Business Development – Page 3

April 26, 2010October 2, 2010

Book Review of “The New How” (Business Strategy Book)

It is atypical for me to write a book review for this blog, but Nilofer Merchant’s “The New How: Creating Business Solutions Through Collaborative Strategy” is very respectable contribution to both audiences of this blog and the process of strategy development in general. In particular, the book does two important things beyond other strategy books:

it breaks down the ivory tower of centralized strategy and addresses, in detail, the roles and responsibilities that each employee must fulfill in the new model, and
the book explicitly documents a collaborative process that one can use to develop strategy, a process which from my vantage point has only been addressed either through mentorship and transfer of tacit knowledge or in fragments within other documents.

The book divides strategy into two domains – 1) where a company competes, and 2) how a company competes. The premise of the book is that the former topic (where a company competes) is well-addressed by existing strategy books, such as those by Porter, Chan, Kim, and Mauborgne. Nilofer’s book addresses the gap in business texts regarding the latter topic, which includes day-to-day and quarter-to-quarter strategies, such as “how do we grow sales of product XYZ” or “how do we grow sales of division Y by Q%?” As she writes, “One person’ strategy is another’s tactics. The unnecessary and fruitless war of what is tactics or strategy or execution must end.”

Part 1 of the book provides a call to action for individual employees and leaders. But the book goes further by providing specific responsibilities that each person must fulfill. Where I admire the book is in its approach to addressing each employee’s role. Whereas “older” methods of strategy may have been focused on executive management teams, this book provides context, terminology, and frameworks for educating a broader audience. As an aside, I am also struck by the fact that Nilofer does a good job of incorporating concepts of improvisation into the strategy development process, culture, and mindset of employees. Improvisation is especially a soft spot for me given my involvement with Business Improvisations, a collaboration between business academics and improvisation instructors which helps companies in areas such as innovation, leadership, teamwork, etc. through customized, experiential learning sessions.

Part 2 of the book goes into greater detail on process of strategy development. It breaks down the process into four major areas:

Question Phase – articulating the problem scope and assessing the current state of the organization
Envision Phase – creating options for the organization developing criteria that would be used to evaluate options
Select Phase – using a “MurderBoarding” process to sort, tune, fix, etc. options
Take Phase – creating accountability, identifying who does what, and getting down to interdependencies and execution.

Although the book goes into much greater detail on all of these areas (with specific examples, charts, tables, etc.), one of my favorite charts is the MurderBoarding overview chart (copyright image reproduced below from “The New How” via permission from Nilofer Merchant). I often find this part of the strategy development process to be at risk of falling apart – this part of the strategy process is inherently messy, and unless the team focuses on a disciplined reference framework (like the one here), it becomes too tempting and easy to try to cut corners. Look carefully at the chart and see if you have been tempted to cut corners in the process. For example, did you forget to test the idea in part before finalizing the strategy? Or did you forget to vet and refine the criteria used to evaluate a strategic option?

Even as an experienced management consultant and manager, I would highly recommend this book (I’ve also added it to my popular Crash Course Consulting Reading List). The book is practical and covers a body of knowledge that has been largely undocumented to date. Whether one explicitly uses the processes Nilofer describes, the book still provides a good framework for assessing how one is doing. This book is well-suited for corporate executives, strategic planners, general managers, and management consultants. It would also be good as a textbook to supplement strategy and/or consulting courses.

Feel free to let me know your thoughts!

April 12, 2010October 2, 2010

How To Help Ensure Strategy Scorecards Don’t Fail You

For many strategy engagements, a lot of attention is paid to the detailed analysis framework. For example, should a benchmarking framework be used? Or will that framework lead us down a path of mediocrity? Or perhaps value-chain or Blue Ocean-like analysis should be used here? What method should we use for prioritizing brand associations and rectifying brand image versus identity? Regardless of strategy technique, one key output of these efforts is often a scorecard summary. A scorecard is tangible. It can be like a report card that you got from school in elementary school. While the scorecard is important, it’s important to not lose sight of how a scorecard is developed and what the scorecard could mean for your organization.

The figure below shows an illustrative scorecard for a company. The scorecard helps to identify strengths and weaknesses. In the scorecard below, I’ve also depicted areas where the company needs to make improvements (operational and tactical focus) and where the company needs to differentiate longer-term (strategic focus).

Traps with scorecards can happen with the processes before, during, and after the scorecard.

Common traps that can occur before the scorecard are:

Failing to craft the problem statement properly
Pursuing too narrow activities to solve the problem statement
Falling short on involving a broad part of the organization in the assessment & strategy development process
Getting the wrong mix of structured and unstructured methods
Using the wrong tools for the job
Having an inherently biased processes or failing to frame and address biases and limitations properly

Traps during the scorecard readout process include:

Being too negative and demotivating an organization
Not stepping back from the scorecard to look at the bigger picture
Failing to educate new audience members about the context of the scorecard and the prior processes used to arrive at the scorecard
Letting an organization rest on its laurels

(Very) common traps after the scorecard readout process include:

Failing to develop specific action plans
Not having a good follow-up and cadence for making progress

The picture below shows the logical context for an example scorecard process, and it is an important aspect often lost in the mix. Note that the process context for the scorecard is as important (if not more important) than the scorecard itself.

What are your experiences with scorecards? How can you use them more effectively?

April 2, 2010October 2, 2010

The Business Plan Is Alive And Well But It May Not Be What You Think

As many times I have written a “business plan”, it seems the flavor of it can vary quite substantially. I think the notion of this catches a good number of people by surprise. And why shouldn’t that be the case? Many textbooks and templates seem to cover business plan outlines with relatively similar structures. My suspicion is that the perspective that gets lost in the mix is intent. The intent of a business plan affects its format and content dramatically (more than outline). For this post, I thought it would be good to share some perspectives on why the process and plan should vary.

Business plan as a process – The process of vetting ideas, getting buy-in, and achieving alignment is most important in these situations. Example situations are new business launches in larger companies (e.g., intrapreneurship). Business plans can often take the form of workshop sessions and Powerpoint documents as opposed to a traditional textual Word document. See a popular post of mine, “In Consulting The Process Is An Essential Part Of The Deliverable“.

Business plan as a sales document – This situation is particularly appropriate for fund raising (e.g., angels, VCs). Key goals of the document are to establish trust with prospects, enable the investment idea to be shared via networks, and persuade people of the merits of an investment opportunity. Often need a mix of instruments here (Powerpoint & Word docs, napkin drawings, demo), depending on the team, industry, and phase of product development (e.g., technology feasibility, commercial feasibility, ramp-up).

Business plan as a hypothesis test or investigative framework – An entrepreneurial way of looking at a business plan is more as a framework or series of hypotheses tests. Questions may be: do customers really want product aspect A, do customers prefer this variation over that one, do customers perceive me as Y relative to my competitors, and will the dog eat the dog food? The business planning effort can be more organic than written and involve focus groups, customer prospect interviews, etc. But the framework process should be systematic in determining which hypotheses are true/false to prove out aspects the business over time.

Some other ways that come to mind are viewing the business plan as a communication tool, a dissertation (that must be closely inspected), debate tool, product development stage gate requirement, and RFP response requirement (e.g., for government grants).

How do you view you business planning efforts? To what extent could you benefit from new ways of thinking about them?

February 18, 2010October 2, 2010

Using a “Frontier Chart” to Evaluate and Plan Project Portfolio Strategy

The introduction of new product or service lines into an existing customer base is a challenge that companies often face with new business development. Sometimes the opportunities can be readily quantified using traditional financial analysis (e.g., using net present value, scenario, and waterfall buildup methods). At other times, there may be hazards of trying to quantify an opportunity too early in the process before conceptual alignment of the stakeholders. For example, people can simply get stuck “in the weeds with the numbers”.

In this post, I share a method that I have sometimes found useful as a first step in framing and getting alignment among parties (especially when looking at new product development situations involving platforms upon which multiple products or product lines can be built). To be honest, I am not sure if there is a name for the type of chart I describe below, but I call it a “frontier chart” (which is derived from investment portfolio theory from finance).

The basic idea is that there are a set of lower risk projects out on the left side of the chart which have more known (potentially lower) expected returns. In contrast, projects on the right side might have higher risks but also higher, expected returns. So as an example of a project on the left side, a software company may have early customer engagements with a straightforward, add-on product that it directly developed (say a GPS mapping tool). As an example of a project on the right side, that same software company may be looking to introduce new platform capabilities such that indirect, 3rd parties can develop applications (e.g., Apple’s “there’s an app for that”). The later project venture is more risky, but the payoff could be larger than the former project.

A key benefit of using a frontier chart is that it can help to get buy-in on the high-level things and projects that people tend to agree with. There will be plenty of time later to put on our “propeller hats” and get bogged down in detailed numbers and execution tactics.

The ability to facilitate a company’s management team to move forward is priceless, and sometimes facilitation can be more difficult when introducing new products or services (which is outside of the core, day-to-day business). Consider using frontier charts and thinking about platform strategies (the latter which may be topic for another post).

January 14, 2010

Musings On Conducting Competitive Intelligence Ethically

Competitive intelligence (CI) is an activity done by a wide range of professionals ranging from marketers to product managers to consultants to strategic planners. Now I’ve held back for many years on posting on the subject of conducting CI ethically. I tend to be more on the conservative side, and by posting my thoughts on this subject publicly, I’ve had concerns that some clients and future employers would see me as too soft on the issue. Would a client shy away from hiring me because I was unwilling to go the “distance” to get a job done?

In spite of my concerns, I’ve decided to address the issue here. In my experience with the business world, I’ve seen the topic of ethics (in the context of CI) discussed much less frequently than I would have expected, and that should change. Here I’ll provide some examples of bread and butter methods and more infrequently used methods for conducting CI. People should feel free to comment on other methods they have used. I’ll also provide some examples of activities that I either think are questionable or outright unethical.

Here are some examples of ethical, secondary research methods for performing CI:

Pulling annual reports and shareholder presentations on competitors from the web
Analyzing securities and exchange commission (SEC) filings and financial statements
Gathering marketing collateral information from trade show booths of competitors
Obtaining industry reports from investment banks and/or financial institutions
Reverse engineering the positioning focus of competitors from marketing collateral
Searching through LinkedIn to analyze salesforce profiles and reverse engineer likely go-to-market methods
Analyzing resumes of employees of competitor
Using Google satellite to analyze geographic profile and size of competitor facilities
Using Crunchbase or Techcrunch to analyze private companies
Using Compete, Alexa, and other web services to analyze web traffic
Analyzing advertising copy and positioning
Purchasing third-party reports (e.g., Gartner, Forrester, Parks Associates) to round out research
Looking through job postings by the company on the web

Here are some examples of ethical, primary research methods for performing CI:

Interviewing a distributor that has experience with competitors and asking questions whether client’s proposed offer would be competitive
Asking distributor to describe any non-confidential information that they would be comfortable sharing about either the competitor or distributor’s relationship with competitor
Visiting retail outlets of competitor to infer go-to-market methods, assess general profile of locations, etc.
Directly purchasing a competitor’s service or product
Surveying salespeople within client organization to get their feedback on what they’ve run into with respect to selling against the competition
Conducting focus groups with general customers to get their feedback on competitor’s products versus the client’s prospective offerings
Obtaining general information by calling into a competitor’s call center

Finally, here are some examples of questionable or unethical methods of performing CI (and these topics come up somewhat frequently in my experience):

Misrepresenting oneself as a potential customer of competitor in order to get pricing information not made generally public
Asking a current distributor or employee of competitor to share proprietary information about competitors and violate non-disclosure agreements
Interviewing a competitor’s employees for the sole purpose of gathering competitive information as opposed to intending to consider such people for direct hire

One problem that I see organizations run into is that they can get focused on one single issue. For example, they may say “I must know exactly how competitor XYZ is pricing”. This type of logic can be dangerous because it tends to lead to one solution. It may also tempt one to try to take unethical shortcuts. If the problem statement is reframed around “getting a better picture of whether my client’s market offer is competitive”, then this can lead to more flexible and varieties of solutions. Tools like conducting customer focus groups, surveying salespeople, etc. then become possibilities for solving the real problem at hand.

As a closing note, in a framework I alluded to in a prior post, one way to think about activities are to classify them in two dimensions: (ethical – unethical) & (legal-illegal). The other framework that I use for weighing ethical issues is to determine how I would feel if my activities were plastered all over major press outlets. Would I be embarrassed by my team’s or my personal activities? Posing that type of question is often a nice litmus test for good behavior.

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December 11, 2009

Perspectives on Facilitating a Consulting Engagement Related to Business Development and Innovation

One of the projects I have been working on recently with a partner involves helping an incumbent software vendor explore new business opportunities and facilitating strategy direction with the leadership team. The project involves research & planning with culmination of a key phase being a go/no-go and a commitment of money for development. Innovation and business development engagements can be tricky to facilitate due to the cast of characters and specific nature of innovation problems, so I wanted to share some experiences with facilitating these types of situations.

First, here are some examples on how these projects can die out (e.g., before getting funded):

Innovation is more radical and not incremental, and the primary decision-maker needs "numbers" as a first step to prove out the case for innovation (too much analytical, left brain early on)
The team is diverse but cannot effectively develop a set of innovative solutions that range from incremental to more innovative (on either or both dimensions of technology and end-user meaning and associations)
If the team can develop a range of solutions, the method of managing the portfolio is ineffective or mismatched with the type of innovation area (e.g., incremental innovation areas not researched in enough detail versus radical innovation areas not given enough breathing room)
The method for more fully developing the innovation solution does not balance (based on the type of innovation) gathering information from current end-users versus a larger, ecosystem of industry players and participants beyond end-users

So we have the following as potential backdrop: a mix of left-brains and right-brains and a diverse team that may address primarily incremental innovations but that recognizes the need for more radical, game-changing innovations. Wherein lies the risk tolerance of the leadership team, we cannot yet articulate in concrete terms. Yet the goal is to get everyone on the same page and committed.

A common method of attack that I use for facilitating these types of engagements is to work from common ground to more specific ground and from right-brain (creative) appeal to left-brain (analytical) appeal and then back to teamwork. So the storyboard presentation for getting on the same page with respect to an innovation project may be:

Review industry trends (facilitation strategy: develop common ground)
Get on the table the high-level, company situation (e.g., via strength, weaknesses, opportunities, threats -> SWOT matrix) (facilitation strategy: develop common ground)
Portray the potential innovation projects on a canvas that shows the current situation versus the potential future (facilitation strategy: develop common ground, but more targeted to right-brain)
Portray the innovation projects on a conceptual frontier of risks versus returns (e.g., like here), sort of like an investment portfolio (facilitation strategy: develop common ground with segueway to left-brain)
Provide deeper-dive summaries (e.g., ROIs where possible or at some more numeric info if that's all that can be done) on specific projects (facilitation strategy: develop more targeted to left-brains but provide offshoot points for open discussion with right-brains)
Provide summary on the roadmap for tying everything together, identifying unknowns and open issues, and providing governance for individual innovation projects (facilitation strategy: develop trajectory for people to start working together before passing judgment on all projects)

In a prior post, I talked about the importance of articulating and rearticulating problem statements. That principle still applies, but in many strategy projects, there's also an element of facilitating a diverse set of people that cut across left- and right-brain problems. As consultants and managers, we need to think about that aspect as well.

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October 19, 2009

Business Development May Be On The Upswing Careerwise, But What Is Business Development?

Earlier this year I had heard from sources at various business schools that given the recession and slower consulting and investment banking hiring, a lot of MBA graduates were looking to careers in business development. This is a great development, but in my experience the term "business development" means quite different things to different people. Here's a paraphrasing of some of the types of statements I've heard in the workplace:

"Business development is about new customer acquisition and sales."
"Sales personnel are divided into existing accounts and hunters. Business development looks for breakthrough, strategic sales."
"Business development handles strategic partnerships & deals."
"Channel sales are the primary focus of the business development team."
"The VP of Business Development works financing, acquisition, and strategy activities."
"Business development establishes the cross-promotional marketing deals."
"Business development focuses on strategic initiatives (whether partnership, financing, product) identified by the Board."
"The business development team is facilitating design of a new product with XYZ company and our development team."
"Business development sells product to the channel."
"Oh. You handle a mixture of finance, marketing & sales, strategy functions. You're business development."
"Business development folks are jacks of many different trades."
"Business development is about getting larger partners to commercialize on brand extensions that you may not be able to handle on your own."
"The sales team does that. You want to know what business development does? We need to talk about that in my office. Come on in, and please shut the door so we can have some privacy."

There is an element of truth in all of these statements. Business development can be all of these things. It really depends on company. In my mind, however, the role of business development is to find new strategic opportunities for the company and start the company on the path to execute (incubation). It is not uncommon for business developers to have a combination of strategy, marketing & sales, finance, legal, and operations background.

Based on my experience in business development, here's the flavors I've run into (roughly from more to less common):

Partnership development
Strategic market development and sales
Strategic marketing
Mergers, acquisitions, and financing
New business line exploration
Channel sales
New product development

What are your experiences with business development professionals? To what extent is it a well-defined function within your business? What types of issues have you run into?

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September 30, 2009

Musings On Winning and Losing Moves Within Startup Situations Within Larger Companies

Though anecdotal, I've seen a slight rise in activity with companies looking to incubate new businesses or start-up climates within a larger company. These are challenging situations to get off the ground. Based on a mixture of consulting to a number companies in these situations and being involved with at least one of these situations as a manager within the company, here are some thoughts on winning and losing moves:

Structure: Having a start-up sponsor in name or position only (losing move) – Successful, external startups have managers that will fight to win, pave new ground, work out kinks, get the best resources, etc. If the sponsor is a senior executive that provides only oversight, does not push or provide guidance, and does not empower delegates, this could be a warning sign for an effort that will not bear fruit. If you have a start-up sponsor that provides political and boundary management only, then it might be a good idea (winning move) to get a powerful delegate that answers to the sponsor and can help to "fly cover" in the organization. Situations where cover may be needed include designing new marketing material, getting special access to the sales team, breaking new ground in the legal contracts area, and getting financial budgets approved outside of normal (overly conservative) control mechanisms.
Strategy & Goals: Failing to clearly articulate the ultimately goal and problem statement of the startup early on (losing move) – I guess an addendum to this might be making the strategy too complicated. For example, when faced with the startup options of creating new revenue, helping cross-sell other services within the larger company, reducing customer churn, or all of the above, I would tend to advise leaning away from trying to knock down too many of these at once. All options can be on the radar and should be part of early brainstorming & strategy sessions, but viewing the startup as a standalone business may be the best option of getting traction first.
Core Team Makeup: Failing to bring in new blood when new blood is needed (losing move) – At risk of disrespecting both large company employees and entrepreneur-types, these groups often don't understand one another. For example, entrepreneurs-types can lack respect for large company bureaucracy, but this is dangerous because buy-in and tapping into the resources (people, structure, assets) of a large company can be tremendous. On the other hand, large company employees can become accustomed to the culture, pace, and processes of existing businesses - these may be incompatible with aspects of a new venture. Bringing in new blood for a start-up within a larger company is often a winning move, and the resources need to be different & complementary.
Extended Team Resources and Horse Trading: Failing to capitalize on resources of the larger entity (losing move) – If entrepreneurial types are brought into the new business, there needs to be complementary intrapreneurs (winning move) that understand the structure of the large company and can help get things like data from business units within other areas of the company, identify potential A-team resources already within the company that can help (e.g., marketing, business development, project management, finance), or tap into key channels and partners external to the company (e.g., lighthouse accounts).

There are many more winning and losing moves to create startups within larger firms. What are your experiences? Where do you see pain points?

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