JACK MIXNER STRATEGY

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

NBC decided not to re-sign its December-outdating contract with Apple's iTunes. The reason? NBC wants to charge more than the $1.99 Apple charges. 251% more as a matter of fact, all the way to $4.99 per episode (Barnes).

NBC is ranked in fourth place among broadcast networks. Clearly, it needs all the help it can get.

Looks to me like NBC ought to re-consider. New theories on strategy tip old strategies on their head, saying in effect that increasing value and lowering prices go together (Kim et al. 16.). It used to be that increased value allowed you to increase your prices. Not any more. While NBC is producing its new shows, it can't keep its eyes off the expense total. If it can't cut expenses, it needs to re-examine what it is selling.

A re-examination of NBC's current programming with an eye toward increasing value while reducing expenses, and thus price, is in order.

Let's think this through a bit. What is left out of the discussion (Hirschberg)?

• Apple doesn't do anything to help artists, except sell their work.
• Apple only wants to sell tracks for $0.99, far less than the studios want.
• The studios claim Apple is leaving money on the table. Why is a new release by a major artist worth the same as a track recorded in the thirties by an unknown band?
• The studios used to do a lot of hand holding, something they can no longer afford if Apples' pricing structure holds.
• The touring bands are unwilling to share their touring profits with the studios.
• Columbia is looking to using "word-of-mouth" to launch its next album.

Cirque du Soleil re-invented the circus (Kim. 1.) business twenty years ago by dumping the elephants and circus "stars", telling a story, however vague, pitching a high class tent, and losing the vendors in the aisles. Their invention has stood the test of time.

The music industry is begging for the same type of re-invention. Apple could lead if they choose to, but it'll be a stretch. Two things could happen: the industry itself gets real, or a new player with a whole new outlook emerges. I already told you that Apple is likely to win the price war. Let's see who wins long-term. I think it'll be interesting to watch.

References

Barnes, Brooks. Apple Bars New NBC Shows From iTunes. New York Times. 31 August 2007. http://www.nytimes.com/2007/08/31/technology/31cnd-nbc.html?_r=1&ref=technology&oref=slogin

Hirschberg, Lynn. The Music Man. New York Times Magazine. 1 September 2007. http://www.nytimes.com/2007/09/02/magazine/02rubin.t.html?_r=1&oref=slogin 

Kim, W. Chan and Renee Mauborgne. Blue Ocean Strategy. How to Create Uncontested Market Space and Make the Competition Irrelevant. Harvard Business School Press. 2005.

Posted by jackmixner at 03:17 PM | Permalink

Copyright Jack Mixner.     714 449 1040.    www.mixnerstrategy.com

Last year this time we wrote an article on speeding up the pace at the end of a game to confuse the defense and win a game (Mixner). Things are becoming even more speedy.

Video game experiences of young college quarterbacks is applied now universally. Multiple screens, filming practices from multiple cameras, and practicing using all sorts of technology enablers are making the practice field - and film room - a whole new experience. The result? Universities are applying the new technology to speed up the game, not just in the final three minutes, but across all four quarters. Texas Tech and Hawaii did it last year. Expect everyone to do it this year.

The result we should expect to see this year?

• Higher scoring.
• Faster games, and
• More excitement, hopefully.

What's that got to do with your company?

Nothing has changed from last year.

Planning is nice. However, the real focus is on execution. Without it, you've got a boring, unprofitable game.

Reference

Mixner, Jack. Applying End Game Strategy: Speed Up the Pace. http://mixnerstrategy.com/blog/2006/08/applying_end_game_strategy_foc.html

Weinback, Jon. On Sports: Making the First Three Seconds Count. Wall Street Journal. 31 August 2007. W1.

Posted by jackmixner at 07:59 AM | Permalink

Copyright Jack Mixner.     714 449 1040.    www.mixnerstrategy.com

Let's say you have a very important decision to make.

You feel like your normal self, capable to high-level decisions accurately based on the facts. Research says that's a good time to trust your intuition and go ahead and finalize your decision by taking action (Dreifus).

Let's say you are getting beat up in the marketplace, nothing is going right, and you need to make a crucial decision by late today. Do you do it?

Researchers say the equivalent of "Take the weekend off, gather more information, ask for advice, and, then, make your decision (Dreifus)."

Makes sense to me. I am amazed about how a good night's sleep on a stressful decision gives me additional insight I am glad for. Now we know why.

And what to do when your gut reaction says there is something wrong at your company? Question authority. Ask questions. Derive new strategies to convince management to change. Insubordination isn't probably a very good idea, but, again, ask hard questions at appropriate times.

Kaplan lays out a whole scenario that politically is maybe too hot to handle. The discussion is about whether the Generals and senior staff in Iraq have crucial decisions that are proving wrong, without accountability. Cast the hot stuff aside, however, and look at the strategy dialog underlying the discussion. Lower level officers are trying to make themselves heard in a system that doesn't recognize questioning of authority. How to proceed depends on someone making the correct gut decision.

It is probably worth taking some time at your company to examine your decision-making processes. Make sure there is a role for dialog - and dissension.

Reference

Dreifus, Claudia. Through Analysis Gut Reaction Gains Credibility. New York Times. 30 August 2007. http://www.nytimes.com/2007/08/28/science/28conv.html?_r=1&ref=science&oref=slogin

Kaplan, Fred. Challenging the Generals. New York Times. 30 Aug 2007. http://www.nytimes.com/2007/08/26/magazine/26military-t.html?_r=1&oref=slogin&pagewanted=print

Posted by jackmixner at 03:02 PM | Permalink

Copyright Jack Mixner.    714 449 1040.     www.mixnerstrategy.com

Two key points (from a list of twelve) on maximizing valuation (Davidson, A-41):

• Demonstrate growth.
• Explain financial performance.

A sales process takes time. During the process make sure that your company continues to grow. If something is going wrong, and growth isn't occuring as you would like, have an explanation.

One less than obvious trap (Davidson, A-41): spending too much time selling your company and not enough time selling your product or service.

Have a plan. Work your plan - even while you are trying to unload your company.

Reference

Davidson, Joe M. Maximizing Value in a Sale of the Company Transaction. Orange County Business Journal. 27 August 2007. A-41. jdavidson@allenmatkins.com

Posted by jackmixner at 01:37 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

The Seven Steps

Success requires a game plan, practice in advance, the right people to support you, and implementation. The pay-off? A richer life in all ways for yourself, your family, your community - and your clients. The success game plan follows seven steps. They are simple, but not necessarily easy. Let's work together to create Your Own Strategic Plan.

The seven success steps are:

1. Realize You Need a Plan
2. Understand Your Personal Values
3. Create a Company Mission Statement
4. How Vision and Objectives Work Together
5. Create Strategies and Tactics Based Upon Personal Strengths - And Opportunities
6. Don't Bother If You're Not Going to Implement
7. Revisit Your Plan More Frequently Than You Might Imagine.

All that is left is action.

You Need a Plan

In our seven-step process to create - and implement - a strategic plan, the first step is to realize you need a plan. Then, admit you need to learn how to put together a plan. Finally, involve a team in your effort. Consultants working alone might bring in their spouse and family. Sole proprietors might create an advisory board to support them during the process and to give - free - advice.

In the preface to his famous book How to Win Friends and Influence People, Dale Carnegie suggests that the best way to learn and, finally, implement, anything is to use what you learn. My guess it that he thinks people ought to struggle a bit along the way until they are able to apply the principles (Carnegie, pages 27 through 29). Once you have the plan in action, he suggests that you let your team "fine" you for every time you go off plan and do something that does not make sense. Then he suggests reviewing your progress on at least a weekly basis. Repetition is part of the process. On a daily basis, keep notes on your progress for review at the end of the week.

Learning is the first step in the process. Use my format or another - it really does not matter. The goal is to implement what you learn.

The plan gives you a scorecard to measure your progress. It also makes sure you understand what you are doing, and why. We forget the why in the rush to make money. Clients know when you are just about the money. Many times, they are buying not your process, but the heart behind it, with all that implies. Having a plan helps make sure you are about more than just money.

The next step, figuring out your values, helps to get to the underlying heart in all this, the basis for your business success.

Your Personal Values

The place I go to look for a discussion of values is George Morrisey's books (Morrisey, page 27).From a private practice point of view, George suggests values of, for instance,

• Independence/freedom of choice
• Financial return
• Challenge
• Family
• Personal legacy
• Power and influence and
• Principles and ethics.

You might have different values. Another friend of mine focuses on a continuum between success and significance. He has all the success he needs (although he still is building) and is focusing on the significance of everything he does.

Other folks are trying to figure out how to give back to the community. One, for instance, is in the midst of joining the Peace Corps after a long career in strategic planning. You will have your own list of values.

Hawley makes the case that there is a difference between being a manager and a leader based upon their value systems. A manager might be concerned with goals and objectives, while a leader focuses more on vision (Hawley, page 167).

Change is an unpleasant fact. Values help you take into account change in your market niche. Continual learning. Taking risks. Investing in the future. All are values that may influence your future personal, and business, growth (Kang, page 199).

In business, Johnson & Johnson has one of the most comprehensive value systems of any company. During the Tylenol scare, they destroyed their whole inventory of Tylenol and started over again with tamper proof bottles. They did not need to destroy everything. It just felt right. Within a year, they had recaptured a large portion of their once-leading market share.

A simple bulleted list of values suits me just fine. You do not need a bunch of flowery text to make this impressive.

The short list of values you create is easy to apply. If your values are all about money, you will know that you charge for everything. Sometimes you will find a project that a client wants and will pay for that just does not fit your value system.

This is the time when you refer the off to someone else, or point out to your client that they might want to reconsider their strategy. It is still amazing to me how many times CEOs change their strategy when something just does not feel right - even if it is profitable.

Values underlie the entire strategic planning process. Start here in your process.

Company Mission Statement

Now it is time to focus on business. There are all sorts of different types of mission statements. They differ according to which book you consult. When I first started consulting, Birnbaum showed me his simple mission statement formula. He asks just two questions when creating a mission statement:

• What is your product or service? and
• Who buys it, and why (Birnbaum page 124)?

Values are not part of the mission statement, nor are objectives. Just product/service and marketplace. If your mission statement were longer than, say, thirty words, I would look very carefully to make sure it is useful to your company.

Locally, I see a demolition company's huge trucks that say on the side "no job too small". It looks to me like they actually focus on big jobs. I suspect the poor receptionist has a lot of screening to do. A discussion about the company mission statement, and a change in company truck graphics, would make things a lot easier - and profitable.

Just last week I went out on a "get to know a CEO" visit with a potential client. The son of an old friend, I wanted to make sure he got what he wanted and needed, and that everybody ended up looking good. His was a wonderfully successful company. Only one problem. It really did not fit the niche I target. I think we both came to realize that the fit was not perfect. We will see how it ends up.

Mission statements help you - and your potential clients - decide if business makes sense for your company. Sometimes it is better to refer work on to a perfect fit if there is one.

Mission statements help you decide what business to take, where and how to market. Answer two very interesting - and very useful - questions. Sometimes they are not so easy to answer, but they do make things easier.

Vision and Objectives Work Together

At one point, one of the folks who was working on a project with me needed to understand what my vision was relating to the project. It was an economic development project focused on helping entrepreneurs acquire more venture capital. Why were we doing that in Orange County?

One way of looking at it is the purely personal point of view of helping a few people get rich. That is not really what we did. The goal was to help Orange County succeed on the world stage. By helping a local company find funding, we were successfully competing against the tech capitals of the world like Switzerland, Ireland, Hong Kong, Singapore - and Silicon Valley. A single success helps Orange County succeed on a global scale.

What about your vision? Covey talks about being proactive in everything you do (Covey, page 75). Proactivity fits with vision. Have a picture, even a very vague one, of where you want to end up. Then everything works better. One CEO I spoke with recently wanted to build a company like the ones Collins describes in Good to Great. He had three employees. Think his company is going to grow? I think so. A simple vision - we want to be great - helps define for him the next steps. New hires need to fit the mold. Can they grow with the firm? Will they know how to sell in a large company environment?

Objectives take the vision and make it more concrete for the next year or so. It is OK to be a small firm. If you are going grow, however, state annual objectives that reflect that growth. Make them doable. Make them somewhat hard to accomplish. A stretch is in order if you are going to grow.

In the economic development project above, we stated goals in economic impact terms. We continually measured our results, and set our goals, according to the specific economic impacts our projects had for Orange County.

Having a long-term vision makes sense. Having annual objectives supporting your vision also makes sense. Keep them in front of you at all times. Look at them at least weekly to make sure you are on track.

Strategies and Tactics Based Upon Personal Strengths - And Opportunities

When you attend a National Speakers Association meeting, you learn very quickly that they see one very crucial strategy to succeed at speaking, writing a book. The first national conference I attended actually had a skit with fifteen dancing people all dressed up as books. They are serious about books. Dottie Walters has created a whole industry around speaking and writing (Walters, pages 132 and 180).

I had a client in the pest control business. Every time one of his competitors went out of business, he bought their phone number and their yellow page ad space. In some phone books, his ads were the only ones available. Call any company and you called him. While I will not say if I agreed with the ethics of his strategy, I will say it was very effective.

For folks who like to write, speaking about their books is a very good strategy. Owning ad space in the yellow pages makes sense for a termite company. Locating next to a research university with a teaching hospital makes sense for a pharmaceutical company or a medical device company. If you have the strength, create a strategy that takes advantage of opportunities.

Weiss continually expands upward the envelope of clients he attracts, while handing off smaller clients to other practitioners who provide great service in the smaller company niche (Weiss, page 50). Shenson says never make cold call for business. His focus is on obtaining referrals from existing clients and lecturing to civic, trade and professional audiences in his target market (Shenson, page 18).

How many strategies do you have for your company? Probably not that many. They may change over time, especially if you have a look at, and modify, your strategic planning at least quarterly. New data says that revisiting your plan frequently and modifying it as necessary is a very profitable use of time (Hymowitz, page B1).

Don't Bother If You're Not Going to Implement

I heard Colin Powell speak on leadership recently. His key points:

• Set goals with the your team
• Train your team continuousl
• Provide your team with the resources they need
• Reward your team based upon their performance and
• Provide ethical leadership.

Planning only takes you so far. Build a plan that you and your team will implement.

Make your plan implementable, or do not bother planning.

Revisit Your Plan

Hymowitz describes an antiquated strategic planning process, namely creating - and filing and never using - an annual strategic plan. She says that CEOs practice this process at their own peril. She cites evidence that annual planning cycles generate less that three major strategic decisions, while companies that hold regular (read that monthly, or even bi-monthly) meetings make more than six major decisions (Hymowitz, page B1 citing research by Marakon Associates).

Annual is not enough. Monthly is better. Bi-monthly might be better yet. Include senior management staff who will affect decision-making, and who have information about competitors and implementation strengths and weaknesses.

REFERENCES

Birnbaum, William S. If Your Strategy Is So Terrific, How Come It Doesn't Work? AMACOM. 1990.

Carnegie, Dale. How to Win Friends & Influence People. Simon & Schuster. 1936.

Covey, Stephen R. The 7 Habits of Highly Effective People. Simon & Schuster. 1989.

Hawley, Jack. Reawakening the Spirit in Work. Berret-Kohler Publishers. 1993.

Hymowitz, Carol. In the Lead: Two More CEO Ousters Underscore the Need For Better Strategizing. Wall Street Journal. 11 September 2006. Page B1.

Kang, Lawler. Passion at Work How to Find Work You Love and Live the Time of Your Life. Pearson. 2006.

Morrisey, George L. Creating Your Future Personal Strategic Planning For Professionals. Berret Kohler. 1992.

Shenson, Howard. Shenson on Consulting Success Strategies From the Consultant's Consultant. Wiley. 1994.

Walters, Dottie and Lilly Walters. Speak and Grow Rich. Prentice Hall. 1997.

Weiss, Alan. Million Dollar Consulting The Professional's Guide to Growing a Practice. McGraw-Hill. 1992.

Posted by jackmixner at 07:38 PM | Permalink

Copyright Jack Mixner.    714 449 1040.    www.mixnerstrategy.com

Key Points 

• Form Teams 
• Focus on Customers
• Focus on Suppliers
• Focus on Technology
• Actually Implement
• Confidentiality
  

FORM BOARDS as quickly as possible in the process of increasing the value of your company. There are three of them, advisory board, board of directors and your planning team. Some of them you will already have up and running. Maybe you need to create one. Creating boards starts you down the road of creating new value for your company.


A potential buyer for your company is looking very closely to see if your company is capable of creating the cash flow to pay for itself. Sometimes, there may be a contract to keep you around for a while either in a management position or in a consulting role. That is fine for you, but the buyer is looking for the team to run smoothly, without you. Thus, form the teams.


The advisory board is a very special group. Many times, especially in entrepreneurial ventures, they are not paid. Other times companies about to go public may pay with cash or stock. It doesn’t matter. The folks you entice onto your advisory board have “been there, done that” in your industry.


Since your revenues may exceed $5 million, you do not need an advisory board to address start-up issues. Focus on the crucial issues for your company like landing large clients, dealing with a highly compensated sales team or preparing to raise capital. Find someone in your industry who has already sold his or her company. Bring them aboard to give you advice. The advisory board is perfect for them, as it usually retains no fiduciary responsibility. A past CEO is not going to be interested in joining your team if it will put her personal wealth at risk in some sort legal battle. Make this clear in a written a written agreement if necessary.


Sometimes, you do not actually meet with your advisory board, although most times it makes sense to have a face-to-face meeting at least quarterly. Use the team for advice as often as it makes sense.
 

The board of directors is different. Depending on how you set up your company, they may retain fiduciary responsibility. [Always, consult with proper legal counsel.] That might mean that you have a committee structure and reporting requirements. It also means that you will need to provide compensation, including insurance for errors and omissions and maybe directors and officer’s insurance coverage as well. What does this do for you in terms of increasing your company’s value? It shows that you are serious about taking your company to the next level. In these days of close examination of CEO performance and Sarbanes-Oxley, make a clear signal to buyers that performance comes first.


The planning team is the most important group so far. They focus on implementation strategies that increase the value of the company. There are tactical plans as well, all normally reviewed with the approval of the planning team. While we will talk about confidentiality later, it is important to note that many strategies when successfully implemented increase the value of the company. Keep the focus on increasing value. You do not have to belabor your other goal of selling the company at this point. It makes sense that the objectives, as they are set, address financial issues in addition to other goals like selling the company.


The planning team is composed of the senior management of the company. It might also include consultants, customers and maybe even competitors or industry experts. Having everyone in the room in these days of personal digital assistants, sales people located all around the world, and 24/7 responsiveness is tough, but crucial.


It is always a pleasure to watch a team work together until they experience what I call a “crystalline moment” where suddenly, for the first time, every one understands what they need to do and how to do it. Sometimes the moment occurs, literally, in a second of recognition for everyone. Creating the plan and communicating it to the entire company is easy after the “moment.”


You do not need to bring up the sale of the company in the planning sessions, especially if there is some time before a sale occurs. You use the sessions for an annual review of current strategy and for quarterly updates to specific strategies. Annual planning should start with a clean slate. Perform a situation analysis using new information each time to make sure your planning is relevant to the current period.


Another group, the scientific advisory board, is special, normally reserved for pharmaceutical and medical device companies. I have watched it be most useful for finding hospitals and doctors to perform clinical trials. Usually, management teams in biotech or medical device companies already understand how to manage scientific advisory panels. Done correctly, a scientific advisory board will ultimately increase the value of your company.


FOCUS ON CUSTOMERS, especially if you have but one single large customer.


I met up with a CEO friend recently in the Dallas-Fort Worth airport. He was lamenting the fact that his company had a single large customer at the same time that raw material costs were rising. He spoke to his customer about the need to increase prices. The customer’s immediate response was to suggest that they take the product out to bid with other suppliers in the mix. That was the last time the CEO brought up price increases. He is now focusing on decreasing manufacturing costs, while trying to find additional customers. I hope that the customer will not take the product out to bid, as off-shore companies might be able to provide the product a better price.


Early on in my consulting practice, I had a client that sold many of its services to the State of California. That was fine for most of the year. My client could price its services properly and provision of services was easy. There was only one problem. Come June of just about every year, the State of California goes through a budget crisis and stops paying bills until things are resolved. That was not such a good deal for my client, as its margins were relatively small and its payroll large. Finally, we got a line of credit to bridge the gap between budget approvals each year. The single large customer was profitable as long as it paid its bills. It was a disaster when it did not pay its bills. The single large customer “syndrome” is a red flag to anyone looking to buy your company.


Involve customers in your annual strategic planning to help you decide where to spend your product/service development budget. There are some interesting discussions going on in the business press about whether it is better to spend scarce dollars on product development or marketing. Interestingly, at least for now, the focus is on product development. Having customers in the loop as you create new products makes a lot of sense.


ONE LARGE SUPPLIER is just as bad as having but a single customer. The supplier has you in an awkward position on price, certainly, and delivery, possibly, if there are other parties interested in purchasing what you were buying. A local flashlight designer made a strategic alliance with a local plastic molding company. The plastics company made the molds, the designer did the marketing and they split the profits. A sole source agreement worked in this instance. It is not always that easy. The injection molding company had a lot of power in marketing decisions that would normally fall to the distributor. I have not seen the product in the markets lately, probably because its price was higher than the competition.


Involving suppliers in your planning is tricky, especially if you are planning to sell your company. It is not unheard of for a supplier to consider investing in your company with better terms or lower prices when they understand that your planning forecasts higher volumes. Occasionally, suppliers can help generate larger sales with their own contacts.


Going to market with a company with a single large supplier does not make a lot of sense if you want the highest price for your company. Diversify your supplier base just as you would diversify your customer base.


FOCUSING ON TECHNOLOGY can help you increase your valuation in all sorts of ways. Upgrade inbound and outbound logistics, manufacturing, sales and product service with technology. Web based sales support programs make sense for middle market companies. Warehousing costs along with inventory control are also areas with great potential. Burying technology in your products also makes sense. Electronic products are obvious places to invest in technology. Even agricultural processes are having major technological impacts from GPS out in the field to branding apples instead of individually labeling them. It all comes back to return on investment. An investment in technology, while helping the income statement, probably increases net worth at the same time, especially if payback periods are short.


Making your reporting processes work better is a perfect use of technology to increase your valuation. Casinos managing cash are an easy example. Installing rapid cash counting might ultimately reduce the amount of cash needed to “float” all the games in a casino. New slot machines are electronic in order change the game and the size of the bet instantaneously according to the time of day and the crowd expected.  Hourly profit and loss statements and cash flow statements in real time are easy to prepare, and very useful.


Figuring out new ways to price your technology-based product is a possibility. A friend recently told me about reworking a folding machine for a laundry company to reduce labor investment. We talked about pricing the machine by the “click” instead of selling the machine outright. Technology could handle the click counting and reporting in real time. The new folding technology expands the profitability of both the hotel and the inventor. My guess was that the inventor could give away the machine while charging the customer for each single use. This is the way the Japanese copier makers entered the American marketplace way back in the 1980s. They would give away the copier to sell toner, paper and service. HP is basically giving away their printers in order to have us hooked buying proprietary ink cartridges. 


STRATEGIES FAIL in implementation frequently. The excuses I hear would fill a book. Most times, they are about things that “intervened.” Not enough time to implement. A major account got away. The CEO had to spend time somewhere else. Who is in charge of making things happen? Work the teams together, have them continue to meet together, report together, and hold each other accountable. An implemented plan will increase your valuation. The CEO is involved. He just is not the cop. Working together will make everything work faster and easier. It is a win for everyone.


One last planning topic needs discussion. What is the role of the business plan? We used to call them “show” plans. You made a business plan with the intent of raising money. Many times, a company would receive new money and immediately forget to follow their plan.


Times have changed. The business plan is now the “go” plan used to launch a new business or increase the valuation of an old business.


Remember that an effective plan spends as much time on the marketing of a new product or service as it spends on the technology involved. It lists the early adopters as well as the market segments likely to buy your product later on along with a road map for approaching each buyer group. The best use of a business plan for a going concern is first to convince some entity to invest in your company. Then it is used increase sales.


From the point of view of someone buying your company, the business plan shows commitment to success, to actually implementing the plan. It also lays out the marketing plan enough that the prospective owner understands where you are going to get new sales the week after he buys your company, and the year after. It is crucial to showing how committed you are to success of your company, either in your hands, or his.


CONFIDENTIALITY is crucial in all types of planning. We have given you all sorts of reasons to entice employees, customers, suppliers and maybe competitors (well, maybe not) to join your planning team. You do not want to show your hand to quickly, especially with the competition, as they are likely to hatch a strategy to steal a portion of your clientele. What do you do in the interim? Focus on growing the business. Do not create a public strategy focusing on selling the company, at least not in real terms. Bring trusted employees into your confidence slowly, entice them to stay with your company and continue to focus on building value.

With John Bates, Avalon Advisors, Inc.


 

Posted by jackmixner at 04:20 PM | Permalink

Copyright Jack Mixner.     714 449 1040.      www.mixnerstrategy.com

Reis and Trout had six questions for you regarding your current position in the marketplace (Reis, 193):

1. What position do you own?
2. What position do you want to own?
3. Whom must you outgun?
4. Do you have enough money?
5. Can you stick it out?
6. Do you match your position?

They had you start not from your point of view, but your customer's. A key was to realize that you already owned a space and that moving isn't necessarily as easy as it sounds.

Additionally, the focus was on your competition. You tried to position your organization differently from your competition, to own a different space. Volkswagen entered a new marketplace dominated by entrenched competitors with huge, powerful offerings. Their pitch? "Think small." "It stated the Volkswagen position, and it challenged the prospect's assumption that bigger is better (Reis, 55)."

There's a new way to do this that you might consider, however, Value Innovation (Kim, 12). Innovate to create more value. 

Cirque du Soleil pursued two strategies simultaneously, differentiation and low cost. It innovated by making the traditional circus theatrical. It focused on cost by eliminating all the "must-haves" from the circus experience.

• No expensive actor clowns.
• No elephants.
• No rents for big venues.
• It returned to a carefully constructed tent with not three rings, but one.
• It introduced a theme to the performance. A new market opened up, adults willing to attend the circus.
• Cirque kept the clowns (but without a starring clown), kept the acrobats (but reduced their roles) and made the evening almost spiritual (Kim, 13-15).

The result? In twenty years, Cirque du Soleil grew to the size of Ringling Bros. and Barnum & Bailey circus. It took Ringling one hundred years to reach that level.  

Reference

Kim, W. Chan and Renee Mauborgne. Blue Ocean Strategy. How to Create Uncontested Market Space and Make the Competition Irrelevant. Harvard Business School Press. 2005.

Reis, Al and Jack Trout. Positioning: The Battle for Your Mind. Warner Books. 1981.

Posted by jackmixner at 03:46 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Here is a bibliography on business failure (Shuchman, 19):

Goldhammer, John. The Save Your Business Book: A Survival Manual for Small Business Owners. Lexington Books. 1993.

Goldston, Mark R. Thr Turnaround Prescription: Reposition Troubled Companies. Free Press. 1992.

Silver, A. David. The Turnaround Survival Guide: Strategies for the Company in Crisis. Dearborn Financial Publishing. 1992.

Sloma, Richard. The Turanaround Managers Handbook. Free Press. 1985.

Reference

Shuchman, Matthew L. and Jerry S. White. The Art of the Turnaround. How to Rescue Your Troubled Business From Creditors, Predators, and Competitors. AMACOM. 1995.

Posted by jackmixner at 02:30 PM | Permalink

Copyright Jack Mixner.    714 449 1040.     www.mixnerstrategy.com

The company VMware went public on 14 Aug and has continued to rise (Richtel). VCs are using it as evidence that the meltdown market bodes well for them. They see their market as a sort of safe harbor from the turmoil in the market.

VCs haven't changed at all. They are still looking for good people with protected technologies in markets that have the ability to grow substantially enough to repay VC investments at ridiculously (seemingly) high rates of return.

Other data points: The Baltic Exchange Dry Index continues to rise "a good indicator that demand's not going away (Davis)".

What's it all mean? While we always run the weakness list first during strategy sessions (because it is so easy to complete), the opportunity list is where the money is to be made.

Looks to me like there are still opportunities for growth.

We'll see.

Reference

Richtel, Matt. V. C. Nation. Subprime Fallout Could Help Venture Capitalists. New York Times. 24 August 2007. http://www.nytimes.com/2007/08/24/business/24venture.html?_r=1&ref=business&oref=slogin

Davis, Ann. Growth Gauge: Offbeat Indexes On Commodities. Wall Street Journal. 24 Aug 2007. C1.

Posted by jackmixner at 11:34 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Want to de-rail your deal to sell your company?

Here's how (Silver, 148):

• Don't disclose all your liabilities. That's pretty straight forward. While it seems obvious that a complete balance sheet is part of the equation, missing it will ultimately derail your deal.
• Accept back-end payments (some kind of back end financing) cause problems. Examples: 
• Royalties as a portion of future earnings
• A non-compete agreement
• Subordinated note.

What are the possible times to take a note? It might make sense to take a note from the buyer  when your company is losing money.

How to avoid problems? Involve a lawyer who gets the process and, at the same time, wants the deal to happen.

Always get the best professional advice possible as part of your negotiation. Include tax advisors and legal representation.

Reference

Silver, David A. Cashing Out. How to Value & Sell the Provately Held Company. EnterpriseDearborn. 1993.

Posted by jackmixner at 11:42 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Ouchi defined a time. It was the early eighties. Japan hovered on the horizon. American business was convinced it couldn't compete and needed to understand what was right about its business practices - and what needed to change. Things are a little different today, but the basic constructs still work.

Ouchi's thirteen step process to understand your company (Ouchi, 99-127):

1. Understand what a Z organization is (loosely, life long employment, slow progress and evaluation, meandering promotion schemes) and your role in it.
2. Audit your company's philosophy.
3. Define the desired management philosophy and involve the company leader.
4. Implement the philosophy by creating structures and incentives.
5. Develop interpersonal skills
6. Test yourself and the system - after changes have been announced, test to see if they are being implemented.
7. Involve the union
8. Stabilize employment - this was the eighties. Japan was offering lifetime employment in return for a commitment.
9. Decide on a system for slow evaluation and promotion - the key word is slow. Advancement, even initial advance, was measured in decades.
10. Broaden career path development - specialization was not the watch word. Moving middle managers from assignment to assignment at the same level broadened skills, and commitment.
11. Preparing for implementation the the first level - everything above focused on managers and professionals. Only now did the focus shift to production and clerical employees. Invitation for participation had to come from above.
12. Seek out areas to implement participation - "if equitable reward, job stability, and inter-departmental coordination have been achieved, then the commitment and the productivity of hourly employees will already have begun to rise (Ouchi, 126)."
13. Permit the development of wholistic relationships - " ... bring superiors and subordinates together as temporary equals (Ouchi, 127) ..."

A first, quick read finds Ouchi dated and irrelevant, especially when you remember that Japan is starting to abandon the concepts of life-long employment and the dedication it fosters.

The goals are good. Process has changed. Re-evaluating what your company does to foster enthusiasm over the long-term makes sense. 

Reference

Ouchi, William. Theory Z. How American Business Can Meet the Japanese Challenge. Addison-Wesley Publishing Company. 1981.

Posted by jackmixner at 10:30 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Quick notes on our summer reading to date: 

On the Sixties

Conspiracy theory hangs thick in Talbot's book on the Kennedy brothers, especially his discussions about Bobby's relations to and investigation of the mob in the fifties, Meredith and the federal marshals at Ole Miss, and the Cuban missile crisis. There were choices made to use alternative communications and enforcement channels in the face of set, and seemingly inalterable, beliefs. Those channels were ultimately successful for the change of the American landscape. They came at a huge cost.

Condolezza Rice lived in Birmingham during the riots of 1963. One her kindergarten classmates was killed in the bombings following Kennedy's order to desegregate the schools. She focused on school and piano practice, not the horrors close by. The message from her family: she had to be twice as good at everything she did in order to succeed in the society of the day (Mabry).

On the Seventies

Felt writes an innocuous story about his personal history at the FBI. If you read just his words, written in the 80s when Felt was still keeping mum about his role, you never realize that Felt was Deep Throat, the source of all the stories at the Washington Post about Watergate. Amplified by his lawyer in a single chapter, the story comes to life. Felt's reasoning? If he had played it by the book, Watergate would have been about a burglary (Felt, 217). He wanted it to be about a whole lot more.

Machiavellian politics played a part in the training of Prince Bandar Bin Sultan, the Saudi Prince who became an intimate of many world leaders, and ambassador the United States during the nineties. In his master's thesis, he quotes Machiavelli:

"He (the Prince) should not even concern himself about incurring infamy for those vices without which he could, with difficulty, save the state: because, if one considers everything well, it will be found that something which seems virtuous, being followed, will bring about his ruin; and something else, which seems vice, being followed, will bring security and his well-being. (Simpson. 421)."

Bandar occasionally had to act in a manner that didn't please America. He helped the Saudis buy middle range missiles from China, for instance, an unexpected act the West discovered only from satellite photographs. Much of Middle Eastern politics were entertwined with Bandar's closeness to world leaders and Saudi needs for internal security.

On the Eighties

Ronald Reagan succeeded with insightful speeches at opportune times in his career. In 1964, in his national political debut, Reagan focused on foreign policy in an election year looking at problems at home. In 1966, using the words "government is beholden to the people (Diggins, 133)", Reagan showed how to listen to the masses as they "sought not to destroy but to preserve" institutions.

Key tidbit for me in the economic discussions of the eighties was that Reagan was willing to try new economic stimuli (including tax cuts) because of his training and degree in economics. All the stories about Reagan's youth had talked about his lifeguard and baseball announcing jobs, not the fact that his training was in economics.

Reagan the actor didn't trump Reagan the person in his appearances or in his philosophy. Yep, he wore only brown suits (to appear like one of us), and his people arranged the photo angles carefully. But Reagan was Reagan. Pragmatic, with a twinkle in his eye, if need be. His Presidential model? Calvin Coolidge, Silent Cal, the man who was against racism and corrupt government. Other models? Emerson, for one. Poverty "demoralizes". Earning "dignifies". "Reagan believed that democracy made morality possible by holding individuals responsible for what they do with their lives (Digins, 308)."

After he was shot, Reagan failed at opening a dialog with Russia, a dialog he was successful at opening some years later, culminating in his speech at the Wall in Berlin. Realizations that the Russian defensive mentality linked to their offensive military strategy in Europe (Diggins, 374) forced a dialog about not wanting war, but if it were to break out, the east or the west would respond. The key word was if. And the if could be caused by mis-calculation or mistake - folly. Chernobyl helped the world recognize just what a nuclear disaster would look like, and again, understand what folly really meant.

Reagan walked from the negotiating table when he didn't feel right in Iceland. While a setback to the negotiations, ultimately his intuition was right about what was right for America and the world, and we all succeeded.

On the Nineties

China had a different problem. Rapid evolution of American military affairs and the success of the 1991 Gulf War made China realize its military was out of date. Re-examination of the three pillars of Chinese power (ability to provide security and welfare for the people, and the very legitimacy of the governing structure (Gelber, 398)) caused expenditures on military modernization and subtle - or huge, depending on your point of view - shifts in public morale and politics. China imported raw materials in quantity and exported finished goods, both new. Change came in the new richness but is not evidenced in the continuing authoritarian police state. Over building in infrastructure in some areas is not matched in others, leading to inequities. The Chinese challenge is not over yet.

Key Thoughts

• Bobby Kennedy had to rely on data gathering and enforcement capabilities that were new and/or underutilized. Both Kennedy's were forced by events to act more quickly than they had expected without the necessary support they would normally depend upon.
• Being "twice as good" worked for Condoleezza Rice.
• Felt made decisions, some of them personal, about how large the Watergate investigation should become.
• Reagan seemingly relied on intuition in stressful situations. Forgotten was his training, his union leadership in a stressful time, and his willingness to install a team and leave it alone to manage, until he needed to change his team. And change his team he did when it was necessary.
• It's hard to personalize the Chinese experience. The bottom line? It's not done yet. China has a long history. Even when it has made errors, time has allowed it to recoup.

References

Diggins, John Patrick. Ronald Reagan. Rate, Freedom, and the Making of History. W. W. Norton & Company. 2007.

Felt, Mark and John O'Connor. A G-Man's Life. PublicAffairs. 2006.

Gelber, Harry G. The Dragon and the Foreign Devils. China and the World, 1100 B. C. to the Present. Walker & Company. 2007.

Mabry, Marcus. Twice As Good. Condoleezza Rice and Her Path to Power. Modern Times. 2007.

Simpson, William. The Prince. The Secret Story of the World's Most Intriguing Royal. Prince Bandar Bin Sultan. Regan. 2006.

Talbot, David. Brothers. The Hidden History of the Kennedy Years. Free Press. 2007.

Posted by jackmixner at 04:43 PM | Permalink

Copyright Jack Mixner.     714 449 1040.    www.mixnerstrategy.com

You could distill the Apple design story into one word (or two, to be kind): Steven Jobs.

More detail (Turner) on Apple:

• Spends 15 to 20 percent of design time on concept (a huge amount relative to other firms)
• Looks for new processes-and adopt them even if it takes more time.
• If it isn't quite right keeps working until it is right.
• Achieves precise design parameters-it shows.
• Listens to the design teams-democracy has its usefulness, of course, but so does focus.
• Simple is better than complex-dropping features is OK.

Is the focus on design worth it? That's a good question. Apple is still here after all these years, and growing. It's working.

Reference

Turner, Daniel. The Secret of Apple Design. The inside (sort 0f) story of why Apple's industrial-design machine has been so successful. Technology Review. 1 May 2007. https://www.technologyreview.com/Biztech/18621/

Posted by jackmixner at 03:55 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Forward looking investors can look to these attributes in the changing CEO landscape (Lucier, 47-48):

• CEOs are more likely to leave prematurely.
• CEOs who exit via a merger or buyout deliver the best performance for investors. 
• Boards are looking at future performance.
• Independent Chairmen (where they didn't ascend from being CEO or are closely related to the CEO in some way) are best performers.

If yours is a challenged market, looking for a merger or buyout may provide the best likelihood of long-term, positive financial performance. 

Inclusiveness of the Board in company decision making is new - and a good sign for investors.

Reference

Lucier, Chuck, Steven Wheeler, and Rolf Habbel. The Era of the Inclusive Leader. As turnover levels off, our annual CEO succession study shows chief executives and their boards adopting new survival strategies. strategy+business. Summer 2007. http://www.strategy-business.com/press/article/07205?gko=04dd3-1876-26242394

Posted by jackmixner at 03:40 PM | Permalink

Copyright Jack Mixner.     7134 449 1040.     www.mixnerstrategy.com

For centuries and centuries, China barely recognized the existence of anyone outside its boundaries, much less responded to them.

Times have changed, China along with them. The real question is, "What about the future?"

Six key points (Gelber, 427-442):

• Demographics.
• How will 'one child' play out in the end?
• What about the real interest in having sons?
• Immigration is huge in much of the world. What role will it play in China?
• Governance.
• Tiananmen Square spoke loudly to the reality in China; however, things continue to evolve.
• The Party is not going away. How will it evolve, especially in a wired and televised world.
• Economics.
• Entrepreneurism is almost in the Chinese genes. The government sparked growth with all sorts of incentives. Many have not flowed nation-wide. How will that play out?
• Will growth continue at break-neck speeds? Will investor capital continue to flow into China?
• China's role in science and technology.
• Will over-capacity and banking scandals bog things down?
• Borderland relations.
• China doesn't want refugees from Korea, or a war, for that matter.
• It seems able to postpone resolving the Taiwan issue.
• Either could prove incendiary. India enters the equation as well, as does Russia.
• China's place in the global balance of power.
• Accommodation with the West seems likely to continue, assuming "reasonable good sense" (Gelber 439) on both sides.

China is now a participant in the world economy. Let's hope things stay positive, long-term.

Reference

Gelber, Harry G. The Dragon and the Foreign Devils. China and the World, 100 B.C. to the Present. Walker & Company. New York. 2007.

Posted by jackmixner at 12:01 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

High level leading isn't that much different than high level chess. A couple key points:

• "Learn how to maintain the tension" (Waitzkin, 171). World class chess, and world class leadership, require the ability to hold up under tension, to "maintain the tension" under mounting pressure. The seemingly ridiculous - and, perhaps, obvious but often forgotten - subtleties (Eikleberry, 116)?
• Fight your fears.
• Get professional help - a coach perhaps.
• Don't abuse drugs and alcohol.
• Develop your character.
• Give yourself time.
• "...In virtually every discipline, one of the most telling features of a dominant performer is the routine use of recovery periods (Waitzkin, 179)." Limit your recovery to a short period of time, based upon your observations of when additional recovery is now wasted effort, however.
• If you trust in a recovery period, you must trust in your ability to re-focus when you return to your work (Waitzkin, 185-188). And recovering is a learned attribute. Spend the time to figure out the best steps for you to re-enter the fray. Useful tips that might be part of your -re-engagement routine:
• Small snacks - not big ones.
• Music
• Meditation
• Stretching.

In strategy sessions we allow breaks but we always keep the team focused on the planning session, the short document we produce as a result and, crucially, on ultimate implementation.

References

Eikleberry, Carol, PhD. The Career Guide for Creative and Unconventional People. Third Edition. Ten Speed Press. 2007.

Waitzkin, Josh. The Art of Learning. A Journey in the Pursuit of Excellence. Free Press. 2007.

Posted by jackmixner at 09:54 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

We've talked about company training before (Mixner). 

Now more ways to ensure training on strategy works:

• Use insiders - not outsiders - to do the training (Welch, 13 Aug).
• Don't let your company university be a dumping ground for folks who can be spared for a couple of weeks.
• Make the university a bonus for superior performance. Leaders and HR pick attendees. 

Final observation: Deloitte says to use insiders, yes. They also say to use senior executives, the higher the better (Deloitte, 7).

References

Deloitte. Alligned at the Top. Deloitte. 2007.

Mixner, Jack. Post Neutron Jack. http://mixnerstrategy.com/blog/2007/05/post_neutron_jack.html

Welch, Jack with John A. Byrne. Jack Straight From the Gut. Warner Business Books. 2001.

Welch, Jack and Suzy. Ideas The Welch Way. BusinessWeek. 13 August 2007. 92.

Posted by jackmixner at 08:56 AM | Permalink

Copyright Jack Mixner.     714 449 104.     www.mixnerstrategy.com

It's an interesting time to suggest "standing up to the environmental interests" (Kotkin, A13) what with global warming and restricted water supplies in the LA Basin, but Kotkin suggests just that. He also suggests re-directing masses of graduating high school students not to college but to skills training and blue collar jobs that pay pretty well.

His example? The San Pedro/Long Beach harbor. If we don't cut the harbor some slack environmentally, and train more workers for jobs in the harbor, there could be ramifications. The most interesting possibility? Moving the harbor to Baja where there are lots of people looking for jobs, and minimal environmental concerns.

Sounds far-fetched until you think about it. Wouldn't take that much to build a new harbor in Mexico. Then all they'd need are rail connections going all the way across the northern part of Mexico capable of tapping connections up to Chicago, the mid-west, and the east. All because we didn't take the time to train enough trades workers and figure out a way to resolve the environmental issues.

Every time I hear about the Baja plan, I smile and think it'll never happen. Some Southern California possibility thinking and problem solving might be in order before we actually do lose a very useful - and job generating - asset.

Reference

Kotkin, Joel. The Myth of Deindustrialization. Wall Street Journal. 6 August 2007. A13.

Posted by jackmixner at 01:45 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Kevin Long joined the Yankees this year as batting coach. He has performed remarkably as the Yankee hitters have improved greatly.

Among Long's recommendations for any hitter (Barra, D6):

1. "Practice a compact swing ...
2. ... go up to the plate with a clear idea of what you're going to do ...
3. assume he's going to throw you a fastball and be ready for that ..."

In strategic terms:

1. Practice in advance. Make sure your team is trained - and is willing to change at a moments notice.
2. Have a plan. For big plans, have alternate scenarios already mapped out.
3. If you don't know what going to happen, make sure your plan allows for fall back positions. However, your main plan represents the most likely scenario that you are willing to support.

Reference

Barra, Allen. Long Ball: Yankees' New Hitting Coach Has A-Rod and Team Back in Top Form. Wall Street Journal. 7 August 2007. D6.

Posted by jackmixner at 01:25 PM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

The dot.com boom brought us one of the marriages of the century founded on the convergence of print and electronic media and reliant on synergies in marketing. AOL and TimeWarner were supposed to be perfect for each other. What went wrong?

AOL assumed there were synergies. Jerry Levin, CEO at Time Warner, apparently bought Steve Case's case for the merger (and synergies) hook, line, and sinker.

AOL's head of sales Robert Pittman assumed that on the day of the merger, entree to TimeWarners trove of main-line advertisers would be automatic. AOL's sales operation was a boiler room operation focusing on the "dregs of advertising" (Munk, 231) while TimeWarner focused on a long sales process trolling long term for "high-class, major advertisers". Pittman assumed that TimeWarner would be forced to share their 100 top clients and that they were all perfect for incorporation into the AOL way.

Everybody was wrong. AOL shortly imploded - the dot.com bust didn't help - and TimeWarner was left holding the bag.

Synergy is tricky. It assumes that, at a minimum, folks can just get along. Levin had negotiated in secrecy. His team, when it found out about the imminent merger, was totally unconvinced. Things went downhill from there.

Keys to success? Openness. Communication. Involving customers. Bigger things like including the whole management team in decision making and keeping the Board informed and on your side would have helped, as well.

Reference

Munk, Nina. Fools Rush In. Steve Case, Jerry Levin, and the Unmaking of AOL Time Warner. HarperBusiness. 2004.

Posted by jackmixner at 09:48 AM | Permalink

Copyright Jack Mixner.     714 449 1040.     www.mixnerstrategy.com

Many books have been written about Secretariat, the Triple Crown winner. Statistically, his times in each of the three races have never been equaled which, of course, is pretty cool by itself. Scanlan spent some time reworking the story, a story which was supposed to be all about a racehorse and ended up being about a racehorse and its groom, Edward "Shorty" Sweat. The key point was that Sweat was forgotten in the mix of horse-owner-trainer-jockey, and he deserved to be remembered because it was as much his effort as anyone else's that helped Secretariat succeed.

This is all well and good (in fact, the story is quite amazing). What's it got to do with management?

Secretariat was an asset that needed to be managed. In large measure, Sweat managed Secretariat. He did everything for the horse outside the very rare moments on the track itself. The owner, the trainer and the jockey all listened to, and depended on, the groom.

I realize I could push this simile too hard, but this is almost like the way your customer service team handles your biggest customers. While you like to think you are managing your customer relationships, it is probably your team, out in the trenches, that is more important in helping your customer relationships thrive.

The implication?

• Know your customer service team.
• Train your customer service team to communicate with clients - and to communicate with you. Their loyalty to you and your company's clients is probably remarkable. What have you done lately to deserve that loyalty? Sweat apparently was under-compensated for his work and the author tries to make a case that he eventually died bitter over his treatment. I don't think so. I think he died proud of the his accomplishments with Secretariat.
• Pride gets tricky, I know, but what have you done lately to foster the pride your team inherently has for a job well done?

Strategically, the issues include Values specifically, but they also effect Vision and Mission. Having given the three some thought - and including your team in the process - goes a long way toward leveraging team, training and pride in your company's success.

Reference

Scanlan, Lawrence. The Horse God Build. The Untold Story of Secretariat, the World's Greatest Racehorse. St. Martin's Press. 2007.

Posted by jackmixner at 08:11 AM | Permalink