Wayne Wilson on Companies in Transition

Business is like baseball in two very important ways.

“They just need a hero. Anyone will do.” [1]

First, the game is played based on the odds. Teams maintain voluminous statistics and calculate innumerable ratios about the performance of every individual player as well as their team and how they have performed against every other team they have played. Key decisions are often based in large part on these statistical analyses. 

Second, on any given night, one of countless individual plays, not to mention the occasional error, can make the difference between whether the team wins or loses. And those plays (and errors) are made by individual players.

Success in business often turns on the same two phenomena. The successful owner/CEO analyzes his business (the team), competitors, and the playing field so as to put forth the best team and game plan for each situation encountered. 

Once the game begins, the business team’s success is largely dependent on discrete actions undertaken by individual business team members (working late to write the winning proposal; going the extra mile to solve a customer problem).

Winning is about organizing for the game and then empowering the individual players because that key play could be made by any one of them.

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[1] Desperate for a Win, Boston Forces Game 7, The New York Times, October 20, 2007, http://www.nytimes.com/2007/10/21/sports/baseball/alcs.html?fta=y

Multiplying your equity – tilling the soil allows ideas to sprout and grow

Like pruning, there always seems to be a natural reluctance among managers to seeking ideas from others. [1] Gardeners loosen the soil around their plants by plowing or tilling to allow water and nutrients to more easily reach the plant’s roots. The goal is to accelerate the plants’ growth.

Effective business leaders regularly till the soil by creating opportunities for customers, employees and associates at all levels to identify and develop new ideas which can move the business forward. They help good ideas to sprout and grow.

Here some examples of successful idea cultivation:

• A distribution center manager significantly improved his operational efficiency when allowed to re-design a few work flow processes with the support of some modest capital expenditures.

• An IT [2] professional services company reduced the number and size of project cost over runs after a key technical professional was assigned to vet proposals before delivery to clients.

• Companies like Apple, Intel and Google often owe their success to “obscure process innovations” [3] developed by unnamed employees working in the depths of the organization.

Tilling the soil or trolling for ideas is a lot like trolling for fish: it’s not very hard; you just need to pay attention.

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[1] This is the second in a series of articles illustrating ways to multiply your equity.
[2] Information technology
[3] The Unsung Heroes Who Move Products Forward, The New York Times, September 30, 2007, http://www.nytimes.com/2007/09/30/technology/30ping.html

Business is a lot like surfing –

It requires a lot of paddling to get into position to take advantage of opportunity.

Success requires three elements: opportunity, positioning, and effort.

• Opportunity – Like ocean waves, opportunity is everywhere. And when the big wave comes, it can be very powerful. Your task is to be ready to take advantage of opportunity when it arrives. If you miss the first one, learn from it and get ready for the next one.

• Positioning – The wave will do you no good if you are not in the right position. In fact, it can be down right dangerous. Figuring out the position to be in, and holding that position, is vital. Like your fellow surfers, your competitors are constantly jockeying to improve their positions relative to yours.

• Effort – Most of the effort required for success is expended in finding and maintaining an advantageous position. While riding a wave can be tricky, it requires less effort than paddling your way back to shore.

Position and patience are a powerful combination. In an interview about the iPod’s success, Steve Jobs of Apple was once asked what he planned to do for an encore. His response: “I’m going to wait for the next big thing.”

Business Valuation & Exit Strategies: Planning for the End Game

Wayne will be a guest speaker at the October 18, 2007 breakfast meeting of the Upper Valley Computer Industry Association (UVCIA) at the Fireside Inn, West Lebanon, NH. The topic of his remarks will be "Business Valuation & Exit Strategies: Planning for the End Game." The presentation will highlight some important questions, definitions, and options related to valuing and monetizing a business, illustrated by actual case examples.

The Upper Valley Computer Industry Association (UVCIA) was founded in 1993 in a collaboration between the Thayer School of Engineering at Dartmouth College and a group of Upper Valley businesses and consultants. The UVCIA provides a forum linking technology and business resources in the Upper Valley through regular monthly meetings, periodic seminars and a college scholarship program.

Click Here for more information about UVCIA or to register for the October 18 breakfast program.

Multiplying your equity – pruning for productivity

There seems to be a natural reluctance among managers to pruning. [1] Gardeners often prune trees to stimulate fruit production or to increase the value of timber. Managers should do likewise.

Regular pruning of poorly performing products, customers, business locations, or operations allows business resources to flow to those which are healthy and growing. The net result should be an increase in the overall rate of growth and profitability of the organization as a whole.

Here are some examples of pruning in a business context:

• Retail sku [2] analysis – A very large retailer sends daily reports of product sales to all of its vendors. If sales of a given item trend below target for a specified period of time, additional orders for that sku may be terminated.

• Banking customers – A large financial services company uses special software to analyze the revenues from and cost of doing business with individual customers. Good customers might receive special offers and promotions, while less desirable customers might receive higher charges and lower levels of service.

• Annual performance reviews – Some companies utilize an annual performance review process which stack ranks all employees at a given level. Top performers are rewarded and slated for advancement, while the poorest performers (e.g. as the bottom 10%) are targeted for separation.

Pruning can leverage long-term growth and profitability. Whether or not you choose to prune in your organization, your competitors are probably doing it.

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[1] This is the first in a series of articles illustrating ways to multiply your equity.
[2] Stock keeping unit

What is your market positioning?

In the marketing classic, Positioning: The Battle for Your Mind, [1] the authors expanded on the traditional four Ps of advertising (Product, Price, Place and Promotion) by articulating the notion of Positioning as the platform on which the four Ps rest.

Positioning is about finding a niche in the mind of your prospect where you can place your product, your service, or yourself in such a way that you make a unique connection with that prospect above the din of competing marketing messages. “You concentrate on the perceptions of the prospect. Not the reality of the product [or service].” [2]

How can you achieve that lasting impression in the mind of your prospect?

1. Be first – Everyone remembers who did something first; few people remember number two. [3]
2. If you can’t be first, latch on to #1 – Avis did it with “We try harder.” Avis’ strategy was to hitch their wagon to Hertz and benefit from riding in Hertz wake. [4]
3. Climb on to someone else’s ladder – This type of positioning strategy is a contrarian’s play: stake out a new position based on comparison to the market leader by saying what you are not, e.g. 7-Up, the uncola versus Coke and Pepsi.
4. Stay with it – Positioning is about branding which takes time and numerous impressions. Don’t change your story when your prospects are just beginning to connect with it.
5. Sometimes you can’t get there from here – If you are going up against Google, think of a new strategy; or try number 5.
6. Look for the hole – Most markets have holes or niches where the needs of some customers are not being met by the larger players. This approach is often very effective for small and mid-sized companies. Find the holes. Exploit them. Own them.
   

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[1] Al Ries and Jack Trout, Positioning: The Battle for Your Mind, 1993.

[2] Ibid, p. 8.

[3] Neil Armstrong was the first man on the moon? Who was second?

[4] Boaters know that riding inside someone else’s wake is a lot smoother than bouncing around on the waves at the edge of the wake.