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Friday, June 29, 2007

Friday afternoon Story

One Night 4 College Students Were Playing Till Late Night And Didn't Study For The Test Which Was Scheduled For The Next Day.

In the morning they thought of a plan. They made themselves look as dirty and weird with grease and dirt. They then went up to the Dean and
said that they had gone out to a wedding last night and on their return, the tyre of their car burst and they had to push the car all the way back and that they were in no condition to appear for the test.

So the Dean said they can have the re-test after 3 days. They thanked him and said they will be ready by that time. On the third day they appeared before the Dean. The Dean said that as this was a Special Condition Test, All four were required to sit in
separate classrooms for the test.
They all agreed as they had prepared well in the last 3 days.

The Test consisted of 2 questions with the total of 100 Marks.
>( can you guess what the questions were?? Scroll down to see ...)

Q.1. Your Name........ ......... ........( 2 MARKS )
Q.2. Which tyre burst ?........... ....( 98 MARKS )

So what do you want your employees to be Smart or Wise

May you have a blessed weekend


Setting the price for your product / service

This is one area that can catch a company out, what should we charge, if you are a follower into
a market with a similar technology, and following the faster / better widget plan then it has been mostly done for you, there is not much of a premium to be had abouve what the market is supporting at present, if you are a new technology into a new market, then it is a lot harder to set the correct pricing strategy. This following article may help you to get that critical part correct, the setting of the pricing strategy dictates how your operation will be structured, and what the key objectives are for development, whether you are delivering a service or product, you will have to deal with cost / ASP pressures and you need to prepare to deal with them, understanding your product / service life cycle and how to extend and replace is key to success. The best source of information for this will be your customer and the end user.
Determining the Right Price for a Product or Service
by BNET Editorial

Setting the price of a product or service is both a financial and marketing issue. Clearly, the price has to cover all the costs you have incurred. It also has to generate a profit—the business won’t survive otherwise. Then again, you should never gouge your customers or you will lose any chance of their repeat business. This article looks at some basic issues to consider when setting your prices.
What You Need to Know
How do I set the correct price?

This is generally done in two stages. First, you need to factor in all of your costs and then divide this figure by the number of products, or days of service, that you expect to sell. This gives a minimum price based on elementary cost-per-unit calculation, or the cost basis. However, this amount is only that at which your business can break even without making a profit. Thus, the second stage is just as critical: you need to research the market to determine the maximum price that could be charged for your product or service. You can then set your actual price somewhere between the two measures.

Should my price be lower than my competitors’ price?
Many believe that if they set their price lower than their competitors, then they will win greater market share. Such thinking is only partly correct. Small businesses (which often have a relatively higher cost basis) are usually too small to achieve the economies of scale necessary to enable them to fix a really competitive price. If you are in this position, you need to differentiate your product or service in order to secure a competitive edge. For example, your business could provide better quality, better service, or quicker delivery. You may find that quicker delivery is an especially attractive benefit for which your customers are willing to pay. For any major product or service, most customers do a cost-benefit analysis, just as you (hopefully) do.

Is it ever okay to increase my prices?
Sometimes you have to take this step, especially if your cost basis rises. Fixing a price is a juggling act between strategy, pricing, and cash flow. Set prices too low and the income may not cover all your costs. If the price is too high, even with a well-differentiated product, you may have difficulty convincing customers that what you have to offer is worth it. Pricing is effective when you have determined the right balance between managing costs and setting a reasonable profit expectation. The challenge, always, is to find the right balance.
Whenever you do change prices, the differential will probably cause a change in demand. Small businesses often find that they can raise prices without losing too many customers, thus increasing profitability. This happens, usually, because of the strong relationship between a small business and its customers. But it’s important to understand the potential effect that a price change will have on your customers. Always warn them that prices are going to rise and explain why. This is the best way to keep the good rapport you have with your customer base.

Can I be flexible in moving prices up or down?
The amount of flexibility that you have largely depends on the way that your product or service is perceived in the marketplace. A cost leadership strategy—one in which you have the lowest prices of all competitors—gives you almost no flexibility, because you have to respond to the price set by your competitors. A differentiated strategy is based on demonstrating how your product or service is special as compared to your competitors. Thus, you can change prices in direct proportion to your ability to rationalize the value of your product or service in the buyer’s mind.
Should I ever offer goods or services for free?
It’s certainly something to consider, and it’s done widely. Used carefully, offering existing or prospective customers free access to your product or service can be the best way to attract further interest. For example, existing customers will be thrilled that you think so highly of them, and this will engender increased goodwill.
Prospective customers like promotional giveaways as they can try out new products without risk. The key is to make them want to stay with you after the free trial period. Do you truly have the best option around? If not, what can you do to change that situation? In short, the value of giving away your goods or services at no cost is that it gives prospective customers the chance to enjoy something they can get nowhere else. Once they try what you have to offer, the reasoning goes, they’ll never go back. Unless that reasoning seems truly genuine to you, free samples will cost you more than you’ll gain.

What to Do
Think About Marketing Factors
All businesses must focus on their marketing mix, which is often referred to as the four Ps (product, position, price, and promotion). The marketing mix conveys your marketplace message to the customer.
Your price is paramount in the mix and needs to reflect the position that you want to adopt in the marketplace. If you adopt a position of quality, you will want (and will probably need) to charge a premium price. If your product or service is regarded as mass-produced, and therefore of basic quality, then the price should be lower.
Price Strategically
There are a number of possible pricing strategies that you could adopt. Here are the main ones:
Cost-based pricing happens when total costs are calculated and a simple mark-up is added to yield the required profit. The mark-up is usually a percentage of the cost.
Skimming happens when you initially charge a relatively high price to recover investment costs quickly, if the product is new and unquestionably unique. If and when competitors enter the market, you lower the price.
Negotiated prices occur when customers help to set the price based on the quantities they are prepared to buy. For example, you may have a suggested retail price that can be altered if someone buys your product in high volume.
Expected price is similar to negotiated price, only it is hinged on the attitude of customers toward your product or service. If your customers believe that they are buying “the best,” then you have latitude to set and keep higher prices. (For example, a “premium” hotel chain usually charges higher prices, in part because their customers know they are not staying at a discount chain.)
Differential pricing happens when you charge different segments of your market different prices for the same service. How can this happen? It’s not as unusual as you might first think: Businesses often offer discounts to loyal customers who sign up for club membership, to senior citizens, or to those who are willing to buy during a slow season.
Lifetime pricing is done when you believe you can convince your customer that, while the initial price may be dramatically higher than the competition, it will prove to be the best buy over the long haul as your product endures and performs while your competitor’s product wears down or out. Also, you may be able to show that the cost of maintaining your product is lower, thus reducing the annual cost.
What to Avoid
Your Prices Are Too Low
Undercutting your competitors is sometimes perilous; cost leadership is a difficult strategy for small businesses to pursue. Instead, aim to differentiate your product or service.
Your Prices Are Too High for the Volume
You must sell enough products at your chosen price to cover all of your costs and to generate a profit. Keep a careful eye on your income to make sure that your projected sales (what you used to determine your cost basis) are enough to justify your chosen price. If not, take remedial action quickly.
Your Pricing Structures Are Too Simple
You should regard price as one part of your marketing mix, rather than a straight financial calculation. Consider all the parts of the equation carefully. Research the market thoroughly and make sure that you are familiar with your competitors’ pricing strategies and your customers’ needs. Determine your pricing only when you have a convincing pricing strategy.
Hope this helped there is a web link that may help as well that BNET provided, but I would always suggest that you know your own product / services value and learn to set your own market value, what you know you can control, someone elses value may not be yours.

Thursday, June 28, 2007

Prioritization: Maximizing The Wow-To-Work Ratio

Prioritization: Maximizing The Wow-To-Work Ratio
By Dharmesh Shah

At most startups, one of the hardest things to do is prioritize tasks. If your startup is anything like mine, you've got hundreds of things you could work on.There are always more ideas and tasks than there are people to do them. The trick is figuring out what to work on now and what to work on later. I've had to deal with this challenge for most of my professional career. Figuring out how to prioritize is a non-trivial challenge because there are many factors at play. I don't think it's possible to come up with the "optimal" prioritized list of things to do (and even if you had the optimal sequence, you wouldn't know it or be able to prove it). So, the way I like to think about this problem is to analyze the inputs into the function. Here's how I think about prioritization within a startup. Note that these points are related to prioritization of tasks related to the product (in my case, software for internet marketing). But, some of the principles would likely work for other types of businesses as well. The Art Of Startup Prioritization When reading this list, assume that all other factors are equal (which I recognize that they never are). Also, it's important to recognize that a lot of my thinking about startup task prioritization is solving for the somewhat amorphous concept of "startup success". I'm not just looking to build the "best product" or create the highest margins. Also, I don't think the classic approach of "work on the things that are most important" is a good one. In tends to sub-optimize because of other factors. For example: There may be one critically important task that you would think is the "highest priority", but may need to be deferred based on the fact that it's so mind-numbingly boring that you're going to lose your lead developer if you make him work on that task immediately after he just spent a week working on another mind-numbing task. One of the goals of the prioritization process is to make optimal use of resources that you have - and ensure that you still have them. But, I digress. Here are the things I like to think about when deciding what to do.
1. Proximity To Customer: When choosing between two otherwise equally important tasks, pick the one that will deliver the most direct value to the customer (i.e. it is the closest to the customer's needs). So, although picking just the right shade of blue for your logo might be important - it doesn't really help the customer directly. (Note: I recognize this is an extreme example, but since this is the first point, I wanted to make sure I'm clear on the structure of this list).
2. Visible Value: Tasks that create value that can be seen win out over tasks that are under the covers. Customers often lack imagination and appreciation. In the early days, it's very important to create both the perception of progress and actual progress. On a related note, non-engineers share this some trait with the customers. So, your CEO is likely going to be more impressed with a feature she can see than one she can't.

3. Non-Controversiality: Pick tasks that are non-controversial and don't require debate, discussion and lots of analysis. Basically, pick the tasks that are "obvious" (i.e. of course we should do this thing and of course we would do it this way). For example, an easily replicable bug that deletes all the user's data at random times is non-controversial. Everyone agrees it is a bug and there's likely not a lot of debate about how to fix it.
4. Maximize Wow to Work Ratio: This is possibly the most important item (and my clear favorite). That's why I changed the title of the article. This tip suggests that when in doubt, pick the task that has the highest "wow to work" ratio (that is, the task that creates the most customer delight for the least amount of effort/investment). You'd be surprised to see how easily we engineers get this wrong. We have this mistaken notion that the "Wow!" factor and the level of work needed are somehow correlated. They're not. Customers are impressed by the most trivial things sometimes. Find these trivial things and do them.
5. Team Productivity and Preservation: Pick tasks that optimize the level of productivity of your current team and minimize the chances that one or more of them are going to go running into the hills. Business-types get this one wrong all the time. Yes, getting you the report that tells you with precision exactly how much money you're losing on your freemium product is important. And yes, you have to have it by the end of the week so you can update your VC investor spreadsheet. But, forcing this task is going to be sub-optimal if it causes your programmer to quit on you - because then you have two problems. In short, don't just force-feed the most "important" tasks. Be mindful of the state of the team. I've got several more items on my list, but these are the most important. What are your thoughts? How do you go about choosing between the hundreds of possible tasks in your startup's list of things to do? Please leave your comments.

Wednesday, June 27, 2007

The Five Roles of a Great Leader

An Interesting article for all those who want to make it to the top and be successful, and for those who are there and need some help...

The Five Roles of a Great Leader Taking on the role of leader means wearing many hats. Here are the five that you should learn to wear most comfortably. By Patty Vogan

It’s no secret that leaders today must balance many roles and serve multiple audiences, all while communicating one primary vision. In any given business day, you might serve the role of creative business thinker trying to inspire employees to embrace your vision then morph into an industry sage role helping to advance not only your company but your entire industry. Juggling it all might make you feel like a chameleon.
At a recent conference, I heard Cara Good, owner and president of WunderMarx, a public relations agency in Tustin, California, speak about the confluence of communications styles and leadership. She outlined how a successful leader is, in essence, a business storyteller playing five key roles: futurist, historian, ambassador, analyst and contrarian. I sat down with Good and asked her to explain how mastering these communication roles could aid entrepreneurs today in perfecting their leadership skills
Patty Vogan: How do you explain how the day-to-day activities of your company help you and your employees achieve your vision?
Cara Good: This is a classic leadership role in which the leader plays the role of futurist defining the expected direction of the company. All your stakeholders--from customers to employees to vendor partners to the media--look to you to impart knowledge on where your organization is headed and how it will get there. It's your CEO perspective that helps people connect the dots between their day-to-day activities and the future direction of the company. And from a media perspective, your vision makes headlines.
Vogan: Why is it important for a leader to reflect on where the company’s been?
Good: Just as people want to know where your company’s headed, they also want to know where the company’s been. In this, leaders are playing the role of historian. You can humanize your business, especially one that’s product-driven, by creating strong messages around your company's origins.
Vogan: What communication style do you think is most important to the role of leader?
Good: I believe that serving the role of ambassador is the most important communication style you can adopt as a leader. You’re the "face" of your company. It's vital to portray an image during meetings, employee one-on-ones, media interviews and other public events that’s congruent with your company's overall vision, mission and values. Think about watching the evening broadcast news: Headline-grabbing CEOs are personable, conversational and charismatic, no matter what the news may be. This is the ultimate leadership role.
Vogan: How can entrepreneurs follow industry trends and stay ahead of the curve?
Good: Leaders are also analysts, that is, they’re industry forecasters who are well versed on the trends, opportunities and problems that their industries might face. In any public exchange, they must be ready to answer the question, "Where do you see your industry going over the next year, and what challenges do you anticipate?"
Vogan: As a leader, how can you distinguish yourself from the competition?
Good: One of the most important leadership opportunities is to know what you stand for and be able to communicate it. This helps you distinguish yourself from the competition and provide true leadership--not “me too” copycat management. This sometimes means you’ll play the role of contrarian, disagreeing with others because you see the big picture and want to map your day-to-day decisions based on your long-term leadership vision. Take a look at industry issues, economic climates and general business forecasts. Now analyze your opinions on each. Do you agree or disagree? Let people know how you stand, especially if it counters conventional thought.



Tuesday, June 26, 2007

Tuesday morning...how to tell someone how they are doing

One management task I have seen time and again poorly handled is giving feedback to team members, my wife's boss (as a poor example) uses the shot gun approach, load up, don't aim , fire at the whole team, hoping that he will get the message across to the one or two individuals that he has the problem with. I am sure many of you have seen that approach, it does not work, the targets hide behind the cannon fodder who in turn just get upset with the boss and it all back fires, and reduces his ability to be effective in his role. I have pulled together some thoughts on how to approach this task, and as your company grows, you will need to give feedback, either positive or negative, look on it as small corrections to the companies direction, or small boosts to speed, bad feedback can kill momentum for a while, so do it well , and do it with a the person in mind, not a gun fight at the OK Coral, set the scene, do it without pomp and circumstance, feedback is not praise so should not be done in a group, but away from the madding crowd. Have a read through some things Michael Papanek a coach/ sits on the board, for IA a consultancy, http://del.icio.us/SFMichael, I found some of his work on there website at www.interactionassociates.com .

5 steps to giving feedback by M Papanek.
Feedback is the oil in the engine of teamwork: keep it flowing and the engine can operate at a high level with no damage, let it dry up and your engine could seize up or fail completely, potentially beyond repair.
While most leaders would agree with this analogy, most do not ensure that regular feedback is a part of their organization's culture. They miss an easy way to make performance improvements, improve morale and develop employees. Feedback is avoided for many reasons: fear of an emotional reaction, fear of retaliation, or the lack of a strategy for having the conversation. The problem is, the issue that is driving a need for feedback will not go away on its own, but tends to get worse until the person cannot stand it anymore. This leads to "drive-by" feedback: a quick hit of why you are driving me crazy, then a quick escape. On the receiving side, even employees who want to improve fear having to defend themselves or agree to something they do not really believe.
The solution lies in leadership modelling of feedback, and the use of some simple but powerful guidelines for giving, or better yet, exchanging, feedback. It is an organizational truism that the higher one goes in an organization, the less feedback one gets. So start by asking for feedback from others, and then be very careful not to get defensive. Then try to act in a visible way on the feedback. This will show the organization you are willing to "go first" and lead the way before you ask others to make a change. If feedback is the "breakfast of champions", you will need to eat the first meal yourself.
Successful feedback must be focused on three key dimensions: results, process and relationship. The feedback must increase results, use a clear process and lead to enhanced, rather than diminished, relationships. This can be done by following these guidelines:

1. Choose when to give the feedback: If you are too angry or upset yourself, you will not be able to give the feedback in a respectful way. Wait until you cool down. Also, find a time and place which allows the employee to hear the feedback (especially negative) in private and a time when they can handle it emotionally, but do not wait so long that they can no longer act on the input. Positive feedback should be given quickly, when the employee is still "sweating from the effort."
2. Describe the behaviour in as objective language as possible and be specific. Words like "bad attitude" will not be understand and will seem judgmental.
3. State the impact of the behaviour on you, the team, the goal, the client, etc. Saying what the impact is allows the receiver of the feedback to better understand why they should change or at least consider the input.
4. Make a suggestion or request. You may ask them to change a behaviour that is not working, to continue or do more of an effective behaviour, or to simply understand your point of view. "You are not well organized" is a criticism, not feedback. Have a concrete action in mind so the employee has a clear path to improvement.
5. Lastly, check for understanding and be open to alternative views. There may be relevant facts you are unaware of and asking for a response avoids just dumping on the employee and damaging the relationship



PS I have been signed of work with this leg infection, so my posts are gated by my ability to keep at a key board. http://en.wikipedia.org/wiki/Cellulitis

Monday, June 25, 2007

Peak Performance and getting there in business or sport (6)

.....Continuing from the last post, I have come to the last part of the model to improve performance.....

Step 5: Recognition and Celebration

Give recognition where it is due, and give it in measure to what has been achieved, and celebrate major events in the companies progress. The means of recognition should be thought about, there are better ways than handing out money.



Friday, June 22, 2007

Peak Performance and getting there in business or sport (5)

Peak Performance and getting there in business or sport

4. Individual Achievement

Part 4 of the plan or route to peak performance of the team, is the use of good solid performance management designed to improve individual achievement in an organization. When a performance management system is successful, employees are able to attain virtually all their performance goals, which lead to successful business outcome. Performance management is the systematic process of monitoring the results of activities and collecting and analyzing performance information to track progress toward planning results. Performance management uses performance information to inform and program decision-making and resource allocation. The main objective is to communicate results achieved, or not attained, to advance organizational learning. The success in a persons individual performance and improvement will benefit the team and the organization



Thursday, June 21, 2007

Peak Performance and getting there in business or sport (4)

I will post an article I picked up from Rob Smorfitt, have a look at his blog for starting businesses in South Africa, this is to support part 4 of the plan.

3. Entrepreneurial Spirit:

"....Your entrepreneurial spirit makes you no more than this: A heroic soul born desperately in need of adventure.To you ... a crisis is an opportunity, a moment is an eternity, a rule is a tyranny, a process is a purgatory, a joy is an ecstasy, a daydream is a vision, a hazard is a playground, silence is suffocation, and completion is death.Add to this brutally expansive spirit the overwhelming need to risk, create, and express, so that without the creating of music or poetry or books or businesses or buildings or something of meaning, your very breath is cut off ...You must create , must pour out your entire being in creation and risk.By some strange, unknown, inward urgency you do not feel truly alive unless you are intimately involved in the risk of self-expression.Thank you for having the courage to create, innovate and risk. For without your creations the world would grow dull and listless And the rest of us who are like you would not have your courageous act to lean on to inspire our own...."

If you can build a team with this spirit..you will have a top performing team..



Wednesday, June 20, 2007

Peak Performance and getting there in business or sport (3)

"He who builds a better mousetrap these days runs into material shortages, patent-infringement suits, work stoppages, collusive bidding, discount discrimination--and taxes." - HE Martz

Peak Performance and getting there in business or sport part 3
He who builds a better mousetrap these days runs into material shortages, patent-infringement suits, work stoppages, collusive bidding, discount discrimination--and taxes." - HE Martz

Peak Performance and getting there in business or sport part 3

2. Process and Metrics

This is another step in building a robust performance enabling model for your business or your workout in the gym :), these two go hand in hand, your business needs processes to operate within and you need to be able to measure the effectiveness of the processes by establishing metrics.


Process (lat. processus - movement) is a naturally occurring or designed sequence of changes of properties/attributes of a system/object [1], [2], [3], [4], [5], [6], [7]. More precisely, and from the most general systemic perspective, every process is representable as a particular trajectory (or part thereof) in a system's phase space.

Your business is one long process,divided into sub-processes, finance guys appreciate this as they can value map the whole business, the whole complex procedure of getting money in to your business and spending money on supplying the product service/product, and hopefully making a profit at the end of it. The operations guys appreciate this as they can plan and improve, a process can be defined( Material,Manpower,Machine,) and has a set time frame that it happens within, it can be mapped out and improved on, reduce the process time, in steps or completely, improve the use of materials, make sure you get the process correct first time, the list is endless. The techniques used by the finance team and operations teams are transferable, we see the 6 Sigma process being used in finance houses as well as the manufacturing process, we see lean manufacturing techniques being used in the health care service. In the early days your process will be fluid, but as the company grows you need to get your process well defined, from order's won through to order fulfilment, so you can start to have some stability in the organization, and steady growth.


"Metrics are a system of parameters or ways of quantitative and periodic assessment of a process that is to be measured"

Once you have defined your process, you can start to put in place the metrics you require to control the process and make it deliver your required output. These are well defined at the top of the process, Sales, Orders, Book to bill, profit, margin, etc, the key to making this an effective tool for the team to self manage there own performance and push forward, is to set in place metrics at sub process level, for the sales guys, how many calls do they need to make a month, for finance set metrics on debtor ratios etc...and make sure everyone can see the results of the metrics, canteen, notice board, regular company and team meetings , comment on them, reward or discipline by them, make them important to everyone, make it become a habit of meeting the metrics, take time to walk the floor and give praise directly to those who do well, and talk to those who miss the target, understand why and make sure there are corrective actions taken to recover the poor result. There should be no happiness in making only 95% of the target, it has to be a culture of achieving all the metrics set.


Process and metrics can be powerful tools to help you get the best performance from your team and can be self maintaining if the review process is transparent and involves those who it impacts on, they should not be imposed, they need to be set after consultation. Have fun..

Tuesday, June 19, 2007

Peak Performance and getting there in business or sport (2)

Peak Performance and getting there in business or sport (2)

......Continuing from yesterdays post, I thought I would take some time to talk about the five steps I pointed out in Mondays post about performance, today I will talk about step one.

1. Mission, Values, and Pride

The companies mission statement, should be short, and deliver the message in an easy to digestible package, here are some well know companies and there mission statements:

3M"To solve unsolved problems innovatively"
Mary Kay Cosmetics"To give unlimited opportunity to women".
Merck"To preserve and improve human life".
Wal-Mart"To give ordinary folk the chance to buy the same thing as rich people".
Walt Disney"To make people happy."

When you started your company you had a dream, the Mission statement will give you the opportunity to state that dream and how you will deliver it, this will give a focus for the team to work to, the Mission should always be the at the fore front off what you do in the company.This is something that your whole company should be able to "buy in to" and be proud off achieving, it should include how you will accomplish that, how you will conduct business, morally and ethically if you are going to, but be careful, if you state these ideals to the public you need to live up to them. I hear some folk thinking I am only a small enterprise why do I need one, I would suggest that whether you are a little acorn wanting to be a shrub or an oak it is important to let the all know what you are about, and what they can expect from you. The mission is a rallying point for you and your team and a performance enabler.

some more mission statements "if you want to be big you need to think big"

Ford Motor Company (early 1900's)"Ford will democratize the automobile"
Sony (early 1950's)"Become the company most known for changing the worldwide poor-quality image of Japanese products"
Boeing (1950)"Become the dominant player in commercial aircraft and bring the world into the jet age"
Wal-Mart (1990)"Become a $125 billion company by the year 2000"


So, when you are preparing your Mission Statement remember to make it clear and succinct, incorporating socially meaningful and measurable criteria and consider approaching it from a grand scale. As you create your Mission Statement consider including some or all of the following concepts.
The moral/ethical position of the enterprise
The desired public image
The key strategic influence for the business
A description of the target market
A description of the products/services
The geographic domain
Expectations of growth and profitability

Tomorrow "Process and Metrics"



Monday, June 18, 2007

Peak Performance and getting there in business or sport (1)

Peak Performance and getting there in business or sport

Peak Performance:
The early days of starting up a company require you and the team to be running at peak performance, there can be no poor performance from the team there is no room, it needs to be on it's best game. This is usually the norm for an early doors start up (MBO and MBI's are different beasts), the newness and excitement drive the team forward, they have clear goals and a strong supporting vision, but as the team grows this will start to fade a little and it will need a strategy from the founders to keep the team running at peak performance. I have a tried and tested model that you may help you with this..on the other hand it may not,

1. Mission, Values, and Pride

2. Process and Metrics

3. Entrepreneurial Spirit

4. Individual Achievement

5. Recognition and Celebration

These are five parts of a strategy which you can interlace together to build a strong model this can help to maintain the peak performance of the team. Think them through clearly and design them to support each other, this will strengthen the overall strategy. Let me know what you think and please contact me if you would like to discus this also I have had experience of implementing this strategy so if you need some help or advice..drop me a line.


Friday, June 15, 2007

Developing the team to excel

Once you have passed the break even point and the monkey is off your back for a little while something you need to look at is developing the team you have around you, to build a successful company you need to develop the team, stretch them in areas of good performance and help bolster the areas of weakness, everyone can't be good at everything, and it is up to the senior leadership in the team to build up a full set of competences in the company. There needs to be succession planning, I have a good friend who worked for AMAT, Gerry Kelly, and he always said that was a strength in that organization was planning your replacement, how else will you be able to grow and develop and the organization. Have a thing if you need to grow the business by 100% this year do you have the team in place to grow into the roles that will open up, it could be the one thing that stops the growth curve.

These are some notes on developing a good performance management system, with these things I would suggest you keep the KISS principle in the midst of it all, you want this to be painless and quick.

You need to develop competencies that test their development and allow staff to achieve corporate and personal goals. So people can see where they are headed and what can be done to achieve the next level.
What comprises performance management?
In essence it's a managerial process that consists of:
Planning Performance (Establishing Goals and Objectives)
Managing Performance (Assessing and Reviews)
Appraising Performance (Through Annual regular Appraisals)
Improving Performance (Through Coaching and Development)
Measuring Performance (Against Goals Peers and Workgroups)
Rewarding Performance (Through Compensation)

Performance Management Occurs Everywhere:
Every manager
Every Executive
Every Project Manager
Every High Performing Individual

Performance Management Involves:
Goal Management
Cascading Goals
Self Assessments
Manager Assessments
360 degree Assessments
Development Plans
Skills and Competency Management
Using basic tools such as performance assessments, and capabilities assessments.
Leading to

Performance Appraisal
Development Plans
Succession Plans
Performance Rating
Competency Rating
Forced Ranking

With all of the actions involved building competencies into the whole program are the answer...
· Competencies give managers a common currency for assessing performance and potential for promotion
· Competencies give employees a set of clear objectives for self- improvement and development
· Competencies enable the whole organization to select high potential leaders consistently and effectively
· Competencies provide benchmarks and provide criteria for hiring the right people for particular jobs
· Competencies enable the Learning & Development team to create focused performance improvement programs
· Competencies create alignment and clear understanding of corporate cultures and values

What research has shown that performance-driven organizations develop competencies which are specific and proven for their business. They take time to figure them out with employees and management. It's a process of development and the more engaging it is the better it works. Like any change program
When these organizations want to improve poor performance of a business area or division they first focus on identifying the proven competencies and seeing how they re being utilized and if they are even still valid. In a fast changing world things may change rapidly and old competencies may become obsolete!
The question is which competencies form the right "currency" for your organization? Your organization needs to determine it's own way forward. Just like Key Performance Indicators (KPI), the more specific they are the better.
There are a few caveats and we've noticed that there are typically Hygiene vs. Performance Competencies. Hygiene Competencies are those which define the "minimum requirements" of the job. People should be hired, trained and on the job (i.e. technicians must be seen to have technical ability, customer care reps must have customer care focus, service reps have powerful service focus, etc)

Then there are Performance or Critical Competencies, by contrast, create outstanding, highly competitive performance. They are capabilities which help you beat the competition, grow market share and transform your organization. They are your "secret sauce." It may appear obvious but high-performing organizations focus much more heavily on performance competencies and far less on the hygiene competencies. Hygiene competencies are window dressing and the group you're trying to engage will figure this out in a heartbeat. With or without cheat codes.

Some important themes and ideas come to mind:
Focus on "organizational capabilities" vs. individual capabilities". This drives higher growth as it's not a personal thing rather a corporate extension.

Clearly differentiate between "hygiene" competencies and "performance" competencies. Really understand the difference between the two.

Leadership drives the organization; organizations with a more solid focus on leadership show higher profitability. Their staff also know where they are going and what it takes to get there.
Competencies drive values messages; effective organizations reward what the company wants to be. Not just what the job demands. Again hygiene vs. performance!
Keep competencies simple, effective organizations focus on a few key competencies.

Final thoughts and recommendations.
Work closely with managers and executives to identify the competencies critical to your organization. Understand their business perspective and refine the knowledge with the teams involved. Off the shelf competencies are only a start not an end. It's your business, these are a guide only. It takes time to figure them out, so the sooner you start the better. However, if your competencies are vastly different than these make sure you know why, and can explain them.
Remember you are using competencies to drive higher level behaviors, it's not just job performance, nor should it just be about job performance. They need to propel employees to want to maintain the next level and stay logged on until they do. If done right they will improve retention and even recruitment. This will reduce costs substantially and improve your place in your market.
Finally revisit and update your competencies every few years as your organization changes. Business changes rapidly, as I mentioned before so to do the competencies required for your success.

Thanks for the input from Graeme Nichol who is a principal consultant in Arcturus Advisers Please visit their website at www.arcturusadvisors.com. Arcturus Advisers works with
businesses to implement their strategies

Hope you all have a great weekend



Thursday, June 14, 2007

I am starting my new company and I feel nervous, so here is something to help

I get a tingle down the spine when I move to a new start up, it's all about the unknown, and the new adventure ahead, the challenges. I was at the doctors again this morning with the auzzie leg infection, it seams to be taking an age to clear up, so more antibiotics and another week off my new delivery of Red wine.....but when I was there I was flipping through the national geographical and I saw a map of the Grand Teton's with the mountains detailed and being a climber of sorts myself in a past life it came to me that each of those peaks had a story to tell, and individuals who climbed them had there own memories good and bad, the events that had happened to produce the names, like Death Shelf, Battle mountain or Hurricane Pass, and I thought of all the peaks that I had climbed personally and professionally, Physically and figuratively, and these all have taught me lessons that can be used to help on the next adventure. I would suggest that as you step out on the next adventure and you feel nervous, think off all the peaks you have claimed, and how you felt, and get stuck into the next one ahead.

conscious competence learning model

I picked up this article from Pamela Slim's blog Escape from Cubicle Nation"it talks about a model or frame work of how we learn, a good read and would look good in any ones term paper, let me know what you think.

STAGE 1: UNCONSCIOUS INCOMPETENCE. You aren't aware of what you don't know. Otherwise known as blissful ignorance.
Example: If you are a full-time employee of a corporation and have never pondered becoming an entrepreneur, you have no real idea what is involved. The idea sounds dangerously romantic, and you spend hours in your cube, fantasizing about your carefree lifestyle.
What you need in this phase: A dose of reality.
STAGE 2: CONSCIOUS INCOMPETENCE You become painfully aware of what you don't know. This is the "hopeless klutz" phase. Example: You get excited about the possibility of working for yourself, so you poke around on the web and buy a few books. You find out there are a million things to take into consideration and everyone has a different opinion about what will make your business a success. You don't feel like you have a handle on things, and it feels both uncomfortable and overwhelming.
What you need in this phase: Sound guidance, support and information from trusted experts.
STAGE 3: CONSCIOUS COMPETENCE You are able to do the task with focus and mental effort. Think of how you felt as a kid when you were able to ride your bike without your Mom or Dad's hand on the back of the seat, and you didn't wipe out. Example: With careful planning, study and support, you are able to start your business. You develop your product or service and begin to sell it. You start to interact with customers and handle all aspects of running your business. You still need to use instruction manuals, get expert guidance and spend a lot of time preparing, but you are able to run your business with a decent level of comfort.
What you need in this phase: Practice, practice, practice. And feedback from a trusted source.
STAGE 4: UNCONSCIOUS COMPETENCE You do the task effortlessly without even thinking about it. Very smart Czech author Mihaly Csikszentmihalyi calls this flow. Example: You are in business for a few years and work very hard. You perfect your products and services, understand your market and develop real expertise in your field. You learn from your mistakes. You handle all aspects of running your business without a lot of stress. People look at you as an expert and think "man, he must have been born doing that, since he does it so well."
What you need in this phase: Not much, as you are comfortable and "at home" with your new skills. Pretty soon, however, you will need to challenge yourself with something new or focus on improving your performance, since if you stay in the "unconscious competence" stage for too long you can get bored.
The power of this model was really hammered home when I used to teach presentation skills around the country. Regardless of experience, most people were terrified of standing up in front of a camera and giving a presentation, especially when they were trying to change some ingrained habits, like inserting"ums and ahs" in every other sentence, rubbing their hands together nervously as if they were being interrogated by an IRS agent, or rocking back and forth like an ocean buoy. Many would get extremely frustrated with themselves when they were unable to expunge habits after one 3-minute practice run. After introducing the conscious competence model, however, they realized that they had to go through each stage of learning to successfully change habits, and they relaxed.
Over time, you will learn that you get stuck in stage 2 or 3 with certain tasks and it never gets better, no matter how much you practice. This is a good indication that a skill is not a natural strength, and it may be better to hire someone to do it for you.

PS I have been running a serious of question and answers on http://www.linkedin.com/ and have quoted from Mihaly Csikszentmihalyi a few times, drop by and see what other folks think about it all.



Wednesday, June 13, 2007

Steve Jobs on starting out

This is the text of the Commencement address by Steve Jobs, CEO of Apple Computer and of Pixar Animation Studios, delivered on June 12, 2005.

I am honored to be with you today at your commencement from one of the finest universities in the world. I never graduated from college. Truth be told, this is the closest I've ever gotten to a college graduation. Today I want to tell you three stories from my life. That's it. No big deal. Just three stories.
The first story is about connecting the dots.
I dropped out of Reed College after the first 6 months, but then stayed around as a drop-in for another 18 months or so before I really quit. So why did I drop out?
It started before I was born. My biological mother was a young, unwed college graduate student, and she decided to put me up for adoption. She felt very strongly that I should be adopted by college graduates, so everything was all set for me to be adopted at birth by a lawyer and his wife. Except that when I popped out they decided at the last minute that they really wanted a girl. So my parents, who were on a waiting list, got a call in the middle of the night asking: "We have an unexpected baby boy; do you want him?" They said: "Of course." My biological mother later found out that my mother had never graduated from college and that my father had never graduated from high school. She refused to sign the final adoption papers. She only relented a few months later when my parents promised that I would someday go to college.
And 17 years later I did go to college. But I naively chose a college that was almost as expensive as Stanford, and all of my working-class parents' savings were being spent on my college tuition. After six months, I couldn't see the value in it. I had no idea what I wanted to do with my life and no idea how college was going to help me figure it out. And here I was spending all of the money my parents had saved their entire life. So I decided to drop out and trust that it would all work out OK. It was pretty scary at the time, but looking back it was one of the best decisions I ever made. The minute I dropped out I could stop taking the required classes that didn't interest me, and begin dropping in on the ones that looked interesting.
It wasn't all romantic. I didn't have a dorm room, so I slept on the floor in friends' rooms, I returned coke bottles for the 5¢ deposits to buy food with, and I would walk the 7 miles across town every Sunday night to get one good meal a week at the Hare Krishna temple. I loved it. And much of what I stumbled into by following my curiosity and intuition turned out to be priceless later on. Let me give you one example:
Reed College at that time offered perhaps the best calligraphy instruction in the country. Throughout the campus every poster, every label on every drawer, was beautifully hand calligraphed. Because I had dropped out and didn't have to take the normal classes, I decided to take a calligraphy class to learn how to do this. I learned about serif and san serif typefaces, about varying the amount of space between different letter combinations, about what makes great typography great. It was beautiful, historical, artistically subtle in a way that science can't capture, and I found it fascinating.
None of this had even a hope of any practical application in my life. But ten years later, when we were designing the first Macintosh computer, it all came back to me. And we designed it all into the Mac. It was the first computer with beautiful typography. If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts. And since Windows just copied the Mac, its likely that no personal computer would have them. If I had never dropped out, I would have never dropped in on this calligraphy class, and personal computers might not have the wonderful typography that they do. Of course it was impossible to connect the dots looking forward when I was in college. But it was very, very clear looking backwards ten years later.
Again, you can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.
My second story is about love and loss.
I was lucky — I found what I loved to do early in life. Woz and I started Apple in my parents garage when I was 20. We worked hard, and in 10 years Apple had grown from just the two of us in a garage into a $2 billion company with over 4000 employees. We had just released our finest creation — the Macintosh — a year earlier, and I had just turned 30. And then I got fired. How can you get fired from a company you started? Well, as Apple grew we hired someone who I thought was very talented to run the company with me, and for the first year or so things went well. But then our visions of the future began to diverge and eventually we had a falling out. When we did, our Board of Directors sided with him. So at 30 I was out. And very publicly out. What had been the focus of my entire adult life was gone, and it was devastating.
I really didn't know what to do for a few months. I felt that I had let the previous generation of entrepreneurs down - that I had dropped the baton as it was being passed to me. I met with David Packard and Bob Noyce and tried to apologize for screwing up so badly. I was a very public failure, and I even thought about running away from the valley. But something slowly began to dawn on me — I still loved what I did. The turn of events at Apple had not changed that one bit. I had been rejected, but I was still in love. And so I decided to start over.
I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.
During the next five years, I started a company named NeXT, another company named Pixar, and fell in love with an amazing woman who would become my wife. Pixar went on to create the worlds first computer animated feature film, Toy Story, and is now the most successful animation studio in the world. In a remarkable turn of events, Apple bought NeXT, I returned to Apple, and the technology we developed at NeXT is at the heart of Apple's current renaissance. And Laurene and I have a wonderful family together.
I'm pretty sure none of this would have happened if I hadn't been fired from Apple. It was awful tasting medicine, but I guess the patient needed it. Sometimes life hits you in the head with a brick. Don't lose faith. I'm convinced that the only thing that kept me going was that I loved what I did. You've got to find what you love. And that is as true for your work as it is for your lovers. Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don't settle.
My third story is about death.
When I was 17, I read a quote that went something like: "If you live each day as if it was your last, someday you'll most certainly be right." It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: "If today were the last day of my life, would I want to do what I am about to do today?" And whenever the answer has been "No" for too many days in a row, I know I need to change something.
Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure - these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.
About a year ago I was diagnosed with cancer. I had a scan at 7:30 in the morning, and it clearly showed a tumor on my pancreas. I didn't even know what a pancreas was. The doctors told me this was almost certainly a type of cancer that is incurable, and that I should expect to live no longer than three to six months. My doctor advised me to go home and get my affairs in order, which is doctor's code for prepare to die. It means to try to tell your kids everything you thought you'd have the next 10 years to tell them in just a few months. It means to make sure everything is buttoned up so that it will be as easy as possible for your family. It means to say your goodbyes.
I lived with that diagnosis all day. Later that evening I had a biopsy, where they stuck an endoscope down my throat, through my stomach and into my intestines, put a needle into my pancreas and got a few cells from the tumor. I was sedated, but my wife, who was there, told me that when they viewed the cells under a microscope the doctors started crying because it turned out to be a very rare form of pancreatic cancer that is curable with surgery. I had the surgery and I'm fine now.
This was the closest I've been to facing death, and I hope its the closest I get for a few more decades. Having lived through it, I can now say this to you with a bit more certainty than when death was a useful but purely intellectual concept:
No one wants to die. Even people who want to go to heaven don't want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life's change agent. It clears out the old to make way for the new. Right now the new is you, but someday not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it is quite true.
Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma — which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.
When I was young, there was an amazing publication called The Whole Earth Catalog, which was one of the bibles of my generation. It was created by a fellow named Stewart Brand not far from here in Menlo Park, and he brought it to life with his poetic touch. This was in the late 1960's, before personal computers and desktop publishing, so it was all made with typewriters, scissors, and polaroid cameras. It was sort of like Google in paperback form, 35 years before Google came along: it was idealistic, and overflowing with neat tools and great notions.
Stewart and his team put out several issues of The Whole Earth Catalog, and then when it had run its course, they put out a final issue. It was the mid-1970s, and I was your age. On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath it were the words: "Stay Hungry. Stay Foolish." It was their farewell message as they signed off. Stay Hungry. Stay Foolish. And I have always wished that for myself. And now, as you graduate to begin anew, I wish that for you.
Stay Hungry. Stay Foolish.
Thank you all very much.

How to speak to a group for impact

Speaking as a Performing Art
By Guy Kawasaki

My buddy Doug Lawrence has been a professional singer, music director, and speech coach. He is a highly respected concert artist having sung for almost forty years in venues such as Carnegie Hall, Hollywood Bowl, and throughout Europe with conductors like Leonard Bernstein and Michael Tilson-Thomas.
In the last forty years, in addition to singing, he’s done tons of speaking in front of groups of all sizes. Here’s the big surprise: Singing and speaking have everything in common—except for maybe really good tunes. The main goal is to engage your audience and make them listen to you, so everything a singer does, a speaker ought to do too. Here are the absolute necessities of an engaging performance or presentation that Doug compiled for me:

Circulate with your audience. Before every concert, speech, and seminar, I try to mingle with the crowd, ask questions, and let them know I’m glad they came. This isn’t always possible in the real world, but when it is, I have an opportunity to feel a bond with the people I’m about to perform for and undo some of the jitters that are a natural part of being “on.”
Command attention. The breastbone (sternum) has to be high if you want to project authority. You might want to pretend you’re a rooster showing off. Relaxed sternum = loser, high sternum = winner!

Snarl. If people can’t hear you, they won’t listen to you. Add some nasal resonance to your voice, but keep smiling. Snarl is that nasal sound you get when you speak partially from your nose instead of your mouth. It generates overtones above 2,800 cycles per second that make any room “sing.” Pretend you’re trying to yell/warn a child that’s about to run out in front of a bus—like yelling, “STOP!” This works whether you’re using a microphone or speaking without one

Bite your tongue. If your mouth gets dry in the middle of your presentation, try gently biting your tongue. Opera singers use this all the time to release saliva which moistens your mouth.
Always perform a sound check before you speak. A good sound person will adjust the EQ to your voice and its idiosyncrasies. If you’re comfortable using a hand mike, do so—work close to the mike and you’ll have a better chance of being heard. If you turn your head, make sure you turn the mike with your head. Lapel mikes usually work fine, but for softer speakers they’re very frustrating. Wrap-around mikes (such as the AKG C520L—$159) that fit over your ear are the best for intelligibility. If you speak often and you know your venues will support this technology, buy a really good one and take it with you.

Use your eyes all the time. Hand gestures, pacing around the platform can all be useful tools in presentation, but the eyes…ah, the eyes have it! If you can’t engage people with your eyes you will eventually lose your audience’s attention. Your eyes always tell people whether or not you believe in what you’re saying! Scan the room, select a person to make a point to, and look right at them. It’s a little intimidating for them, but it keeps you focused on the individuals who make up your audience. Keep moving to new people—right, left, middle—it works! If all else fails, look at each person as though you’ve loved him or her all your life—like mom, or your child.
Move away from center to make your point. When you come to a place in your presentation where you really want people’s attention, move to the left or right of your primary speaking position. This will always make people look up at you. If you are a constant mover or shaker, stand still for a few moments—it will have the same effect.

Get quiet. If you really want to get people’s attention, get quiet suddenly. It will scare the sound guy to death, but I guarantee the audience will pay attention. Singers use this trick all the time. That’s the “you could hear a pin drop” effect. Believe me, that’s what sells your talk!
“Underline” certain words with a pause or repetition. If you really want to make a point, slow down, pause, and say the word or phrase that you most want people to hear with a calculated emphasis on each word. The sudden switch in style gets attention. Also try repeating a word or phrase before you make your big point. For example: “You know (pause) you know (pause) you know, the thing I want you to remember is…” Songs are full of repeated text, a device that locks down meaning!

Take a risk and be vulnerable. Say or do something that’s totally out of character for you. Use a “pretend” voice like Mickey Mouse or Barry White for effect while you’re telling a joke or saying something shocking or humorous. Whether your persona is reserved or funny, it’s endearing to have a little fun. This trick humanizes the most serious topics.

Tee it higher. Raising the overall pitch of your voice for a few seconds will create urgency. It shows your passion for the subject matter and also relaxes your exhausted larynx. Low pitched voices relax the room—high pitched voices increase the adrenaline flow of the audience.

Know when it’s time to go. You don’t have to be a genius to know you’ve overstayed your welcome. Check your “presentation barometer” often to see if everyone is still with you. Change something—anything—if you’re starting to lose the crowd. If all else fails, stop talking, start thanking, and get off the platform. People will love you more for knowing when to stop than for all the wonderful content you brought to your topic!

Use Q and A as an “encore.” Singers usually prepare an encore because this practice makes the audience feel special and makes them think you like them more than other audiences you’ve encountered. Q and A functions something like an encore. You may think you told them stuff they needed to know, but questions often reveal the important things you left out of your content. Where this opportunity exists, use it as a tool for picking up the pieces you left dangling in your talk and warm the crowd to your candor and self-effacing graciousness.

Rehearse, rehearse, rehearse. That’s how I got to Carnegie Hall! Where possible, memorize your material like singers memorize their songs. Remember, the more you rehearse, the freer you will be to make your talk fresh and engaging.

Perform for a hero. Several years ago I was asked to sing a command performance for the Queen of Spain. I worked harder on that concert than any I have ever sung. It was very successful and I was proud of my preparation. From that time on I imagined I was about to sing for the queen, it made me twice the performer I had been previously. Pick a hero, and give them your best shot!



Tuesday, June 12, 2007

New beginnings, setting out on a road well travelled

I am moving on from my present company to join a start up in the renewable energies industry, this is an area that I have had interest in for a while. I spent part of last year in New Zealand looking at one of these projects, the inventor Joe Waite was a passionate man, a 70 year old gold miner who had his eureka moment underground in a deep mine in the pitch black (Ideas are no respecters of place or time), the invention was sound, but was too far from being a business at the time and there was no way I could get a visa from the New Zealand immigration services to move and take up the role, there is a stereotype for immigration to New Zealand and I did not fit. I am going to work for a Solar cell (Photovoltaic) start up, which will be a true adventure, and will be fun. The organisation that I will be working with is http://www.narec.co.uk/, The new and renewable energies center in Blyth, and Sigma Ventures from Edinburgh, I will be starting on this project end of July, so it is a busy time wrapping up here and getting things in place for the move, I was running a forum on http://www.linkedin.com/, and had asked the question what does the word synchronicity make you think off, feel, well this move has synchronicity marked all over it and my God's. I found the link below from the TED talks, the only link to the video I could find was on YouTube so if you watch one YouTube video this year, this should be the one. It’s a 20 minute time investment that is worthwhile. John Doerr, a principal at Kleiner Perkins was videotaped giving this talk at the TED Conference last year.If you want to know why I want to be engaged in this space, watch the video, Doerr states the case clearly and with passion.
"I don't think we're going to make it," John Doerr proclaims, in an emotional talk about climate change and investment. Spurred on by his daughter, who demanded he fix the mess the world is heading for, he and his partners at Kleiner Perkins Caufield & Byers embarked on a greentech world tour -- surveying the state of the art, from the ethanol revolution in Brazil to Wal-mart's (!) eco-concept store in Bentonville, Arkansas. KPCB is investing $200 million in green technologies to save the planet and make a profit to boot. But, Doerr fears, it may not be enough
Link to Video from TED website

Monday, June 11, 2007

What is Strategy

I was asked a question last week by a friend what is Strategy, I did my usual and replied come on you don't know what Strategy means? We launched into a discsusion on strategy and what's the best way to devlope strategy, I thought that this article would be an interesting opener on the subject for everyone.
The concept of strategy has been borrowed from the military and adapted for use in business. A review of what noted writers about business strategy have to say suggests that adopting the concept was easy because the adaptation required has been modest. In business, as in the military, strategy bridges the gap between policy and tactics. Together, strategy and tactics bridge the gap between ends and means. This paper reviews various definitions of strategy for the purpose of clarifying the concept and placing it in context. The author's aim is to make the concepts of policy, strategy, tactics, ends, and means more useful to those who concern themselves with these matters..
Some Language Basics
Strategy is a term that comes from the Greek strategia, meaning "generalship." In the military, strategy often refers to maneuvering troops into position before the enemy is actually engaged. In this sense, strategy refers to the deployment of troops. Once the enemy has been engaged, attention shifts to tactics. Here, the employment of troops is central. Substitute "resources" for troops and the transfer of the concept to the business world begins to take form.
Strategy also refers to the means by which policy is effected, accounting for Clauswitz’ famous statement that war is the continuation of political relations via other means. Given the centuries-old military origins of strategy, it seems sensible to begin our examination of strategy with the military view. For that, there is no better source than B. H. Liddell Hart.
Strategy According to B. H. Liddell Hart
In his book, Strategy [1], Liddell Hart examines wars and battles from the time of the ancient Greeks through World War II. He concludes that Clausewitz’ definition of strategy as "the art of the employment of battles as a means to gain the object of war" is seriously flawed in that this view of strategy intrudes upon policy and makes battle the only means of achieving strategic ends. Liddell Hart observes that Clausewitz later acknowledged these flaws and then points to what he views as a wiser definition of strategy set forth by Moltke: "the practical adaptation of the means placed at a general’s disposal to the attainment of the object in view." In Moltke's formulation, military strategy is clearly a means to political ends.
Concluding his review of wars, policy, strategy and tactics, Liddell Hart arrives at this short definition of strategy: "the art of distributing and applying military means to fulfil the ends of policy." Deleting the word "military" from Liddell Hart’s definition makes it easy to export the concept of strategy to the business world. That brings us to one of the people considered by many to be the father of strategic planning in the business world: George Steiner.
Strategy According to George Steiner
George Steiner, a professor of management and one of the founders of The California Management Review, is generally considered a key figure in the origins and development of strategic planning. His book, Strategic Planning [2], is close to being a bible on the subject. Yet, Steiner does not bother to define strategy except in the notes at the end of his book. There, he notes that strategy entered the management literature as a way of referring to what one did to counter a competitor’s actual or predicted moves. Steiner also points out in his notes that there is very little agreement as to the meaning of strategy in the business world. Some of the definitions in use to which Steiner pointed include the following:
Strategy is that which top management does that is of great importance to the organization.
Strategy refers to basic directional decisions, that is, to purposes and missions.
Strategy consists of the important actions necessary to realize these directions.
Strategy answers the question: What should the organization be doing?
Strategy answers the question: What are the ends we seek and how should we achieve them?
Steiner was writing in 1979, at roughly the mid-point of the rise of strategic planning. Perhaps the confusion surrounding strategy contributed to the demise of strategic planning in the late 1980s. The rise and subsequent fall of strategic planning brings us to Henry Mintzberg.
Strategy According to Henry Mintzberg
Henry Mintzberg, in his 1994 book, The Rise and Fall of Strategic Planning [3], points out that people use "strategy" in several different ways, the most common being these four:
Strategy is a plan, a "how," a means of getting from here to there.
Strategy is a pattern in actions over time; for example, a company that regularly markets very expensive products is using a "high end" strategy.
Strategy is position; that is, it reflects decisions to offer particular products or services in particular markets.
Strategy is perspective, that is, vision and direction.
Mintzberg argues that strategy emerges over time as intentions collide with and accommodate a changing reality. Thus, one might start with a perspective and conclude that it calls for a certain position, which is to be achieved by way of a carefully crafted plan, with the eventual outcome and strategy reflected in a pattern evident in decisions and actions over time. This pattern in decisions and actions defines what Mintzberg called "realized" or emergent strategy.
Mintzberg’s typology has support in the earlier writings of others concerned with strategy in the business world, most notably, Kenneth Andrews, a Harvard Business School professor and for many years editor of the Harvard Business Review.
Strategy According to Kenneth Andrews
Kenneth Andrews presents this lengthy definition of strategy in his book, The Concept of Corporate Strategy [4]:
"Corporate strategy is the pattern [italics added] of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organization it is or intends to be, and the nature of the economic and non-economic contribution it intends to make to its shareholders, employees, customers, and communities. (pp.18-19)."
Andrew’s definition obviously anticipates Mintzberg’s attention to pattern, plan, and perspective. Andrews also draws a distinction between "corporate strategy," which determines the businesses in which a company will compete, and "business strategy," which defines the basis of competition for a given business. Thus, he also anticipated "position" as a form of strategy. Strategy as the basis for competition brings us to another Harvard Business School professor, Michael Porter, the undisputed guru of competitive strategy.
Strategy According to Michael Porter
In a 1996 Harvard Business Review article [5] and in an earlier book [6], Porter argues that competitive strategy is "about being different." He adds, "It means deliberately choosing a different set of activities to deliver a unique mix of value." In short, Porter argues that strategy is about competitive position, about differentiating yourself in the eyes of the customer, about adding value through a mix of activities different from those used by competitors. In his earlier book, Porter defines competitive strategy as "a combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there." Thus, Porter seems to embrace strategy as both plan and position. (It should be noted that Porter writes about competitive strategy, not about strategy in general.)
Strategy According to Kepner-Tregoe
In Top Management Strategy [7], Benjamin Tregoe and John Zimmerman, of Kepner-Tregoe, Inc., define strategy as "the framework which guides those choices that determine the nature and direction of an organization." Ultimately, this boils down to selecting products (or services) to offer and the markets in which to offer them. Tregoe and Zimmerman urge executives to base these decisions on a single "driving force" of the business. Although there are nine possible driving forces, only one can serve as the basis for strategy for a given business. The nine possibilities are listed below:
Products offered
Production capability
Natural resources
Market needs
Method of sale
Method of distribution
It seems Tregoe and Zimmerman take the position that strategy is essentially a matter of perspective.
Strategy According to Michel Robert
Michel Robert takes a similar view of strategy in, Strategy Pure & Simple [8], where he argues that the real issues are "strategic management" and "thinking strategically." For Robert, this boils down to decisions pertaining to four factors:
Products and services
Market segments
Geographic areas
Like Tregoe and Zimmerman, Robert claims that decisions about which products and services to offer, the customers to be served, the market segments in which to operate, and the geographic areas of operations should be made on the basis of a single "driving force." Again, like Tregoe and Zimmerman, Robert claims that several possible driving forces exist but only one can be the basis for strategy. The 10 driving forces cited by Robert are:
Sales-marketing method
Distribution method
Market type
Natural resources
Production capacity-capability
Strategy According to Treacy and Wiersema
The notion of restricting the basis on which strategy might be formulated has been carried one step farther by Michael Treacy and Fred Wiersema, authors of The Discipline of Market Leaders [9]. In the Harvard Business Review article that presaged their book [10], Treacy and Wiersema assert that companies achieve leadership positions by narrowing, not broadening their business focus. Treacy and Wiersema identify three "value-disciplines" that can serve as the basis for strategy: operational excellence, customer intimacy, and product leadership. As with driving forces, only one of these value disciplines can serve as the basis for strategy. Treacy and Wiersema’s three value disciplines are briefly defined below:
Operational Excellence
Strategy is predicated on the production and delivery of products and services. The objective is to lead the industry in terms of price and convenience.
Customer Intimacy
Strategy is predicated on tailoring and shaping products and services to fit an increasingly fine definition of the customer. The objective is long-term customer loyalty and long-term customer profitability.
Product Leadership
Strategy is predicated on producing a continuous stream of state-of-the-art products and services. The objective is the quick commercialization of new ideas.
Each of the three value disciplines suggests different requirements. Operational Excellence implies world-class marketing, manufacturing, and distribution processes. Customer Intimacy suggests staying close to the customer and entails long-term relationships. Product Leadership clearly hinges on market-focused R&D as well as organizational nimbleness and agility.
What Is Strategy?
What, then, is strategy? Is it a plan? Does it refer to how we will obtain the ends we seek? Is it a position taken? Just as military forces might take the high ground prior to engaging the enemy, might a business take the position of low-cost provider? Or does strategy refer to perspective, to the view one takes of matters, and to the purposes, directions, decisions and actions stemming from this view? Lastly, does strategy refer to a pattern in our decisions and actions? For example, does repeatedly copying a competitor’s new product offerings signal a "me too" strategy? Just what is strategy?
Strategy is all these—it is perspective, position, plan, and pattern. Strategy is the bridge between policy or high-order goals on the one hand and tactics or concrete actions on the other. Strategy and tactics together straddle the gap between ends and means. In short, strategy is a term that refers to a complex web of thoughts, ideas, insights, experiences, goals, expertise, memories, perceptions, and expectations that provides general guidance for specific actions in pursuit of particular ends. Strategy is at once the course we chart, the journey we imagine and, at the same time, it is the course we steer, the trip we actually make. Even when we are embarking on a voyage of discovery, with no particular destination in mind, the voyage has a purpose, an outcome, an end to be kept in view.
Strategy, then, has no existence apart from the ends sought. It is a general framework that provides guidance for actions to be taken and, at the same time, is shaped by the actions taken. This means that the necessary precondition for formulating strategy is a clear and widespread understanding of the ends to be obtained. Without these ends in view, action is purely tactical and can quickly degenerate into nothing more than a flailing about.
When there are no "ends in view" for the organization writ large, strategies still exist and they are still operational, even highly effective, but for an individual or unit, not for the organization as a whole. The risks of not having a set of company-wide ends clearly in view include missed opportunities, fragmented and wasted effort, working at cross purposes, and internecine warfare. A comment from Lionel Urwick's classic Harvard Business Review article regarding the span of control is applicable here [11]:
"There is nothing which rots morale more quickly and more completely than . . . the feeling that those in authority do not know their own minds."
For the leadership of an organization to remain unclear or to vacillate regarding ends, strategy, tactics and means is to not know their own minds. The accompanying loss of morale is enormous.
One possible outcome of such a state of affairs is the emergence of a new dominant coalition within the existing authority structure of the enterprise, one that will augment established authority in articulating the ends toward which the company will strive. Also possible is the weakening of authority and the eventual collapse of the formal organization. No amount of strategizing or strategic planning will compensate for the absence of a clear and widespread understanding of the ends sought.
The Practical Question: How?
How does one determine, articulate and communicate company-wide ends? How does one ensure understanding and obtain commitment to these ends? The quick answers are as follows:
The ends to be obtained are determined through discussions and debates regarding the company's future in light of its current situation. Even a SWOT analysis (an assessment of Strengths, Weaknesses, Opportunities and Threats) is conducted based on current perceptions.
The ends settled on are articulated in plain language, free from flowery words and political "spin." The risk of misdirection is too great to tolerate unfettered wordsmithing. Moreover, the ends are communicated regularly, repeatedly, through a variety of channels and avenues. There is no end to their communication.
Understanding is ensured via discussion, dialog and even debate, in a word, through conversations. These conversations are liberally sprinkled with examples, for instances, and what ifs. Initially, the CEO bears the burden of these conversations with staff. As more people come to understand and commit to the ends being sought, this communications burden can be shared with others. However, the CEO can never completely relinquish it. The CEO is the keeper of the vision and, periodically, must be seen reaffirming it.
Ultimately, the ends sought can be expressed via a scorecard or some other device for measuring and publicly reporting on company performance. Individual effort can then be assessed in light of these same ends. Suppose, for instance, that a company has these ends in mind: improved customer service and satisfaction, reduced costs, increased productivity, and increasing revenues from new products and services. It is a simple and undeniably relevant matter for managers to periodically ask the following questions of the employees reporting to them:
What have you done to improve customer service?
What have you done to improve customer satisfaction?
What have you done to reduce costs?
What have you done to increase productivity?
What have you done to increase revenues from new products and services?
The Decisions Are the Same
No matter which definition of strategy one uses, the decisions called for are the same. These decisions pertain to choices between and among products and services, customers and markets, distribution channels, technologies, pricing, and geographic operations, to name a few. What is required is a structured, disciplined, systematic way of making these decisions. Using the "driving forces" approach is one option. Choosing on the basis of "value disciplines" is another. Committing on the basis of "value-chain analysis" is yet a third. Using all three as a system of cross-checks is also a possibility.
Some Fundamental Questions
Regardless of the definition of strategy, or the many factors affecting the choice of corporate or competitive strategy, there are some fundamental questions to be asked and answered. These include the following:
Related to Mission & Vision
Who are we?
What do we do?
Why are we here?
What kind of company are we?
What kind of company do we want to become?
What kind of company must we become?
Related to Corporate Strategy
What is the current strategy, implicit or explicit?
What assumptions have to hold for the current strategy to be viable?
What is happening in the larger, social and educational environments?
What are our growth, size, and profitability goals?
In which markets will we compete?
In which businesses?
In which geographic areas?
Related to Competitive Strategy
What is the current strategy, implicit or explicit?
What assumptions have to hold for the current strategy to be viable?
What is happening in the industry, with our competitors, and in general?
What are our growth, size, and profitability goals?
What products and services will we offer?
To what customers or users?
How will the selling/buying decisions be made?
How will we distribute our products and services?
What technologies will we employ?
What capabilities and capacities will we require?
Which ones are core?
What will we make, what will we buy, and what will we acquire through alliance?
What are our options?
On what basis will we compete?
Some Concluding Remarks
Strategy has been borrowed from the military and adapted for business use. In truth, very little adaptation is required.
Strategy is about means. It is about the attainment of ends, not their specification. The specification of ends is a matter of stating those future conditions and circumstances toward which effort is to be devoted until such time as those ends are obtained.
Strategy is concerned with how you will achieve your aims, not with what those aims are or ought to be, or how they are established. If strategy has any meaning at all, it is only in relation to some aim or end in view.
Strategy is one element in a four-part structure. First are the ends to be obtained. Second are the strategies for obtaining them, the ways in which resources will be deployed. Third are tactics, the ways in which resources that have been deployed are actually used or employed. Fourth and last are the resources themselves, the means at our disposal. Thus it is that strategy and tactics bridge the gap between ends and means.
Establishing the aims or ends of an enterprise is a matter of policy and the root words there are both Greek: politeia and polites—the state and the people. Determining the ends of an enterprise is mainly a matter of governance not management and, conversely, achieving them is mostly a matter of management not governance.
Those who govern are responsible for seeing to it that the ends of the enterprise are clear to the people who people that enterprise and that these ends are legitimate, ethical and that they benefit the enterprise and its members.
Strategy is the joint province of those who govern and those who manage. Tactics belong to those who manage. Means or resources are jointly controlled. Those who govern and manage are jointly responsible for the deployment of resources. Those who manage are responsible for the employment of those resources—but always in the context of the ends sought and the strategy for their achievement.
Over time, the employment of resources yields actual results and these, in light of intended results, shape the future deployment of resources. Thus it is that "realized" strategy emerges from the pattern of actions and decisions. And thus it is that strategy is an adaptive, evolving view of what is required to obtain the ends in view.
Slainte Gordon