Category: Management

Joel Spolsky recommends Rick Chapman’s The Product Marketing Handbook for Software. From the pitch: “The 4th Edition of The Product Marketing Handbook for Software is the definitive guide to successful software marketing. Completely up to date, the Handbook is read and relied on by software publishers, entrepreneurs, and software product managers worldwide, including such companies as Bentley Systems, Cognos, Hewlett-Packard, IBM, Inso, Miacomet, Microsoft, Ulead, and many, many others. The Product Marketing Handbook for Software is written and edited by industry insiders. It discusses the industrys special challenges, uses your language and provides solutions specific to the task of marketing and selling software. From blogs through to E-mail and webinars, if you want to succeed in marketing and selling your software, you cant afford to be without it!”

The Economist has an editorial and report on the world’s largest company (by revenue) and which “is defying its critics by continuing to grow vigorously:”

With $256 billion in sales in the year to January 31st, the firm is already the world’s biggest company by that measure. Its nearest retailing rival, a French supermarket chain called Carrefour, is less than half Wal-Mart’s size. In America, Wal-Mart manages nearly 3,000 giant discount stores and hypermarket supercentres. Abroad, it has ventured into Mexico, Britain, Japan, Canada, Germany and China, as well as making smaller investments elsewhere. Eight out of ten American households shop at Wal-Mart at least once a year. Worldwide, more than 100m customers visit Wal-Mart stores every week.

The mathematics of big numbers suggests that Wal-Mart’s growth must slow. Amazingly, the opposite appears to be happening. In America this year, Wal-Mart intends to open some 50 new discount stores and more than 220 new supercentres, some of which will be existing stores moving to new locations. Overseas, it plans another 140 or so new stores, including relocations. This adds up to some 50m square feet of new spaceeven more than many of its rivals operate in total.

As Wal-Mart’s boss, Lee Scott, likes to points out, Wal-Mart still represents only 8% of total retail sales in America. It is not unusual for dominant firms in mature industries to command market shares of 30% or more. So, in theory at least, Wal-Mart could still get an awfully lot bigger.

HBS Working Knowledge writes: “Harvard Business School’s Leadership Initiative is attempting to answer these and other questions about the nature of leadership through its formation and study of the Great American Business Leaders database.” Excerpts from an interview with Tony Mayo, executive director of the Initiative:

When we examined our database of great business leaders by the decades in which they served their companies, the role of contextual intelligence became an increasingly compelling proposition.

. By analyzing our pool of great business leaders by decade, three distinct leadership patterns or archetypes emerged. We called these leadership archetypes Mold-Makers, Mold-Breakers, and Mold-Takers.

Makers essentially created or enhanced businesses that took advantage of the coalescing context of their times. They built businesses that thrived in a specific contextual framework and modified their operations and leadership styles as the contextual factors evolved. Some admittedly were in the right place at the right time, but it was often more than luck that made the difference between being merely successful and being wildly successful. In contrast, Breakers were business leaders who succeeded in breaking through the contextual mold of their times. They sought not to be constrained by the present conditions of their market; they were able to envision a future landscape for success. Finally, Takers were business leaders who saw value in industries and/or businesses that others thought were no longer viable. Takers took advantage of industry consolidations and often breathed new life into companies; extending business value well beyond what others thought was possible.

There is a strong tendency to search for a candidate who has a specific track record of success, but board members need to understand the context in which specific CEO candidates were successful. It is all too easy to ignore both the past contextual framework of success and the present one. Are they aligned? Does success in one context predict success in a new one? Would Sam Walton be as successful today? What about Michael Eisnerhas his time run out? Has he kept pace with the changing contextual framework? Despite the overwhelming evidence to the contrary, boards tend to favor the “proven” talent, but often fail to ask “proven in what context?”

The US Yellow Pages market has been largely controlled by the Baby Bells. Now, Yellow Book is upsetting the applecart with its aggressive pricing. WSJ has more:

Mr. Walsh, the 41-year-old chief executive of Yellow Book USA, a unit of Yell Group PLC, is riling the once-sleepy yellow-pages industry with a simple formula: selling cheaper ads that attract more advertisers. In just 10 years, Yellow Book has grown from a small local directory service to the publisher of more than 500 directories with a total distribution of 72 million in 42 states.

While Wall Street is fixated on the brutal competition to provide phone service, there’s an equally brutal competition under way in the $14 billion yellow-pages industry. As recently as 1995, Baby Bell phone companies and other incumbents snared around 96% of yellow-pages revenue, according to the Kelsey Group, which analyses the industry. Now, they get about 86%.

The Bells badly want to protect this lucrative franchise from further inroads. While yellow-pages advertising accounts for a relatively small part of the revenue for the former Baby Bells, it accounts for a much larger share of their profits.

For now, Mr. Walsh’s Yellow Book USA appears to be the most ominous threat to the Bells. Through a combination of acquisitions and internal growth, the company’s revenue in 2003 hit $1 billion, compared with $46 million 10 years ago. Today, three out of four Americans live in a market with Yellow Book directories, and Mr. Walsh aims to push that number higher.

It’s not just acquisitions that make Yellow Book tick. Mr. Walsh’s strategy is to go after smaller customers. Where Verizon charges around $3,300 for a full-page ad in Philadelphia, Mr. Walsh charges less than $1,900 for the same. Mr. Walsh says that he can live with Yellow Book’s profit margins being a lot lower than those of the Bells’ directory services, which can run well in excess of 50%.

An interesting article in WSJ about how hospitals are adopting techniques from Toyota’s production techniques to cut costs and wait times:

In the factories of Toyota Motor Corp., any worker who spots a serious problem can pull a cord and stop the assembly line…The Toyota system emphasizes the smoothest possible flow of work — accomplished by, say, mapping out work processes and eliminating unnecessary steps, and using teamwork to identify and fix problems as soon as they crop up. Hospitals are using the tactics to reduce patient waiting times, slash wheelchair inventories, prepare operating rooms faster and move patients through a hospital stay or doctor visit quickly, seamlessly and error free.

Some U.S. manufacturers are pushing the Toyota approach from factory floor to hospital ward, as part of their continuing effort to hold down rising employee health-care costs. Local industrial executives, who have been through wrenching Toyota-inspired changes in their own businesses, are promoting the techniques to their counterparts in hospitals.

How Toyota’s production techniques are applied to hospitals:

Flow: In a factory, the Toyota approach emphasizes the smooth flow of people, gear and finished goods. In hospitals, it emphasizes rapid flow of patients, staff.

Root-Cause Analysis: In a factory or hospital, errors are examined immediately, and countermeasures taken to avoid a repetition.

Value Stream Mapping: Workers diagram work processes, aiming to
eliminate steps that aren’t valuable to customers — or patients.

Kaizen: This Japanese term for continuous improvement involves constant small steps to improve efficiency.

Barron’s writes on HP’s progress two years after it merged with Compaq:

CEO Carly Fiorina was only warming up. She went on to deliver a whopping $3.5 billion in promised cost-savings — and a year ahead of schedule. Lately she has started to boost the performance of two key units that have been holding back the technology giant: personal computers and corporate computing systems. Along the way, H-P has amassed a surprisingly large, $6.5 billion cash horde.

Fiorina is making two major pushes. She is trying to take advantage of H-P’s revered brand and potent retail channels in anticipation of the digital home — where the flat-panel TV in the family room, for instance, will routinely be linked to the PC in the den. In efforts aptly named Big Bang I and II, H-P launched more than 150 consumer products over the past two years, ranging from digital cameras to sleek personal digital assistants.

In addition, Fiorina hopes to use H-P’s newfound scale to sell innovative, customized products and services to big corporations. A new partnership with Starbucks, for example, allows customers to burn compact discs in their stores using H-P devices for a fee. H-P consultants worked with Starbucks to create this setup, using H-P servers, storage gear and more.

“The history of every industry, including technology, demonstrates that companies that can make markets and lead markets are the most successful,” Fiorina says. It has yet to be seen whether H-P has what it takes to truly lead all of its markets.

I was among those who was skeptical about HP’s future after the merger. Nice to be proved wrong!

Eric Sink writes about the “function of proactive sales in a small ISV” and a situation which we (and other software companies) face regularly:

At some point in the many activities of a small independent software vendor (ISV), the customer trades money for software. No column on “The Business of Software” could be complete without some discussion of this magical event.

I’ll start by defining some of my terminology. Before the customer makes the purchase, I like to say that there is a “gap”. This gap is the distance between the prospective customer and your product, and it looks something like this:

Product ——————————– Customer

In order for the sale to occur, this gap must be closed. Until that happens, the gap represents all of the issues and obstacles that are preventing the customer from making the purchase:

The customer has never heard of your product.

The customer doesn’t know enough about your product.

Your product is too expensive.

The customer needs two levels of management approval for the purchase.

Your product lacks a feature the customer needs.

Your product doesn’t interoperate with the customer’s other stuff.

Your product isn’t mature enough to meet the customer’s expectations.

To continue to exist as a business, your small ISV must find a way to close this gap, over and over again. There are exactly two ways to close the gap:

Move your product to the right. Tell the world about your product. Make your product better so that people will want to buy it.

Move your customer to the left. Find people who might want your product. Convince them to buy it.

WSJ writes about how Microsoft and HP are “heading to retail outlets to overcome a big impediment to sales: ignorance.”

While Home Depot Inc. has been giving do-it-yourselfers classes in everything from lighting and tiling to home decorating for years, the computer giants decided to set up their own “experience centers” in selected retail chains nationwide, hoping to change the technology-retailing experience and boost sales of their complicated products.

“We actually looked at Home Depot and how they engage consumers in the process,” says Bill DeLacy, vice president of U.S. consumer sales at H-P. “With those types of classes on improvement, the key is giving customers confidence, and that’s now what we need to do with technology products.”

The marketing move came about, in part, because Microsoft and H-P could see that the strategy of relying on ever-lower prices to sell new technology was no longer effective. Industry growth was slowing in a mature market where most Americans already have personal computers in their homes.

The new marketing approach utilizes 15-by-15-foot hands-on displays containing products organized by different scenarios, such as digital imaging, digital music, home office and wireless networking.

“Create,” the photo exhibit, shows shoppers how to transform an HP Media Center PC into a digital-photography center with the help of Microsoft software. “Perform,” the home-office scenario, describes how to stay connected to work when not at the office using products including H-P’s Pavilion notebook PC and Microsoft software. “Connect” details how to set up a home wireless network, and “Play” demonstrates how to transform compact discs into digital music, both using products from the two companies.

The staff, which holds classes about every half hour, is trained in acting and public speaking, as well as technology, and is encouraged to connect with customers at an emotional level, showing them ways the products can help meet real needs in their lives.

“If you can show people how to use the products and make it easy enough so when they get home they can replicate what they saw in the store, they will want to purchase,” says Darrell West, director of business and retail strategy for Microsoft’s Home and Retail division.

“It’s part of a broader trend that has been going on for the past few years,” says Will Ander, a senior partner at the retail-consulting firm McMillan Doolittle in Chicago. “An increasing number of companies are exploring solving problems — we call it ‘solutions retailing.’ The transaction side is bigger because you can sell the package, you can sell the accessories — the things that add value to the consumer that they didn’t know they needed.”

HBS Working Knowledge has excerpts from a forthcoming book by Marco Iansiti and Roy Levien:

Keystone organizations play a crucial role in business ecosystems.

Fundamentally, they aim to improve the overall health of their ecosystems by providing a stable and predictable set of common assetsthink of Wal-Mart’s procurement system and Microsoft’s Windows operating system and toolsthat other organizations use to build their own offerings.

Keystones can increase ecosystem productivity by simplifying the complex task of connecting network participants to one another or by making the creation of new products by third parties more efficient. They can enhance ecosystem robustness by consistently incorporating technological innovations and by providing a reliable point of reference that helps participants respond to new and uncertain conditions. And they can encourage ecosystem niche creation by offering innovative technologies to a variety of third-party organizations.

Broadly speaking, an effective keystone strategy has two parts. The first is to create value within the ecosystem. Unless a keystone finds a way of doing this efficiently, it will fail to attract or retain members. The second part, as we have noted, is to share the value with other participants in the ecosystem. The keystone that fails to do this will find itself perhaps temporarily enriched but ultimately abandoned.

The concept seems similar to that of “platform leadership” which has been dealt with in the past.

Fast Company has an interview with Thomas Daveport, who “has helped midwife some of the biggest trends to have shaped business over the past 25 years–among them, reengineering and knowledge management. Now he’s asking: Where do ideas come from? And how do they get traction? Here’s his eight-point plan for winning with ideas.” Excerpts:

Great ideas have three key elements. All big ideas share at least one of three business objectives: improved efficiency, greater effectiveness, or innovations in products or processes. In a way, it’s an exhaustive set of possibilities. You do things right, you do the right thing, or you do something new. Reengineering could have done all three–the mark of a truly big idea–but people used it solely for gaining efficiencies, which limited its power and value.

There are no truly new ideas out there. Every big idea owes a considerable debt to related ideas that came before it. Reengineering’s key components already existed–they had just never been pulled together into one package. Of course, idea practitioners should avoid pointing out that the next big thing amounts to a reshuffling of other ideas. One of the tensions that idea sellers have to manage very carefully is, on the one hand, the need to get people’s attention. The innovation has to be new and exciting. But they also have to talk about the idea in a responsible way so people understand how difficult it really is.

The story sells the idea. The most important way in which ideas and experiences get communicated from sellers to buyers is through narratives. Stories give proof that your idea is going to work. Confidence-building evidence isn’t statistical, it’s narrative in form.