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| The 50 Critical Questions Essential to Running a Great Business |
| Saturday, December 6, 2008 |
Jan B. King currently leads a consulting practice primarily devoted to helping traditional publishers, writers, and educators with content development and curriculum design for print publications and innovative web sites. In addition she teaches small business management topics and writes and speaks extensively on employee-ownership and participative management.
Consider making each of these questions the topic for weekly management meetings. Do we have a vision about where we are going as a company?
1. Do we plan adequately to grow the company?
2. Do we communicate the plan to all who are involved with the company?
3. Do we have good cash management?
4. Are we building cash?
5. Is the overall financial condition of the company improving or deteriorating?
6. Do we have timely and accurate financial data to review?
7. Does the data we have help you make decisions? Do we need more? Do we look at all the data you receive each month?
8. Do employees understand how their work impacts the company financially?
9. Is our company performing well compared to industry standards?
10. Do we have adequate internal controls to prevent employee theft?
11. Do we meet with employees at least once a month to review variances and trends?
12. Are we losing market share?
13. Have we surveyed or otherwise communicated with our customers for their input in improvements in service and new products?
14. Are overall customer complaints trending up or down?
15. Do we clearly understand our customers and markets?
16. Do we know where we are positioned in our market?
17. Are our products and services out of date?
18. Is our pricing appropriate and competitive?
19. Are we regularly creating new products and offering them to existing customers?
20. Are we satisfied with our revenue growth?
21. Are all of our product sales profitable?
22. Is our customer base shrinking or increasing?
23. Can we identify customers or groups of customers whose business is not profitable for us?
24. Are we satisfied with our plans to expand via the Internet?
25. Do we spend time with our direct reports, one-to-one?
26. Do we spend time with our top customers, one-to-one?
27. Are our sales and customer service people superstars?
28. Do you celebrate the achievements of the company and its employees?
29. Do we do self-audits on our own records, and the maintenance of equipment?
30. Do we have back up suppliers for most of our manufacturing process needs?
31. Do we have adequate internal quality controls or do customers know first if processes failed?
32. Have we adequately protected our intellectual property?
33. Are our facilities that are adequate for today also adequate for our growth plans?
34. Are we adequately minimizing the threats to our business?
35. Are our facilities and information systems prepared for a natural disaster or other physically destructive force?
36. Do we have adequate back up procedures for our information systems?
37. Are we making the best use of available new technologies in manufacturing?
38. Have we talked to our suppliers about better prices or terms or other changes to our relationship to benefit us both?
39. Do we regularly chart and review operational performance?
40. Do we spend enough time to be sure we are hiring for the long run?
41. Do we follow compliance laws and have written policies as required?
42. Are we following procedures that are most likely to keep us out of employee lawsuits?
43. Does our compensation and benefit structure allow us to hire highly talented employees?
44. Are our employees overworked? Do we spend a lot in overtime and temporary help? Is that number increasing?
45. Do we tolerate gossip or other behavior that undermines employee morale?
46. Do we ask employees to review the company?
47. Do we give enough types of feedback to employees regarding their performance? Do we review them individually at least annually?
48. Do we insist our employees stay employable?
49. Is the CEO accountable to someone for his or her decisions and actions? Does the Board (if you have one) communicate their expectations about the company?
50. Is the CEO accountable to someone for his or her decisions and actions? Does the Board (if you have one) communicate their expectations about the company?
WYD Team |
posted by Win Your Dreams @ 2:38 AM
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| Top Ten Mistakes made in Business Plans - Jan B. King |
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Jan B. King currently leads a consulting practice primarily devoted to helping traditional publishers, writers, and educators with content development and curriculum design for print publications and innovative web sites. In addition she teaches small business management topics and writes and speaks extensively on employee-ownership and participative management.
1. Not proving that you have the management expertise to make it happen.The quality of your people will lend credibility to your ideas and even to your financial projections. If your management team is not as strong as it could be, join forces with a great board of advisors.
2. Not demonstrating where your revenue will come from - what customers pay you andwhy they pay you.Don’t be too aggressive in setting revenue projections or you will undermine your credibility.
3. Not proving that your business model and long term cost structure is good enough to make a real profit. How will your business make money - what is your margin structure, what are your costs?
4. Not being clear enough in your product description to allow the reader to quickly see the need and the niche for this product. It may seem obvious to you, but not so to the reader not educated in your business.
5. Not proving that the market opportunity is big enough to get interested in. How big is your market now and what will it look like in 5 years?
6. Not adequately acknowledging your competition. Investors know that if there is no perceived competition, there may be no market for what you are offering. The better you can describe your competition, the better you understand your market, and the more likely you will dominate it.
7. Not writing for the target audience. Although the core is the same, the plan should be written for the perspective of banks, equity investors, and others. Go as far as you can to tailor each plan to the audience’s specific interests to show you’ve done your homework and know to whom you are talking.
8. Starting with a boring, unenthusiastic executive summary. This is the first section to be read, and if it isn’t exciting the rest may never be seen. Make it fun and be enthusiastic. It should stand alone and generate interest for more. It deserves all the thought you would put into a professionally done promotional piece for your customers.
9. Poor presentation. If you have typos and grammatical errors in your business plan, the reader will assume the work you do in your business is sloppy too.
10. Saying too much.Keep the entire plan to a maximum of 30 pages, with an executive summary of 3 pages or less. If investors are interested, they will ask for any other information they need. Amateurs talk in the business plan about unimportant details because they don’t know what they should say and what they shouldn’t. Hire a professional editor to reduce the page count and help you emphasize your strengths. |
| posted by Win Your Dreams @ 2:34 AM
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| Forces that will define companies' future |
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Harvard Professor Michael E Porter, the world's top management guru, developed the two most widely acclaimed and influential models for information systems planning and strategic management:
Competitive Forces Model, and
Value Chaining.
Porter has had a lasting influence on strategic management with the books he authored about the competitive advantages at industry level and global level in eighties. Since then, these models have become a guiding Bible for organisations worldwide.
Porter's ideas faced some criticism in the last decade-and-a-half due to the development of the new economy, called the Internet economy. Compared to old economy, the conditions to do business have changed fundamentally in the Internet world.
The rise of various e-business applications and various companies relying on Internet for business, knowledge, etc., has strongly influenced all industries.
In the eighties, the economic situation illustrated:
A period of strong competition,
Cyclical development,
Relatively stable market, and
Changes in technology were not as rapid as today.
In Porter's model, the focus was on:
Actual situation such as organisation's relation with customers, suppliers, etc.,
Intensity of competition, and
Predictable developments in areas of new entrants, substitutes, etc.
Porter's framework relies on developing the competitive advantages from strengthening the parameters within the 'five forces framework.' These models do not address today's dynamic changes that have the power to transform industries.
Three New Forces by Larry Downes
Larry Downes is a consultant, educator and speaker on developing business strategies in an age of constant change caused by information technology. He works with Fortune 500 businesses in a variety of industries, and serves on the advisory boards of several startups. In his article Beyond Porter, the five forces model is no longer viable.
He introduces three new forces that require a new strategic framework and set of very different analytic and business design tools.
Digitalisation;
Globalisation;
Deregulation;
Digitalisation: As computing power and communications bandwidth become cheaper, more and more activities move to a digital format. The rise of public networks makes this information more widely available, increasing the possibilities for collaborating and competing.
Downes quotes example of the rise of online shopping malls, operated by telecom operators and credit card organisations. Organisations that use the five forces model and base on thinking strategy of today, would never see changes coming in time. This has been the trend in last couple of years, with improvements in network bandwidth, information is available in digital format and more widely adopted.
Online communication, collaboration, coordination and competition have gained traction and increased the possibilities and strategies for innovation.
Globalisation: The world is rapidly migrating to one very large network (the Internet) whose attraction, based on Metcalfe's Law, is irresistible. The effects are felt throughout the production and distribution chain, as local businesses become global overnight, customers engage in borderless commerce, and competition kicks into overdrive.
Since the rise of Internet, we are seeing a steep increase in business process outsourcing and IT enabled services such as call centre activities, e-learning, etc. It has improved the distribution logistics. Customers have a chance to shop around and compare prices globally. As a result, local mid-sized companies have to compete in a global market, even though they do not import or export their products and services.
Global and networked markets impose new demands on organisation's strategies. Competitive advantages emerge from the ability to develop lasting relationships with customers and partners leveraging far-reaching networks for mutual advantage.
De-regulation: The current trend towards deregulation reflects a belief by governments and regulated industries alike that the disease (open, international competition) is better than the cure (laws to protect local economies). The result is a radical shrinking, outsourcing, and restructuring of traditional enterprises.
Countries around the world are going through this phase. For instance, the insurance, telecom, and aviation sectors are de-regulated in India. The energy sector was de-regulated in the United States in 2002, giving rise to competition and good service to consumers.
Downes summarises that the role of IT differentiates strategy of the Porter world and new forces in new world. In the old economy, IT was used as a tool for implementing change. Technology has become the most important driver for change.
Is Porter's 'five forces model' still viable?
In fact, digitalisation, globalisation and deregulation have become powerful forces in last few years. Porter's models rarely consider Downes' three forces. Technological progress, especially IT, has influenced today's market to a great extent. Henceforth, it is not practical and viable to just develop a strategy solely on Porter's models.
The new economy has transformed from its initial euphoria to a more sustainable economic eco- system. But the speed of technological change and innovation has not slowed down. Economic laws that apply to products and services cannot be simply transferred to the new category called Information goods. The production, marketing, etc., of products and services are different for different categories.
However, I am of the opinion that if one were to base strategy development on few selected models then they are not useful. This was true in the eighties too. Every strategy should base on a careful analysis of all internal and external factors and on their potential future development. This is no new insight.
Further more, we have realised and learnt that the basic laws of economy hold good for the new economy, which is the basis for sustainability of Porter's ideas. Porter, who is an economist, based the five forces of model on microeconomics. IT just explains microeconomics in a more understandable way.
Porter talks about the attractiveness of an industry that is influenced by the shape of five forces. In economics, the constellation of factors determines issues like profit maximization or supernormal profits.
These laws are unquestionable. In reality, what Porter's models demonstrate is how the fundamental laws of economics tell the stories of all industries covering all aspects of product/service selling starting by raw-materials supplied by suppliers to manufacturing, to distribution to customers.
Therefore despite all the changes in the industry dynamics and business models -- Porter's ideas are not totally obsolete. Their underlying idea is that every business operates in a framework of suppliers, buyers, competitors, new entrants and substitutes.
This idea is valid in every competition-based economy. Even today, every organisation in the old economy and in the new economy has to produce its goods and services and to sell them by offering an attractive bundle of value for money and supporting services. Every online portal has to produce or buy content, to present it, and to find buyers for its offerings -- be it visitors or advertisers.
Hence, organisations still operate in the framework of the five forces described by Porter.
Transformation
The three forces mandated by Downes made the five forces framework, instable, dynamic and complex.
Even careful market observation cannot foresee all potential new entrants or substitutes that might enter the market virtually overnight, driven by technological progress. Organisations have to adjust their structures, processes, business models and strategies to this new dynamics.
Nevertheless, it is no less important to think about the own bargaining power towards suppliers or customers. The difference is that organisations today have more means to influence competitive forces. Traditional thinking in Porter's world was largely limited to achieving a better competitive position against other players.
Now it is more important to form collaborations for mutual benefits. This can be ad hoc networks of partners, common standards, strategic alliances and much more in-between.
As a result, Porter's ideas have become just one tool in a wide array of tool sets available to organisations. This tool is no longer the only or the most important tool. But it is not obsolete either. Rather it should be used in tandem with new and traditional management techniques in order to gain the most comprehensive picture.
It is just that Porter's models focus too much on economic conditions of the old age. The viability is limited under the transformed business conditions. It is clear that Downes new forces were derived from the transformed economic conditions in a particular era. In next few years or a decade, the three forces would lose some of their importance because other developments would take a driver's role.
The most sustainable of Downes new forces will probably be digitalisation. Good 'information' will become more and more important for any economy. There will be more technological progress in information technology that has the power to transform industries again and again.
Deregulation and globalisation are just temporary drivers. Within a few years, governments will have deregulated everything. Similarly, all companies would adjust their operations to a serve the global economy. Otherwise, companies will have to fear the failure to succeed in the market place.
We are already experiencing this phenomenon. Today, global thinking is fast becoming as standard a management activity as cost control or selling. In all probability, there would not be major transformations from deregulation and globalisation.
Conclusion
Michael Porter's models will have to be considered for learning how the fundamentals of economies work. Then base the decision to develop the strategy for building and nurturing companies on the forces that drive the economy specific to market, industry and customers.
We should apply the knowledge with their limitations in mind and use them as a part of larger framework of management tools and techniques. I would advise this approach suitable for any organisation's business model, either new or old economy.
WYD Team |
| posted by Win Your Dreams @ 2:22 AM
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| Smart Strategies: Putting Ideas To Work |
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In the early 1980s, Michael Porter gave us Competitive Strategy and told us what fueled the engines of corporate growth. A decade later, C.K. Prahalad and Gary Hamel told us to mind our “core competencies.” In the years since, however, there hasn’t been a whole lot of shaking going on in the world of corporate strategy. As one consultant put it, “There have been several great eras in strategy. This is not one of them.”
One reason, of course, has been the seasick economy. Companies busily battening down the hatches and tossing employees over the gunwales weren’t exactly interested in charting innovative courses for growth. Another problem was guru-fication. Too many experts quit doing the hard research and instead hit the speaking circuit armed only with derivative sequels to their previous groundbreaking works, plus plenty of charm.
But there are signs of spring in the land of strategy. Quietly, minus all the hoopla, a few innovative thinkers have been doing the work of finding new strategies to succeed in a tough environment. Ram Charan has a new book out this spring; C.K. Prahalad does, too; Mercer Management Consulting’s Adrian Slywotzky and Monitor Group’s Bhaskar Chakravorti turned out books of case studies last year; and Porter is working on a new strategy tome for next year.
The true test of a strategy, of course, is whether it has any traction in the real corporate world. We wanted to know who out there on the front lines of business has been putting smart ideas into action, seeking to grow in saturated markets, hunting for talent in new places, and navigating a fully globalized environment. And so, with input from several of these thinkers, we offer these five tales of strategic innovation–not as it’s pondered or promoted, but as it’s practiced.Create demand by solving problemsRobert Walter, Cardinal Health
Life used to be a lot simpler for companies, says Adrian Slywotzky, vice president at Mercer Management Consulting Inc. You invented some great products, bought up smaller competitors, and kept getting bigger. But now, says the coauthor of How to Grow When Markets Don’t (Warner Books, 2003), things are much tougher. “Product markets are saturated; the good acquisitions are done already.”
One way to grow in that world, Slywotzky says, is to innovate your own demand. That’s what Cardinal Health Inc., a Dublin, Ohio-based health-care-services company, is doing. Cardinal uses its unique access to both drug manufacturers and hospital chains to figure out where the problems are in the pharmaceutical business. Cardinal then creates new products to solve those problems, save customers money, and produce a tidy profit for itself. “They grow by figuring out how to improve their customers’ economics,” Slywotzky says.
Take the thorny issue of delivering medicines to patients in hospitals. Messy, handwritten prescriptions, a growing shortage of nurses and pharmacists, and pills lost during the dispensing process all add up to a dangerous and expensive problem. Incorrectly dispensed drugs can injure or kill patients and cost hospitals millions in lost medications or lawsuits.
Cardinal CEO Robert Walter smelled an opportunity. “We were already delivering products to the loading dock,” he says. “Why not manage delivery all the way to the bedside?” Walter bought a company called Pyxis, which makes ATM-style machines that are prestocked with the most commonly used medications. Approved prescriptions are loaded into the machines’ memory; nurses gain access via their fingerprints. Pyxis cuts down on mistakes and requires fewer personnel to dispense medications, improving safety and cutting costs. For Cardinal, which has deployed the machines into about 90% of U.S. hospitals, it means a steady new source of revenue plus a boost to its drug distribution business: Hospitals with Pyxis machines are more likely to buy their drugs from Cardinal.
Cardinal also found a problem it could solve for its suppliers: how to keep supply-chain costs down–a big challenge drug companies face when one of their patents expires and a once-hot product becomes a commodity. Walter’s solution? “I bought a packaging business, so we can bottle and box drugs for the big pharma companies,” he says. Drug companies can now cheaply outsource the manufacturing, packaging, and distribution of drugs to Cardinal while focusing their own efforts on developing the next blockbuster. With revenue that grew from $1.9 billion in 1993 to $51 billion in 2003 and operating earnings that ballooned from $60 million to $2.5 billion, it looks as if Walter’s strategy is sound medicine.Customer experience is the brandSally Jewel, REI
Sally Jewel knows there are a thousand other places where outdoor enthusiasts can buy trail boots, maybe even at a better price. But Jewel, the CEO of outdoor-gear retailer Recreational Equipment Inc., also knows there’s simply nowhere else hikers will find the REI experience: testing boots on an indoor mountain to see how much their toes hurt when they tromp downhill, or trying them on a climbing wall to check traction. At REI’s flagship store in Seattle, hikers do just that, and at REIs across the country, shoppers also test gas stoves, practice setting up tents, and ask real explorers–who happen to be store clerks–which sleeping bags they would use on a mountain trek.
The in-store learning works both ways. When women shoppers looking to get active began flooding stores in recent years, REI responded with a new line of products based on what they asked for: tops with built-in bras for hiking and sleeping bags with extra room at the hips and extra warmth at the feet. When its staff heard complaints from shoppers about being pressed for time, REI responded with more gear for activities that can be done in a day, instead of focusing only on multiday adventures.
In a world where customer service is routinely terrible, REI has created a customer experience that is unique in retail. “We used to be product-driven–assuming we have the experience in gear and relying on customers to trust us to pick the right products,” Jewel says. “Our breakthrough four years ago was to shift to being market-driven–paying attention to who these customers are and how we can adapt to the way they want to recreate.”
If indoor mountains and climbing walls sound gimmicky, don’t be fooled. It’s not the individual pieces but the combined effect that’s important. In his most recent book, The Future of Competition (Harvard Business School Press, 2004), University of Michigan professor C.K. Prahalad writes that developing brand value by increasing the quality, not just the frequency, of interactions with customers, is a strategic imperative in a market overcrowded with too many brands for customers to care about. No longer content with the emotional imagery of advertising campaigns, shoppers now demand experiences in exchange for brand loyalty. As Prahalad puts it, “Experience is the brand.”
The REI experience extends beyond its store walls. REI’s Web site stocks thousands of products; customers can access it from kiosks in stores, and clerks can use it to place orders at checkout. The site was profitable in its second year and contributed $84 million in revenue in 2003. That successful multichannel strategy, with seamless click-and-mortar operations, is a part of REI’s success. So too is its effective vertical integration as both a manufacturer of original products and reseller of other brands, which kept overall sales growth at 9% during a tough retail year. And so is its active base of co-op members who pushed the company to nearly double its stores to 70 since 1996. But in the end, perhaps REI’s success relates back to Prahalad’s insight. Says Kate Delhagen, who follows retailing for Forrester Research: “People care about the REI experience.”Competitors can be partnersChet Huber, OnStar
OnStar’s president, Chet Huber, had a simple measure of success in the early days: a bulls-eye target on the wall of his office with a big “50″ in the middle. Every time the company notched 50 new customers in a single day, Huber celebrated. “That was the home run we were looking for,” he says. “Now, of course, we’re doing about 1.5 million new customers in a year. We’ve had some days when we get 15,000 customers.”
It took some doing to get there. Launched in 1996, the General Motors “telematics” service monitors users’ cars and provides 24-hour emergency communications. Huber’s initial hope for OnStar was simply to create a recurring source of revenue for GM–something to ensure a continual flow of money between car purchases. But its costs were steep: OnStar needed call centers nationwide and partnerships with emergency and roadside services in order to deliver on its “safety, security, and peace of mind” promise. With relatively few customers, it was hard to see how OnStar could make money.
So Huber made the move that changed OnStar’s fate. He approached GM’s board of directors and said he wanted to install OnStar in non-GM cars, too. Within the industry, Huber’s idea sounded like sleeping with the enemy: GM was giving away a proprietary techno-logy it had spent millions to develop. “Launching a new innovative technology and service is an accomplishment in itself, but actually selling this to competitors is unheard of,” says Thilo Koslowski, vice president and lead automotive analyst at research firm GartnerG2. There were risks for those competitors, too: OnStar would collect information about their customers when it signed up drivers, and would be getting an early look at their new car models.
Huber argued that OnStar could turn competitors into partners, to the benefit of both, and keep competitive information secure. GM would realize significant economies of scale by signing up additional customers. Rivals would get a way to add customer value and enhance brand loyalty without having to take an enormous hit to their own bottom lines by developing their own systems. “Huber has created a unique partnership between the new business and the existing parent company, GM, which allows OnStar unpre-cedented autonomy to reach out to competitors and broaden its customer base,” says Adrian Slywotzky of Mercer Management Consulting Inc.
Huber’s mold-breaking strategy worked. Today, OnStar provides its service to Lexus, Audi, Isuzu, Acura, Volkswagen, and Subaru cars, in addition to GM’s own lines. OnStar now controls 70% of the market. Ford folded its competing telematics business, outsourcing it to OnStar’s distant competitor, ATX Technologies Inc. GM’s service now has 2.5 million customers, and 2003 revenues were estimated at nearly $1 billion. “We are proud of our partnerships because it obviously means we’ve delivered on what we promised,” Huber says.Talent is wherever you find itAndrew House, Sony
When the Sony PlayStation burst onto the scene in 1994, it almost instantly grabbed 70% of the market from two well-entrenched incumbents, Nintendo and Sega. It was, by any measure, a remarkable debut, and it stemmed from a single insight: If the best and most exciting games were being developed for Sony’s console, the gamers would surely follow. Seems obvious enough. But how to make sure those games were created for Sony? Nintendo and Sega leaned heavily on the internal development of games by staffers and on refurbished old hits. From the beginning, Sony wanted to be open to the best ideas, wherever they came from. So it used outside developers to produce most of its games, and even reached out to gamers themselves. “We didn’t want outside developers to be peripheral to our business model,” says Andrew House, an early PlayStation team member and executive vice president of Sony Computer Entertainment America. “We knew that the widest variety of content possible was the best way to build the largest consumer base possible.”
C.K. Prahalad, professor at the University of Michigan, calls the strategy a “transformation of the value-creation process.” In increasingly competitive environments, it’s not enough to seek talent in the usual channels. Especially in the gaming industry, where users know what they like to play and often have the skills to create what they want, it’s a strategic advantage to reach out to them for innovation.
Soon, the company was searching high and low for talent. In 1997, it launched a developer kit aimed at hobbyists. “We sent it to budding college developers who wanted to try their hands,” House says. Ideas from those amateurs made their way into commercial games in Japan. Meanwhile, externally developed titles like Final Fantasy, Madden NFL Football, and Grand Theft Auto helped put Sony’s second-generation console, the PlayStation 2, at the top of the heap in 2001. Sony also launched a Linux developer kit for just $199 in 2002. “It’s our way of feeding the market for the future. Some of the first great games were developed by people at home in their garages. If we’re not getting people involved and looking for opportunities very early on, we really are missing out,” says House. The payoff for all this reaching out? In 2003, PS2 titles generated $80 million in revenue and included 9 of the top-10 U.S. games in December–all but one of them developed by outsiders.It’s not always the customerRudy Schlais, General Motors China
China is the pot of gold for companies with global aspirations. Its billion-customer market and seemingly endless supply of cheap labor beckon seductively, yet the market seems always out of reach. Many have failed by trying to entice Chinese customers with brands to which they cannot relate, or with products they simply do not want. As a result, most foreign companies have turned simply to exploiting the cheap sourcing possibilities, exporting their finished goods right back to the West.
The Boston Consulting Group senior vice president George Stalk says that’s a huge mistake. “If companies don’t take advantage of developing the emerging local market, people will take the training and technology and simply become their biggest competitors,” he says. “They’ll be cannibalized by local versions of their very own products.”
Stalk’s Shanghai-based partner Jim Hemerling identifies General Motors as one company to avoid this trap by establishing its Buick cars as a coveted premium brand in China, then quickly moving to introduce successful mid-range and entry-level vehicles. Though GM currently controls just 10% of the Chinese market, ranking second among foreign automakers behind Volkswagen (with 30%), it has gotten there in just five years, while VW has played in the Chinese market for two decades.
How did GM succeed where so many others failed? “They have been recognized as a company with shrewd government relations right from the initial negotiations to choose GM over Ford for the first joint venture plant in Shanghai,” Hemerling says. Rudy Schlais, the man tapped to lead GM into the Chinese market in 1994, recognized that it was not nearly as important to court the end customer as it was to seek the aid of the Chinese government.
So when presented with the opportunity to meet with a Chinese vice premier in 1994, Schlais leaped at the chance. “I sat down with him and asked, ‘GM is late coming to China, what do we have to do to really win?’ ” Schlais recalls. The official said it was vital to create employment for locals and to help China develop a world-class automotive industry (instead of using the local market as a dumping ground for outdated vehicles and technologies). That insight helped GM win the competition with Ford and Toyota for the coveted right to create a joint venture.
To establish Buick’s premium brand image, Shanghai GM again courted the government, selling 35% of its early output as official vehicles. GM’s good governmental ties haven’t insulated it from all woes in China, including the piracy of one of its Chevrolet models this year. But in 2003, GM China sold nearly 387,000 cars, an astonishing 46% rise over its sales in 2002.
WYD Team |
| posted by Win Your Dreams @ 2:12 AM
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| Jones Soda's Secret |
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Every great product has a secret formula. Coca-Cola's legendary recipe includes "essence of coca leaf" -- stripped of cocaine, of course. KFC mixes different parts of its 11 herbs and spices at three separate facilities to safeguard the Colonel's secret blend. And McDonald's hunted down its original special-sauce mix for Big Macs last June as part of its turnaround effort.
Jones Soda Co. founder and CEO Peter van Stolk has his own secret ingredient. It has created buzz, produced 30% yearly revenue growth in a flat beverage market, drawn major distribution partners such as Starbucks and Target, and brought in $30 million in annual revenue. That ingredient: you. Virtually everything about a Jones Soda, from labels to flavors, comes from customers. That's important because "the reality is that consumers don't need our s -- -," van Stolk says unapologetically. The world wasn't necessarily clamoring for another soda, even if it tastes like blue bubble gum. So how do you sell an unnecessary product? If you're van Stolk, a 41-year-old former ski instructor who started Jones eight years ago, you hand the product over to customers. Strategy guru C.K. Prahalad might call that a good example of how to "cocreate unique value." Van Stolk has a more down-to-earth, but no less profound, way to describe it: "People get fired up about Jones because it's theirs."
It all started with the Web site Jones Soda launched in 1997. Hundreds of comments poured in from customers, and van Stolk quickly took up their suggestions and online votes for offbeat flavors (including chocolate fudge and green apple), wacky names (Whoop Ass and MF Grape), and neon colors. Even the "Deep Thoughts"-like quotes found underneath the bottle caps ("76.4% of all statistics are meaningless") come straight from Jones enthusiasts. Van Stolk also encouraged customers to submit photos, and the eccentric and strangely captivating images on Jones's stark black-and-white bottle labels have come largely from fans. And as the site became flooded with hundreds of thousands of cute, but useless, baby snapshots, he launched myJones to offer customers 12-packs of soda with custom-made labels for $34.95. MyJones has since blossomed into one of the cornerstones of the Jones Soda brand.
Jones also stays close to its 12- to 24-year-old demographic with a pair of roving RVs. The two flame-festooned vehicles spend nine months out of the year visiting Jones-friendly venues, from small skate parks in the middle of nowhere to major extreme-games competitions such as the X Games. They also turn up in places where they're less welcome, such as high schools to which they weren't invited. "The more deviant you can be, the better," says RV driver Chris King, 32, on a crackling cell phone. "Kids love to see you get kicked out of places. I, personally, am banned from Nassau County in New York." The idea is simple. Kids come in and grab a bunch of Jones Soda stuff -- buttons, stickers, key chains -- while King, who despite his rebel persona has worked in marketing for a company that ultimately became part of WebMD, studies them for a mental inventory of what's hot and what's not.
King's marketing background suggests that Jones Soda hasn't completely surrendered itself to the whims of its customers. As only van Stolk can put it, "The customer's not always right. F -- - that. If you're always trying to cater to everyone, you have no soul." To van Stolk, the Web site, the labels, the RVs, and the various stunts just add up to being in sync with his audience. "It's the difference between being real and saying you're real," van Stolk says, making a subtle swipe at a certain "Real Thing" rival.
So while customers may feel as if they own the brand, it's van Stolk who clearly runs it. "If you're able to listen to customers from their perspective," he says, "not everything they say will make sense. Not everything they do will be right. But you'll know more about what you have to do because of it."
Staying so close to customers will become more of a challenge as Jones grows and its customers start buying its soda at the likes of Panera Bread and Target instead of the local skate shop. And the company's growth hasn't come without hiccups: In 2001, three of Jones's top five distributors went bankrupt, and it had a bad second quarter in 2004, when sales came in lower than expected, the weak U.S. dollar affected Jones's important Canadian sales, and cash was dwindling.
But van Stolk had much happier news about the third quarter, announcing higher-than-expected sales, lots more cash, and strong initial reports of sales at Target (Wall Street predictions are now that Jones will grow to $100 million in revenue by 2008). With the stock analysts mollified and the rest of that corporate stuff out of the way, van Stolk celebrated by treating the Seattle-based staff to a different kind of drink: shots of Jaegermeister.
WYD Team |
| posted by Win Your Dreams @ 1:52 AM
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| Leading People |
| Friday, December 5, 2008 |
So Many CEOs Get This Wrong
Because human resources, unfortunately, often operates as a cloak-and-dagger society or a health-and-happiness sideshow. Those are extremes, of course, but if there is anything we have learned over the past five years of traveling and talking to business groups, it is that HR rarely functions as it should. That’s an outrage, made only more frustrating by the fact that most leaders aren’t scrambling to fix it.
Look, HR should be every company’s “killer app.” What could possibly be more important than who gets hired, developed, promoted, or moved out the door? Business is a game, and as with all games, the team that puts the best people on the field and gets them playing together wins. It’s that simple. You would never know it, though, to look at the companies today where the CFO reigns supreme and HR is relegated to the background. It just doesn’t make sense. If you owned the Boston Red Sox, for instance, would you hang around with the team accountant or the director of player personnel? Sure, the accountant can tell you the financials. But the director of player personnel knows what it takes to win: how good each player is and where to find strong recruits to fill talent gaps.
Several years ago we spoke to 5,000 HR professionals in Mexico City. At one point we asked the audience: “How many of you work at companies where the CEO gives HR a seat at the table equal to that of the CFO?” After an awkward silence, fewer than 50 people raised their hands. Awful! Since then, we have tried to understand why HR has become so marginalized. As noted above, there are at least two extremes of bad behavior.
The stealthy stuff occurs when HR managers become little kingmakers, making and breaking careers, sometimes not even at the CEO’s behest. These HR departments can indeed be powerful, but often in a detrimental way, prompting the best people to leave just to get away from the palace intrigue. Almost as often, though, you get the other extreme: HR departments that plan picnics, put out the plant newsletter (complete with time-in-service anniversaries duly noted), and generally drive everyone crazy by enforcing rules and regulations that appear to have no purpose other than to bolster the bureaucracy.
They derive the little power they have by being cloyingly benevolent on one hand and company scolds on the other. So how do leaders fix this mess? It all starts with the people they appoint to run HR—not kingmakers or cops but big-leaguers, men and women with real stature and credibility. In fact, managers need to fill HR with a special kind of hybrid: people who are part pastor (hearing all sins and complaints without recrimination) and part parent (loving and nurturing, but giving it to you straight when you’re off track).
Pastor-parent types can come up through the HR department, but more often than not, they have run something during their careers, such as a factory or a function. They get the business—its inner workings, history, tensions, and the hidden hierarchies that exist in people’s minds. They are known to be relentlessly candid, even when the message is hard, and they hold confidences tight. With their insight and integrity, pastor-parents earn the trust of the organization.
But pastor-parents don’t just sit around making people feel warm and fuzzy. They improve the company by overseeing a rigorous appraisal-and-evaluation system that lets every person know where he or she stands, and they monitor that system with the same intensity as a Sarbanes-Oxley compliance officer.
Leaders must also make sure that human resources fulfills two other roles. It should create effective mechanisms, such as money, recognition, and training, to motivate and retain people. And it should force organizations to confront their most charged relationships, such as those with unions, individuals who are no longer delivering results, or stars who are becoming problematic by, for instance, swelling instead of growing.
Now, considering your negative experience with human resources—and you are hardly alone—this kind of high-impact HR activity probably sounds like a pipe dream. But given the fact that most ceos loudly proclaim that people are their “biggest asset,” it shouldn’t be.
It can’t be. Leaders need to put their money where their mouth is and get HR to do its real job: elevating employee management to the same level of professionalism and integrity as financial management. Since people are the whole game, what could be more important?
WYD Team |
| posted by Win Your Dreams @ 11:18 PM
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| Voice and Dignity |
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Our final underlying principle is based on our deep belief that every person in the world wants voice and dignity and every person deserves them.
By voice, we mean people want the opportunity to speak their minds and have their ideas, opinions, and feelings heard, regardless of their nationality, gender, age, or culture.
By dignity, we mean people inherently and instinctively want to be respected for their work and effort and individuality.
If you’ve just read the above and said, “Well, obviously,” then fine. We assume that most people will have that response. And maybe the belief in voice and dignity doesn’t even need to be stated, it is so widely accepted and its importance is so self-evident. But we have been surprised over the past couple of years how often we end up coming back to this value when I talk about winning.
Not long ago in China, for instance, a young woman in the audience stood and, literally in tears, asked how any businessperson in her country could practice candor and differentiation when “only the voice of the boss is allowed.”
“We, the people underneath, have so many ideas. But we cannot even imagine speaking them until we are the boss,” she said. “That is fine if you are an entrepreneur and start your own company. Then you are the boss. But some of us are not able to do that.”
But the “repression” of voice and dignity is hardly a Chinese problem. In fact, while the Chinese woman was very emotional in her questioning, people in every country we’ve visited share some of her frustration and concern on this matter.
Now, when you are running a unit or a division, you rarely think that people aren’t speaking up or that they’re not respected. It feels like the people around you certainly are, and your days are filled with visits, calls, and notes from people with strong opinions. But it ends up that what you experience is a skewed sample. The majority of people in most organizations don’t say anything because they feel they can’t – and because they haven’t been asked.
For Jack, that became clear in the late ‘80s, just about every time he had a marathon session at GE's training center in Crotonville.
He tells that story in his own words:
At Crotonville, detailed questions about local business issues – questions that should have been answered back on the home turf -- were thrown at me from every direction. “Why is the refrigeration plant getting all the new equipment while we’re letting laundry suffer?” and “What are we moving the GE-90 engine assembly to Durham for, when we can do it right here in Evandale?”
In frustration, after several such questions, I would invariably stop the class and ask, “Why aren’t you asking those questions to your own bosses?”
The answer would come back, “I can’t bring that up. I’d get killed.”
“So why can you ask me?” I would say.
“Because we feel anonymous here.”
After a year or so of these kinds of exchanges, I realized GE had to do something to create an environment back in the businesses where people at every level would speak out like they did at Crotonville.
The Work-Out process was born. These were two or three-day events held at GE sites around the world, patterned after New England town meetings. Groups of 40 to 100 employees would come together, with an outside facilitator, to discuss better ways of doing things and how to eliminate some of the bureaucracy and roadblocks that were hindering them. The boss would be present at the beginning of each session, laying out the rationale for the Work-Out. He would also commit to two things: to give an on-the-spot “yes” or “no” to 75 percent of the recommendations that came out of the session, and to resolve the remaining 25 percent within 30 days. He would then disappear until the end of session, so as not to stifle open discussion, only returning at the end to make good on his promise.
Tens of thousands of these sessions took place over several years, until they became a way of life in the company. They are no longer “big events” but part of how GE goes about solving problems.
Whether it was a refrigeration plant in Louisville, where employees debated faster and better paint systems, or a jet engine plant in Rutland, Vermont, where employees had recommendations on how to cut cycle time in blade manufacturing, or a credit card processing facility in Cincinnati, where employees had ideas about billing efficiency, Work-Outs led to an explosion in productivity.
They brought every brain in to the game.
A middle-aged appliance worker who was at one Work-Out spoke for thousands of people when he told me, “For 25 years, you paid for my hands when you could have had my brain as well – for nothing.”
At last, because of Work-Out, we were getting both. In fact, I believe Work-Out was responsible for one of the most profound changes in GE during my time there. For the vast majority of employees, the boss-knows-all culture disappeared.
Now, a big bureaucracy like GE needed something as systematized as Work-Out to break the ice and get people to open up. But it is not the only method to make sure that your team or company is getting every voice heard. Find an approach that feels right to you.
Of course, I’m not saying that everyone’s opinions should be put into practice or every single complaint needs to be satisfied. That’s what management judgment is all about. Obviously, some people have better ideas than others; some people are smarter or more experienced or more creative. But everyone should be heard and respected.
They want it and you need it.
WYD Team |
| posted by Win Your Dreams @ 11:11 PM
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| The Ascent of Money: A Financial History of the World |
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Niall Ferguson’s latest book, “The Ascent of Money: A Financial History of the World,” went to press in May 2008, but it shrewdly anticipates many aspects of the current financial crisis, which has toppled banks, precipitated gigantic government bailouts and upended global markets.
“Are we on the brink of a ‘great dying’ in the financial world,” Ferguson asks, “one of those mass extinctions of species that have occurred periodically, like the end-Cambrian extinction that killed off 90 percent of Earth’s species, or the Cretaceous-Tertiary catastrophe that wiped out the dinosaurs? It is a scenario that many biologists have reason to fear, as man-made climate change wreaks havoc with natural habitats around the globe.
But a great dying of financial institutions is also a scenario that we should worry about, as another man-made disaster works its way slowly and painfully through the global financial system.”
In the course of this useful volume, Ferguson looks at the roots of the current economic meltdown, examining how, in a globalized world that uses increasingly complex financial instruments, defaults on subprime mortgages in American cities like Detroit and Memphis could unleash a fiscal tsunami that spans the planet.
Ferguson discusses such cycles of euphoria and panic within a larger historical context: he traces the evolution of credit, debt and the idea of risk management over several centuries, and as he did in an earlier book, “The Cash Nexus,” he examines the potent links between politics and economics.Ferguson explains why money went from coinage to paper and the advantages and disadvantages of the gold standard.
He argues that aging societies (like those facing a large baby-boom generation entering retirement years) have “a huge and growing need for fixed income securities, and for low inflation to ensure that the interest they pay retains its purchasing power.” And he looks at how exotic financial innovations (like collateralized debt obligations) and wide support for adjustable rate and subprime mortgages pushed the snowball of the current financial crisis. WYD Team |
| posted by Win Your Dreams @ 3:45 AM
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| The Magic of Voicepower |
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When your credibility is on the line, the quality of your voice may be critical. Essential information for salespeople, presentation specialists, spokespersons and virtually all professionals
The most successful salespeople are often those that don't know the most about the service or product they are presenting. But they make commission checks that boggle the minds of their co-workers. They bring smiles to the faces of their sales managers .
They make the accountants speechless. Why? I believe it has to do a lot with their voices. The deeper a voice, the greater its believability. Just listen to commercials on the radio. You will notice calm, relaxed, deep voices. Have you ever paid attention to voices? Norm Voice Range occurs shortly after one begins to talk (assuming the voice is not too high or too low). This is the level others recognize you as being you. Pitch is the level (high/low) of one's voice. A pleasing one is mixed, high at times, low at others. Pace is the number of words per minute.
We use 145 words per minute on average. The older one gets, the slower the pace. Pauses are the breaks we build into our speeches, so the listener can think. But one has to have confidence to use pauses. Projection is the way we emphasise clarity and tone. If one lacks confidence, the projection will give it away. One will sound uncertain and that will be recognized instantly. As soon as the voice rises above Norm Voice Range, the believability of the message diminishes.
The minute it drops below the Norm, the believability of the message increases. Imagine two sales people. It doesn't mater what color, sex, or in what industry they are. They're both equally qualified to do the job. Educational background, physical appearance and even religious beliefs are both identical. They had the same mother and father. They are fraternal twins. They work for the same company and live in the same neighborhood and buy their clothes from the same store. They both even drive the same kind of car. There is only one difference between them.One is a winner who sold quota three times over, and a $50,000 bonus cheque was deposited to her bank account. The other hasn't sold anything for the last few months. He knows if he doesn't produce, he's had it.
So how do they feel?How does the winner feel? Confident, self-assured, happy and fulfilled. She has a positive outlook towards her future, and an inner feeling of real accomplishment. It would be no understatement to say the other twin feels nervous, uptight, unsure, insecure and unconfident. Life isn't fair! Assume both have to make a presentation this afternoon to equally qualified prospects. The one who sold three times quota subconsciously assumes that if the prospect doesn't buy, he would be stupid and miss out on a big opportunity.
(I did not say she thinks like that, I said she feels like that.) The projection of her voice automatically varies. (She is exited to make another sale!) That makes any presentation more interesting. Just before she comes to the close, she pauses. (It's like playing roulette - will I win, will I lose?) She has all the confidence in the world she will win. Then, when she asks for the order her pace gets slower. That means her voice gets lower and the believability of her message increases.And what are the results? She gets the order. Pure luck! Just ask any loser. The other twin is extremely nervous. Very uptight.
He feels that if he doesn't sell, he's a loser. Remember, he might lose his job. When it comes to closing, he gets even more nervous and starts to talk faster, so his voice rises. As soon as that happens his believability decreases_ This is not the result of academic research. It's the result of Peter Urs Bender's field observations. It's not always what you know that matters, it's how you present it. When one is under great pressure, one talks faster.
Therefore the voice rises. When that occurs, believability diminishes. How can you avoid that? Next time when you get nervous, slow down your speech. Make a conscious effort to do it. It will make your voice deeper, and that will signal that you're in control. Your confidence level will increases, as well as your believability. It can give you that extra oomph required to close the sale or make that deal. The power your voice commands is very important. It's extremely critical in any situation in which you have to make points come across. It does not matter who you are, believability is one of your most important asset.
WYD Team |
| posted by Win Your Dreams @ 3:29 AM
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| Executive Presence |
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Dear Joan: I’m a manager in a large organization and I’ve been considered for several Director jobs, but have yet to get one. I spoke to my manager about it and in the spirit of helpfulness she finally told me that I had all the technical qualifications and that I was an excellent performer but that I needed to work on my “executive presence.”
I pressed her for some details but she didn’t tell me much. She mentioned that I needed to work on my presentation skills.
She said I tend to get too detailed when I present to executive audiences—they get impatient, she said. In the past when I presented, the executives in the room jumped in before I even got halfway into my slides. But how can I communicate the message if I only cover a few points?
She also said that I tend to “melt into the room” instead of standing out and speaking up during larger meetings. I don’t like to call attention to myself in these situations, so I could use some tips.
She also said that I tend to bury myself in my department and that I’m not well known around the organization. But how do I “network” if I don’t have a good reason to speak to someone? I don’t want to look fake.
Any help would be appreciated. I do want to get ahead but I’m not sure I want to do it if I can’t be myself. Any thoughts?
Answer:
The move from manager to director is a bigger jump than the move from supervisor to manager.
Directors are considered “upper management” in most organizations, and as an executive, you are expected to fit the part.
You need to fake it ‘till you make it. They need to be able to visualize you in the role. Since you have credibility and are a great performer, your boss was trying to tell you that you need to work on how you are perceived.
While I can understand that you don’t want to seem artificial, what she is suggesting doesn’t sound unusual and shouldn’t require you to become someone you’re not.
Let’s take presentations, for example. Executives have to sit through countless meetings and presentations and they want to get the most information in the least amount of time. Ironically, they will often jump in and drill down into the most minute details, if they are curious or need a detail to make an informed decision.
So, the best way to approach this is to present what is called an executive summary. Then, if there is a lot of supporting background information, prepare an appendix.
To prepare the executive summary, ask yourself, what two to five points do I have to convey? Also ask, “What exactly do I want them to do, think, or decide?” Then, work backwards and design slides for each point. Keep them simple and uncluttered.
It also helps if you can start with the conclusion and then build your reasoning behind it. Executives typically hate presentations that start with all the background steps and move step-by-step to the conclusion.
As you present each slide, use the “3 S’s.” That is, Set up, Story, So What. For example, to Set up each slide tell them what they are looking at and why. The story should be an example, or describe what is going on behind the point (don’t read your slides!). And the So What is explaining the conclusion they should come to about the information on each slide.
Then take the slides you have developed and ask yourself, “If I had to cut the number of slides in half, which ones could I get rid of?” Then edit down. The appendix can either be at the end or on paper. Don’t worry, if they want more detail, they’ll ask for it.
To start getting more comfortable in larger settings, begin by speaking up at least once in each meeting. Think through what you are going to say and when you open your mouth, don’t use any disclaimers (“This may not work but…”).
Speak up loudly and hold the floor long enough to be heard. Studies have shown that when a woman is in a room with men, they often don’t even remember the women’s remarks unless she has spoken loudly enough and for a long enough duration. (Read Deborah Tannen’s book, “Talking from 9 to 5,” published by William Morrow and Company, Inc. 1994, for more great communication tips.)
I can understand your reluctance to call a peer or executive out of the blue to network. That might feel awkward. Instead, start thinking about who would benefit from knowing about the projects you are working on.
What executive could you visit to get his input or to give him a head’s up? What peers are you involved with on projects, with whom you might meet—for coffee or lunch, perhaps—to discuss the project and tap their ideas?
WYD Team |
| posted by Win Your Dreams @ 3:24 AM
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