Friday, January 30, 2009

On the Road, a poem by John Updike.

Novelist, critic, short story writer, poet, essayist, and dramatist, John Updike (1932 – 2009) who died this week, earned virtually every American literary award available during his lifetime. He first aspired to be either an animator for Walt Disney or a magazine cartoonist. But a sense of narrative was nurtured by summer work in high school as a copyboy for a local newspaper, The Reading Eagle, for which he wrote several feature articles. Graduating from Harvard in 1954, summa cum laude, he won a Knox Fellowship at the Ruskin School of Drawing and Fine Arts in Oxford. In June of that year, he had a short story and a poem accepted by The New Yorker, an event, he later said, that remained “the ecstatic breakthrough of my literary life.”

It’s lovely to see a poem describe something with such few words by someone who used so many millions of them in his other works. “I would write ads for deodorants or labels for catsup bottles, if I had to,” he told The Paris Review in 1967. “The miracle of turning inklings into thoughts and thoughts into words and words into metal and print and ink never palls for me.”

On the Road by John Updike

Those dutiful dogtrots down airport corridors
while gnawing at a Dunkin' Donuts cruller,
those hotel rooms where the TV remote
waits by the bed like a suicide pistol,
those hours in the air amid white shirts
whose wearers sleep-read through thick staid thrillers,
those breakfast buffets in prairie Marriotts —
such venues of transit grow dearer than home.

The tricycle in the hall, the wife's hasty kiss,
the dripping faucet and uncut lawn — this is life?
No, vita thrives via the road, in the laptop
whose silky screen shimmers like a dark queen's mirror,
in the polished shoe that signifies killer intent,
and in the solitary mission, a bumpy glide
down through the cloud cover to a single runway
at whose end a man just like you guards the Grail.

Thursday, January 29, 2009

How to recognize a "good" product.

How do you recognize a “good” product?

• A “good” product helps the company get known and accepted in the marketplace so it can move up the food chain later on. Netscape’s web browser is an example.

• A good product gives customers the capability to do more than they need to do at the moment. Delivering more value than customers expect creates product loyalty and increases the chances of creating a truly “hot” product.

• A good product ensures that the company is first to market with something that boosts distinctiveness was well as improving functionality.

• A good product incorporates correct assumptions about market readiness. Set realistic goals - don’t make the product a loser by aiming for unreasonably high sales.

• A good product reduces the ease with which competitors can copy the innovation.

• A good product neutralizes a competitor’s advantage.

• A good product supports a price premium.

• A good product grows in revenue by at least XX % a year.

• A good product has a return on equity greater than XX %.

• A good product exploits the company’s core technologies.

• A good product is faster ... cheaper ... closer ... friendlier. As Loretta Lynn says, “You have to be first, better or different.”

• A good product leverages your business partner’s capabilities.

• A good product contributes to your customers' success.

• A good product builds market share quickly.

• A good product creates a new platform of capability by using cross-functional processes for competitive advantage.

Rubbermaid asks these three questions:

- Who is your customer?
- What relevant service are you providing for them?
- Which of our business strategies are you satisfying?

Wednesday, January 28, 2009

Best Practices for New Product Development.

1) Plan for "right-to-market" v/s "speed-to-market."

Although being among the first to introduce a new product or extension of an existing product is an important goal, creating a product that will satisfy customers should be a higher priority. Companies can often have greater success entering a market late, but with a better product. The Thermos Electric Grill and IBM's ThinkPad notebook computers are good examples.

2) Focus innovation on product elements that are "visible and valuable."

IBM ThinkPad developers looked at all available technologies that would give their product more value for the customer, whether these were invented by IBM or not. Technological innovation should only be used to develop product features that the customer will be aware of and find valuable. Digital speedometers, for example, were soon abandoned by auto manufacturers when they found customers weren't aware of them and didn't think they added value.

3) Get physical fast.

Rapid prototyping to create tangible product models in the early stages of development allows engineers, designers and customers to learn more about a product's use by interacting with it, even if it’s just a physical mock-up, and to observe how customers use the product in the their own environment.

4) Have total team involvement in marketing research.

When it comes to researching customer requirements, it's better to have too much data than too little. In addition to surveys, quality function deployment methods and focus groups, the IBM ThinkPad team formed industry and customer advisory councils, and had "Customer Call Days" where members of the development team called customers directly to discuss the product.

5) Go beyond traditional market research.

Customers want it all. If you ask if they’re interested in a specific feature, they’ll invariably say "Yes." The Hewlett-Packard Digital Multimeter team asked customers if they had to choose from a list, which features would they keep. This "forced pain" questioning adds quality to quantitative data.

6) Have a complete model of customer needs.

The $APPEALS model introduced by Peter Marks in Defining Great Products, includes Cost, Availability, Packaging, Performance, Ease-of-use, Assurances, Life-cycle costs, and Sanctions (or social influences). This format offers a good starting point to understand customer's buying behavior as well as other factors that influence competitiveness.

7) Think "total product."

A customer's relationship with a company doesn’t end with the sale, but continues through service, upgrades and maintenance. It’s more economical to sell more to existing customers than it is to find new customers.

8) Ease-of-use opens new markets.

"Human factors" design can make a product more accessible. The less specialty knowledge required to use a product, the larger the potential market.

9) Understand the science of your product.

Defining a product's specifications means understand its physical and technological limitations. Knowing the trade-offs of the science and technology up-front can make the path of product definition clearer.

10) Choose your team carefully, then make them accountable.

Make sure the functions represented on your team are appropriate to the project. The JBL Sound Effects team had a seat reserved at every team meeting to represent the customer. Even when that seat remained empty, it still left a physical reminder for the rest of the team to keep the customer in perspective.

Tuesday, January 27, 2009

Planning for breakthrough products.

Breakthrough products are rare and consume unpredictable amounts of time and money - “they take what they take.” The most frustrating cases, which are often the most important ones, are next-generation core products (like the Ford Taurus) which are true advances and whose success is central to a company’s fortunes. Introducing frequent small improvements based on customers’ reactions is less risky than taking one great leap forward based on the prognostications of market researchers. That way, new products are a series of little pops, not big bangs. Variations on existing products are predictable enough that phased development works, especially for companies that dominate mature markets. H-P believed it could grow incrementally by integrating its test, measurement and computer capabilities to provide unique offerings (information appliances such as hand-held gas chromatographs, for example) for customers building complex networks. Innovations that depend on technical platforms or infrastructure that others lack provide a sustainable source of competitive advantage. Little advantage comes from just developing clever technical applications.

Faster product development comes from pausing to plan basic technologies. Technology planning keeps developers from chasing technical sophistication that only engineers can appreciate. In most new products, only 20% of the design brings added value. It’s important to establish checkpoints for a technology’s readiness and robustness before letting the designers use it. Think about successors to new products as well as the products themselves. If you don’t plan new generations early, you end up looking at your competitors’ innovations saying, “I wish we’d done that.” Trying to recover quickly by adding features that you didn't initially think results in an expensive, unreliable, untimely (late) product.

Experience suggests that successful marketing strategies emerge from identifying multiple niches, focusing on just one niche and doing very well there, then leveraging this success into other segments. As a company increases its volume through success in other segments, it can re-define the market in terms of its product or service. When Peoplesoft started out, for example, prior to merging with J.D.Edwards and being being acquired by Oracle, it knew it couldn’t compete against much larger software companies. So it concentrated on creating a client-server capability for HR applications and won 70% of that market segment, thus becoming the industry leader. This enabled it in time to move into other segments, such as finance. It now provides Human resource management systems (HRMS), customer relationship management, Manufacturing, Financials, Enterprise Performance Management, and Student Admin. software solutions to large corporations, governments, and organizations.

The difference between a new product idea and a business revolves around the question of how are you going to make that first sale.
- Find people with pain.
- Define that pain.
- Then define the market size.
- Find industries in pain.
- Find the people in those industries who feel that pain.
- Then get a Beta customer, someone who says, “Yes, I think I could use that.”

Monday, January 26, 2009

Involve customers in new product development.

A 1989 McKinsey study showed that products that got to market on time and 50% over budget eventually earned only 4% less than those that were on time and on budget. Products that got to market six months late and on budget earned 33% less than those that were on time and on budget. In a fast changing world, it’s especially important to get new products and services into the marketplace as early as possible rather than waiting to perfect them. Once they hit the market, no one can anticipate where that will lead or whether they’ll succeed or not. Sanctioning experiments with uncertain outcomes is the best way to make progress quickly. The penalties in being late to market in a growing business far outweigh overruns in development costs or the potential waste of having to shut down a development team. Strategies that move organizations in the right direction can be quickly refined through rapid experimentation and adjustment when managers concentrate on failing and learning faster than the competition. Every new product decision has two parts. First you make it, and then you decide to continue it or change it.

As the president of a hi-tech company explained to me recently, “We’re making products daily that are still evolving, delivered to a market that’s still emerging, using a technology that’s still changing on a daily basis.” In uncertain times, much of the route forward may be invisible from the starting point. The only way to see the road ahead is to start moving because clarity emerges more readily from error than from confusion. In a business environment where progress depends on serendipity and spontaneity, high risk and high rewards go hand-in-hand. In many organizations, however, the quest for efficiency drives out opportunities for experimentation. This is a mistake. The quick rise of Casio and Sharp in hand-held calculators and of Ricoh, Canon and Sharp in plain-paper copiers came largely from launching more new high-quality products that the competition did. Time-to-market is as important for success as proprietary technologies and processes. If you wait to move until everything is certain, you can be sure your competition will get to market before you.

Business and product development strategy should be driven primarily by customer needs, values and priorities. Ask, “How do the customers we’re targeting want to deal with us?” Then design the product from the outside in. Make the customer’s use of the product, not the technology, central to all product development. Employees need to develop an instinctive understanding of target customers. Don’t launch a product just because engineering loves a new technology. Consult target users at every step of the way, from the initial idea stage to the actual rollout. Customers don’t want drills; they want holes. Strive to move customers into the design arena, making them part of the design process, developing them into “prosumers” rather than just accepting them as consumers. Success comes not from satisfying customers, but from keeping customers reasonably dissatisfied with what they have so they’ll welcome new products.

In high technology companies, the products are complicated and the people who use them often know as much about how the products work as the people who develop them. Researchers at MIT found that 77% of the innovations in equipment used to make semiconductors and circuit boards came from customers. As technologies become more complicated and users more sophisticated, customers are no longer the passive recipients of a company’s products but the engines of innovation instead.

Friday, January 23, 2009

Passers-by, a poem by Carl Sandburg.

I normally like Elizabeth Alexander's poetry. However, I wasn’t particularly taken by her inauguration day poem, "Praise Song for the Day." So I asked myself who would I have picked if the president had asked me to make the choice. I would probably have recommended Passers-by by Carl Sandburg from his Chicago Poems (1916) both for the relevance of the poem and the poet.

Carl Sandburg (January, 1878 – July, 1967) was an American writer and editor, best known for his poetry. He won two Pulitzer Prizes, one for his poetry and another for a biography of Abraham Lincoln. Sandburg was born in Galesburg, Illinois to Swedish immigrants. At the age of thirteen he left school and began driving a milk wagon. He subsequently became a bricklayer and a farm laborer on the wheat plains of Kansas. After an interval spent at Lombard College in Galesburg, he became a hotel servant in Denver, then a coal-heaver in Omaha. He began his writing career as a journalist for the Chicago Daily News. Later he wrote poetry, history, biography, novels, children's literature, and film reviews. Sandburg also collected and edited books of ballads and folklore. He spent most of his life in the Midwest before moving to North Carolina. He once said, “All politicians should have three hats - one to throw into the ring, one to talk through, and one to pull rabbits out of if elected.” He also believed that, “Ordering a man to write a poem is like commanding a pregnant woman to give birth to a red-headed child.”

Passers-by by Carl Sandburg.

Out of your many faces
Flash memories to me
Now at the day end
Away from the sidewalks
Where your shoe soles traveled
And your voices rose and blent
To form the city’s afternoon roar
Hindering an old silence.

I remember lean ones among you,
Throats in the clutch of a hope,
Lips written over with strivings,
Mouths that kiss only for love.
Records of great wishes slept with,
Held long
And prayed and toiled for. . .

Written on
Your mouths
And your throats
I read them
When you passed by.

Thursday, January 22, 2009

Managing mergers & acquisitions.

Startups are often tempted to grow quickly by combining their efforts with those of other companies. However, there’s more to managing successful mergers and acquisitions than just looking at the numbers. According to the worldwide managing director of Bain & Company, 60 to 70% of corporate acquisitions don’t create shareholder value. That means for every ten deals, seven don’t work out as planned. It seems that the road to successful acquisitions is fraught with danger. Mergers today differ from marriages in that there’s seldom a honeymoon period.

Mergers are only a winning proposition if:
- the underlying business strategies are sound,
- the integration plans are well carried out,
- the cultures of the companies involved can be consolidated successfully.

Experienced practitioners use the following guidelines:

• Be clear about the logic of a potential acquisition. Don’t rely on “synergy.” Clearly understand how the new combination will leverage its assets and abilities to create value.

• Use due diligence beforehand to examine a prospective partner’s organizational health, leadership talent, and managerial abilities. While some differences can be worked out, others are insurmountable and should be avoided.

• Design the integration as carefully as the initial deal. If you’re Quaker Oats, don’t buy Snapple and then dismantle the distribution system that made it successful.

• Apply the guiding principles that were important to the success of the acquiring company to the acquired business as well.

• Specify roles for each of the partners and their top executives in advance. Working it out as you go is usually a recipe for disaster.

• Standardize transferable practices and apply what’s worked well in the past. If the acquired company insists on doing things its own way, verify it’s essential to achieve strategic leverage rather than just a way to resist changing.

• Don’t make additional acquisitions to fix, justify, or further leverage the original deal. If it doesn’t provide the value you expected, fix what can be fixed and cut your losses.

• Define the "where you want to be" before you define the "as is." Identify issues of common concern and rally everyone around these issues.

• Get the leadership established as quickly as possible. Promote a few smart people and give them responsibility for managing the integration process.

• Control the executive compensation system to reward the behaviors that support the culture you want.

• Get the transition over with as quickly as possible by making it painful to hold on to the old.

• Always bear in mind that you get big because you get better; you don't get better just because you get big.

Wednesday, January 21, 2009

The demographics of selling online.

Newegg had experienced management, a clear market segment to focus on (gamers), and a successful model to copy (Amazon). So, I wondered who are some of the people who buy other products online?

The global Internet user population grew 265% from 2000 to 2007 to 1.3 billion consumers, more than 1 billion of them outside of North America, according to Internet market research firm Miniwatts Marketing Group.

• Among U.S. Baby Boomers, born between 1946 and 1964, 42 million shop online.

• Among consumers born before 1946, 12 million shop online, according to Focalyst LLC. Among older consumers with above-average incomes, online shopping is growing. 65.6% of those over 50 with income of $50,000 or more said they had made at least one Internet purchase in the past year in a 2007 survey by research firm The Media Audit, up from 50.2% in a 2004 survey.

• 82% of those 65 and older agree or strongly agree that they don’t like to give their credit card or personal information to web sites, compared with 79% in the 50-64 age range, 74% of those 30-49 and 71% of consumers 18-29, according to the Pew survey.

Who’s not online?

110 million U.S. adults do not shop online. They are:

* 55 million U.S. adults who do not use the Internet.

* Nearly 36 million (74%) adults 62 and older don't shop online.

* About 12 million Internet users don't shop online for fear of providing personal or payment information to web sites.

* Consumers with dial-up Internet connections at home are less likely to shop online than those with broadband connections (59% versus 74%). That means 34 million dial-up users as well as 21 million consumers with broadband don't shop online.
* Minorities are less likely to shop online:
* 17 million African-American adults (59%) don't shop online
* 19 million Hispanics (58%) don't shop online.

Among Hispanics, language proficiency is a key indicator of Internet use. Only 32% of Spanish-dominant Hispanics use the Internet, versus 78% who are English-dominant and 76% who are bilingual.

Even with the proliferation of comparison shopping sites, search engines and new online competitors, e-retailers that meet consumers’ expectations can keep them coming back. In March '08, 48% of traffic to e-commerce sites and 67% of sales came from consumers who typed in a retailer’s URL or clicked on a bookmark, says web analytics firm Coremetrics Inc.

Reliable delivery leads to more sales. When consumers are confident they’ll get their product, they keep coming back. And that leads to business growth. Consumer loyalty isn't dead, however online retailers have to do more today to earn it.

Tuesday, January 20, 2009

How to grow quickly on the web.

In recent years, sales growth at online computer retailer has been explosive – the site posted $1.5 billion in annual sales in its first 6 years of operation after it launched in 2001. In 2004 and in 2005, annual e-commerce sales rose by 30% and 40%, respectively. "Our actual sales versus our projection was slightly below our expectation, but we are quite pleased with our improved product margin growth and this was largely due to our continued focus on product selection, customer support and logistics," the company says.

Inc. Magazine recently distinguished Newegg in its list of America’s 500 Fastest-Growing Private Companies. It’s one of four companies in the list’s 25-year history to qualify on growth merits while also recording $1+ billion in annual sales. is the second-largest online-only retailer in the United States (after Amazon) with more than 10-million registered users. At its award-winning web site,, customers can shop for a comprehensive selection of the latest high-tech products, view detailed product descriptions, pictures, how-to information and customer reviews, and interact with members of the technology enthusiast community.

The online retailer’s core demographic are younger gamers and IT do-it-yourselfers who grew up with computers and the Internet, like the latest in computers and computer games, and are often employed as information technology workers. “We recognized an emerging segment early on,” says Howard Tong, Newegg vice president of marketing. “We sell to the individual who would rather install more memory on their own computer than always buy a new one or have someone else do the installation.”

Newegg launched as a site primarily selling computer components to video game players. Informational content on the site comes largely from customers themselves who post product reviews and ask and answer questions on the site’s community forum. “People will ask, ‘What’s in your system? What graphics card did you use? What power supply?’ These guys love to talk to each other,” says Bernard Luthi, vice president of merchandising at Newegg.

As evidence, he points to the more than 1,000,000 reviews posted to the site since its launch, including more than 250,000 in the past year. Newegg's customers can video their reviews and upload them to the site. While Newegg employees participate in forum discussions, they don’t recommend products. And the company doesn’t measure the value of the forums and reviews by whether they directly drive purchases.

“It’s about getting closer to that customer, making sure we’re giving them every opportunity to give us feedback. That’s what drives our business,” Luthi says. He’s convinced the strategy is working because more than half of new customers are referred by other customers and because the company grew again by more than 25% last year to $1.9 billion in online sales.

Newegg created pages on both MySpace and Facebook because “we heard from our customers that’s an area where they live on a daily basis,” Luthi says. Sales from those sites remain small, though growing, and the conversion rate of clicks from MySpace and Facebook is slightly higher than average, he says. “You have a community of like-minded people that have self-identified as interested in certain things and you have an opportunity to be in front of them in ways that have meaning for them.”

Monday, January 19, 2009

Learning from failure.

Failure usually comes when the startup team doesn’t get along, the market doesn’t materialize, or the company runs out of money. Running out of money happens when the team either doesn’t make enough progress to generate investor interest or spends its initial money unwisely. When either of these happen, investors lose interest.

The following four patterns of failure were described by Geoffrey Moore in Red Herring:

The first kind of failure is the slow fail - not failing fast enough or explicitly enough. You can waste a lot of time this way.

The second kind of failure is failing to transition into the mainstream market. Technology markets begin with disruptive innovations promising unheard-of benefits wholly unavailable with the current market offerings. To transition to mainstream markets, vendors must win over pragmatic buyers who look at each other during the early introduction phase and hold back until they see others like them adopting. They also wait to see if a whole product is available. So the vendor sponsoring the new technology must recruit other companies from the industry to complete the whole product. They must, in effect, bring into existence a new value chain. But value chains don’t readily form in unbounded spaces. To get going, new technologies need to be incubated in confined markets where problems are manageable and the competition is modest. This permits smaller, more vertically focused players to pitch in like Aldus and Adobe did with the Macintosh in desktop publishing.

The third kind of failure occurs when managers and investors agree they don’t need a niche market to get started and dive right in. This is the hypergrowth phase of high-tech market development where markets grow at triple-digit rates for several years at a time. Two key ingredients are needed to start this kind of tornado. The first is a killer app - a universally compelling application that creates mass-market adoption across multiple sectors simultaneously (word processing was the killer app for the PC). The second ingredient is timing. The killer app must intersect with an emerging infrastructure at exactly the right time so that the two of them can race forward together. To get first mover advantage, managers target the missing pieces of the value chain to support the killer app in an all-out assault on the mass market. This usually involves a high level of risk as it’s very unlikely that all these conditions will come together at exactly the right time.

The fourth mode of failure is ending up in the dead zone.
Dead zone products offer good but not fantastic gains that can be adopted with discomfort but not excruciating pain - such as applications compromised by too much complexity or a nice-to-have item where the customer has to endure some pain in learning how to use it.

Failing means getting blocked on an intended course, backing out and restarting. Losing means persisting in failing ways, refusing to change the current course.

In high-tech ventures, expect to fail many, many times and get back in the game. But if you lose just once, you may never have another chance.

Friday, January 16, 2009

Country Fair, a poem by Charles Simic.

Charles Simic was born in Belgrade, which was then in Yugoslavia. Growing up as a child in war-torn Europe shaped much of his world-view. He immigrated to the United States with his family in 1954 when he was sixteen. He grew up in Chicago and received his B.A. from New York University. He is currently professor emeritus of American literature and creative writing at the University of New Hampshire. He’s been awarded a MacArthur Fellowship (1984-1989), and he’s won the Pulitzer Prize for Poetry (1990). Most recently, he was given the Wallace Stevens Award (2007), a major annual American literary award for mastery of poetry in the English language awarded by the Academy of American Poets. Simic was selected to be the fifteenth Poet Laureate Consultant in Poetry to the Library of Congress in 2007. When asked to comment on his poetry, he once said, " A poem is an invitation to a voyage. As in life, we travel to see fresh sights … Words make love on the page like flies in the summer heat and the poet is only the bemused spectator."

Country Fair by Charles Simic

If you didn't see the six-legged dog,
It doesn't matter.
We did, and he mostly lay in the corner.
As for the extra legs,

One got used to them quickly
And thought of other things.
Like, what a cold, dark night
To be out at the fair.

Then the keeper threw a stick
And the dog went after it
On four legs, the other two flapping behind,
Which made one girl shriek with laughter.

She was drunk and so was the man
Who kept kissing her neck.
The dog got the stick and looked back at us.
And that was the whole show.

.......and that's the whole poem as well! I'll be back to business on Monday writing about learning from failure.

Thursday, January 15, 2009

Building collaborative alliances.

Collaborative alliances and partnerships with other companies can often be used to build world-class capability and global reach, rapidly and cost-effectively. Developing strategic partnerships makes sense when what‘s needed is a highly-specialized capability in a fast-moving field, or when significant risk is present. Through these arrangements, companies can concentrate on learning their partner’s skills while at the same time building barriers that discourage competitors from entering their markets. Some companies don’t develop core products themselves anymore. However, they make sure they still know more about them than anyone else does (as an example, Sun Microsystems knows more about circuit-board technology than any of the specialized circuit-board companies that supply it with products).

Canon has been involved in simultaneous partnership agreements with Texas Instruments, Hewlett-Packard and Eastman Kodak, all competitors at that time. Canon used its patents as bargaining chips in cross-licensing technologies, believing that you can only enter into cooperative alliances when you’re able to bargain from a position of strength. Partnerships involving competitors provide access to new markets or technologies, or they allow the creation of products that neither partner can produce on its own. However, such alliances can raise sticky issues about what information to share and what to keep proprietary. In the world of collaborative competition, negotiating skills become as important as technical or operating skills. While collaboration between rivals often makes sense, the companies involved must make sure that cooperation makes their ability to compete stronger, not weaker. Questions that have to do with rethinking strategy and redeploying assets in response to a collaborative environment are: When is it wise to enter into relationships with competing companies? How can a company strengthen its individual identity at the same time?

For a partnership to bear fruit, it should offer both parties a win-win opportunity based on a common vision and strategy, where each partner clearly understands what it might gain or lose from the arrangement. It’s important that partners not only offer the best products or services available, but that their principles, policies and corporate cultures are compatible with yours. Successful alliances depend on shared values and cultural traits. Differences in structure, decisionmaking processes and measurement systems can cause communication gaps and operating tensions. For example, a joint venture involving managers from two companies who work under different bonus systems will quite likely suffer the ill effects of opposing priorities.

Partnership is a win-win relationship where both sides give a little to get something. You have to put yourself in the other guy’s shoes to get a win-win relationship - structuring deals that make sense both ways. Start by role playing how they’ll react to your offer. You need to have each side committed to the deal to make it work effectively. When partnering with a much bigger company, an important consideration had to do with how you relate to the key players there. Obviously, they should be people you feel you can trust. Their style (casual, formal) should match your own. They should have a non-bureaucratic approach to doing business so the deal gets done quickly, without a lot of nit-picking and haggling. Speed is crucial. “Let’s start working on it today and we’ll paper it over as we go forward.” Otherwise, working with a large company can take forever, slowing you down and killing the buzz.

Find someone in senior management who will prosper if this partnership or alliance works. He’ll then lead you up through the ranks to reach the CEO or whoever else you need to work with to get the deal done. Spell out issues like licensing and pricing first. But remember, alliances are nothing but alliances. If people’s needs change, then all the paperwork in the world means nothing. Don’t worry about the big guys stealing your ideas. Gaining time is what matters most.

Go to trade shows, wear a badge, be obvious and easy to find, and go after who you want. Approach other parties with, "Here's who we are. Here's what we do. Here's the kind of transaction we're looking for." Be very directed, focused, to-the-point in meetings. Make it clear what the price range is and that it’s not negotiable. When you partner with another company, make sure the deal enhances future career possibilities for everybody in your company.

Wednesday, January 14, 2009

Forming strategic partnerships.

Technical and Computer Graphics in Sydney, Australia developed a network of 24 small companies with hundreds of employees and revenues in excess of $50 million. Together, they made portable data terminals, computer graphics and bar coding systems. One of the paradoxes of today’s business world is that companies must lower the walls between them rather than building them up to make them safer. Large organizations with more resources are better able to support partnership experiments that open up new possibilities than small companies. As a result, lopsided partnerships are proliferating, matching smaller innovative companies with larger deeper-pocketed investors.

Try to form alliances with people who are richer, smarter, larger, and who need you. Give or sell them what you’ve got cheaply to create market share and product awareness. You want them to eventually become your friend and help make your market. Joint marketing arrangements for building brand-name recognition can involve finding someone who is willing to subsidize your distribution. But make sure you know how the other company’s sales force is compensated. Otherwise, the cash you get up front is likely to be all the cash you get. You risk ending up as a line-item in a catalog that no one reads. Get to the sales people and tell them how much money they’re going to make from selling your product. And you still have to sell, to represent, to advertise your product. Don’t assume it’s going to be in your partner’s best interests to help you - they’re more likely to concentrate on selling their own products. Joint venture companies don’t always believe that promoting the partner’s product is in their own strategic interest.

Two key objectives should drive any strategic partnership deal. First, it should be a very good financial transaction for the company and its principals - that’s the primary consideration. Second, it should create an association with a partner who adds value. That’s the secondary part of the transaction, but it’s crucial in choosing who you sign up with.

Start by getting clear on what the absolute requirements of the partnership are and how you want the transaction to work. For example, “We want a partnership because it’s a flexible and creative form of an alliance. However, it’s crucial that we keep control of our current business."

Tuesday, January 13, 2009

Startup advice from Leo Speigel.

Leo Spiegel is a managing partner with Mission Ventures, a hi-tech venture capital firm. He’s been president of Digital Island, and CEO of Sandpiper Networks. He’s also a member of Dean’s Advisory Council of the Rady School of Management at UCSD. Leo says that fast growth startup companies need to pay particular attention to the following top ten issues:

1. Hire great people fast and hire executive management early. Use every possible opportunity and media to find them and when you do, pull the trigger quickly. However, make sure they’ll mesh with the rest of the team and fit in with what you’re trying to accomplish.

2. Be well funded. It doesn’t matter what percentage of the company you own - what matters is how big the pile of money is. Object Design used strategic alliances and venture financing to build its market capitalization to $500 million. Spiegel says, "We figured we'd rather own 20% of $500 million than 80% of $50 million."

3. Purposefully create a company culture that values empowerment, delegation and self-direction.

4. Employees are carbon-based units, not machines. Make each one a star.

5. Understand your own personal weaknesses and have great advisers.

6. Buzz is king - there’s a direct correlation between creating buzz and creating shareholder value. To generate buzz, you need advocates who will validate what you’re saying. And you need to capitalize on news events - use them to get your message out to the right place at the right time. Train your managers to broadcast the right message. Have them look like leaders. Google is a brand and Google is buzz - together, they make the world believe.

7. Know your target market and watch all your competitors. Be really, really aware.

8. Find the boulders. On any given day, there are too many things to do - so prioritize. Push like hell to move the biggest boulders up the hill every single day.

9. Work hard, have a “can do” attitude and be passionate. Make sure that making the company successful is all you think about at work every day. You lead by example – your passion rubs off on others.

10. Focus on keeping a balance between your personal and your private life. Work should only be a part of your life.

Monday, January 12, 2009

Grow the business.

Within a year of its founding in 1982, Compaq Computer posted revenues of $111 million. In 1995, six years after its founding, Telegroup Inc., (now part of Primus) posted revenues of $129 million - nowhere near Compaq’s record, but in many ways a more spectacular performance. While Compaq's growth was executed by a start-up team of seasoned executives who followed a detailed plan and spent a lot of investment capital in the process, Telegroup's growth wasn't planned at all. "My intention was to do this business to support my family while I decided what to do with the rest of my life," according to Telegroup’s founder, Fred Gratzon. Besides starting without any sort of plan, Gratzon was also dead broke at the time. Gratzon was an accidental entrepreneur. Down and out after losing his job, he parlayed a way to make a toll call on the cheap into one of the largest long-distance telephone companies in the world. But it might never have existed if Gratzon hadn't tapped into package deals offered by AT&T as a way of reducing his own telephone bills.

Iomega hasn’t produced a significant hit since it introduced the Zip Drive in 1995. This is usually the kiss of death for a technology company - things just move too fast for hot products to stay hot for very long. In 1995, hard discs rarely stored as much as one gigabyte of data. Today, a typical $100 hard drive can store several terrabytes. People no longer pass data on large products back and forth either - they just send the data by email. The Zip has devolved into a solution to a problem that no longer exists.

Despite its fame as an innovator, 3M hasn’t come up with another Post-it. Most unique selling points prove to be anything but, as they’re rapidly imitated by competitors. In a fast moving world, even blockbuster products have less and less time to reap the rewards. By regularly introducing new products, you give the consumer a reason to buy. You need to convince them that, “If the product you currently have is more than two years old, you’re really missing something.”

Be the first to create new products that put your existing products out of business. Develop new products fast, get to market first, that’s how you win. A McKinsey study showed that products that got to market on time and 50% over budget eventually earned only 4% less than those that were on time and on budget. Products that got to market six months late and on budget earned 33% less than those that were on time and on budget. A Stanford University study of 78 product development projects in 36 companies in Asia, Europe, and the United States, found that in negotiating a highly uncertain path through shifting markets and technologies, the key is to build on intuition and to include flexible options.

A fast product development cycle:
- Allows a company to reinforce its new brand positioning more frequently.
- Ensures the company is first to deliver new products and features through more rapid innovation.
- Reduces the impact when competitors copy the company’s innovations.
- Integrates consumer feedback into the product more frequently.
- Improves reaction time to competitive actions.
- Supports competitive advantage and price premiums.

If success arrives too big or too early, then you've got to have the passion and commitment to go beyond success - to build a durable, lasting enterprise. The best entrepreneurs don't focus on success; instead, they focus on building a company that can be a leader in the global economy. They know success will follow. If you focus on success, you won't get there. If you focus on contribution and customer value, then you can win.

To many entrepreneurs, the greatest satisfaction, owning a business, which often includes working closely with customers and employees, inevitably diminishes as the business grows and the owner’s role changes. Jack Ferner, a former dean at Wake Forest University says, “Many entrepreneurs would rather limit their company’s growth than give up those satisfactions. My experience has been that for every one who has dreams of grandeur and size and billions of dollars, there are probably five that prefer to remain small.” The other perspective is pointed out by John Thorne from Carnegie Mellon University: “I think there’s an argument in many industries that if you don’t grow, you can’t hold on to good people, you’re not going to stay in touch with the technology or the marketing trends, and you sort of slowly die.”

Friday, January 9, 2009

Song for Cracked Voices, a poem by Morris Bishop.

Morris Bishop (1893 - 1973) had a long and distinguished career as a scholar, linguist, teacher, and author of 30 books. He was also a master of light verse, and enjoyed a wide and appreciative readership in the 40-years he contributed to the Saturday Evening Post, The New Yorker, Life, and the Saturday Review.
He was a professor of Romance Literature at Cornell and held three degrees from that university. He was awarded many honorary degrees from other universities in the US, Canada, and France, where he was made a Chevalier de la Legion d'Honneur. He served for a time as president of the Modern Language Association.
His verses speak to our fads and foibles and his ingenious way with words makes us laugh at ourselves.

Song for Cracked Voices by Morris Bishop

There once was a man
With a burning desire:
"As soon as I can
I want to retire;
Retirement is what
I want to get on to,
And work I will not,
But do what I want to."

With energy vast,
He labored undaunted
In order at last
To do what he wanted.
But when, after all
His struggles were through,
He couldn't recall
What he wanted to do.

Oh, most of us can't
(And much we regret it)
Still want what we want
When able to get it.
But happy, I grant,
Are the fortunate few
Who do what they want
When they know what to do.

Thursday, January 8, 2009

Keeping focused as you grow.

If you don't know where you're going, you probably won't get there. A very common problem in startup businesses is confusion of purpose and lack of focus. It's easy to fall into the trap of being scattered, unfocused, overwhelmed. Entrepreneurs are often high-achievers, but they waste time, money and energy having too many irons in the fire because they’re unable to let go of the details. It's tempting to be a jack-of-all-trades and master-of-none. But that won't work - you must focus, focus, focus.

Your thoughts, energies and ideas must all be single-mindedly concentrated on your primary objective and your strategic initiatives. You can’t pursue five goals at once. You must focus your energy until you become like a laser beam. Then, communicate, so everyone understands the vision, the plan. Talk about these every single day. Don’t ask employees to pursue vague intermediate objectives like “excellence.” If you can’t clearly state on paper what you expect from someone, you’re in trouble.

Keep people focused on bottom-line performance and long-term survival. Have really clear system-wide goals - reduce crime by 30% for example, rather than concentrating on intermediate objectives such as increasing arrests or improving the response time of police officers. Avoid goals such as launching a new advertising campaign by the end of May - focus instead on increasing market share by 20%. Don’t focus on narrow functional goals. When you do, everyone goes off in a different direction and even though the basic measures of the company’s performance may be slipping, no one feels responsible to do anything about it. Emphasize improvement in broad business performance instead. Sharon Ballard says, “You get what you inspect, so inspect the things that are key for your startup's success.”

You can't succeed without mastering the fundamentals of your business. People who are masters at anything are relentless about studying, practicing and polishing the fundamentals. There are no short-cuts to mastery. You must be doing the fundamentals right before you get to the advanced stuff. The fundamentals include: business, management and interpersonal skills, planning, financial controls, marketing strategies, superior products and services, effective sales efforts, unparalleled customer service, and effective tools and systems. And you must understand the financials. After all, it’s your money. You have to have the numbers down cold.

One of the problems that comes with success is that people don't want to change. So the person at the top has to be the champion for change. When complacency stalls growth, get people to think about redefining their markets. In the early 1980s, Robert Goizueta challenged Coca-Cola’s staff to stop thinking about their 35% share of the soft drinks market, but to remember instead that people drank 64 fluid ounces of liquid a day - and only two of these were Coke.

As your company grows, you no longer face the challenge of having to do everything yourself. Instead, surround yourself with people who are smarter than you are and get out of their way. Don’t be afraid to give up control. Include rather than exclude them in decisions about running the business. Delegate and you’ll be amazed by what people can do. However, the price of getting people’s commitment is working on their issues as well as your issues.

Wednesday, January 7, 2009

Entrepreneurial leadership.

The ideal personal profile of an entrepreneurial leader is someone who is strong on every level, physically, mentally, emotionally, spiritually:

- Physically strong - healthy, fit, and energetic.

- Mentally strong - tough, sharp, and disciplined. Can solve problems quickly and decisively. Comfortable handling conflict and adversity.

- Emotionally strong - in touch with his or her emotions. Human. Empathetic.

- Spiritually strong - is grounded, balanced. Has a rich inner life. Feels a deep connection and purpose. Has his or her life together.

Great leaders have high reserves in all areas of their life. This is the case when:

- They make sure their personal needs are met.
When you have unmet needs, you attract others in the same position.

- They tolerate nothing.
You are what you tolerate. When you put up with something, it costs you. Costs are expensive and thus unattractive. “The art of leadership is saying no, not yes. It’s very easy to say yes,” according to Tony Blair.

- They’re oriented exclusively around their values.
When you spend your days doing what fulfills you, you're attractive to others.

- They deliver twice what they promise.
When you consistently deliver more than was expected, people are drawn to you.

- They affect others profoundly.
The more you touch others, the more attractive you become. And optimism is a force multiplier.

Here’s a checklist of things to think about as you carry out your leadership roles:
- Are you really focused on results, or on your own needs?
- Are you open or closed to correction?
- Do you always try to learn, and teach others when you can?
- Do you hold yourself fully accountable in work, or shift responsibility when things go wrong?
- Do you move quickly to solutions or take perverse delight in problems?
- Can you earn people’s trust?
- Are you looking for progress, not perfection?

Finally, remember Pat Murray's observation; “No great leader is a scorekeeper – all the wealth happens on the way to somewhere else.”

Tuesday, January 6, 2009

Becoming an entrepreneurial leader.

Bill Gates says, “When I started Microsoft, I was so excited that I didn’t think of it as being all that risky. It’s true, I might have gone bankrupt, but I had a set of skills that were highly employable. And my parents were still willing to let me go back to Harvard and finish my education if I wanted to .... If you’re going to start a company, it takes so much energy that you’d better overcome your feeling of risk.“ Entrepreneurs have the innate ability to compartmentalize their fears and doubts. They believe in what they’re doing with a passion that overcomes doubt. They’re resilient, tenacious and have the guts to overcome some white-knuckle adventures, such as replenishing a bank account the day before the payroll is due. They’re very resourceful and operate mostly on instinct. They’re always rolling the dice. They have a powerful need to provide for their families and they have an overpowering urge to do it their way. If they’re too intent on the dream to recognize the risks, they often lack the experience and the resources to protect themselves. So, they take action, make the mistakes, pay the price and if they’re lucky enough to survive, a successful business emerges. Although much has been written about how the “entrepreneurial personality” is characterized by “a propensity for risk-taking,” successful entrepreneurs spend considerable time trying to define the risks they have to take and trying to minimize them.

Leaders, by definition, set standards and attempt things that “can’t be done.” So, in a startup, the CEO’s job is figuring out what the company stands for, pushing the company to understand what it’s really good at, and building mechanisms (preferably something dramatic) that will force people to pay attention, such as Granite Rock’s altered invoice that says, “If you’re not satisfied with something, don’t pay us for it. Simply scratch out the related line item ... and send your check for the remaining balance.”

An entrepreneurial leader focuses on three employee-management fundamentals to start building an innovative organization. The first step is to formally integrate innovation into the strategic-management agenda of senior executives. In this way, innovation is not only encouraged but it's also managed, tracked, and measured as a key element of the company’s growth. Second, executives make better use of existing (and often untapped) talent for innovation, without implementing disruptive new programs, by creating conditions that allow dynamic innovation networks to emerge and flourish. Finally, management fosters an innovative culture by developing and enhancing trust among employees. In this kind of culture, people understand that their ideas are valued, that it’s safe to express these ideas, and that everyone collectively shares the risks inherent in introducing and implementing new ideas. This environment will be more effective than just using monetary incentives to sustain innovation.

Monday, January 5, 2009

Startup advice from Sharon Ballard.

Sharon Ballard is the CEO of Enable Ventures Inc. and the former CEO and cofounder of Reticular Systems. She’s been a management fellow for UCSD’s CONNECT program where she advised over 60 early stage high technology companies. She served as entrepreneurial management consultant to the San Diego Technology Incubator, mentoring their high technology clients, and served several fellowships with Hunter Centre for Entrepreneurship at the University of Strathclyde, Glasgow, and the Center for Enterprise Management at the University of Dundee, Scotland. She’s been a frequent judge for San Diego State University Entrepreneurial Management Center's Annual Student Business Plan Competition. For Arizona State University, she’s assisted university spinouts with their federal proposals for research grants and contracts. She’s one of two principals of Tech Continuum Ventures, LLC, under contract to deliver education, coaching and connecting events for ASU's Technopolis Program.
Sharon cautions to watch out for the following in a new startup:

1. Product development delays.
When products run late, this can have serious implications for cash flow. Try to keep development cycles on track and on time.

2. People problems.
People are the core of most businesses and the single largest expense. Hiring great employees takes time, hard work and some good luck. Every business makes hiring mistakes, but one key to success is fixing the mistakes quickly. If your company has problems with poor individual performance, lack of teamwork, or high turnover, deal with it immediately. Don't wait until personnel issues threaten to destroy your business.

3. Sales below projections.
Revenue projections are often overly optimistic. Be realistic. Sales usually ramp up more slowly than expected. Factor this into your thinking because it affects cash flow and can cause serious operating problems.

4. New competitors.
There’s a lot of money chasing a few good ideas. If your idea works, expect investors to form new companies that will compete with you. Stay focused, and continually think about what your company can do to stay ahead of your competition.

5. Investor agendas.
A constant consideration for any startup is asking, “What am I doing and how is that going to be perceived by the investment community?” as well as, “Does it make sense and will it build value for my present investors?” An entrepreneurial CEO is constantly thinking about both.

6. Feel the fear, but do it anyway.
If you’ve been honest and have done your very best to make your venture successful, there’s no shame in failure and also no reason not to try again.

Thursday, January 1, 2009

Thoughts on Capital Punishment, a poem by Rod McKeun.

Born in Oakland, California, in 1933, McKuen ran away from home at the age of eleven to escape an alcoholic stepfather and to send what money he could to his mother. After a series of jobs, from lumberjack, ranch hand, railroad worker to rodeo cowboy, McKuen began in the 1950s to excite audiences with his poetry readings, appearing with such well-known poets as Jack Kerouac and Allen Ginsberg. McKuen's commercial success is unparalleled in the field of modern poetry. He also achieved considerable success as a songwriter, soundtrack composer, and singer. As a songwriter, he has contributed to the sale of over 100 million records. In addition, his humanitarian efforts have twice won him the prestigious Freedoms Foundation Award. McKuen retired from live performances in 1981. What a guy!

Thoughts on Capital Punishment by Rod McKuen

There ought to be capital punishment for cars
that run over rabbits and drive into dogs
and commit the unspeakable, unpardonable crime
of killing a kitty cat still in his prime.

Purgatory, at the very least
should await the driver
driving over a beast.

Those hurrying headlights coming out of the dark
that scatter the scampering squirrels in the park
should await the best jury that one might compose
of fatherless chipmunks and husbandless does.

And then found guilty, after too fair a trial
should be caged in a cage with a hyena’s smile
or maybe an elephant with an elephant gun
should shoot out his eyes when the verdict is done.

There ought to be something, something that’s fair
to avenge Mrs. Badger as she waits in her lair
for her husband who lies with his guts spilling out
cause he didn’t know what automobiles are about.

Hell on the highway, at the very least
should await the driver
driving over a beast.

Who kills a man kills a bit of himself
But a cat too is an extension of God.