next 12 months, you can begin to impact the market shares of the high-end OEMs, this is the surest way to gain their attention. Once you start to gain share, a likely outcome is that one of the high-end OEMs will buy you to lock up your IP.
    • Another company recently used a similar strategy entering a new market by collaborating with a high-visibility partner.
      • In one year, they took 30% market share from the market leader.
      • The next year the market leader bought them because “it was less expensive to buy you than to spend the marketing dollars that we would have had to spend to compete against you.”

 

[like]

 

How Do You Manage Communications Post-Riff? Three Thoughts

Situation: A company missed production milestones and had to reduce top and line staff by 20% to keep salaries in line with expected revenue.  An executive who was very angry about being let go has asked the CEO to meet him for lunch. How do you manage communications with employees post-riff?

Advice from the CEOs:

  • If you haven’t already, call a company meeting to explain the situation, as well as the rationale for the riff. The company has to manage itself financially in line with current and expected future revenue to assure that it can take care of employees. Explain the connection between production milestones, revenue, and the company’s ability to afford staff. Employees generally understand these connections and will accept this well.
  • When you have lunch with the executive, first listen to what he has to say.
    • Anger expressed in an exit interview is part of a natural emotional response to difficult news or change. Listen for signs of ongoing anger or progress toward acceptance of the situation.
    • If the individual threatens the company or tries to bargain the severance package, don’t negotiate.
    • However, if the individual is reasonable and asks for assistance in finding a next position – references, introductions, etc. – then offer to assist as you can.
  • Should the CEO make an attempt to follow-up with others who were riffed?
    • No. If they contact you, then respond in a similar fashion as you are to the VP, but otherwise don’t try to contact them.
    • In the Silicon Valley economy, people are familiar that employment situations change and know that as this happens they can be affected.

[like]

How Do You Satisfy a Difficult Foreign Customer? Three Factors

Situation: A company has a long-term relationship with a Japanese distributor that is also an investor in the company. Due to time zone differences and language difficulties, communications are very difficult. This leads to significant cost overruns for the company. How do you satisfy a difficult foreign customer?

Advice from the CEOs:

  • In working with a difficult partner, it is critical to set expectations, establish ground rules and repeat these at the beginning of each conversation or teleconference until it is clear that both sides understand each other. Even at this point, these should be repeated and reinforced any time a new individual is participating in the conversation.
    • Do you want us to give you (a) our honest answer, or (b) do you want us to tell you what we think you want to hear? – They would be foolish to choose (b).
    • Preface each critical response with this choice to reinforce the agreement at the beginning of the meeting.
  • In a situation where you are losing money under a fixed price contract, you may have to have a “Come to Jesus” meeting. During this conversation, you want to understand and establish:
    • Whether this relationship is profitable for both of us, and
    • Whether this project is doable by each of us.
    • Usually this will result in a radical shift in the model.
    • If it does not they it is better for both if you part ways. You are unlikely to reconcile the situation.
  • The bottom line is to establish, mutually, whether you can satisfy your partner through your efforts. This is critical to your future with this customer.
    • If you cannot find an acceptable solution you must abandon the effort.
    • It makes no sense to take on business that is not profitable to you, even if the revenue is important to plan achievement.
    • At the current rate, you will not make up the loss in profitability through additional volume.

[like]

What Are The Best Ways to Create a Presence in China? Six Suggestions

Situation: A company’s major customers are expanding their manufacturing in China. They want the company to be able to service their Chinese locations. If you don’t already have a presence in China, what are the best ways to create a presence in China? In addition, how do you get the cash produced by these operations out of China?

Advice from the CEOs:

  • Increasingly, multinational businesses with operations in China seek vendors who can seamlessly handle all of their domestic and international needs. In China, the objective is to be able to translate service output into English so that US managers can monitor the output and assure that Chinese operations are meeting the same or similar basic standards as their domestic and other foreign operations. If your company can’t do this large contracts are at risk.
  • Look for local partners, including partners located in Hong Kong or Japan who can deliver service in China to your standards. You want partners who you can risk-manage.
  • It is interesting to look at the Japanese approach to China. Japanese concerns known to CEOs around the table only transfer highly developed, late stage manufacturing projects to China.
  • As you look at partners who have capabilities in China there are a number of qualities that you want to investigate:
    • Competence and honesty.
    • Loyalty – a partner who will stick with your company and not just take the new knowledge and start to compete with you.
    • Absence of graft and record of compliance with the Foreign Corrupt Practices regulations.
  • If you work with Chinese partners, work with two of them. Do not give them exclusive agreements, and do not tell them about one-another. This is critical to protecting any IP that you will be using in China.
  • We’ve learned over the past year that taking cash from your Chinese operations out of China is difficult. The Chinese government imposes heavy fees and levies on companies exporting earned capital because they want this capital to remain in China. Given this, you must ask yourself whether this is important to you. [like]

Can You Do Business With Competing Companies? Three Guidelines

Situation: A company has received RFPs from two companies who regularly do business with each other, but who are also competitors. The projects specified by the two RFPs might compete with each other. Under the terms of the two RFPs, the company can not disclose the existence of either RFP to the other company.  Can you do business with competing companies, and how do you protect the company if you do?

Advice from the CEOs:

  • The principal concern for the Company will be assuring that there is no violation of the CDAs that you have with each company.
    • Assign the RFPs to two different groups within the Company, with strict instructions that they must maintain their respective client’s confidentiality both internally and externally.
    • Emphasize the importance of confidentiality in responding to the RFPs to the Project Manager responsible for responding to each RFP.
  • Respond to both RFPs, but do so such that if both projects are contracted you can disclose this to both companies.
  • Prepare a set of talking points – the same talking points – to both companies and disclose the situation to both immediately after the project has been contracted.
    • Let them know what happened, share the timeline, share your obligations under your CDAs with both companies, let them know what you did internally to preserve their confidentiality, and that as soon as you were able – i.e., as soon as both projects was contracted – you informed them of the situation.
  • Companies commonly get involved in similar situations. The beauty is that you get business under either scenario. The challenge is that you must take all steps necessary to assure that the interests of both potential customers are preserved.
  • If you can successfully demonstrate to both companies that you have acted in an honorable fashion, they are more likely to trust you to do the same in the future.

[like]

What Should You Ask When Evaluating New Opportunities? Five Foci

Situation: A CEO recently sold his company and is evaluating new opportunities. What are the most important questions you should ask when evaluating new opportunities?

Advice from the CEOs:

  • Perhaps the most important thing to evaluate is your passion for the choice that you select. As you evaluate options look closely at the business involved and your enthusiasm for that business. In addition, how does the company feel to you? Does the staff and culture reflect your values? Are you comfortable with the sense of teamwork and collaboration that you see?
  • Doing a cost/benefit analysis on each opportunities, with a focus on:
    • Financial stream – financial prospects for the company as well as the financial package and incentives that you are being offered. In the case of an early stage company, what are their prospects for obtaining financing? If you will be an investor, what is the investment required on your part and what it will cost to support family until you can replace your recent salary?
    • Personal enthusiasm and satisfaction associated with each option.
    • Consult several trusted advisors throughout your selection process
  • Any new CEO assignment requires considerable work and focus, especially in the early phases. Anticipate long hours. The more that you feel compatible with the company and culture, the easier this will be.
  • Look for an appropriate balance between your personal and career priorities, and the financial opportunity offered by each option. If there is an imbalance, you will have to determine which – financial or personal priorities – you want to give the greatest weight.
  • In addition to personal, career and financial priorities, determine the most important factors that you want in your lifestyle. As you evaluate options, assess the match that each option offers to your results.

[like]

How Do You Evaluate A New Business Opportunity? Six Questions

Situation: A company has been presented with a new business opportunity. The opportunity is compatible with the company’s current business, but also involves skills and markets with which the company is not familiar. How do you evaluate a new business opportunity?

Advice from the CEOs:

  • There are at least four critical questions to assess as you evaluate any new businesses opportunity:
    • What is the total available market, and what is the immediately convertible market for the product or service?
    • Can you acquire expertise in the new markets that this will open to you?
    • Do you have a track record starting and nurturing new business within your company?
    • Is there sufficient seed money available – through company funds or outside investment – to keep the effort going for at least a couple of years as you develop the core team that will operate this business and gain traction?
  • If there is an offer of outside investment, consider how many months this funding will support the salaries of the team that will build this business, plus operating and overhead costs. You want to be sure to give yourself an adequate runway.
  • New business development opportunities typically require huge energy, creativity and focus for the first few years. Key management will have to devote all of their effort during the start-up period. Can the company afford to lose the services of key personnel for the time that you estimate this effort will take?
  • Before deciding to pursue this opportunity, take the time to investigate the market for this opportunity.
    • In particular, look for other companies that have tried to enter this market, and learn from their experience.
    • Develop a network of advisors who understand this market and can help you understand both the workings of the market and why companies may have struggled trying to enter the market.

[like]

How Do You Shift From Regional to National Operations? Three Foci

Situation: A company has a network of regional offices, operating under loose oversight from the home office. Increasingly, large customers are asking for national service agreements, but the company struggles to coordinate uniform national service delivery. How do you shift from independent regional to coordinated national operations?

Advice from the CEOs:

  • If you want to act like a national company, then organize like a national company. Create a national account office which will take the lead in negotiating national contracts. That office will then coordinate with the regional offices to assure that service delivery occurs according to contract.
    • As the national office is built, it will be important for them to understand how service delivery may vary between states because of differences in state regulations. This will require a manager who is experienced and knowledgeable in your field. This may be a promising current regional manager or an outside individual from your industry.
    • You will also want to define customer categories which will enable you to classify current and prospective customers as regional or national accounts. You may want to consider three customer categories, for example Regional, Emerging National and National Accounts.
  • The key to success will lie in your incentive and professional development structures.
    • If region managers receive their incentives and promotions primarily for developing regional business, then this is where they will focus.
    • If you want the region managers to shift their activity and priorities to creating and servicing national contracts, then bias both your incentives and professional development programs accordingly.
    • For region managers, continuity of business will be a top priority, as this enables them to maintain region performance. To come on-board with the new program, they must perceive a value for both themselves and their customers.
  • Once you have determined your structure, look for high profile wins that drive the structure. Reward and promote those who produce these wins.
    • These producers will become your champions for change.
    • The message will spread quickly across the organization.

[like]

How Do You Leverage an Advisory Board for Biz Dev? Three Guidelines

Situation: A company has a high-powered Board of Directors. This Board is focused primarily on company strategy. The CEO wants to create a separate Advisory Board for technical and business development. How do you create and leverage an Advisory Board for technical and business development?

Advice from the CEOs:

  • Be clear on the role and compensation of the Advisory Board.
    • Create a clear set of expectations to initiate the process, and refine these expectations in early meetings of the Advisory Board.
    • Early stage companies often pay out of pocket expenses for attending Advisory Board meetings, plus stock options. When business development is the focus, you may want to add a percentage of any new business brought to the company by the member.
    • More mature companies may add a stipend for Advisory Board service.
    • Not all Advisory Board members may be compensated equally, particularly if members receive a percentage of business that they help to create. You may also choose to compensate members differently based on their experience and influence.
  • Choose Advisory Board members carefully.
    • Go beyond personal contacts of the CEO and company officers. Look for individuals who are known and respected within the industry. You also want individuals who have exceptional contacts and who will agree to use them to benefit you.
    • Look for individuals who are highly positioned within target companies – for example a VP of Operations or of Business Development. Also look for individuals who have excellent relationships with personnel in target companies
  • Be open and clear about your expectations of individual Advisory Board members. Celebrate success.
    • Establish metrics that the members are expected to fulfill.
    • Record commitments made by Advisory Board members and include updates against commitments as part of Advisory Board meetings, as well as updates against metrics that expected of members.
    • Celebrate successes of Advisory Board members and note individual and team contributions whenever the Advisory Board meets.

[like]