Tag Archives: Differential

How Do You Manage Seasonal Gaps in Project Flow? Five Options

Situation: A company experiences seasonal gaps in project flow. This makes it difficult to project both cash flow and staffing needs into the future. In addition, monthly cash flow tends to be uneven. What can they do to improve control of internal and external resources in this environment? How do you manage seasonal gaps in project flow?

Advice from the CEOs:

  • The company currently focuses 60% on consulting and 40% on internal projects, some of which produce future projects. Relative proportions shift over time, and projects can be cancelled.
  • Try to write the company’s contracts to push revenue to early stages of a project, so that there is more cash cushion to help ride out short cash periods.
  • Look for options to change the business model to increase financial flexibility.
    • If there are significant margin differentials between different types of projects this has overhead implications when resources are shifted.
    • Look for ways to allocate less expensive resources or virtual resources with a lower cost to lower margin projects. Look for opportunities to utilize remote resources if these resources cost less.
  • Adjust staff assignments to maximize payoff, as well as staff retention options. Look for project work opportunities.
  • Analyze and evaluate the ability to switch personnel between paying projects and internal development projects.

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How Do You Create Larger Deal Sizes? Six Options

Situation: A company has good deal flow, but the CEO finds that margins are significantly increased with larger deals. Larger deals reduce the overhead component, much of which is the same regardless of deal size. The company is dominant in their market and can provide multi-site and multinational services. How do you create larger deal sizes?

Advice from the CEOs:

  • One company with multiple consulting contracts has found that bidding for RFPs on larger projects has opened the door to larger contracts..
  • Another company has looked at cost of sales and its contribution to business wins. .
    • Under 6% was ineffective and over 12% did not generate significantly more business. Their target win ratio is 30%
    • Factors that positively influenced win ratios were positioning the company as the preferred bidder up-front, and avoiding sham RFPs which are already slotted in favor of a competitor that helped to spec the RFP:
  • When bidding on RFPs, if the company will not be the low bidder it is important to identify the critical non-price parameters where the company will offer a differential advantage.
    • Focus on large multi-site or international RFPs which are more likely to be larger dollar RFPs.
    • Look at supply chain management opportunities.
    • Offer to warrant results in exchange for a higher price.
    • Look at system-type opportunities where the company can offer a more comprehensive solution based on its depth and experience.
    • Look for situations where the company can develop an advantaged position.
  • What are the implications of these strategies?
    • It will require retraining the inside sales force to research and qualify RFPs.
    • It will shift the focus to project vs. outsourcing opportunities. The latter are more price and availability driven and don’t play to the company’s strengths.
  • Explore channel sales through the existing partner network.
    • Offer a referral fee to regionals for referring opportunities outside their scope. In return, hire them as subs on the project.
  • Take a look at the big engineering firms who work multinational contracts, and handle their mitigation matters with small teams.
    • Offer them a comprehensive approach that is less expensive, more consistent, and more visible than their current self-service approach.

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How Do You Grow Business in China? Four Perspectives

Situation: A company has established a foothold in China. Their objective is to grow that business. The CEO is curious about the lessons that others have learned while doing business in China. How do you grow business in China?

Advice from the CEOs:

  • There continues to be ambivalence about the legal challenges of doing business in China. Primary concerns include both protection of IP and corporate / securities law. Become the firm that lifts the fog and charge a premium for this talent. Play off of corporate fear factors about doing business in China.
  • Networks in China look much different from networks in the US.
    • In China there is the government, and then there is the Communist Party which really runs things.
    • Particularly on a regional basis, the Chinese Communist Party has both formal, informal, and “nonaffiliated” branches and activities. All of these may be controlled by local or regional officials with little or no oversight by Beijing. Much depends upon shifts in the political climate.
    • Contacts within Chinese companies and law firms will be critical to understanding how to negotiate these networks on behalf of the company’s Chinese and American clients.
  • China has been big in the press for several years but may not be center of focus of all large firms yet. They may be waiting for additional clarity before making a significant investment China. Be a pioneer who points the way for corporations that feel that they have to be part of the China game.
    • As you develop expertise in China, this may generate opportunities to become the service bridge for other firms who find it more efficient to rely on others’ specialized expertise rather than build their own expertise in China.
  • Use the Blue Ocean Strategy techniques that are used by large corporations to create differential advantages for the company’s China presence.

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How Do You Enhance Your Customer Service Model? Four Thoughts

Situation: A company wants to up its game by focusing on service. They are evaluating different options to provide customized services to gain a sustainable differentiating advantage over their competition. How do you enhance your customer service model?

Advice from the CEOs:

  • In the gaming industry one CEO sees an effective model focusing on higher level customer service. The top games have allowed user customization using generic customization tools. This allows the provider of the tool kit to serve a larger number of users using a single tool kit to provide a wide variety of gaming options.
  • Another example from the gaming industry focuses on middleware developers. These developers create an interactive knowledge base for customer self-service. The knowledge base is monitored by the host company, and misleading or potentially harmful input is excluded. The benefit is that this enlists clients to provide their input on customer service as well as product development.
  • Another CEO sees this as a useful way to drive down customer service costs by providing more tools and fewer bodies to perform the customer service task. The model’s objective is for the customer not to need personalized service, but to be able to develop solutions on their own using a flexible took kit. The host company gains additional advantage because their user agreement allows them to take the best models used by clients to spark their own product development.
  • A fourth CEO sees lasting value in developing close relationships with customers. They have developed tools that allow the customer to solve simple customer service tasks but require company assistance for the more sophisticated solutions. The company, in exchange for this added expense, learns from the customer interactions.

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