Tag Archives: Framework

How Do You Focus on Doing Things Right? Seven Recommendations

Situation: A CEO is concerned that her company is not as efficient or effective as it could be. Of the key activities where the company is focused, few have any obvious connection to the customer or the customers’ needs. How do you focus on doing things right?

Advice from the CEOs:

  • Create a set of cost graphs to parallel the company’s revenue graphs. If these are put side by side, does it indicate that the company is doing some things that add relatively low value and profit? What happens if resources are shifted away from less valuable activity?
  • Concentrate resources on doing one profitable thing well. Become best in class at this one thing. This may both increase the value of the firm and help to focus future development.
  • Bring in a senior level marketing research person or marketing manager with marketing research experience to determine what the customer wants, how should the company compete, and what current customers may be willing to pay for its software.
  • Strengthen the primary product – it represents 90% of sales. This is where the company has the best understanding of both its customers and the market. Look at what it takes to become enterprise wide with the company’s largest customers. Expand vertical capabilities and build $1 million accounts to $5 million a year.
  • The company already has a diverse group of clients, many of whom are huge.
    • How deep is the company in each of these clients? It may be easier and less expensive from a sales standpoint to go deeper into these clients than to bring on new clients.
    • Look for ways to make current $1 million clients $5 million clients by selling what the company currently sell to more of their divisions and locations.
    • The key to executing this strategy is to listen closely to what clients’ needs are and adjust or customize the offering to better meet their needs.
  • Focus on solutions and reduce the cost of solution implementation. Consider becoming more vertical in one key implementation and become the best at that.
  • Create a relevant framework for the company’s strategy. For what purpose is it necessary to do the right thing? If the purpose is to exit in 2 to 3 years, this yields a very different strategy than if the objective to dominate the company’s market in a 5 to10 year period.

[like]

How Do You Help Managers Think Bigger? Four Guidelines

Situation: A company is transitioning from a time and materials to a fixed price bid model. Estimators and project leads find this transition difficult. We need them to think like business managers. How do you help managers to see and think in terms of the big picture?

Advice from the CEOs:

  • First, set up a framework that repositions projects in a business framework.
    • All projects are business go/no decisions with expenses, minimum profitability targets, and incentives provided for beating initial projections.
    • This will help generate more consistency in bids and final gross margins per project.
  • Next, teach managers and employees industry and company standards within your new model.
    • Do post-mortems on all projects. Did we make or lose money versus initial estimate? How much? How did we perform against estimated time and expense? Were client expectations met? Were they exceeded? What was good or bad about the project? Were there errors in the original estimates? Where could we have saved cost?
    • Use this information to improve your estimating process over time.
  • You have a long history of T&M projects. Categorize these by project type. Look at the hours required to complete the projects – both engineering and management time – as well as other costs. Establish range and averages within each category.
    • Look for key variables among the project categories: scope of project, learning curves, efficiency of team members.
    • Work through known costs and outcomes on past projects as examples to teach the process.
    • For new projects, calculate best, medium and worst case hours and costs. Bid based on your worst case as you develop your learning curve.
    • Make sure to include a project management fee on top of your T&M estimates. Eventually you want to develop an overhead percentage to cover project management.
  • Team your estimator with the project lead both for project input, and performance against the bid.
    • Evaluate and compensate both based on project outcome.
    • The critical measure will be gross margin generated versus gross margin estimated on the project.

Key Words: Leadership, Project, Time and Materials, Fixed Price, Bid, Framework, Consistency, Standards, Variables, Estimator, Lead, Incentive

[like]