Category: Management

HBS Working Knowledge writes:

The process of transforming top management’s goals into concrete sales typically breaks down for one or more of the following reasons:

– Lack of top management clarity about objectives.
– Difficulty translating objectives into an operational business plan.
– Vagueness communicating objectives and business plan to the sales force.
– Failure to align compensation with the objectives.
– Problematic individual sales plans and managerial coaching.

In order to reconnect sales management to profitability, address each of the points of breakdown. Managers can do this through a five-step process:
– Understand profitability.
– Translate into business objectives.
– Communicate the business objectives.
– Translate into a compensation plan.
– Create individual sales plans.

John Battelle writes: “Influencers are critical to business success. But the last thing you want to do is treat them like a mass market. Instead, do the hard work of cultivating them in a personal network.”

how do you find your own influencers? In the entertainment business, for example, they’d include the obvious elite — media critics and senior executives in the business, but also well-respected reviewers on Amazon (AMZN), crossover voices like Wil Wheaton (a sometime actor who now has a wildly popular weblog), and outspoken critics of Hollywood. In technology, your influencers would include large corporate customers, industry analysts and journalists, selected policy wonks, and a sampling of early adopters — the folks who eagerly try out new technology.

Instead of hiding behind marketing programs, make it your business to create a personal network. Identify the communities that consume or champion your product, as well as the controversies (like the health value of hot cereal, for example). Then start talking to people. Don’t try to sell them anything, just ask for input. Most people like being asked for their opinions, particularly if their ideas affect how the product is made. Include critics — if you can learn why they dislike your product, and integrate their input, they may become your greatest champions. Over time, this network will start to spread positive word of mouth, and good things will happen.

The act of maintaining a network of influencers may not come naturally, but if you don’t already have one, you’re out of touch with the very people determining your success. Get out and meet them — it’s a lot cheaper than a Super Bowl ad and, I’d wager, a lot more effective.

Blogs can be a powerful way to market and build influence.

[via Veer Bothra] Ed Sim points to a Fred Wilson post about building a “customer-obsessed company” as opposed to a “technology-obsessed company.”

Fred: “It’s going to get harder and harder to build value in core technologies that have broad horizontal markets. The value is going to get created in providing technology-enabled solutions for customers. And if its the customer that matters most, instead of the technology, then I want to invest in customer obsessed companies, not technology obsessed companies…I like to say the way you start a company is you build something for not a lot of money, sell it to a few brave customers who you then develop deep relationships with, listen to them very closely, follow their lead and improve your product and develop new products around your customers feedback, and soon enough you’ll have a good business that will be profitable and loved by its customers. It’s not easy to do but that’s the model I like best.”

Ed adds some great advice:

I was just at a board strategy session with one of our new investments where we are in the process of ramping up the business. As we reviewed the 2004 budget and dove into the technology department and product deliverables for the year, it was clear that the developers were getting pulled into many different directions. This is a common problem. Many companies that bootstrap their businesses tend to have developers acting as presales support, post sales support, and customer service. Every second a developer is out helping with a customer is a second not focused on advancing the product. Every second a developer is coding is time not spent answering customer support issues. As you ramp, this is not an ideal solution. So our recommendation was to make sure that the company created a separate presales group/sales engineering group to work with the sales team and to make the investment now to create a separate customer service organization to build for the future. As Fred mentions, too many companies overlook the customer support side of the business. Many times, putting the right customer support processes and organization in place early can mean the difference between success and failure.

And yes, product management is an incredibly important role to fill early on in a company’s life. This function should serve as the intermediary between market and customer requirements and engineering. If you have someone too close to sales performing this function, you may end up with a focus on short-term results where too many one-off requests are made to just close a deal. If your engineering handles this, you may end up with an over-engineered product that does not meet customer needs. Your product person should be in marketing with significant experience balancing the short-term and long-term needs of the various stakeholders. This includes gathering data from customers (direct meetings, customer support, sales team), prospects, analysts (yes it is a necessary evil), and your own team to prioritize the product “must-haves” for the next release.

Fast Company takes a reality check: “The New Economy isn’t dead. It just didn’t happen in the way we all imagined. And now it’s been long enough that we can think more analytically about which of the shiny and alluring ideas of the New Economy were lasting and real, and which were just the iridescent glint of a bubble.”

Boom-Time Buzz: The Internet changes absolutely everything.
Cold Reality: Absolutist statements are absolutely a bad idea.

Boom-Time Buzz: Free Agent Nation is a utopia. The Brand Called You makes you more marketable than ever.
Cold Reality: Free Agent Nation is a jungle. The Brand Called You is the only way to survive.

Boom-Time Buzz: IT spending has fueled an unstoppable productivity boom that has ended the business cycle.
Cold Reality: Productivity is still strong–and so is the business cycle.

Boom-Time Buzz: Move first–or die.
Cold Reality: Move first without a real business–and die.

Boom-Time Buzz: The Internet gives the customer new, limitless power.
Cold Reality: New power, yes. Limitless, no.

Boom-Time Buzz: Destroy your business, or someone else will.
Cold Reality: Incumbent businesses aren’t so easily destroyed.

Dan Bricklin writes about Scott Kirsner’s interview with Christensen:

Scott asked about not always following current customers. Clayton’s response: Any given customer can only lead you in a certain direction. So you need to listen to non-customers sometimes.

Another observation: A competitive strategy that uses lower cost only works if there is a high cost provider around. As soon as the high cost provider leaves the market, the prices collapse. So, you must constantly move upscale to attack the higher cost providers that have moved there. Dell needs to move up and up (as they are with servers and related hardware) and needs Sun to be there.

Scott asked about the low cost airlines. Clayton then discussed the two strategies for competing with disruptive technologies: A Low-Cost strategy and a New Market strategy (selling to people who are not buying in the category). He said that Southwest Airlines went after the type of people who used trains and buses and/or used out of the way airports. That was a New Market strategy. The other low cost airlines are mainly using a Low-Cost strategy. He feels that they can only last 5 years, because the incumbents must go after them on the cost front — the incumbents can’t go up market.

When asked about Linux and Google, he discussed how Linux is more modular than Windows and that you can fit it in an appliance or tailor it to an application better. What I realized is that the open source development model encourages a more modular design than many traditional development models, but the customizability of the source code eases application-specific tuning breaking the modularity barrier if you want. This model encourages platform designs that can be molded by small groups for their purposes. Modular architecture is an advantage for certain disruptive products and in mature industries. Interdependent architectures have advantages when you are pushing out every ounce of performance.

With regards to Google vs. Yahoo and others, he sees portals (like Yahoo and AOL) as vulnerable to specialist providers (seeing Google as a search specialist in this case). He gave the example of how department stores (like Sears) gave way to specialist stores (like Best Buy). He says things change once you know where to go for things. In the early days you go to the “have everything” place, but later go to the “best” place for each thing.

Clayton sees some of the industries that haven’t been disrupted recently as education, legal services, and healthcare. They have high cost, variable quality, and low satisfaction.

In 2004 there will be a new book he’s collaborating on: “Seeing What’s Next”. He says that traditional business school teaching has enshrined data driven decision making. But data is from the past. Seeing the future needs theory, not looking at the past. The book is about this.

NYTimes has a story on how the former New York mayor (and TIME Person of the Year in 2001) has built a fast-growing consulting business.

In its two years of existence, his firm, Giuliani Partners, has earned tens of millions of dollars by assembling an extremely broad range of clients, jumping almost immediately into the ranks of the nation’s most prestigious consulting firms, according to two industry guides.

A detailed examination of its business practices shows that the firm’s work for its base of 20 or so clients with at least two on different sides of the same issue stretches well beyond providing advice on policing and domestic security, the type of job that has produced the most publicity for Giuliani Partners.

The firm has been hired to improve public confidence in a horse-racing gambling operation. It has advised New York hospitals on buying bulk supplies, helped expand a California-based business that sells inexpensive wills, and set up an alliance with a large accounting firm to fight computer hackers.

More recently the partnership moved into the world of venture capital, working with Bear Stearns & Company to invest $300 million in security-related businesses, with Giuliani Partners to eventually share in the profits of businesses that succeed.

Taken together, the firm’s deals, carried out chiefly by a handful of former civil servants, have made the partnership one of the most novel and lucrative ventures ever begun by an out-of-office American politician, avoiding the familiar path of many ex-officials who join law firms or become lobbyists.

[via Yuvaraj] IEEE has a story on 10 electrical engineers and their dream jobs. Among them is a person I’ve met – Balaji of Icrisat:

As head of the Information Systems Unit of Icrisat, the International Crops Research Institute for the Semi-Arid Tropics, in Patancheru, a suburb of Hyderabad, in Andhra Pradesh, India, he has set an immediate goal that is both simple and ambitious. He wants to stop drought in Africa and Asia from threatening people’s lives. Meanwhile, he spends at least half his time running Icrisat’s information infrastructure, which connects its eight centers across Africa and Asia.

Sounds like a job for an agrichemist, perhaps, or maybe, in other times, a rain dancer. But Balaji thinks it is a job for an information technologist, because, he says, only with information and communications technology can the problem be solved. Such technology will allow knowledge of advanced agricultural techniques to spread to rural farmers, and it will link those rural farmers as well to local, national, and international markets. Both those factors, as well as improved drought prediction and the dissemination of that information, will allow information technology to finally defeat drought-created famine, he predicts. He calls this effort Vasat, for Virtual Academy for the Semi-Arid Tropics.

A few years down the road, Balaji hopes his current work preventing drought from threatening lives will be self-sustaining and he will be able to move on to work on his dream project. That goal is to create a cloud of nanosatellitestiny communications satellites, almost the size of cellphonesover small regions to serve as communications outposts in the sky for poor rural communities. “The technology is already tested,” he says. “It’s only a matter of entrepreneurial initiative to make it real.”

[via Ganesh Bhandarkar] Excerpts from the ACM Ubiquity interview where Esther Dyson talks about the coming PC Forum which has as its theme “The Big Picture in Focus”:

The theme points to a tension between the desire, on the one hand, of wanting to be Bill Gates and build something that’s horizontal and universal and repurposeable for everything and on the other hand the reality that in order to solve problems and add real value, you increasingly need to be domain-specific.

For example, you need to understand the medical market, or you need to understand how salespeople work, or how to re-orient a supply chain in real time when a factory has a problem. Even though everybody in the industry says, “Oh, we sell the solution,” they’re just flattering themselves; in reality, all they can sell is tools for the customer and its CIO to build a solution with. That solution includes making sure the marketing and salespeople talk to each other, the salespeople actually use the automation tools, and the CEO has a good strategy. These are the things the vendors have no control over, but they can’t sell effectively unless they understand the CIO’s mindset and challenges.

Think about industry strategy, seismic change, the shift from the paranoia of the last couple of years; realize that business is not just about cutting costs anymore, but also about increasing revenues. But the focus has shifted to domain knowledge, and is no longer on generic horizontal activities. The term “in focus” makes the point that you’ve got to do something in particular and be concrete about what kind of value both you and your company can add. One of the basic messages is: You can’t sell generalizations and make big promises anymore. You’ve got to get down to cases. It has to do with the basic tension between wanting to be grandiose and solving all the world’s problems, and realizing that one can do more good by gardening one garden than by thinking you can fix all the gardens in the world. And of course the same is true for technology.

Apple has become one of the most interesting companies in the computing landscape. Shrikant Patil pointed me to HBS Working Knowledge, which has an interview with David Yoffie about Apple. Some excerpts:

There are at least three different ways in which you can imagine Apple going forward.

One is to say they’re going to build their business off of the digital home, the iPod, iTunes, iPhoto, etc., and become more of a service and software digital home application company. The strategy going forward is going to be more like a consumer electronics company, making hardware and software, rather than being a computer company. The Macintosh will be the core businesses that they milk and then they will build these other businesses for the future. The question is, can they sustain the huge premiums they earn with today’s iPod when Dell is coming in with much lower-priced products and other competitors are entering the market? They’re also running into the same challenge of selling a proprietary solution. (Music on the iPod can’t play on non-Apple devices.)

A second strategy for Apple is to really go back to the Mac OS licensing business and try and generate a large enough volume so that the economics of their operating systems business will make sense in the future. For many years I thought that Apple’s OS business was dead because they lost and Microsoft had won. Today it’s a little less clear again. The reason is that so many of Microsoft’s customers are unhappy with Microsoft pricing, and there is a new willingness to entertain new concepts, new ideas, new products, that didn’t exist before.

The third option is that Apple says our real advantage is in application and industrial design. In my view, Apple has three critical advantages over anybody else in the markets they serve. One is they have an incredibly strong brand; two, they have been the best at industrial design, far better than their closest competitor, Sony; and third, they have been very good at delivering applications in the digital home space.

The third strategy is very different from the second, which is to (concede) we lost the operating system war, and instead leverage our brand, our industrial design skills, and our application base. This strategy would suggest that Apple give up on the Mac OS, become a Microsoft customer, and go after the consumer PC in a very big way.

WSJ writes that technology is one of the strong driving forces behind Comcast’s audacious bid for Disney:

Behind Comcast Corp.’s audacious bid for Walt Disney Co. is the powerful force of technology reshaping one company after another in media and communications. It is disrupting basic business models, plunging companies into new markets, creating new competitors and blurring the boundaries between industries.

In response, companies are scrambling to protect themselves in two ways. Some are bulking up. Several telecom companies, for instance, are circling AT&T Wireless, the No. 3 U.S. cellphone player, as the dissolving boundaries between long-distance, local, wireless and the Internet ignite new competition and drive down prices. Music companies, confronting a surge of digital piracy, are in a wave of consolidation.

Others, seeing their old markets come under siege, are pushing into new ones. Eastman Kodak Co. recently began moving away from its traditional film business and into printers and other digital devices that have it competing with a new lineup of electronics rivals.

Comcast is doing both: A merger with Disney would turn it into one of the world’s biggest media companies and give Comcast a new reach into movies and theme parks.

It’s an intense response to the disruption Comcast faces from newly strengthened competition. The nation’s biggest cable company, long used to monopolies in its regions, faces the growing threat of satellite television as an alternative. That threat is particularly acute as Rupert Murdoch’s giant News Corp. completes its purchase of a controlling stake in DirecTV, the biggest U.S. satellite-TV player.

The central technological change driving all these shifts, under way for years and now accelerating, is the digitization of sounds, words and pictures — allowing companies to transmit and manipulate them in new ways. The latest wave of corporate moves is reviving the question of whether content companies should also own distribution channels, and presenting new challenges to regulators and Congress.

Mitch Rubin, a money manager at Baron Asset Management, said that people have been debating for years which was more important, media content or the means to distribute it. Now, that debate has been rendered moot. “What this deal says is, it would be great if you had both. You can debate which is better, but if you have both it doesn’t matter,” Mr. Rubin said.

Om Malik doesn’t think it’s smart move:

Why is it a dumb idea? Well for starters, Comcast is still digesting the ATT Broadband acquisition, has to spend gazillions on the fast growing demand for broadband and at the same time trying to figure out how to fight off the defectors to the dish land.

Why is the timing bad? Because Disney has just lost its premier earnings growth engine – Pixar. The company is going to lose out to rivals in the highly lucrative animation market. Secondly, its other studios like Miramax are losing some of their fizz. In other words, if Brian Roberts waits for another 12-months, he could have himself a bargain. (Yeah Rupert is lurking around somewhere, but he has his own set of issues!) Roberts move is equally logic defying because the whole content business cannot deal with one thing – the digitization of content. Like Music, Movies and everything else is being reduced to bits-and-bytes. And that is a situation where it is very hard to make money.