Tag Archives: planning

What Raleigh Can Learn From Chengdu

Many groups of people have been trying to spur innovation in Raleigh, North Carolina. One in particular, Innovate Raleigh, has sought to unite the educational community with economic development and entrepreneurship. Conferences, forums, and meetups all have been convened to help identify what needs to be done to create an ecosystem that is comparable to other areas of extreme innovation across the United States. What about overseas? What can be learned from places like Chengdu?Innovation ball

Chengdu, with a population of 14 million, is the capital of Sichuan province. It is the city where paper money — a colossal innovation — first appeared in 1024. The printing of the Buddhist canons “Four Books” and “Five Classics” made Chengdu the early center in the art of printing.Rowan Gibson, the co-founder of Innovation Excellence, describes Chengdu’s spirit this way: “Innovative thinking is part of its history, and it is shaping its future.”

John and Doris Naisbitt, who are well known for global trends and futuristic studies, have recently written a new book, Innovation in China: The Chengdu Triangle.  They make the following observations:

Innovation in Chengdu is growing out of a strategically planned nourishing business environment and an entrepreneur-friendly administration in a stable social climate. Following the principles of a well-run company, Chengdu’s leadership combines management and business acumen with social consciousness and, to a much greater extent than we have ever seen in a Western local government, a service-oriented administration. A good example of innovative service are the quarterly meetings the  mayor holds, and in which every problem, request or complaints must be solved or dealt with within three days. The first meeting was held in March 2003 and meetings have been held without interruption since that time.

The first pillar of Chengdu’s reform is its wider focus which is not exclusive on industrial development, but on a whole range of investment attractions. 

The second pillar of Chengdu’s innovation model is to seek to enhance the allocation and efficiency of “intangible assets.” 

The third pillar of the Chengdu model is bilateral exchange.  

Chengdu is dedicated to beat its innovation drums faster, louder and more insistently on all fronts. But Chengdu is only one of China’s many ambitious and competitive cities. High Tech Parks are growing like mushrooms after a warm summer rain and lure with high wages and $150,000 moving grant for top executives. Top-talents find support in Incubation Centers. Mentors, seed capital, offices and technological equipment are part of the package. China’s “Thousand Talents Program” aims to bring back 2,000 talented Chinese paying salaries between 60,000 and 360,000 Euro. Up to the year 2020 China is dedicating 15 percent of its GDP to human resources.

As we look at ways to broaden the Raleigh economy to capitalize on the success of the Research Triangle Park, the major research institutions, and a highly educated workforce, the Chengdu model is enlightening. We have witnessed the high tech park approach as a key economic driver in our history, and are hopeful that the next evolution of RTP will benefit Raleigh as strongly as the first few decades. The emphasis on Incubation Centers is important. Raleigh needs many such centers of innovation. Thankfully, organizations like the HUB and EntreDot are addressing this need. EntreDot is, in fact, expanding beyond its Kindred Boutique for artisan entrepreneurs and opening a new innovation center in Lafayette Village tomorrow (January 17, 2013).

Innovation centers that offer programs that do not include a strong mentoring component do not prepare entrepreneurs and existing businesses to optimize their talents. Seed capital is needed, as are offices and access to the right equipment. However, the entrepreneurial education and mentoring are key. Finding a way to attract talent back to the area is another idea whose time has come. Even in biotechnology and emerging, fast-growth sectors, study after study has stated the need for more top talent to run world class organizations. Let’s apply some of the principles of Chengdu to our own market and spur even greater innovation!

Private Company M&A Lacking Objectivity

One of the area of my consulting practice that is most enjoyable is advising clients on merger and acquisition issues. While very few of my clients actually do a deal, more and more are considering inorganic growth as a means to address both the economies of scale that come from combining back office solutions as well as what are perceived as historic opportunities to perform “roll-ups” in a variety of vertical niches. Understand that my clientele is exclusively privately held businesses whose annual revenues are under $50 million. In fact, in the $1 – $50 million range, they are usually on the lower end when we start working together. 

When I have the opportunity to become involved in a strategy conversation about the potential benefits of a transaction, then, it is not with multinational, public companies who are measuring cross border opportunities as a defensive mechanism to preserve market share against more aggressive competition. These facts notwithstanding, I enjoy reading research performed on the larger company front because many of the issues studied trickle down into my part of the market. This past fall, the global law firm Eversheds published a study, The M&A Blueprint: Inception to Integration, wherein the authors claim that deal teams need a more holistic approach and stronger connections between the planning, completion and post-deal integration phases. Amen!

The universe of participants in the study included 400+ large businesses who had pursued cross-border deals in the period 2009-2012. Many respondents felt that the inability to envision the end from the beginning (think through integration and beyond during due diligence) was the single greatest cause of unrealized potential. 

Robin Johnson, M&A partner at Eversheds, said: (bolding of phrases added)

The current economic climate has made the business of doing deals much tougher, with the research highlighting an acute awareness of risk in the process…Our research shows that the overriding factor contributing to the success of a cross-border deal, is the presence of a core team providing the ‘connective tissue’ to link all the phases together, taking the deal from the inception stage through to post-completion integration. Businesses need to start joining the dots between the different stages of the deal cycle to move the focus from just simply ‘doing the deal’ to thinking about life for the business beyond the deal.

The Eversheds report recommends a methodology that rolls out as follows:

1. Inception

  • From the start – 38% of deals where the in-house team were brought in too late suffered problems during integration.
  • Early warning – 59% of all respondents said they had spotted potentially damaging issues early enough to advise that a deal should not go ahead.

2. Planning and due diligence.

  • The crucial stage – 43% said the most common cause of the failure to realise value in transactions was down to avoidable errors in the due diligence and planning phase.
  • Joined up thinking – 70% felt that linking due diligence and integration planning together would help to improve the deal process.

3. Deal execution

  • What matters most – The reasons General Counsel would advise not to proceed with a deal were illegality/regulatory (45%), e.g. bribery, competition and antitrust, and commercial concerns (45%), e.g. price and valuation, litigation risk, integration costs.

4. Integration

  • A false saving? – 83% did not use external lawyers to a large degree during integration, although they were acknowledged to add value. The main reason for this was cost.
  • Avoid mismatches – 26% felt that the failure to realise value in a recent cross-border M&A deal was due to a misalignment between legal dealmakers and the day to day business team.

Recognizing that Eversheds is acutely focused on the implications for the legal field, they found that involvement of external transaction advisory experts earlier in the deal process yielded better results. Applying this thought to and the process outlined above to my own experience, I strongly recommend that cultural due diligence be brought front and center early on. Internal teams are not usually objective enough to evaluate their own culture, let alone that of another entity. When we delve into matters of governance, decision making, core values in action, executive team personalities and styles, we are able to more accurately predict what may happen in integration and beyond. If red flags go up, back away!

 

 

Do You Have an Innovative Strategy?

 

After a very long (10 days+) break from blogging, we are back on the job for the New Year today. The time away was refreshing and helped to restore focus. One of the reasons I began writing this blog last year was to develop a discipline for getting observations about small business management and strategy out of my head and into a “written” format. At some point in 2013, we will attempt to cull through last year’s blog posts, sort and organize them, and format all of the content into a cohesive story that should make a good book. It has been over 20 years since I published my last book and it will be fun to be in print again.

Back to the matters of management and strategy…I’d like to run through a few scenarios I’ve encountered with clients recently in an effort to highlight some of the ways business owners get “stuck” in their approach. One client is in the midst of a family business transition–none of which are what one would call a “piece of cake.” As with any business worth laboring over, this one has experienced enough success in its history that all parties think it has enduring value. All parties would be right–and wrong! 

Business valuations derive enhanced magnitude from observed plans for managing risk. The risk of the owner getting hit by a bus is, for instance, substantial. With no business continuity plan for such a horrible occurrence, the company that has taken years to build can be undone in a very short amount of time. Insurance is seen as a way to mitigate the impact of such an event on the financial performance of a business and its stakeholders. However, no amount of insurance can replace institutional knowledge. Most companies are operated based on lessons learned the hard way. When the person who remembers all the lessons is no longer around, others must climb the same painful learning curve and waste precious resources in the process. Taking the time to document what you have learned and how you apply that knowledge in daily management makes your company worth way more money–even if you never plan to sell it!

hourly billing agreementAnother client is a professional services firm that is struggling with the industry standard of billing fees on an hourly basis and all the timekeeping and dysfunction associated with this antiquated practice. In addition to the record keeping requirements, there are collection processes that are time consuming, result in write-downs, and become demoralizing. What we are implementing, then, is a change in the way business is done. We will begin to charge clients a retainer and a success fee. The retainer is some minor amount that basically allows this specialized practice to recoup some monies for overhead obligations while the team works on client issues. It is meant to encourage more calls from clients to discuss everyday items so that we become an extension of their management and leadership teams. The success fee is structured up front to be awarded to us for doing a better than average job. We work with clients when they are prospects to identify    how success will be measured before an engagement begins. we put the feedback responsibility in the hands of the client, and adjust our final payouts based on results.

These two examples illustrate how matters of strategy can be brought into the regular operations of any business. In every business we’ve encountered, there are things that are overlooked or left un-addressed because they are accepted rather than challenged. What are those things in your business that need to be tackled in 2013? How will you tackle them?

Create a Stronger Brand Through Research and Leadership

As an adviser to SMBs, we frequently are in the role of addressing branding issues in an organization either looking to jump start growth or figure out how to combine forces with a merger partner. In any such scenario, the effort to rebrand is a challenge. To take a known corporate identity and recast it in the minds of a target audience requires research data, creativity, and commitment.

Overture NetworksOverture Networks in the Research Triangle area of North Carolina merged with another competitor, who happened to be located in the same town. Both Overture and Hatteras Networks competed in the telecommunications equipment sector. After the merger, the new company had a broader product line, bigger sales distribution channel, and deeper expertise. Mark Durrett, Overture’s marketing director, and Alicia Smith, the communications director, shared seven lessons from their rebranding experience via the Marketing Profs website this morning:

1. Executive buy-in is critical

Our executive team recognized that our rebranding project had the power to help grow the business and change buying behavior. With the CEO’s support, every executive leader, a member of our board of directors, and other company leaders became involved. Vested in the project’s success and expecting measurable results, they all cleared their calendars to participate.

2. Set internal and external goals

The merger brought together two companies with complementary products, but different operating cultures. By marrying the objectives of our rebranding work with the company’s strategic business and growth goals, we helped ensure that everything we did drove business value and focused on growing the bottom line. We learned to be realistic with our timing, knowing that ships don’t turn on a dime, and gave ourselves time to define and then “live” our new brand.

3. Research can inform and guide

There’s tremendous power in asking questions—and in listening. Diving deep, we asked everyone—customers, analysts, internal stakeholders—what they thought we did, how we did it, how we could do it better (or different or easier or with more impact), what they wish we did, how they prefer to work with… you get the idea. After we created a safe forum to receive candid, useful responses, the input poured in. In any such exercise, you must be prepared to get quality feedback; you must listen carefully, evaluate honestly, and decide what really matters.

4. Collaboration (and outside experts) can bring you together

A valued and trusted partner will use your research, extract ideas from the entire team, and empower key leadership to make quality decisions. And just because you’ve expanded the circle of collaboration doesn’t mean you make decisions by committee. With everyone invested (and involved) in the process, our leadership made decisions that the other collaborators readily accepted.

5. Establish a foundation, then build on it

Before beginning any creative exercise—from your new logo to a datasheet—your team needs to have agreed on all the elements that define you as a company. Armed with those foundational brand elements, you can effectively build out the language, design elements, stories, and guidelines that allow your brand to grow in the direction you desire.

6. Convert collaborators to evangelists

Executives and other leaders have a unique role in sharing your brand story with customers, analysts, employees, and key stakeholders. Ideally, they will transition from collaborators to evangelists. 

7. Keep walking the walk: You have to live the brand

Once the launch party fades, the hard work begins. Hopefully, by now, your entire company agrees that your brand consists of everything that has anything to do with your company, and that your brand goes everywhere. Your stated values must become reality. Anyone who interacts with your people or your products, receives an invoice, or sees your logo—really anyone in any circumstance—expects an experience that aligns with your brand attributes. 

 

Even if you have not undertaken a rebranding project, you and your company can benefit from the advice offered above.  Think through how you can solicit and implement feedback from customers. Incorporate their input into your messaging, involve executive management in the process, and seek to build collaboration into brand evangelism.

Measure Marketing For Better Results

Marketing is the main subject of this week’s blog posts–in case you hadn’t noticed the pattern yet. One of the biggest challenges in marketing is to prove that efforts are generating results–and at a reasonable ROI to boot! We know that marketing can be used to initiate relationships–it is also about nurturing them and providing great leads to the sales side of the house. Being able to measure how much positive attention you are able to attract is key for a marketer to justify the marketing budget, and (in a recession, her role.)Mktg Dashboard

Leanne Hoagland-Smith, Chief Results Officer for Advanced Systems in Chicago, IL writes that,

With the Internet, the ability to measure your marketing efforts is far easier now than ever before. Websites can include Google Analytics or their own customized statistics dashboard. Then others sites and tools provide additional metrics to measure current marketing campaigns. Even WordPress has a plug by Yoast to measure Search Engine Optimization (SEO). This is a great tool for measuring the SEO effectiveness of your blog posts. I know because I have been using it for the last three years. 

Inbound Marketing Measurements

Each morning, the first action I take beyond deleting all the SPAM from my email accounts is to measure my inbound marketing through more than 20 metrics. Some of these measurements include:

• Unique Visitors to my website

• RSS feed from my website

• Twitter followers

• LinkedIn

• Alexa Ranking

 

Additionally, I also have another 10 weekly metrics plus another 15 monthly metrics.

I am currently expanding into delivering some webinars and Eventbrite provides additional statistics as does Citrix Go to Webinar. All of this data is crucial if I wish to use my limited resources of time, energy, money and emotions to increase sales.

..These numbers allow ..me.. to see trends, what is working ..and what is not working. The time investment averages around 10 minutes each day with another 10 minutes for the weekly data capture. At the end of the month, this adds another 20-30 minutes for updating and analysis.

Outbound Marketing Measurements

During the course of the last 10 years, I have identified some key benchmarks for the more traditional marketing efforts. For example, when I speak, I usually receive a client from that presentation within six months. Lately, that statistic has changed with two to four months being the average. What has also changed due to the economy is the average sales value of that client has dropped.

Another marketing effort was something I gleaned from Robert Middleton specific to sending pertinent articles to potential customers. When I employ this marketing campaign, my first time appointment rate is around 50 percent compared to the usual cold calling rate of 25 percent. As I am selective when I do engage in cold calling, my success rate is probably higher than most…

One simple action is to always ask how a potential customer discovered you. Sometimes these prospects will tell you without asking. Just this past month, I earned my first client from a YouTube video. Efficient and effective marketing is hard work. To not measure the efforts of all those actions is not probably the smartest course of action.

The role for small business owners have expanded to include measuring marketing efforts. Without knowing the results from all marketing efforts both inbound and outbound, the small business owners to even crazy busy sales professionals are missing significant opportunities to maximize their profits, reduce costs and increase sales.

As you look at what LeAnne does in her business, what ideas come to mind? Check out the tools she recommends. Determine your own marketing dashboard. Think through how to collect data, analyze it, and make adjustments. As you begin to apply some science to the art of marketing, you can calculate the metrics of success that drive revenues and profitability. Isn’t that why we all started businesses?