Posted tagged ‘Change’

Trends that You Should Worry About…

January 1, 2010

Lately, I have been “heads down” more than ever working with companies on redefining their strategies. In these conversations, I am often asked what surprises me the most. Here are a few observations.

The biggest surprise to me has been the pace at which whole industries have begun to disappear. As fast as one charts the list, another one needs to be added. The postal service, newspaper and magazine publishing, television, and retail stores are just a few.

Last week, I went into a high end department store to buy a present for a newly engaged couple. I went to the registry and met with the manager. She told me that 80% of the gifts for a couple is now purchased on line. This is good news for the retailer because it can pay less commission, as there is no sales rep involved in the purchasing transaction.

What was shocking to me was that manager told me that when an item is returned to the store, it gets applied as a negative sale to her commission. She is running harder just to stay in place. And the store is comfortable making her role obsolete.

Another recent trend that I find fascinating is the increasing need to create engines as opposed to creating businesses. Zappos is a great illustration of this process done well.

Zappos had become an Internet business legend, so to speak, for its ability to sell footwear. Its use of social media to promote and service its business is very well known.

In July, Amazon announced its intention to purchase Zappos. The deal closed in November.

Today, less than two months later, Zappos has transformed itself into a clothing site. The engine that it has designed and the practices that it has implemented are being used to allow it to enter a whole other segment of the clothing industry.

What does all this mean to you?

For starters, if you have been doing business in a traditional way, start rethinking your business model because your next competitor can come from anywhere.

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Have we seen this challenge before?

March 20, 2009

“David, there is nothing new under the sun.”

And with that brief message, my mentor Carl, shared the first lesson about this challenging issue.

I am very fortunate to have Carl as my mentor. Besides being blessed with remarkable business acumen and a wealth of experience leading companies and divisions in the food, electronics, housewares and fashion industries, Carl possesses the most important traits that a mentor must have. He is a very giving person with a strong desire to share, better others and educate.

Carl went on to explain that in the 1940’s and 1950’s, the food industry experienced the very same issues that these houseware companies are going through now. When his mother shopped at the local grocer,  he made the decision about what brands she could be purchasing. Choices were limited. Yet, less than a generation when his wife shopped, she was the one who chose the brands.

What had occurred in the intervening years was a change in how food was sold. The grocer of the past was replaced by the retailer. This new brand of retailer stopped being a merchant and became more of a landlord. In reality, he was selling space and his “tenants” were the products that he sold.  Those who paid more for their position and location received more favorable space.

To compete, the supermarket owner had to leverage a different kind of appeal, one of better selection and lower price. Their key measure was the return on investment against cost per square foot. Their goal was to stock the floor with products that gave them the best return.

There were some exceptions and those retailers although new at what they were doing, learned about these exceptions very quickly. There were certain items that, even if they didn’t meet the ROI criteria, still had to be carried in the store. If these staples were not in the store, the consumer would have to go to another store. If the consumer did, the storeowner risked the possibility that the consumer would begin to shop in another place for not only those staples but for other items as well.

Sounds familiar, huh? A large store model replacing the mom and pop stores and more items competing for the attention of the consumer. The retailer controls the space and influences price and margins. Customers flock to these stores for convenience and better price.

So the first lesson then was that there is historical precedence to this dramatic change. In our next post, we’ll learn about the methods that Carl used to meet this challenge in the very same industry that our housewares executives are working.

Branding and Gaining Control of Your Business in the Age of Twitter

March 19, 2009

Today, I received a really provocative and interesting challenge. A business that makes kitchen gadgets has lost its leverage with its customers and wants to know how to get that leverage back.

The kitchen gadget industry is really quite interesting. Inventors create and design products. These gadgets need to solve a problem and be very easy to use. Once they have created a prototype and tested it with some audiences, these inventors then take their products overseas to be manufactured. Some of these inventing companies protect their products with patents and sometimes they don’t because the patent will not afford them enough protection to prevent others from copying their products with minor alterations in design.

But now, the business environment is even worse for these companies.

It wasn’t that long ago that the inventing companies could sell these products to lots and lots of stores. But then the industry began to consolidate. Soon, it became apparent that if you wanted to sell to your target market, the only way to do that was to sell these products through superstores like Wal-Mart, Target and Bed, Bath and Beyond.

This is a problem though for these companies. Because these distribution channels are so large and dominate the marketplace, these department and superstores can dictate the margins and the way these products go to market. The inventing companies must tolerate and accommodate the requests made of them because upsetting one of these large companies could doom the product.

The question that was posed to me today was how to help these companies build a presence so that alternative channels for identifying products that need to be invented can be identified, products and related concepts could be tested faster and better, and alternate marketing channels could be developed.

This seemed particularly fascinating to me so I agreed to take this on.

Here’s my plan.

I think that this is a serious and meaningful strategic question for our times so I’ve decided to be public about it and write about it in this blog.

I am also identifying and approaching a cross-section of friends and colleagues to provide insight. They include one of the fellows accountable for building communities for a large software developer, a PR firm, a specialist in search engine optimization and web site development, my mentor who is an expert at identifying market targets, a senior advertising exec at large advertising company, my son who is one of the founders of TeenTechBlog www.teentechblog, my wife who is a stellar teacher and master chef… and you.

I would like to invite you to join me in this research. If you are interested, please e-mail me at david_blumenthal@msn.com. I plan on speaking on this topic in six weeks and if you assist me, I will share my session with you.

The journey promises to be a lot of fun.

Negotiating Success

January 30, 2009

According to Professor Watkins, to succeed with a new boss (the American People?)  or  for that matter, a new Congress, it is critical to invest the time in the relationship up front. Your new “boss” (and here you can substitute the word “Americans” to relate to President Obama’s situation) sets your benchmarks, interprets your actions for other key players, and controls access to the resources that you need. This person will have more impact than any other individual on your eventual success or failure.

Negotiating with the boss is about determining the shape of the game so that you have a fighting chance of success in achieving your desired goals. It is here that realistic expectations are established, consensus is reached, and resources secured.

If you are in realignment, you need the boss to help you make the case for change. In a sustaining success situation, you need help to learn about the business and avoid early mistakes that threaten the core assets. In start-ups, you need resources and protection from too much higher-level interference. In turnarounds, you may need to be pushed to cut back the business to the defendable core more quickly.

There are certain dos and don’ts concerning how to build a productive relationship with one’s boss.

Don’ts

Dos

  • Don’t trash the past. Understand it instead — and concentrate on assessing current behavior and results and making the changes necessary to improve performance.
  • Take 100% responsibility for making the relationship with your boss work. The responsibility rests with you.
  • Don’t stay away. Get on your boss’ calendar regularly. Be sure that your boss is aware of the issues that you face and that you are aware of the boss’ expectations and how they are shifting
  • Clarify mutual expectations early and often. Begin managing expectations right away.
  • Don’t surprise your boss. Report emerging problems early enough. The worst scenario is for your boss to learn about a problem from someone else. Give him or her a heads-up as soon as you become aware of a developing problem.
  • Negotiate timelines for diagnosis and actual planning. Do not let yourself get caught up immediately in firefighting. Buy yourself some time to understand the organization and come up with an action plan.
  • Don’t approach your boss with only problems. Bring along a plan as well. This does not mean that you need full blown solutions every time. The key is to give some thought to how you plan to address the problem, to your role, and the help that you will need.
  • Aim for early wins in areas important to your boss. Figure out what the boss cares about the most. One way to do this is to focus on three things that are important to your boss and discuss what you are doing about them every time you interact. However, do not take actions that you think are misguided.
  • Don’t run down your checklist. Running through a checklist of what you have been doing is inappropriate. However, updating on what is being attempted and how the boss can help is appropriate.
  • Pursue good marks from those whose opinions your boss respects. Be alert to the multiple channels through which information about you reaches your boss.
  • Don’t try to change the boss. Adapt to his or her style and idiosyncrasies.

There are five conversations that should be held on an ongoing basis.

1)      Situational Analysis Conversation. It is important to understand how your new boss sees the business situation. How did the organization reach this point? What are the challenges? What resources can be drawn upon?

2)      Expectations Conversation. What does your boss need you to do in the short-term and medium-term? What will constitute success? How will performance be measured? When? Are there any areas that are untouchable? Learning the answers to these questions will allow you to reset expectations. If you are operating from different perspectives, it is critical that you have a conversation that creates alignment. Be conservative in what you promise and focus on over-delivering. If you have multiple bosses, it makes sense to bias your efforts to the one who has substantially more power early on, as long as you redress the balance, to the extent possible later on. If you cannot get agreement working with your bosses one-on-one, it is appropriate to bring them to the table together to avoid getting pulled to pieces.

3)      Style Conversation. This is about how you and your boss can best interact on an ongoing basis, i.e., in writing, face-to-face, voice-mail, and/or email? How often? On what kind of decisions does s/he want to be consulted and where can you make the call yourself? How are your styles different and what are the implications of those differences?

4) Resources Conversation. This conversation is essentially a negotiation for critical resources and should be had once you have agreed upon the diagnosis. The first step is to identify what resources are needed given the state of the business. In turnarounds and realignments, the need for resources is far greater because different skills and experiences are required. A menu approach that reflects different results based on different levels of commitment may be appropriate. Focus on the underlying interests of your boss and tailor resource requests accordingly. Look for mutually beneficial exchanges that support both of your agendas.

5) Personal Development Conversation. This conversation should only be held once your relationship has matured. In what areas do you need improvements? What actions or courses could you take? Discipline yourself to be open to learning about new skills that are required for the new role.

Securing Early Wins

January 28, 2009

While it is important to secure early wins, it is equally important to avoid early losses. Common causes of early losses include the following:

  • Failing to focus. This appears as having too many initiatives. Identify the moist promising opportunities and concentrate on them
  • Not taking the business situation into account. What constitutes an early win in one situation can be a waste of time in another. See the table above regarding examples for each type of situation.
  • Not adjusting for the culture. Leaders who come from outside the organization naturally assume their old culture is in existence. Be sure to understand what the organization considers a win.
  • Failing to get wins that matter to your boss. Addressing problems that your boss cares about will go a long way toward building credibility and cementing access to resources.
  • Letting your means undermine your ends. Process matters. The early win must be accomplished in a manner that exemplifies the behavior you hope to instill in the organization.

Studies show that successful change is implemented in “waves” with distinct phases. These phases include acclimatization, change, consolidation, and deeper learning so people can catch their breaths. What follow are deeper and more thorough structural changes. The final wave is focused on fine-tuning to maximize performance.

Each wave ought to consist of distinct phases.

  • Learning
  • Designing the changes
  • Building support
  • Implementing the changes
  • Observing results

The goal of the first wave of change is to secure early wins that build personal credibility, establish key relationships, and identify and harvest low-hanging fruits – the highest-potential opportunities for short-term improvements in organizational performance. These targets should be consistent with your A-item business priorities and introduce the new patterns of behaviors that you want to instill in the organization.

A-item priorities should

  • Follow naturally from core problems
  • Be neither too general nor too specific. They must include measures for overall success so that wins may be recognized. In other words establish S-M-A-R-T goals but not goals that result in micro-managing.
  • Offer clear direction yet allow for flexibility when you learn more about the situation. This is an iterative process. Be prepared to test, refine, and restate the goals.

To realize A-item priorities, it is imperative to eliminate dysfunctional behavior. To alter culture, the new leader must define which behaviors are desired and which ones are not. Some organizations refer to this as the creation of a management philosophy but the key element is that the behaviors must be defined. It is also important to note that every culture has good points and faults. It is crucial that the good points are maintained so that people have stability in times of change. Elevate and praise the good points that already exist so that people have a bridge to the future.

In turnaround situations, bringing in new people from the outside and setting up project teams to secure performance improvement initiatives are a good fit. In realignments, it may be well advised to start out with less obvious approaches to behavior changes. The new leader can set the stage for collective visioning by changing performance measures and beginning to benchmark.

Once the A-items have been identified and behaviors have been defined, detailed plans for early wins may be created. During the first 30 days these wins are about building credibility and deciding where you will focus your energy to achieve early performance improvements in the next 60 days. The goal of a second wave of change, once this has been accomplished, is to address more fundamental issues of strategy, structure, systems and skills to reshape the organization. This is when the real gains of organizational performance are achieved.

To build credibility,

  • Determine what you want to get across about whom you are and what you represent.
  • Decide the best way to convey those messages.
  • Identify your key audiences (direct reports, other employees, and key outside constituencies). Craft messages tailored to each focusing on who you are, the values and goals that you represent, your style, and how you plan to conduct business.
  • Think about how you introduce yourself. Should you first meet with your direct reports as a group or individually? Will the meetings be informal get-to-know-you sessions or immediately focus on business and assessment? What other channels such as e-mail or video will you use to reach people? Will you meet people at other locations?
  • Remove minor but persistent irritants to your organization.
  • Focus on strained external relationships and begin to repair them.
  • Cut out redundant meetings, shorten excessively long ones, and improve physical space problems.

Preparing a Strategy: So Much More Than a Task

September 2, 2008

Preparing a strategy is not a task. It is also not a deliverable, such as a document or a book.

When a strategy has been created and delivered, it will alter an organization’s focus, and allow its leaders to determine what to do, when to do it, how to do it, and who will be responsible for key elements of the strategic program. A strategy is core to an organization’s identity and a roadmap for creating its future.

Not surprisingly, it is the dialogue and the exchange of ideas that really matters. These ideas, filtered by facts and perceptions and synthesized by a healthy debate, will produce a worthwhile result.

In order to create a well rounded, comprehensive approach, one needs many different perspectives represented in the room. Each person will bring her / his talents, experiences, personal marketing strengths and weaknesses, and biases into the discussions.

The first step in the process is then to inventory the talents and perspectives, and then determine who needs to be added to the conversation to compensate for any weaknesses without compromising strengths. In essence, the intention is to determine what we “know we don’t know.”

There are ten perspectives that should be included when we plan our strategy. They may be sufficiently present in a few people or they may require a body of fifteen, twenty, or more.

1)       Vision. Who has an ability to envision a new enterprise and how it will be marketed?

2)       Creativity. Who can see and avoid conventional approaches and envision and design the unconventional?

3)       Sense of timing. Who understands sequencing and timing? Who can implement steps that will achieve the desired result? The “whens” are as important as the “whats.” This would include choreographing the approach.

4)       Ability to spot key trends. Who understands current social, cultural, and political trends? These are NOT trends within the industry. Rather they are trends in our society at large.

5)       Penchant for details. Execution, execution, execution… Who is the master of details?

6)       Ability to change. Who sees trends within the marketplace and can lead the organization to make the necessary adjustments?

7)       A long-term viewpoint. Who takes the long view? Who’s looking to the future? While successful selling looks short-term, in the here and now, successful marketing requires one to look three to five years out. A completely sales-oriented personality will often have a problem putting together a marketing plan as s/he usually lives in a short-term, tactical world.

8)       Focus. Who can maintain her / his concentration on the steps required to move from the beginning to the end? Entrepreneurs are often tempted to go after more markets than they should. Because it is so difficult to understand a single market well, understanding several well enough to succeed is often impossible. Highly focused entrepreneurs tend to go after markets sequentially.

9)       Passion. Who is the product or service evangelizer? Who feels strongly about your products or services and can express how they will make a difference to our customers? Who believes in our goods and services and their value? Who enrolls others in that excitement?

10)    A technology and information orientation. Who understands technology and information systems? This person must understand what systems can be developed that will have an impact on the organization. Successful marketing increasingly depends on the leader’s ability to make effective use of marketing data and information.

With the right perspectives present, the likelihood of the success of your strategy will grow exponentially.


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