Tag Archives: Delivery

How Do You Adjust to Tight Cash Situations? Eight Options

Situation: A company is faced with a tight cash situation. A combination of increased interest rates, a business slowdown, and slow deliveries from suppliers have contributed to this. The CEO needs to find ways to stretch available cash, or to rely on other alternatives to assure that commitments are delivered to clients. How do you adjust to tight cash situations?

Advice from the CEOs:

  • One company actively and consistently uses their bank line of credit to cover end of quarter payables. They pay this down promptly as cash comes in.
  • Profit sharing represents 20 -25% of another company’s total compensation. When profits are down this gives them some cushion because payouts are lower.
  • One company maintains frequent and open communication with their vendors. This makes it easier to get them to work with the company when cash is tight.
  • Another company has vastly increased sales activity. This has helped to improve the business pipeline, and this in turn improves the story that they can tell their bank and vendors. It helps to reassure them that they are a good partner and a good credit risk when cash is tight.
  • It’s a good idea to maintain regular contact with the company’s best funnel clients – the ones who bring in new business. As a result if their competitors are struggling then they get a shot at their business.
  • It is better to cut select people than to put a large number of people on extended reduced time. Hard as it is to let people go, this is better for morale.
  • For less skilled operations work, one company used to use temp workers. When they’ve discussed the need to cut back with permanent employees and asked about this work, they were told that they could cover this work in their available time. The team really pulled together and were grateful for the opportunity to remain full-time.
  • Another company continues to model their pipeline, and plans for adjustments in customer demand. This enables them to act sooner rather than later when adjustments are needed.

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How Do You Maintain the Chain of Command? Three Suggestions

Situation: A CEO finds that some employees are going directly to her to address issues or suggestions rather than working with their managers to develop solutions. She is concerned on two fronts. First, these matters should be handled between the employee and their manager. Second, this distracts her from higher priorities facing the company. How should the CEO convey this to both the manager and the employee. How do maintain the chain of command?

Advice from the CEOs:

  • Concerning the situation where a manager’s direct report is going to the CEO, what is the follow-up with both the manager and the employee?
  • The message to the manager:
    • You are in your role for a reason.
    • You are accountable, and your responsibility is for your team to deliver against company strategy and plans.
    • If this situation is repeated I will send these questions back to you, and will count on you to keep me in the loop as appropriate to assure that the solutions are consistent with company policy and objectives.
  • The message team member
    • It’s okay to share your thoughts with me.
    • But in the case of new ideas or suggestions, you need to bring these to your manager so that your manager understands what is going on and can coordinate your suggestions with the activities and priorities of the team.
  • How do you set boundaries so as not to step on the toes of managers?
    • Set deliverables for the managers, but leave them the authority and latitude to manage those who report to them.
    • If an employee comes to the CEO rather than their manager, refer them back to their manager.
    • After the fact, follow-up with the manager to assure that the issue or suggestion has been addressed.
    • HR issues are handled through the HR process, not by the CEO.

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How Do You Restore a Strong Team? Five Points

Situation: A CEO is looking at his company following the pandemic slowdown. Employees have returned but much of the energy that was there before the pandemic has dissipated. Employees seem to be looking for guidance and inspiration. How do you restore a strong team?

Advice from the CEOs:

  • There are many options for team building activities. There have been some excellent TV shows like Monster Garage and American Chopper that address these. Though these series are no longer aired, episodes can be downloaded. These feature some very effective methods of building team camaraderie and energy.
  • One company regularly conducts team building activities:
    • Taking the crew to the new movie openings of epic movies that are best seen on the big screen.
    • Go-Cart racing.
    • This is done during working hours, and the employees appreciate both the effort of the company, and the fact that they are not asked to do this after hours.
  • While team building functions are an essential part of building and maintaining company culture, they are only part of the task of building a strong team. The group considered conditions that they had previously experienced that harmed morale and even prompted some employees to leave:
    • Lack of advancement or any clear path to advancement,
    • Ambiguity in roles and expectations,
    • Salary and advancement caps,
    • Poor managers, and
    • Lack of consistent or clear feedback on performance.
  • Looking at this list, the converse represent the things that are needed to build a strong retention culture and strong teams:
    • Clear expectations of employees in terms of performance,
    • Clear and public tracks for advancement in job and salary increases,
    • Frequent and consistent feedback on performance – both positive and as necessary corrective feedback – but always with considerate and constructive delivery,
    • Well-trained managers.
  • These factors parallel the findings of the Gallup Organization in their investigation of factors contributing to high levels of employee engagement and profitable growth.

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How Do You Expand Your Customer Base? Six Solutions

Situation: A company produces a consumable product which provides its primary revenue stream. They have developed a new delivery system for the consumable that potentially competes with products sold by its largest distributor. As a defensive move, the CEO wants to expand its customer base. How do you expand your customer base?

Advice from the CEOs:

  • Take a lesson from Hewlett-Packard. HP’s primary revenue stream comes from ink, not the printers. They assume that their cartridges will be copied but design a new cartridge for each generation of equipment, with rapid equipment upgrades. By focusing on upgrades to the latest equipment, HP understands that if customers keep equipment for 3 years, they will likely use cloned cartridges.
  • If the company is going to alienate a key customer by selling the new technology, then they are going to be alienated. Don’t let them know in advance until the new technology is ready for launch.
  • There is no reason to alienate the large customer. Once the new technology is ready for the market, ask if they want to carry it. If the equipment is good, they may well say yes!
  • Given the concern about alienating this one large customer, start to develop other customers NOW, not later.
  • Currently the company does not serve the “mom and pop” market. Could money be made here? If they require technical support, charge for this. Use the software market model and sell single hours or bundles of hours of support.
    • Most questions will likely be elementary, as smaller customers will not be sophisticated users. Use current staff to handle service needs at one price. If higher levels are support are required, warn customers that this is more expensive.
  • The work that has been put into the new technology should qualify for the R&D Tax Credit.
    • This credit can be used against taxes payable. This may defer tax liability until the company starts to make money on the new technology.

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How Do You Quickly Shift Your Marketing Position? Five Points

Situation: A company wants to shift their marketing position quickly and effectively toward a new focus. The new focus is the result of breakthroughs that they have developed that have opened new product and service opportunities. How do you quickly shift your marketing position?

Advice from the CEOs:

  • Hire a strategic marketing consultant to help analyze the market, identify unmet needs and unaddressed segments of the market where the company can establish a strategic advantage.
  • Pick an area where the company is known or can be known as the best. Create differentiation by specializing in this segment.
  • Add both sales and marketing positions to guide the refocus.
    • Marketing is more than just collateral. It is strategic positioning, understanding changing customer needs, and thinking creatively about how to leverage those needs and the company’s capabilities to maximum advantage to support the sales efforts.
    • A good marketing platform provides salespeople the structure within which to operate.
    • How do you find good candidates? Talk to editors and publishers of trade journals. They know marketing contacts and who is good.
  • As the company shifts the model, look for ways to reduce utilization and down-time for engineers and other staff.
    • Maximize the value of this down time.
    • Develop case studies or materials to support the sales effort.
    • Create new concepts or capabilities to add to the offering.
  • Several other CEOs noted that with the quality of the projects that the company has completed for current clients, the company already has both the capabilities and proof of delivery that many sales and marketing people would love to have. Use these as assets and leverage them.

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What are the Pros & Cons of In-House Software Development? Three Points

Situation: A company used internal resources for a small in-house project – developing web-based time sheets. They had obtained bids for external development but found that internal resources could do the same time for about half of what external development would cost. The trade-off was slow delivery. What are the pros & cons of in-house software development?

Advice from the CEOs:

  • Why was delivery slow?
    • When faced with a choice in priority between the internal development task vs. responding to the needs of external customers, internal delivery was pushed back in time.
  • This is exactly what others have experienced when faced with the choice between internal and external software development. Look at the trade-off, not just in terms of “cost” quoted by internal developers, but also in terms of opportunity cost. The real cost is what these resources could have provided had the same time been spent to support external revenue-producing projects.
  • Just as the company did in the first place, get external bids. If the use of internal resources is an option, compare time to delivery forecasted using internal resources plus any other internal costs. Then analyze the opportunity cost of not dedicating these resources to revenue-producing activity. The sum of these costs should then be compared with external bids. Adding opportunity cost to the analysis can make a big difference.
  • Once the company has this information, make a business decision as to the best choice. Keep in mind that unless the priorities of the internal group doing the development work are changed, they may not respond to the needs of the internal project on a timely basis. It will be the CEO’s call as to whether the developers prioritize their time to support external projects or the internal project.

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How Do You Pursue a Market Expansion Opportunity? Three Points

Situation: A CEO is considering expanding market reach to include an additional specialty niche in the market currently served. He sees the opportunity to diversify the current offering, to make significant money, and to grow the company. The principal challenge is finding a person to build this capacity. How do you pursue a market expansion opportunity?

Advice from the CEOs:

  • Without a leader to build the new capacity, an individual who already knows both the technology and the market, it will be difficult to build the new capability.
    • Bring in a heavy hitter with a proven track record in the market to develop the new capability. Someone who can build a team to offer the same quality / delivery package that has been the source of the company’s success.
  • Once this individual has been identified and is onboard, gather top management and develop clarity on the company and its values – why the company is in its current as well as the new business and what the company does for itself and its clients.
    • From this exercise develop or update the values statement and a vision / mission statement.
    • Consider hiring a consultant with proven experience in the market to help develop the value statement, mission, and some of the strategic and planning capacity that the company has not yet developed on its own.
    • Communicate these openly and reinforce them frequently with staff. This will help them understand the company culture as well as the vision for the company. It will also help them to understand the decisions made to guide the company.
  • Is there another firm – or an independent consultant – with proven expertise in in the new field to work with the company on the proposals that are being submitted for the new market?
    • This will help to evaluate the market and to get a taste of what is involved in this work before making a major investment to support the new capability.
    • It will also speed the development of expertise to address the new opportunity. If it goes well, the company can consider either a deeper joint venture, hiring the consultant, developing its own capability with internal resources, or a combination of these options.
    • In the short term, this will impact cost and margin but will substantially reduce risk.

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How Do You Improve Internal Processes and Procedures? Five Approaches

Situation: A CEO’s company has experienced margin erosion due to designs that did not transfer well to manufacturing, and inefficiencies in the transfer process between design and manufacturing engineering. He wants to transform the culture without losing technical performance while meeting cost targets and delivery timelines. How do you improve internal processes and procedures?

Advice from the CEOs:

  • Reinventing the culture of a workforce is an organizational design challenge.
    • The heart of the challenge is understanding the motivations and desires of the individuals involved – particularly the natural leaders within the groups.
    • Learn this is by speaking with them one-on-one, either as the CEO, or through individuals with whom they will be open and trusting.
    • Once their emotional drivers are understood, design accountability and incentive solutions that will align their personal reliability and accountability drivers with their emotional drivers.
  • Tailor the language of communication with the organization so that it responds to the emotional triggers discovered during the 1-on-1s. For example, if there is a negative reaction to sales within the engineering teams, use a different term like client development.
  • Expose the designers to the “hot seat” that gets created when their designs produce manufacturing challenges. The objective is for the designer to see the manufacturing group as their “customer.”
    • Involve manufacturing engineering in design architecture meetings. Do this early in the process so that they can communicate the framework and constraints under which manufacturing occurs and suggest options that will ease manufacturability.
  • Shift from individual to team recognition on projects. Instead of recognizing the contributions of the design component or the manufacturing component, recognize the contributions of the team of design and manufacturing engineers that produced a project on time, on budget, with good early reliability.
  • To kick off the new process:
    • Identify some of the waste targets.
    • Involve individuals who are known to be early adopters.
    • Have them look at the problem, develop and implement a solution.
    • Deliver ample recognition/rewards to these individuals.
    • Next use these people to mentor the next level of 2nd

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How to You Generate a Predictable P&L? Three Solutions

Situation: The CEO of a consulting company is frustrated by lumpy revenue and profits. From quarter to quarter it has been difficult to predict either number. Unpredictability reduces options in valuation and exit exercises, as banks and acquirers favor predictability. How do you generate a predictable P&L?

Advice from the CEOs:

  • The objective is to construct a revenue base built on predictability, even if this is at lower margins. Given a predictable base, the company can complement predictable revenue and profits with higher dollar and margin opportunities as they arise.
    • Analyze the projects that the company contracts for both revenue and profitability. Some projects will be bread and butter situations which are more common and predictable, but which generate less revenue and profit per project. Others will be customer crisis driven. These latter projects will have higher revenue and profit, particularly if the company is the vendor of choice; the tradeoff is that the frequency of these contracts is unpredictable.
    • If the objective is predictability, the company’s base should be built on bread and butter projects. As the company grows, focus on this base. Customer crisis projects can then be added as they arise to bump both revenue and profit.
    • The objective will be to become one of the top 2-3 outside vendors of the choicest clients. Target projects may be ongoing maintenance of older projects in the client companies’ portfolios.
  • How would this model be pursued?
    • Focus on the company’s top 5 customers. Reduce risk by optimizing customer leverage as a proven entity and offer them strategic deals.
    • The focus is long-term project based with guaranteed delivery at lower cost.
    • Identify the fear or insecurity that exists within the customer and provide sleep insurance.
    • This model works well in the new economy – get lean, manage infrastructure size and cost, and grow with the economy.
    • Alternately, identify an area where the customer may not have enough resources and provide a solution that allows them to address this without adding additional personnel or by using existing personnel more efficiently.
  • Another option is to develop a virtual office model. Provide resources for $X per month, with an evergreen provision.

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What’s the Right Model for a Service Company? Four Points

Situation: The President of a professional service company and his team are considering adjustments to their business model. The alternatives under consideration are a client-centered model and a service delivery model. What’s the right model for a service company?

Advice from the CEOs:

  • In the client-centered model, the emphasis is on maintenance of the customer relationship by the responsible manager, with support from the group to optimize service delivery.
    • Consider the service being provided and the client’s expectations. Does the client want to have a principal point of contact – a client manager – to address their needs?
    • This model centers on the key manager creating and maintaining an ongoing relationship with the customer, including rapid response to inquiries from the customer.
  • In the service delivery model, the emphasis is on a developing and maintaining a high standard of service delivery so that multiple individuals can deliver the service rapidly and reliably.
    • As in the client-centered model, consider the service being provided and the client’s expectations. Is the customer’s principle concern functionally rather than personally oriented – for example keeping a system up and running in the fastest time with a manageable expense? In this case, the individual technician is not as important as speed of response and assurance of a quality outcome.
    • The service delivery model centers on standardized and predictable delivery of a defined service, with high responsiveness to the client’s needs. Those who deliver the service are paid variably based on their skills and assigned to deliver service consistent with their abilities. A benefit of this model is that business maintenance is not as dependent on individual service providers as the client-centered model.
  • In choosing between these models, it is important to speak with your clients and to understand their needs and priorities. Is your model a direct business to customer relationship or a business to business relationship? Is your offering perceived by the customer as a service or a product with tangible results? Is your customer more interested in meeting short-term needs or developing a long-term relationship?
  • As an example, is the customer expecting a personal, customized service and desirous of maintaining a long-term relationship? For this, a Nordstrom-like model may make the most sense – a highly personalized level of service where the relationship managers on the sales floor keep detailed records of individual customer’s tastes and past purchases and will even have items pre-selected prior to the customer’s arrival at the store.
    • This model implies that the most important assets to client development and retention will be your account managers. A business development manager may bring in a new client and then hand off that client to “one of my best managers” who will develop the long-term client relationship. The account manager will become the principal point of contact for the client; however, they will bring in other expertise or assistance to handle specific client needs. When a customer calls in, depending on the immediate need, that customer may be triaged directly to their manager or to an individual who could, for example, perform a transaction for them. Responsiveness by the manager within a defined time frame will be an important metric to monitor.

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