"The speaker wore his usual uniform of a faded black Timberland sweatshirt and jeans; his London audience was all tailored suits and double-cuffed shirts. But as James Montier finished explaining why money shouldn't be equated with happiness, the equity and bond traders rose to their feet in applause. "I don't think they heard much beyond rule 3," Montier quipped afterward. Rule 3 of his 10 for achieving sustainable happiness is, 'Have sex.'"
An article in this month's Fast Company details maverick financial analyst James Montier's rules for investing. I liked these so much I'm listing several here with my corollaries regarding how they address transformational marketing and change management as well.
1. Leaving the trees could have been our first mistake. Our minds are suited to solving problems related to our survival rather than being optimized for investment decisions. My corollary: Buying decisions - even those regarding matching specifications to features as in fulfilling design specs - are made in the self-interest, not the objective fact. Market to the emotion, not the intellect.
2. Why does meeting companies hold such an important place in the investment process of many fund managers? Because we need to fill our time with something that makes us look busy. My corollary: As with investment decisions, many buying decisions are made before we ever review, or complete reviewing, the sponsor's 'factual' message. The access to information is so pervasive today, it must be consistently presented across all communication outlets from mass media to watercooler conversations.
3. Our minds are not supercomputers and not even good filing cabinets. They bear more resemblance to Post-it Notes that have been thrown into a bin and covered in coffee. The ease with which we can recall information is likely to be influenced by the impact that information made when it went in. My corollary: Brevity is good.
4. Don't equate happiness with money. Materialistic pursuits are not a path to sustainable happiness. My corollary: In life as in business, make the process the pursuit. Because until you are 'there', you'll never be satisfied, and if you do get 'there', you've often nowhere to go but back again.
5. People adapt to income shifts relatively quickly; the long-lasting benefits are essentially zero... One of my recommendations is to stop, take note, and give thanks--not necessarily to God but just to reflect on what you've achieved and what you've got. You need to stop and think, "Actually, I'm damn fortunate." My collorary: Really, I can't top that one. (Damn, I'm fortunate.)
Wednesday, April 26, 2006
Monday, April 17, 2006
Big Search v Big Brand
According to a Harvest Digital study highlighted in a recent article in IT Week, a brand's influence on directing internet traffic pales in comparison to the influence of search engines. 43% of users are likely to click on links simply because they are on the first page of results, now culled not from one or two words but from three or four word search terms. The same UK study indicated a coming fracture in Google's dominance of search. As marketers, the time has passed when we could manage SEO activities with static metatags and homespun tracking tools. Search Engine Optimization is very much front and center of the marketing mix.
Friday, April 14, 2006
Recommended Reading
I just finished reading Bossidy and Charan's latest, Confronting Reality.
Like their last book, Execution, I found the content to be straightforward, intuitive for most. Yet perhaps the authors were told after the success of Execution that leadership was still more about PowerPoint and politics than actual execution - after all, if you don't know where to start you tend to be hamstrung. The message is to start with (get this) a business plan; one consisting of a hard look at internal, external and financial realities. Using many case studies from Allied Signal to Home Depot, the authors illustatrate how an unbiased view of these forces can shape a workable strategy and a thriving - I would say surthriving - organization. The book gets a bit repetitive but perhaps if I confront my own reality - that today's leadership requires this sort of basic business refresher - then it will have an impact on the leaders for whom it is directed who will take the time to read it.
Like their last book, Execution, I found the content to be straightforward, intuitive for most. Yet perhaps the authors were told after the success of Execution that leadership was still more about PowerPoint and politics than actual execution - after all, if you don't know where to start you tend to be hamstrung. The message is to start with (get this) a business plan; one consisting of a hard look at internal, external and financial realities. Using many case studies from Allied Signal to Home Depot, the authors illustatrate how an unbiased view of these forces can shape a workable strategy and a thriving - I would say surthriving - organization. The book gets a bit repetitive but perhaps if I confront my own reality - that today's leadership requires this sort of basic business refresher - then it will have an impact on the leaders for whom it is directed who will take the time to read it.
Tuesday, April 04, 2006
"Some Exec Must've Read An Article..."
A recent article in the New York Times revealed the all too predictable and (if you aren't a GM exec) humorous outcome of a Chevrolet Tahoe viral marketing campaign that allowed consumers to write their own advertisements:
"At first glance, the video looks like a typical 30-second car commercial: a shiny sport utility vehicle careers down a country road lined with sunflower fields, jaunty music playing in the background. Then, white lettering appears on the screen: "$70 to fill up the tank, which will last less than 400 miles. Chevy Tahoe."
The commercial is the product of one of the advertising industry's latest trends: user-generated advertising. On March 13, Chevrolet introduced a Web site allowing visitors to take existing video clips and music, insert their own words and create a customized 30-second commercial for the 2007 Chevrolet Tahoe."
'Shockingly', we find that pranksters and environmental activists are the most likely users of this viral marketing campaign. It sounds suspiciously like a virus alright. Where I've worked, it is usually transmitted to executives on transcontinental or international flights, who, having been bumped to coach and low on laptop power, have no choice but to catch up on their reading. The result is a widespread contagion - a distribution of a photocopied article and a new directive to employ an emerging media, approach, or program without regard as to whether it is appropriate to the marketplace.
From the article, emphasis mine: "Drew Neisser, the president and chief executive at Renegade Marketing, a New Yor (sic) agency specializing in nontraditional marketing that is part of Dentsu, said companies had such a strong desire for user-generated advertising that they were willing to accept the risks. 'There's this gold rush fever about consumer-generated content,' he said. 'Everybody wants to have consumer-generated content, and Chevy Tahoe doesn't want to be left behind.' A spokeswoman for Chevrolet, Melisa Tezanos, said the company did not plan to shut down the anti-S.U.V. ads. 'We anticipated that there would be critical submissions,' Ms. Tezanos said. 'You do turn over your brand to the public, and we knew that we were going to get some bad with the good. But it's part of playing in this space.'"
Ms. Tezanos, one does not 'turn over' a brand to the consuming public. The brand was never yours to give. It is always your public's brand. However, what you do not do is pay for and provide a platform for your brand's critics.
To play Advertising Agency Creative Director yourself, here's the link: http://chevyapprentice.com/
"At first glance, the video looks like a typical 30-second car commercial: a shiny sport utility vehicle careers down a country road lined with sunflower fields, jaunty music playing in the background. Then, white lettering appears on the screen: "$70 to fill up the tank, which will last less than 400 miles. Chevy Tahoe."
The commercial is the product of one of the advertising industry's latest trends: user-generated advertising. On March 13, Chevrolet introduced a Web site allowing visitors to take existing video clips and music, insert their own words and create a customized 30-second commercial for the 2007 Chevrolet Tahoe."
'Shockingly', we find that pranksters and environmental activists are the most likely users of this viral marketing campaign. It sounds suspiciously like a virus alright. Where I've worked, it is usually transmitted to executives on transcontinental or international flights, who, having been bumped to coach and low on laptop power, have no choice but to catch up on their reading. The result is a widespread contagion - a distribution of a photocopied article and a new directive to employ an emerging media, approach, or program without regard as to whether it is appropriate to the marketplace.
From the article, emphasis mine: "Drew Neisser, the president and chief executive at Renegade Marketing, a New Yor (sic) agency specializing in nontraditional marketing that is part of Dentsu, said companies had such a strong desire for user-generated advertising that they were willing to accept the risks. 'There's this gold rush fever about consumer-generated content,' he said. 'Everybody wants to have consumer-generated content, and Chevy Tahoe doesn't want to be left behind.' A spokeswoman for Chevrolet, Melisa Tezanos, said the company did not plan to shut down the anti-S.U.V. ads. 'We anticipated that there would be critical submissions,' Ms. Tezanos said. 'You do turn over your brand to the public, and we knew that we were going to get some bad with the good. But it's part of playing in this space.'"
Ms. Tezanos, one does not 'turn over' a brand to the consuming public. The brand was never yours to give. It is always your public's brand. However, what you do not do is pay for and provide a platform for your brand's critics.
To play Advertising Agency Creative Director yourself, here's the link: http://chevyapprentice.com/
Monday, April 03, 2006
For Every Action There Is An Equal and... Identical Action?
I’ve been in more situations than I can count where a company does far too little in the way of proactive marketing and far too much reactive marketing. The difference between the two is fundamental.
Proactive marketing is marketing where the outgoing message is controlled by your own company. “But aren’t all outgoing marketing messages controlled by the company?” you might ask.
No.
Unfortunately in most business-to-business environments, marketing strategies and their inter-related advertising messages are actually driven by their competition, making for reactive marketing, which necessarily guarantees a marketing message that is both late to market and no longer relevant to the conversation.
I once had a software client who, upon looking at a creative presentation that involved bees and a beehive, commented that her competitors were sure to joke that the product had ‘bugs’. She was more concerned about possible sarcastic comments from competitors than articulating a clear message in her ads – as if the campaign – even a ‘killer campaign’ – would stop competitors from saying things that were, well, competitive. In Marcom, this is also seen in the rationale to participate in industry events, where companies continue to invest money with declining returns just to ‘be present’, or ‘support the industry’. Often this is further complicated by ever-increasing investments in clever and complex booth themes, as if the Griswolds from the movie Christmas Vacation were event planners.
Yet while marcom is most obvious, sometimes the reactive approach encroaches in ways far less obvious. Strategically, it happens when companies look at a competitor’s recent success in product, promotion, or distribution and attempt to copy it outright, opting for guaranteed also-ran status instead of taking chances to find niche differentiation.
The reactive element is often even more insidious than marcom or strategy. Often it is organizational. Many companies do little to discourage employees from entering into a habit of self-effacing navel-gazing, lamenting their opinion that the company is the least among competitors; and yet, whenever a hire is made from another company, it is surprisingly discovered that the other firm deals with the same issues. Proper leadership stems the natural tendency toward corporate self-flagellation and encourages morale and confidence – in employees, customers, and investors.
Competitive actions are part of the environment in which your marketing must operate, not the sole driver for its strategic direction. Other considerations, including, importantly, customer needs, are the real drivers. Anticipating these needs, then marketing to them proactively and confidently will always make you the lead dog. And as the bumper sticker slogan says, “If you aren’t the lead dog, the view never changes.”
Proactive marketing is marketing where the outgoing message is controlled by your own company. “But aren’t all outgoing marketing messages controlled by the company?” you might ask.
No.
Unfortunately in most business-to-business environments, marketing strategies and their inter-related advertising messages are actually driven by their competition, making for reactive marketing, which necessarily guarantees a marketing message that is both late to market and no longer relevant to the conversation.
I once had a software client who, upon looking at a creative presentation that involved bees and a beehive, commented that her competitors were sure to joke that the product had ‘bugs’. She was more concerned about possible sarcastic comments from competitors than articulating a clear message in her ads – as if the campaign – even a ‘killer campaign’ – would stop competitors from saying things that were, well, competitive. In Marcom, this is also seen in the rationale to participate in industry events, where companies continue to invest money with declining returns just to ‘be present’, or ‘support the industry’. Often this is further complicated by ever-increasing investments in clever and complex booth themes, as if the Griswolds from the movie Christmas Vacation were event planners.
Yet while marcom is most obvious, sometimes the reactive approach encroaches in ways far less obvious. Strategically, it happens when companies look at a competitor’s recent success in product, promotion, or distribution and attempt to copy it outright, opting for guaranteed also-ran status instead of taking chances to find niche differentiation.
The reactive element is often even more insidious than marcom or strategy. Often it is organizational. Many companies do little to discourage employees from entering into a habit of self-effacing navel-gazing, lamenting their opinion that the company is the least among competitors; and yet, whenever a hire is made from another company, it is surprisingly discovered that the other firm deals with the same issues. Proper leadership stems the natural tendency toward corporate self-flagellation and encourages morale and confidence – in employees, customers, and investors.
Competitive actions are part of the environment in which your marketing must operate, not the sole driver for its strategic direction. Other considerations, including, importantly, customer needs, are the real drivers. Anticipating these needs, then marketing to them proactively and confidently will always make you the lead dog. And as the bumper sticker slogan says, “If you aren’t the lead dog, the view never changes.”
Wednesday, March 22, 2006
That Man Behind The Curtain
So a former colleague tells me this afternoon that the company he works for has just sold an expensive software application, a breakthrough that has been anticipated for months. Trouble is, it is expected to consume all the division's development resources for six months (in spite of claims to the contrary, this product is merely 'slideware', that is, product existing only on PowerPoint slides), and is only the first in what is supposed to be, according to revenue projections, ten such sales over the year. The development is not 'build once, deploy multiple times'. It is largely custom.
So how does a company manage to project annual sales five times greater than their production capacity?
An enormous oversight? Is someone having a 'palm to forehead' moment? Not likely. This was anticipated, in a sense. This company, and many others like it, operate under two major, driving assumptions: One, a defeatest attitude that what they are selling will not be bought but will 'position it' for sales of lesser, more deliverable solutions; and two, that impossible tasks are made possible by sheer force of will.
Of the former, any company trying to market itself on the back of slideware that, if successfully sold, would cripple the company's ability to function efficiently, is self-defeating at best and fraudulent (to investors, customers, employees) at worst. The first rule of sales is to believe in yourself and your product. Continued failure to deliver on promises and sufficiently resource projects will undermine customer, investor and employee confidence. It is a consciously engaged strategy designed to hide unpleasant truths for short-term gains.
Of the latter, this only happens in movies. Excepting perhaps for heroic feats in the early years of the space program, impossible tasks are just that - and expectations of rabbits from hats reveal what is essentially an utter lack of planning and no real understanding on the part of management of the broader organization's inter-related functions, a fundamental disconnect from the laws of physics. Too many companies survive (barely) only because of the efforts of a narrow top percentile of employees that are burdened because they are averse to allowing failure - theirs or others. This leads to stress and burnout among the most dedicated and talented, as their efforts become not recognized, but expected; their eventual financial rewards not exceptional but typical.
Vision, mission, strategic planning is designed to avoid all this; honest concession, compromise, discussion and above all, leadership, drive sales and development plans that work as a cohesive unit, breaking barriers and driving growth. This is a company instead driven for short-term result, employing sycophantic ramblings to investors and employees, and an avoidance of the hard decisions that come with leadership. This is a picture of a company on the decline.
So how does a company manage to project annual sales five times greater than their production capacity?
An enormous oversight? Is someone having a 'palm to forehead' moment? Not likely. This was anticipated, in a sense. This company, and many others like it, operate under two major, driving assumptions: One, a defeatest attitude that what they are selling will not be bought but will 'position it' for sales of lesser, more deliverable solutions; and two, that impossible tasks are made possible by sheer force of will.
Of the former, any company trying to market itself on the back of slideware that, if successfully sold, would cripple the company's ability to function efficiently, is self-defeating at best and fraudulent (to investors, customers, employees) at worst. The first rule of sales is to believe in yourself and your product. Continued failure to deliver on promises and sufficiently resource projects will undermine customer, investor and employee confidence. It is a consciously engaged strategy designed to hide unpleasant truths for short-term gains.
Of the latter, this only happens in movies. Excepting perhaps for heroic feats in the early years of the space program, impossible tasks are just that - and expectations of rabbits from hats reveal what is essentially an utter lack of planning and no real understanding on the part of management of the broader organization's inter-related functions, a fundamental disconnect from the laws of physics. Too many companies survive (barely) only because of the efforts of a narrow top percentile of employees that are burdened because they are averse to allowing failure - theirs or others. This leads to stress and burnout among the most dedicated and talented, as their efforts become not recognized, but expected; their eventual financial rewards not exceptional but typical.
Vision, mission, strategic planning is designed to avoid all this; honest concession, compromise, discussion and above all, leadership, drive sales and development plans that work as a cohesive unit, breaking barriers and driving growth. This is a company instead driven for short-term result, employing sycophantic ramblings to investors and employees, and an avoidance of the hard decisions that come with leadership. This is a picture of a company on the decline.
Monday, March 13, 2006
The Smartest Guys In The Room
On a strong recommendation from a former colleague, I added "The Smartest Guys In The Room", a documentary about Lay, Skilling, Fastow, et. al. and the hubris that led to the collapse of Enron, to my Netflix queue and had the opportunity to watch it last night. I am now watching the trials of Lay and Skilling with greater interest (and understanding) than before, and more convinced than ever that the "soft skills" now part of many business programs are critical to operational and individual success.
Enron's culture was driven by hubris, arrogance, and ego - the filmakers try to equate this with greed, but I see only Fastow (who skimmed gains on the questionable off-book partnerships and depositied them in personal accounts) as greedy - the rest saw money - as represented by Enron's market cap - as the scoreboard, evidence of their 'genius' and individual superiority. Being the smartest guys in the room - and being widely recognized for it - was not only their own motivation, but became a driving force for employees at all levels, from Lay to the energy traders working the phones.
An individual that insists on being the smartest guy in the room - especially to the extent that dissention is met with threats and dismissals - is a parasite that eventually devours the host. True leadership not only accepts but encourages individual thought, action, and opinion from all levels.
Illustrating this point, BBDO ad agency creative chief David Lubars was quoted in the September 2005 issue of Fast Company: "I want people to challenge me. I want them to feel they can step up and bring ideas. I insist on not being the smartest guy in the room. But if I hear everything, then I can help craft the smartest idea in the room. Here's the thing: Phil (Phil Dusenberry, Lubar's predecessor) was a genius. I'm not a genius, so I need other people to help me do genius things."
Enron's culture was driven by hubris, arrogance, and ego - the filmakers try to equate this with greed, but I see only Fastow (who skimmed gains on the questionable off-book partnerships and depositied them in personal accounts) as greedy - the rest saw money - as represented by Enron's market cap - as the scoreboard, evidence of their 'genius' and individual superiority. Being the smartest guys in the room - and being widely recognized for it - was not only their own motivation, but became a driving force for employees at all levels, from Lay to the energy traders working the phones.
An individual that insists on being the smartest guy in the room - especially to the extent that dissention is met with threats and dismissals - is a parasite that eventually devours the host. True leadership not only accepts but encourages individual thought, action, and opinion from all levels.
Illustrating this point, BBDO ad agency creative chief David Lubars was quoted in the September 2005 issue of Fast Company: "I want people to challenge me. I want them to feel they can step up and bring ideas. I insist on not being the smartest guy in the room. But if I hear everything, then I can help craft the smartest idea in the room. Here's the thing: Phil (Phil Dusenberry, Lubar's predecessor) was a genius. I'm not a genius, so I need other people to help me do genius things."
Friday, March 03, 2006
When Bad Blogs Happen To Good People
Great article on the use and misuse of Corporate Blogs: http://www.cio.com/archive/021506/schrage.html
Especially interesting are some of the reader comments, including this HSO: "If you think for a moment that I (and other CXOs) will soon see blogging as an inevitable communication media for themselves, we obviously haven’t been talking to the same people. I am convinced that the next revision of Jim Collins’ "Good to Great" will show that while some Good CXOs do blog, no GREAT CXOs do any blogging."
Lucky for me that no one reads this. Except you. And I thank you for that.
Especially interesting are some of the reader comments, including this HSO: "If you think for a moment that I (and other CXOs) will soon see blogging as an inevitable communication media for themselves, we obviously haven’t been talking to the same people. I am convinced that the next revision of Jim Collins’ "Good to Great" will show that while some Good CXOs do blog, no GREAT CXOs do any blogging."
Lucky for me that no one reads this. Except you. And I thank you for that.
Wednesday, March 01, 2006
George Costanza: Business Guru
The definition of insanity, we've often heard, is doing the same thing repeatedly and expecting a different result. What are you doing that is significantly different than your competitors - in a way that positively impacts the customer? Is your best response in defending a particular strategy, "Everyone is doing it", or worse, "Its always been this way"?
A popular episode of the TV sitcom Seinfeld finds perennial loser George so fed up with the poor decisions he has made in his life that he spends an entire episode doing the exact opposite that he would normally do: "It all became very clear to me sitting out there today, that every decision I've ever made in my entire life has been wrong. My life is the complete opposite of everything I want it to be. Every instinct I have in every aspect of life, be it something to wear, something to eat... it's often wrong.", states George. Jerry replies: "If every instinct you have is wrong, then the opposite would have to be right." In the end, George ends up dating a beautiful woman and landing a job with the New York Yankees.
Okay, so you don't trust your company with the likes of George Costanza? Then perhaps you'll listen to Dell CEO Kevin Rollins: "If we followed industry convention, we'd be in a mess. We believe that if you find something that's different from the industry norm, you'll be more successful."
Apply Apple's old advertising slogan to your own business: "Think Different."
A popular episode of the TV sitcom Seinfeld finds perennial loser George so fed up with the poor decisions he has made in his life that he spends an entire episode doing the exact opposite that he would normally do: "It all became very clear to me sitting out there today, that every decision I've ever made in my entire life has been wrong. My life is the complete opposite of everything I want it to be. Every instinct I have in every aspect of life, be it something to wear, something to eat... it's often wrong.", states George. Jerry replies: "If every instinct you have is wrong, then the opposite would have to be right." In the end, George ends up dating a beautiful woman and landing a job with the New York Yankees.
Okay, so you don't trust your company with the likes of George Costanza? Then perhaps you'll listen to Dell CEO Kevin Rollins: "If we followed industry convention, we'd be in a mess. We believe that if you find something that's different from the industry norm, you'll be more successful."
Apply Apple's old advertising slogan to your own business: "Think Different."
Monday, February 27, 2006
Buddy, could you spare a Benjamin?
You lose more weight if you cut your food into small pieces and chew thoroughly. I always used that analogy to explain the best way to introduce change. Smaller, easily digestable, short term goals are easier to comprehend.
Building on these 'quick hits', it gets easier over time to sell broader goals, BHAGs - Big Hairy Audacious Goals, as author Jim Collins (Built To Last) calls them.
On a related note, I found this interesting, a study from my alma mater, The University of Iowa, regarding the impact of small denominations on spending patterns: http://www.press-citizen.com/apps/pbcs.dll/article?AID=/20060221/NEWS01/60221004/1079/RSS01
"It appears that money is not just regarded as a medium for transactions. The denomination of the bill plays significantly into a customer's willingness to spend."
Building on these 'quick hits', it gets easier over time to sell broader goals, BHAGs - Big Hairy Audacious Goals, as author Jim Collins (Built To Last) calls them.
On a related note, I found this interesting, a study from my alma mater, The University of Iowa, regarding the impact of small denominations on spending patterns: http://www.press-citizen.com/apps/pbcs.dll/article?AID=/20060221/NEWS01/60221004/1079/RSS01
"It appears that money is not just regarded as a medium for transactions. The denomination of the bill plays significantly into a customer's willingness to spend."
Sunday, February 19, 2006
M&A In Dim Light
“What are you doing?” asked the stranger to the man, who, lit by a streetlight, seemed to be closely inspecting the sidewalk.
“Looking for my watch,” said the man.
“How long ago did you lose it here”, asked the stranger, starting to help the man search.
“About thirty minutes ago, I guess,” replied the man, “But I didn’t lose it here. I lost it about three blocks that way,” said the man, as he motioned down the street.
The stranger stood up and turned to the man. “Then why in the world are you searching here?” he asked.
“The light is better here.” Replied the man, confidently.
A colleague tells me his company purchased another, smaller rival recently, which on the surface seemed like a positive move as it had been clear for some time that the market they were in was leveling off, even declining.
“So, what do they do?” I asked, expecting to hear about the extension the company now had in the way of offering a new, larger; or perhaps smaller but profitable niche, market.
“Same thing as we do. Same thing”, my colleague shrugged.
“No promising IP (intellectual property)?” I asked. “No vertical markets, new distribution partners, nothing?” I offered, hopefully.
“No, not really. We lost a few deals to them before. Same customers.” He was beginning to see my point. “We’ll just be bigger.” He sighs. “For awhile.”
So it is, another company looking for inorganic growth where the light is better. A market they know, are familiar with, regardless of whether it’s a good fit, because it will, for a time, stave off inevitable decline. To this type of management, to do the right thing - to take on an ancillary product line or enter a new market, is a seen as a bit like dusk… uncertain and just a little spooky. However, I prefer to think of it as a bit more like dawn, as dim and uncertain as dusk, but with far greater promise.
This is a critical difference between management and leadership. My colleague’s company is managed, not led. Leadership would search the right places for something worth finding; whereas management will limit its searches to that with which it is comfortable. When it comes to M&A, competitors and partners are often the first targets (or buyers) that come to mind – vertical integration comes easy. In fact, almost half of such deals are from the sellers' same industry. However, these tend to be strictly buyers seeking financial leverage, and are unlikely to invest significant amounts of additional capital to grow the market or build further on foundations of organic growth. This leads to internal strife and eventual disintegration of even the most modest goals that spurred the initial interest. This is among the reasons most mergers fail. On the other hand, premium buyers, with visionary leadership in place, like many big public companies, invest in potential and pay for it, or alternatively, well-led micro and mid cap companies market themselves to these ideal suitors.
When seeking inorganic opportunities for selling your company or in buying another, be certain of your motivations and goals for the transaction.
And bring a flashlight.
“Looking for my watch,” said the man.
“How long ago did you lose it here”, asked the stranger, starting to help the man search.
“About thirty minutes ago, I guess,” replied the man, “But I didn’t lose it here. I lost it about three blocks that way,” said the man, as he motioned down the street.
The stranger stood up and turned to the man. “Then why in the world are you searching here?” he asked.
“The light is better here.” Replied the man, confidently.
A colleague tells me his company purchased another, smaller rival recently, which on the surface seemed like a positive move as it had been clear for some time that the market they were in was leveling off, even declining.
“So, what do they do?” I asked, expecting to hear about the extension the company now had in the way of offering a new, larger; or perhaps smaller but profitable niche, market.
“Same thing as we do. Same thing”, my colleague shrugged.
“No promising IP (intellectual property)?” I asked. “No vertical markets, new distribution partners, nothing?” I offered, hopefully.
“No, not really. We lost a few deals to them before. Same customers.” He was beginning to see my point. “We’ll just be bigger.” He sighs. “For awhile.”
So it is, another company looking for inorganic growth where the light is better. A market they know, are familiar with, regardless of whether it’s a good fit, because it will, for a time, stave off inevitable decline. To this type of management, to do the right thing - to take on an ancillary product line or enter a new market, is a seen as a bit like dusk… uncertain and just a little spooky. However, I prefer to think of it as a bit more like dawn, as dim and uncertain as dusk, but with far greater promise.
This is a critical difference between management and leadership. My colleague’s company is managed, not led. Leadership would search the right places for something worth finding; whereas management will limit its searches to that with which it is comfortable. When it comes to M&A, competitors and partners are often the first targets (or buyers) that come to mind – vertical integration comes easy. In fact, almost half of such deals are from the sellers' same industry. However, these tend to be strictly buyers seeking financial leverage, and are unlikely to invest significant amounts of additional capital to grow the market or build further on foundations of organic growth. This leads to internal strife and eventual disintegration of even the most modest goals that spurred the initial interest. This is among the reasons most mergers fail. On the other hand, premium buyers, with visionary leadership in place, like many big public companies, invest in potential and pay for it, or alternatively, well-led micro and mid cap companies market themselves to these ideal suitors.
When seeking inorganic opportunities for selling your company or in buying another, be certain of your motivations and goals for the transaction.
And bring a flashlight.
Monday, February 06, 2006
Progress Over Perfection = Design Over Dogmatism
Here's another take on the Strategy180 mantra, 'Progress Over Perfection' that suggests releasing projects/ideas/concepts before they are 'perfect'. This time, the idea is extended to design. Quote courtesy of Fast Company:
"Let's say you have an idea. In a traditional company, given the chance to present the idea to a senior vice president, you're going to knock yourself out to dot all the "I's" and cross all the "T's." The goal is to make it perfect. There's a focus on one solution. We say the better approach is to go and see that person with nine half-baked ideas. Design thinking is iterative. It's okay to be approximate in the beginning and then narrow and narrow. But in companies today the present way of thinking doesn't really allow that to happen. Design thinking is also empathic. Being sensitive and responsive to people at different levels and disciplines will lead to a different kind of thinking. It embraces being intuitive. No self-respecting business thinker takes a creative leap of faith. Everything has to be evidenced based. That's not a bad idea, but creative leaps of faith are part of how innovation happens. So design thinking is fundamentally optimistic. Instead of pulling things down, it challenges everybody to rise up and break through barriers." David Kelley Founder and chairman, Ideo, Palo Alto, California
In 1991, Kelley launched Ideo, the groundbreaking design shop, to help change the way companies like Apple and Cisco innovate. Now, as head of Stanford University's new d.school, he's helping to shape the next generation of designers -- as well as thinkers from other disciplines.
"Let's say you have an idea. In a traditional company, given the chance to present the idea to a senior vice president, you're going to knock yourself out to dot all the "I's" and cross all the "T's." The goal is to make it perfect. There's a focus on one solution. We say the better approach is to go and see that person with nine half-baked ideas. Design thinking is iterative. It's okay to be approximate in the beginning and then narrow and narrow. But in companies today the present way of thinking doesn't really allow that to happen. Design thinking is also empathic. Being sensitive and responsive to people at different levels and disciplines will lead to a different kind of thinking. It embraces being intuitive. No self-respecting business thinker takes a creative leap of faith. Everything has to be evidenced based. That's not a bad idea, but creative leaps of faith are part of how innovation happens. So design thinking is fundamentally optimistic. Instead of pulling things down, it challenges everybody to rise up and break through barriers." David Kelley Founder and chairman, Ideo, Palo Alto, California
In 1991, Kelley launched Ideo, the groundbreaking design shop, to help change the way companies like Apple and Cisco innovate. Now, as head of Stanford University's new d.school, he's helping to shape the next generation of designers -- as well as thinkers from other disciplines.
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