Tag Archives: Expertise

What New Business Options Should You Pursue? Five Guidelines

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Situation: The CEO of a company observes that the business climate has been uncertain, but she hopes that it will improve soon. This will open up new options for her company. As these start to develop how do you decide what to do and what not to do? What new business options should you pursue?
Advice from the CEOs:
• Talk to your customers. What do they value about your current product or service and what is less valuable? Build on opportunities that customers value. What options are most consistent with the company’s strength and focus?
• Consider a customer survey – either online like Survey Monkey or by telephone. If there isn’t in-house expertise to design and administer a survey, look for knowledgeable outside resources. Assure that the survey questions will drive understanding of the company’s focus and potential.
• Get an expert to review the survey and administration plan. Before launching the survey to your full customer base, test it with a select group of customers. This will tell you whether it will produce usable information. If it doesn’t, revise the survey.
• Which opportunities will build sustainable recurring revenue vs. opportunistic or one-time revenue? Recurring revenue can be lower margin if the income stream is sustainable. Balance efficiency and utilization. For example, fixed fee service contracts that renew consistently.
• Judge opportunities against your “Hedgehog” as defined by Jim Collins in his book Good to Great: What you are passionate about? What you can be best at in your marketplace? What you can measure by a single economic ratio?

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How Do You Evaluate Financing Options? Seven Key Points

Situation: A start-up company needs to raise cash to fund the achievement of key milestones. The founders have evaluated private equity, angel, and venture capital financing options. They believe that at their stage of development an angel is the best source of funds. What guidance can the group offer for negotiating with a private financier? How do you evaluate financing options?

Advice from the CEOs:

  • The important questions to answer are: who is the angel, what is the angel’s motivation, and what does the angel bring to the table?
  • What is the angel bringing to the table?
    • Is it money and connections? Who and how many people will be involved?
    • Do these individuals bring the expertise to take business to the next level and beyond?
  • Identify the strengths and weaknesses of the angel’s organization. Ask about other companies that the angel has financed. Talk to those companies about their experience with the angel.
  • Ask how long the angel plans to stay connected to the company.
    • Is the angel committed for the long-term or looking for a quick profit or exit and sale?
    • What happens after the angel leaves?
  • Validate statements made by and the experience of the angel.
    • How may IPOs has the individual or group been involved in?
    • What existing contacts do they have with additional potential funders or buyers?
    • Vet all of the claims and statements made by the angel.
  • Evaluate equity vs. cash funding and the prospects and terms that accompany future funding rounds.
  • What is the company’s long-term strategy?
    • Do the founders want to stay the course long-term or is it sale of the company to another entity?

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How Do You Grow Knowledge Workers into Servant Leaders? Three Methods

Situation: A company’s staff is made up primarily of knowledge workers. These are highly skilled individuals who excel in their roles. The CEO wishes to shift their focus to servant leadership – where the focus is the growth and development of the company. How do you grow knowledge workers into servant leaders?

Advice from the CEOs:

  • One option is to create a different set of incentives. Offering key managers the option to invest in and hold shares in the company will change their perspective. This, in turn, can change their behavior because servant leadership will improve company performance and the value of their shares.
  • Another option, used by Accenture and many Fortune 500s, is to hire a lot of the best and brightest individuals that they can find out of college and see who rises to the top.
    • The ratio in large firms is generally 15 hires to produce 1 high performer. Another CEO at the table is now shifting to this model at his company.
    • Create an entry level position for recent graduates that will allow for this sifting without disrupting the company’s culture.
    • Speed identification and retention of the best talent through annual evaluations of the company’s talent. This includes ratings by employees’ supervisors of both how the individual is doing and their ultimate potential within the company.
    • Be aware of the downsides to this model. One is that the two groups that tend to leave of their own accord are the best and the worst employees.
  • A third option is to create two career tracks within the Company.
    • One track is upwardly mobile. This is the track that identifies, develops and grooms future servant leaders.
    • The other track is a specialty track, which can produce servant leaders along a different dimension – breadth of experience and expertise in key skills of value to the firm.
    • This second track also allows for growth, characterized by levels of title, salary and recognition that reward the acquisition and perfection of skills in key disciplines.
    • Several “kinder, gentler” environments such as 3M have used parallel tracks with great success.

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Where Should You Focus the Business? Four Recommendations

Situation: A company has experienced limited growth and profitability for the past five years. It is also short of resources. They have invested a lot of time and effort in a new technology which has yet to bear fruit. The CEO seeks advice on the company’s future direction. Where should you focus the business?

Advice from the CEOs:

  • Continue to support BOTH business – the core product line and the new technology – but rearrange priorities to boost revenue and profitability growth. Simultaneously, focus new R&D investment in the company’s core product. This has three principal benefits:
    • The company’s primary expertise is in its core product line. This product is its principal source of revenue and has the greatest potential for profitability and growth.
    • R&D and start-up production of new iterations of the principal product is less resource intensive than the new technology.
    • Further, sales of the core product are far less cyclical than the market for the new technology, and therefore more promising to a small, niche company.
  • Looking at this recommendation sequentially, the group recommends that the company:
    • Continue to sell the current product line a well as existing complimentary products to maintain revenue and profits.
    • If additional work or resources are needed to mature the new technology, have someone else take the lead role in R&D and private label the technology for the company.
    • Focus all new R&D investment on improvements to the core product.
    • Refocus market research on current and potential customers for the principal product line to determine their greatest needs to guide product line innovation.
  • The company needs access to advanced equipment to support development of the core product line. Consider creative ways to gain access to this equipment at little expense.
    • Look for advanced equipment that is available at distress or liquidation-sale prices by companies who made poor investment decisions.
  • Find a partner that wants to focus on the new technology, but who also wants and needs the company’s expertise in its core product line.
    • The company focuses on the core line; let the partner develop the technology.

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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 Transition to a New CEO? Four Strategies

Situation: A company founder was advised by her Board to help them hire a CEO with more experience to run the company. This new CEO is now in place. As the founder gains more experience, the Board has indicated its willing to consider her as CEO. How do you transition to a new CEO?

Advice from the CEOs:

  • Become the fire hose! Build a tight relationship with the new CEO and together build the future strategy that will enable you both to win.
    • Others will focus on past issues. Keep your approach and advice positive. Position yourself as a partner, not an adversary. Emphasize your supportive and collaborative capacities.
    • Become the new CEO’s go-to person: trustworthy, objective, knowledgeable, reliable. Nurture the development of chemistry with the new CEO.
    • When the new CEO asks what needs to be done, produce the plan. Leverage your knowledge and expertise to become his greatest resource.
  • Enlist the CEO’s support of one or more of the focused strategies that are already in play within the company. Build the support of the Board and focus on boosting company value to 2x sales. The Board won’t forget who produced the original initiatives.
  • You have more power than you imagine – both with the Board and the new CEO – due to your knowledge of the marketplace and the business. Use it wisely.
    • While there is a new CEO, the company has already been profitable and company operations are clean. The Board will remember this.
  • How do you boost the chances to eventually be named CEO by the Board?
    • Tie yourself very closely to the new CEO – be this person’s more important resource. Build and cement your position as his most important ally within the company. It will help you to gain his support for implementing your ideas.
    • Segue your relationship with the Board members to become the company’s next CEO.
    • At the same time, grow your successor within the company so that you will be ready to move up to CEO when the opportunity arises.

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How Do You Implement a Process Change? Six Suggestions

Situation: The CEO of a service company is concerned about lost income from uncaptured billing. He has identified the cause – failure to capture extra hours that haven’t been billed – but is struggling to get employees to monitor this more effectively. How do you implement a process change?

Advice from the CEOs:

  • The group presented two options for growth: bring in experienced outside people to develop additional systems to run the company, or a hybrid model using internal resources, augmented with outside expertise.
  • Bring in Experienced Outside Resources: Hire an experienced outsider with a track record in your industry to design and implement the needed systems.
    • Pros for this solution: the outsider will bring a fresh vision and new energy, plus the experience and know-how to make the desired changes.
    • Cons: impact on current business culture. This may generate resentment among employees who can no longer make decisions on the spot and may remove a path to management for existing staff. Possible negative impact on customers who receive larger bills due to change orders.
  • Hybrid Model: Outside person creates model and trains employees to implement it, then monitors the system and progress long-term. The key is to change expectations and behavior within the team.
    • Pros for this solution: more opportunity for current employee participation; involves employees in the design of the system, providing better buy-in to the solution.
    • Cons: as with any change, this won’t provide the full expected return. Just the fact that things are being changed impacts the efficiency of implementation. Unanticipated blocks and resistance may hinder progress – don’t be surprised by this, it is predictable.
  • Implement SOPs that facilitate rapid response to change orders – starting now and with whichever option is chosen.
  • Generate a pick list of all possible change orders with pre-calculated costs to guide employee choices and keep customers informed.
  • Whatever solution is chosen, be sure to communicate frequently and consistently with employees to facilitate the change.

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How Do You Transition from Boss to CEO? Three Insights

Situation: The head of a small service company wants to become more strategic – more like a CEO. Ideally, he wants to create a small samurai team to help him expand.  He prefers working with a range of clients to develop creative, out of the box solutions. How do you transition from boss to CEO?

Advice from the CEOs:

  • The eMyth Revisited by Michael Gerber is a valuable primer on how to bring in more clients and revenue. The critical question that this book helps to answer is “what do I want to build?”
    • The book walks you through the critical questions that will help to answer whether your true ambition is to be a Picasso with helpers or a company. The answer may be either, but how you build each is different.
  • The more that skills can tied to a tangible outcome the easier it is for clients to hire a company. Quantify past successes. Make it easy to justify hiring your team.
  • To add to your pipeline:
    • Help friends help you. Make it easy for them to refer you. This can be simple: YouTube videos or improving the company website to highlight past successes.
    • The company web site can’t be just OK – it must be the all-important credibility builder that the company needs. Recreate the site to wow the visitor and tell the company’s story. Make it fun and compelling.
    • Participate in groups or forums that your targets attend. Create presentations, webinars, etc. Establish the company as an expert with the answer and as a trusted resource.
    • Also present to professional organizations to establish expertise and credibility.
    • Testimonials are powerful – particularly if backed by metrics.
    • Collaborate with people with similar depth of experience who can help develop the pipeline. Offer them a cut of total job revenue.

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How Do You Choose Between Strategic Options? Four Points

Situation: The founding CEO of a technology company is considering options for the future. The company is doing well, with two options for future development either within or outside the company. How do you choose between strategic options?

Advice from the CEOs:

  • Domain expertise is less important than business experience, P&L experience, and fund-raising success. A diversified background and successful experience as a CEO are as important as specialty industry experience.
    • Continue to pursue all options for the time being. See how the new opportunities mature before making final choices, and either split time between the options or assign good managers to oversee each.
    • Ownership agreements should be based on cash investment of the parties – not time and effort.
  • Option #1 – Focus on the primary company.
    • A challenge is that most of the Board members just see the numbers, not the dynamics of day-to-day operations. They don’t know the CEO’s contribution.
    • Assure that the Board understands the CEO’s contribution and is rewarding the CEO appropriately.
  • Option #2 – Focus on New Opportunity #1.
    • Is this option more like a product or a company?
    • Consider this option as a product incubator rather than a single product company – producing and spinning off a series of ideas for development.
    • This can be done either within the primary company or as an outside effort.
  • Option #3 – Focus on New Opportunity #2.
    • Software development can be self-funding. Compared with manufacturing, software is inexpensive to develop and requires little investment to scale and sell once the code is written.
    • The trick is to rigorously focus on market opportunity while minimizing cost.
    • Watch staffing commitments. Use scarce resources to lock up irreplaceable capabilities. Hire or offer equity only for significant contributions such as IP development. For labor, use consultants, independent contract arrangements, or look for what can be outsourced.
    • Like Option #2 this can be done either within the primary company or as an outside effort.

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How Do You Brand a New Product? Seven Suggestions

Situation: An information services company wants to launch a new product in an existing market. Their current brands are well-recognized with excellent reputations. Should they tie the brand to the company name or current products? How do you brand a new product?

Advice from the CEOs:

  • Brand specifically for each product or market – just as consumer product companies brand the same product with unique names for each consumer or commercial market.
  • A brand name is not the company’s identity – Apple as a company has created separate brand identities for computers, iTunes, iPods and serves multiple markets.
  • Attend conventions and survey the target market and current providers. Network to meet people and ask questions about what is important to them and to their buying process.
  • Think about the marketing funnel. The first element is awareness.
    • What are the company and its current brands now known for?
    • Build a brand with value that leverages the reputation and expertise currently valued by customers.
  • Define the current and planned market segments and tie branding to them.
    • Who are they?
    • How do they do it?
    • How will the new product fit?
    • Look at ROI for each market and create a strategy for the optimum combination of speed and profitability of market entry.
  • Tying meaning to a name can be a mistake. When one CEO named her company and service around a specific capacity, she limited the way that it was perceived. She is now considering a complete rebranding to open new markets.
  • Hire expert consultants with experience in developing brands. While this is an investment at the outset, these individuals are better, cheaper, and faster than doing this yourself.
    • Monitor the consultants to assure that they are spending the company’s resources wisely and addressing the company’s needs.
    • Hire someone with a network to gather the data necessary to support the branding exercise, a project manager. Use more expensive resources to plan and manage the exercise, and less expensive resources to gather the data.

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