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Wednesday, April 30, 2014

Are You A Reader?

Do you have a program, or some method for your reading?


Do you have goals for creating value from your reading?

How do you keep score?

A couple of readers were talking last week about about our habit. We’re thinking it’s getting less popular.

The next day I was musing about the similarities of the people in the discussion, and realized:

I’m not just a reader.

Because I’m a reader, I’m a thinker, and because I’m a thinker, I’m a writer. Because I’m a writer, I’m a reader.

And you?

Enjoy a Kepler Moment.

Saturday, April 26, 2014

Is Your Company’s Culture Spooking The Buyers?

At the Emerging Markets Forum put on by the Smith School of the University of Maryland (my alma mater) many eye-opening points were raised about confusion and uncertainty of both parties in doing business together.

I came away with two conclusions:
  • much of the friction (failure) is due to a lack of understanding the business culture by each side
  • this applies equally well between seller and buyer here in the USA when owners are selling their companies.
Most of us who started a business have a collection of practices, processes, and procedures for operating the company and making sales that works for our company. They are a hodgepodge of what we have learned over time, best practices adopted/adapted, regulations/industry requirements, and what satisfies the customers’ needs. This collection, combined with how you and your employees go about the day-to-day tasks, comprise the culture of your company.

Do you serve the customer, or do you suffer the customer; do you have SOP or do you rely on an “everyone knows what to do” philosophy; do you trust your employees and customers or do you require extensive documentation and supervision/approvals? These and other characteristics reflect your company’s culture.

The culture of an organization is a contributing factor to its success and may be looked on as the oil which keeps operations and sales running smoothly. However, when that is not the case, you were there to tweak the practices and your company culture absorbs the changes and moves forward.

Enter a serious buyer.

Once the review of the financials and other documents about value of your business has shown that your company is a solid prospect for acquisition, the buyer will want to see the “Your Company How-To Manual” - the what, how, and why of running this business, making sales, and generating profit.

Of course there is no physical manual containing this information, but the buyer is expecting to see sufficient documentation about your business to understand on an applied basis how it operates.

Whether the buyer is from the same industry or comes from outside it, they will want to assure themselves that operations and sales practices and processes can continue without you.

This is where the confusion similar to that in emerging markets comes in play. The culture, operations, and sales – which have served the company so well over the years – has had a central element – YOU – as the hub of the wagon wheel. This structure is strong and works smoothly with the hub in place, but when it is removed – which is the effect of the sale – the structure is unsustainable...unless a replacement hub is available.

The buyer must be convinced that the company can run and prosper without you as the hub, and the loss of some or all of the key players on your staff. Spending time talking about the how and why of running the business can help dispel confusion and concern, to some extent.

However, the more that practices, processes, and SOP are documented, why principal tasks are done a particular way are explained, and how the customer relationships are built and maintained, the clearer the picture the buyer has of sitting in the big chair operating their new company. Offering stories which demonstrate how the culture fits in this picture in a positive way—for the Ritz Carlton, a story would be about empowering every employee to spend up to $X on their own initiative to address a guest’s complaint/concern, which results in one of the highest guest satisfaction rates in the industry. Such stories show the how and why – which reduces the mystery and potential barrier to completing the sale.

A successful sale is the culmination of finding a serious buyer, sound documentation, proven practices, processes, and procedures, a supportive culture, and illustrative stories that convey the what, how, and why of operating the company. A sale begins with preparation.

Your career as a business owner end game The Final Frontier

Tuesday, April 22, 2014

The Best Tool

Starting a company?

Selling a company?

Trying to resolve a thorny problem?

Trying to UNDERSTAND a complex problem?

Make a list.

Seriously, start writing a list. In the last two days I’ve been amazed how half a dozen impasse situations were improved by somebody writing a list.

Now because I’m a hotshot consultant, let me improve on perfection.

For two of the lists, I was in meetings when someone asked for my thoughts. I was hungry, or had a tee time, so I said I would send it to them.

Right there in each meeting, I started making an outline, based on the discussion leading up to the request. That wasn’t hard, everybody else was interrupting each other.

I left, went on golfin’ safari, and forgot about them. Came back a week later, and there were my outlines, looking up at me, expecting further work.

My process is to start from an electronic stationery template, improves my vocabulary, keeps me from using a contraction for firetruck. I also figure anything I write will be public soon enough, so better to establish who wrote it.

In each case filling in the outline took less than an hour and the result was a new area defined, with reasons and recommendations, assets and methods. Sent each off to the customers.

Three other lists were sent to me, from Maryland and California, as my associates define what they see, hear, and think. There weren’t any big words or suspect statistics, just recall, observations, and recommendations.

I was privileged to be on the distro list, because these guys are sharp. I realized we were all creating value just by formalizing the conversations through a second draft. As Jack told us, “Writing is evidence of thinking.”

That’s five, I promised six.

What’s the best way to create a blog post?

Don’t miss The Final Frontier. Learn where we are going, where few have gone before.

Tuesday, April 15, 2014

The Optimal Time To Sell

Jay Leno had an ad for Doritos, “Crunch all you want, we'll make more!” That's for an unlimited product. Especially true when the cost of another copy approaches zero.

What about a one of a kind product? The common wisdom is that prices for art go up after the artist dies. Turns out the artist has to be famous, needs to die prematurely and unexpectedly, and has to leave a growing market.

What about a product, service, or offering that is viable, has an established market niche, history, customers, and competition? I think the model is selling a car you no longer want or need.

First, sell with market demand. If you have served a niche that is no longer as attractive, what has replaced it? Who is taking your money? Why can't you look more like them?

Second, get detailed and shiny before sale. I'm always surprised at the list of things that weren't worth changing for day-to-day operations that emotionally affect buyers. As one operations manager said exasperatedly, “Men can't see anything!” And she was right, so her office got paint and carpet, which moved us from no interest to completed transaction.

Get over being embarrassed. Employees, customers, and vendors all need to hear your best story for making the changes you are planning. If they are adversely affected, I usually find value increases by learning and addressing their concerns.

Don't expect to have your transaction completed with an unknown source. Document everyone you know who could care. Prioritize your list and figure the best way to approach as many as make sense.

Go long. As you make your list of all the usual suspects, figure out who should be on that list, prioritize them best first, and start building your offer to the most important choices. After a couple, you can reuse what you've built to approach as many on the list as you need.

Selling a car is not the same as owning a car. There are new skills that are usually quick to learn and can add to your remaining enjoyment even as you know your time with it is limited.

Take the time to get best value.

Discover the relationship of Truth and Time.

Tuesday, April 8, 2014

Does Business As Usual Attract A Buyer?

There are a multitude of first things that need to be done when you take over in an organization as the new person – especially if you are at the top of the org chart.

When I was elected president of the board of a country club, I immediately talked with the key staff and department heads, influential club members, primary vendors, and community supporters to get a good view operations and the business health of the club. I also looked at the books and administration files as well. While on the walk-about, I shared my views and thoughts about governance under the new administration.

When I took over operations as President and CEO of the National Captioning Institute, a promotion from within the organization, I spoke with the key staff and department heads, board members, major clients, primary vendors, and the auditors. This gave me a broad view of how effective the operations were and gave others the chance to see me in this different role.

In both cases, most operations and administration elements were in pretty good shape, but there were several items that had slipped, resulting from the casual and comfortable nature of long-term relationships between staff and external resources. Like contracts which had expired but were extended by handshake between parties – works fine while the same players are in their respective roles. However, when that changes, there is no documentation of the current contract provisions, and the person(s) with specific knowledge are elsewhere.

In a similar situation, the standard operating procedures (SOP) for the organization most likely have changed in practice but not been written down – everyone knows what changed when it happened – so no urgency to document the changes, so the task of writing them down gets further and further down in the pile of things to do. The problem comes when the players change and specific knowledge of SOP goes out the door.

What I have found in the sale or purchase of a company, a division, or a product line, more often than not, it is these casual agreements and undocumented changes that delay or kill the deal.

Unless, or until, the operations and administration can be substantially documented, prudent buyers will not go forward, because there is no assurance that the informal, handshake deals will convey with the sale. What holds the buyer back is fear of a situation where a reasonable deal becomes nightmare due to negotiation conditions and agreements before the ink is dry on the purchase agreement.

When working with owners, before taking the business to market, an initial step is housekeeping - dotting the “i’s” and crossing the “t’s” to assure current documentation and contracts are complete and readily available for the buyer’s due diligence. This project also helps the owner bring into sharp focus relationships and resources so much a part of the operations that they are all but invisible. What has been disrupted by the Internet – how can we capitalize on a new approach?

Once this is cleaned up, the owner can work on developing materials which present to the prospective buyer the benefits of owning this organization.

Business as usual can have too many ‘just because’ elements, which will spook a serious buyer. Better to convert them to ‘here’s how’ before setting up the sales tent.

What lies ahead for the owner – The Final Frontier

Saturday, April 5, 2014

Models and Actuals

Last week I read 2nd Machine Age, which pointed out that Moore’s Law, that computing power per cost doubles approximately every 18 months and has been chugging along for 60 years, is not a law, but the sum of thousands of heroic breakthroughs, a lot of people doing good work. Every time some theoretically imposed boundary was reached, someone else would come up with a different solution, eventually improving chips, architecture, software, communication and other workarounds to maintain the progress of that “law.”

There have been numerous opinion pieces announcing the end of Moore’s Law for every impending reason, mostly from people who didn’t understand ESR’s Linus’ Law,  that “Given enough eyeballs, all bugs are shallow.”

I was thinking about that as I was reading some analytrash about the end of prosperity. Seems to me that there is a whole class of mumblers who create their place and prestige by predicting, “You’re gonna drop it!”

That’s not a bad prediction, because once the ball is in the air, one of two things is going to happen, and if the ball is caught, who’s going to remember the prediction? Fans care about accomplishment.

It’s also a good bet that the predictors shouting “You’re gonna drop it!” are not the ones sprinting to make the catch, so I guess it’s their best contribution.

What bothers me is the “woe is we” troupers often seem to be backing themselves into positions of political power in a variety of organizations, with truly embarrassing results.

I read someplace that one of the precursors of the Renaissance was the Black Death, which killed a third of the European population, largely in the populated centers of power, which opened up a lot of positions that were filled by people too inexperienced to know who couldn’t succeed.

Success is not some overarching trend. It’s a group of people who find a way to create value in a specific situation. As much as those in authority would like to control success, that is not their function. Or it shouldn’t be anyway.

Dune Leadership Lessons. FTW!

Tuesday, April 1, 2014

The Internet Tool– Faster, Cheaper, Better Results

OK, it is clear to me now – the internet is not a passing novelty, it is a creation tool of considerable versatility and depth, and fosters creativity at every turn. IaaT – the Internet as a Tool is here to stay.

Back in the ‘90s, my organization went through an image update – a new logo, and a branded, coordinated image to go with it. Our PR firm took on the project and immediately dedicated a design team to us.

At the time, we had a long established and recognizable logo of large lowercase initials and at the end, a stylized TV screen shaped into a caption balloon with an accent pointing down.

Numerous meetings were held – gathering input about likes, intent, style preference, and the like. Then the choice of color pallet – more meetings: how does this combination strike you; what about this color and this font, graphic, paper finish and color, and much, much more.

The result of the project after five months of work and numerous sketches, artwork renderings, and final art, was a new logo. The distinctive old logo was replaced by a three line text box with the organization’s name displayed - one word on each line in a pretty common sans-serif font (like Ariel) and a color scheme of dark purple and green with yellow letters. The colors reminded me of a circus and the logo suggested a vision of an animal cage. The project cost many thousands of dollars.

In contrast, last year I changed the logo of the Leadership Breakfast of Maryland – it had simply been the name in block letters. For this project I went to the internet and found many sites which do logo design and several that design logos using a competition framework.

The competition sites involved numerous artists submitting one or more designs within a strict timeframe which the client (me) could review, narrow down to the favored ones, and send feedback about what we liked and what we wanted changed.

The project started with a questionnaire about our business, mission, vision, color preferences (and avoidances), style likes and dislikes, and a general description of the image or message the logo should convey.

When we returned the questionnaire to the vendor, a three-week clock started, with the first week alerting artists of a new competition and sharing most of the information in the questionnaire (not my direct contact info). Later that first week I received the first designs - 10 initially and the flow of new logos increased dramatically up to the end of the second week.

I found several logo designs that interested me, and gave a critical review of likes and changes – sent them to the vendor who forwarded the comments to the artist. Within a day (often within hours) I would receive revisions to the logo and additional designs to consider. Then another feedback cycle followed by revisions and several alternative designs.

The project had a strict timeline – 10-days for initial designs, 6-days for refining the design, and 5 days to finalize and choose the winner. The process generated over 80 logo designs by 40+ designers from all over the world. The project start to end – when I received the graphic file with several sized logos in full color – took a total of 21 days. The cost was about $300.

The contrast between these two projects was startling. The traditional approach of one designer, several consultants of various types, 5-months, and thousands of dollars for a trendy result in the ‘90s vs. 40+ designers competing for a successful design, 3-week timeframe, and $300 in cost.

This is a vivid example of how the internet has disrupted traditional consultative approaches by using gaming theory to involve a larger number of players who seek to be a part of the project and compete on a winner take all basis. In addition, this new meme actively includes the client (me) in the design development.

The disruptive innovation of IaaT leads to paying for results instead of time logged, and getting a wide variety of ideas and possibilities from talented professionals, in an accelerated timeframe, at modest cost.

End game in sight? Selling Out is a good wrap-up.