Tag Archives: Scalable

Do You Diversify or Stay the Course? Five Thoughts

Situation: A CEO seeks advice on the direction of her company. Her objective is to build a lasting company which is a wonderful place to work. She has a creative group of employees who have suggested options to expand the scope of the company. Should she maintain the current direction or entertain exploration of these options? Do you diversify or stay the course?

Advice from the CEOs:

  • With a solid, sustainable business model and the current level of revenue, diversification is not as important as it was when the company was a fraction of its current size. Current objectives could well be reached by just doing more of what the company does now.
  • The most important question to ask is: “What do we want from this or that option?”
  • Concerning the top opportunity under consideration, the group felt that:
    • It’s not the company’s core business and doesn’t play to the company’s strengths.
    • However, there are aspects of the opportunity that fit both the company and the existing client base. These represent an opportunity that fit’s the company’s culture.
    • Explore these aspects in small steps that do not detract from the current business.
  • If culture is a key ingredient of the company’s offering, how scalable is this, particularly into new markets? Look for ways to grow that are consistent with the strong culture that already exists.
  • Improve selling the full breadth of the company’s offering. The company offers many services that may be of interest to clients, but which are not mentioning in initial sales calls.
    • In sales presentations focus on the client, rather than a detailed description of the service offering. Offer clients a small brochure that covers the range of the company’s services.
    • By focusing on clients’ needs it is easier to selectively mention options that will serve these needs.

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How Do You Keep Your Culture in the Face of Rapid Growth? Ten Points

Situation: A CEO’s company is facing rapid growth. The CEO is concerned that the cordial team culture that he has carefully nurtured will be strained as the company adapts to this growth. The present culture is characterized by lack of politics and truthful, frank communications. How do you keep your culture in the face of rapid growth?

Advice from the CEOs:

  • The company currently markets its culture, complemented by a solid history of performance. Clients receive highly personalized service at a competitive cost. This combination attracts and retains clients.
  • The company’s employees are a happy, competent group that enjoys what they are doing. This differentiates the company from other firms all by itself.
  • Identify the key attributes of the company’s culture. This will simplify internal and external communication when discussing what makes the culture special.
  • Use one several tools available to develop behavioral profiles of the current employees. This will help to understand how team members interact with each other. It will also help to build profiles for ideal additional employees as the team expands.
  • Hire an expert do a formal evaluation of the team around individual and group dynamics, as well as bottlenecks in the current structure and culture. This will help determine how scalable the company’s current culture is.
  • Grow at the rate the company’s culture allows, not at the rate that salespeople bring in new business. With gradual, careful growth size will less of an issue as it would be if the company were to simply grow as fast as possible.
  • The more the company grows organically – through additional business from existing clients – the fewer additional clients the company needs to meet growth objectives. This means adding fewer new employees to maintain target client/employee ratios.
  • If the plan is to grow larger, consider growing around core groups of 9-12 employees, perhaps in distinct locations with good communication between the groups. In the military, operating groups are 9 to 12 soldiers; the more specialized and highly trained the group the more it tends toward 9 soldiers instead of 12.
  • There is a Zen saying that a healthy tree grows as tall as it can. Use this as your guide.
  • The key role of the CEO is as CCO – Chief Culture Officer!

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How Do You Evaluate a New Revenue Model? Six Suggestions

Situation: A CEO is considering a new revenue model for his company. The existing model is profitable and stable, but not scalable. A new model, and perhaps additional locations may be needed to add scalability. How do you assess the risks of the model? What steps can be taken to reduce these risks. How to you evaluate a new revenue model?

Advice from the CEOs:

  • Project both the current and new models on a spreadsheet. What do profitability and return look like over time based on current trends?
  • Include assumptions about adding new customers within the model. Consider capacity constraints at the present location. Add start-up investment needed for the new model. Does overall profitability increase in the projections and will this adequately cover new customer acquisition costs?
  • Are performance standards for the current and new models different? Would it make sense to have different teams managing the models? What kind of experience will be required in the people who will build the new business? Account for personnel additions and start-up costs in the financial projections.
  • Critically evaluate the upfront financial exposure as new clients are signed up for the new model. Consider hybrid options which can be added to customer contracts. Examples include:
    • A variable flat fee model. Customers contracted under the new model will receive services up to X hours per month for the flat fee, with hours over this billed separately.
    • How do current time and materials rates compare with industry averages? If they are high, it is not necessary to quote existing rates to new model customers. Create a new rate schedule just for new model customers. Taking a lower rate under the flat fee model will not cover all costs and profit; however, it will at least partially cover utilization exposure and a higher rate for additional hours can make up the difference.
    • During the ramp up period of a new operating unit, client choice is critical. If, based on observations and responses in client questionnaires, heavy early work is anticipated, charge an initial set-up fee. Alternatively, ask for a deposit of 3-4 months to cover set-up exposure. If either at the end of the service contract or after a burn-in period some or all these funds have not been used, the client is refunded the unused deposit. This can both cover early exposure and make it easier to sign new customers for the new unit.
    • Draft contracts under the new model to include one-time fees in the case of certain events – e.g., a server crashes in the first 9 months of the contract, or an unplanned move within the first X months of the contract. These resemble the exceptions written into standard insurance policies. They can be explained as necessary because standard contract pricing is competitive and does not anticipate these events within the first X months of the contract. Most companies will bet against this risk. Those who do not may know something about their situation that they are not revealing. In the latter case you will be alerted to potential exposure.
    • Consider a variable declining rate for the new model. The contract price is X for the first year, and, assuming there are no hiccups, will be reduced by some percent in following years. This resembles auto insurance discounts for long term policy holders with good driver records.
  • Adding hybrid options may make it easier to sign new clients while covering cost exposure. The view of the CEOs is that most clients will underestimate their IT labor needs and will bet against their true level of risk. Provided that the new model delivers the same service that supports the company’s reputation, once clients experience the company’s service, they will be hooked.
  • An additional benefit to hybrid options may be faster client acquisition ramps within new satellite units and faster attainment of positive ROI.

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How Do You Make Time for Priorities? Eleven Recommendations

Situation: A CEO is building a new company. She has a small, highly qualified team, and much of the work is hands-on. In addition, there is fund raising to support the venture. The CEO also makes time for exercise and keeping in shape. With all of this on her plate she is getting overwhelmed. How do you focus on priorities in an early stage company? How do you make time for priorities?

Advice from the CEOs:

  • Maintain your exercise and health – this makes everything else easier.
  • Decide on your strategic platform. This creates a larger conceptual framework and helps to clarify priorities.
  • Identify the gating items. Focus effort here and spend scarce resources strategically to push your goal.
  • Within your gating items, identify the factors that make you scalable. Focus most of your effort here.
  • Create a weekly focus.
  • Lay out your to-do list in a Covey quadrant – most and least important vs. urgent and not urgent. Review this weekly to eliminate or delegate less important priorities.
  • Operational issues are usually symptoms – identify the causes and fix them.
  • Daily, list what you’ve done. Look back every 1-2 weeks and assess how you spent your time. Eliminate time wasters.
  • Don’t let you passion be undermined by the drudgery.
  • As an early stage company, you have to react – understand and appreciate that some aspects of early stage company life will not be very strategic.
  • Fix things rather than adding people and complexity. This compliments Fisher’s Stages of Growth recommendations for a company of under 11 people.

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Why Do You Need Uberinfluencers? Four Factors

Interview with Skip Brand, CEO, Martini Media Network

Situation: Thanks to the rise of social media, the 10-20 million individuals who were the influencers with the most purchasing power have increased to 70 million. Within the influencer group, there is a sub group deemed “uberinfluencers” who have the most influence. How do marketers reach the uberinfluencers and why are they so important?

Advice from Skip Brand:

  • Uberinfluencers increasingly spend more time online, are twice as likely to make a purchase, and spend three times as much per acquisition when they do purchase. Also, they always share new product experiences with friends and family via different social media (Facebook, Twitter, Blog’s, etc). For the first time, consumers control a brand’s reputation and are able to set the brand’s tone and image. This is why marketers need to focus more dollars to get in front of this audience.
    • Uberinfluencers spend more time online than the general US population. They are brand savvy, digital savvy and socially networked.
    • They have diverse and specific interests and leverage the Internet extensively to connect with their passion areas. Niche sites appeal to this audience because of the specificity and existence of community. If you better understand where these people spend their time at work and play –you are better positioned to leverage their influence.
  • The company that wants to reach and leverage these uberinfluencers needs to be scalable, exciting and relevant.
    • For this audience, small is beautiful and also scalable. Let’s use the example of golf, a passion for many uberinfluencers. Your site should feature the highest quality courses and equipment if you want to reach 50% or more of this target audience. It must be easy to navigate, provide enough information to make them feel comfortable about product selection, and have a social component to help them broadcast your message.
    • Uberinfluencers spend time on sites that are exciting, engaging and which have a single share of voice. This means one focused ad per page instead of multiple ads.
    • Particularly in a recessionary market the site must work diligently to maintain relevance by continually enhancing site content to provide a fresh experience with every visit.
    • Marketers should put uberinfluencers at the center of their media buy and strategy.
  • To attract and leverage this audience you must maintain a maniacal focus. Reach out to them using social networking tools, which find uberinfluencers where they work and play on the web. Let’s illustrate this with an example.
    • Let’s say that your uberinfluencer is a digital media executive. You will find them on social networking sites because they are living what they are doing. Put the right message in front of them. If they buy they will spend more, but it’s even better if they tell 10 friends about you.
  • Once you start figuring out the keys that attract uberinfluencers, they will start telling each other about you and news of your product will spread across the web, in turn maximizing your revenue!

You can contact Skip Brand at [email protected]

Key Words: Strategy, Sales, Marketing, Uberinfluencer, Social, Network, Media, Purchase, Opinion, Influence, Online, Work, Play, Hobby, Niche, Scalable, Exciting, Relevant, Focus, Viral

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How Do You Bridge The Supply Demand Gap?

Interview with Jim Hogan, CEO, SView LLC

Situation: The rapid evolution of mobile devices creates new opportunities to build mobile enterprise application businesses. However for businesses there is no clear path to mobilizing business applications. How do you bridge the gap between supply and demand in mobile enterprise apps?

Advice:

  • There are three legs to the stool of a successful SMB business model: developer platform, go to market strategy, and licensing and maintenance sales strategy. There is a consolidation play available for a small company that can generate traction in all three.
  • As to developer platforms, Microsoft originally got traction for Windows by being maniacal about building great developer relationships. Over time they leveraged this and just got better and better.
    • There are several platforms available that show promise, including Rhomobile, Mobile Nation HQ, and Appcelerator.
    • All are small now – in the $1-20 million revenue range. Their principal challenge is identifying a viable go to market strategy.
    • Another platform that shows promise is IBM’s Eclipse IDE.
  • Next is go to market strategies. Yahoo recently launched a search engine for mobile apps in Yahoo for Mobile. This is important to the creation of a viable market place for apps regardless of platform. If a viable platform developer can do a deal to generate a market for business apps this will go a long way to developing a successful go to market strategy.
  • The third leg, development of a long-term licensing and maintenance sales strategy, will most likely occur through acquisition of a company with the first two pieces. The lead would be an initial developer platform but could spin off to others.
    • Apple has started looking into this play with its iCloud strategy; the challenge for Apple will be making it enterprise-friendly.
    • Who else could do this? RIM and Microsoft both have a long history serving business customers, huge customer bases and  and the marketing capabilities to support mobile business applications. The wild card may be HP – currently the largest hardware purveyor in the enterprise and consumer space, and with the new WebOs platform from their purchase of Palm
  • It will be fascinating to watch how this market develops.

You can contact Jim Hogan at [email protected]

Key Words: Mobile, Device, Enterprise, Application, App, Opportunity, Scalable, B2C, Gap, Supply, Demand, Developer, Platform, Go to Market, Licensing, Maintenance Sales, Rhomobile, Mobile Nation HQ, Appcelerator, Microsoft, Yahoo, RIM, HP, Palm

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