Posts Tagged business

Build, Buy or Rent?

Whenever you look at making a change in a business environment, you have to consider three things:

  1. What do you want to change?
  2. Why do you want to change it?
  3. How are you going to change it?

The first two – what and why – are the areas where most people focus a majority of their effort. This is the strategy and should have a good amount of consideration. The issue arises when all of your effort is focused on these areas and not on the how. Unless you can translate your concepts into action, what you want to do and why you want to do it are useless.

So what is the best way to turn strategy into action? Break down the how into three paths:  build, buy, or rent.

  1. Build?
    • Approval – Very low, could even be “under the radar” until a key milestone is hit. The financial cost is minimal since it mostly human capital.
    • Getting it off the ground – Quick. Since approval is low you just need to focus on convincing people to work with you on the project.
    • Efficiency – Unfortunately, this is generally low. Resources are usually generalists, requirements are usually not completely thought out, and often other priorities within the team trump the project the longer it lasts.
    • Effectiveness – Generally the results of a build are low. More often than not, you end up with a finished product that looks very different from the original strategy. However, this is 100% dependent on the team. If you have rockstars, then you are one of the lucky ones.
  2. Buy?
    • Approval – Very high, because you are spending actual money. More money, more people involved.
    • Getting it off the ground – Very slow. This is completely dependent on your ability to sell internally. You need to sell people on scoping the requirements and sell people on the money it will take to meet those requirements.
    • Efficiency – Medium. This is dependent on your ability to know what you really want and finding the right vendor / solution to do it for you. Project management skills are a must here.
    • Effectiveness – Medium. You will find yourself bending your requirements to fit the abilities of the solution, not the other way around. However, if you pick a best-in-class solution it actually might help you identify requirements you never even considered.
  3. Rent?
    • Approval – Medium, because you are spending actual money (not as much as buy) and you are probably getting multiple people involved as well.
    • Getting it off the ground – Very fast. Payments in this category are generally spread out over months, quarters, or years. SaaS has really pushed the speed limits here and opt-out clauses are becoming more and more acceptable to execs.
    • Efficiency – High. Rent options are generally based on best practices and designed for quick(er) implementation. You probably get 80% of what you need “out of the box” and the other 20% is up to you and your team.
    • Effectiveness – Medium. Similar to the buy option, you will find yourself bending your requirements to fit the abilities of the solution, not the other way around.

So what does all of this mean? It means there is no one right answer. Consider the break down above for approvals, getting it off the ground, efficiency, and effectiveness. Figuring out what is the priority is much more likely to help move your strategy into action.



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The Secret Formula to GSD

Many people know it in different ways, but for the purposes of this write up I am defining GSD as Getting Stuff Done. So how do you get stuff done today when there is a process, regulation, approval, etc, for everything? Over and over I have found one common formula that allows you to GSD while still working within some boundaries: Data + Pilots + Speaking Up About Being Wrong.

The first two items are no brainers. From start up to a Fortune 500 company, you need data to support your ideas and a pilot to prove that they work. These are the two things that most people spend their time working on with a focus of proving their theory right. We all want to be the one that thinks up the program or product that makes millions. What many do not realize is it doesn’t usually happen on the first try.

The bigger the stuff you want to accomplish, the more you need to focus on the third part of the equation – speaking up about being wrong. Why? Because it is unlikely you will get it on the first try, so letting others know that you are focused on getting the “right” stuff done is very important. It is rare to hear from people about things that do not work, so when you do hear it, people take note – especially when it is something they are in charge of completing.

If someone knows they can count on you to do the right thing, regardless of the amount of work it causes you, then you have shown them a sense of accountability. It is interesting to see how many people become interested when you involve them in understanding the failure vs just highlighting the success. Because you have shown you are accountable, people become open to adding ideas, providing support, and ultimately becoming an ally. As you get closer to getting the “right” stuff done, your allies become more invested and more supportive. This snowballs into more people working with you to GSD and who wouldn’t want that?

So what should you take from this? Know that those people who get data and try things are easy to come by. Those that experiment and are vocal about failures are the ones that are hard to find. They are resilient and know that being wrong is part of the job. Although we all strive to GSD, those who are truly successful ensure it is the right stuff and bring others along for the ride.

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Become More Memorable With 2 Extra Words and a 5 Foot Radius

Recently I learned a very valuable business tool at a moment when I least expected to and from a person that I would never have considered an advisor. When was this moment? When I was completely “unplugged” from my business mentality during vacation and headed to the pool. Who is this unexpected advisor? My 4 year old daughter. What was this business tool? Well, that requires a short story to fully understand.

My daughter and I were walking back to our hotel room from the pool when I noticed something interesting. We must have walked past 20 people between leaving the pool area, taking the elevator to our floor, and going from the elevator to our room. My daughter was recognized by almost everyone we passed with a wave or a greeting and she smiled back with a comment of some sort. Normally I am so used to this that it doesn’t phase me, but for some reason it caught my attention more than usual.

I am a proud father and truly believe my daughter is a unique person whom none should forget. But this is not so much about my daughter and more about what I finally realized she is doing that makes her so memorable. Once we got back to the room I asked her “Who were all of those people you talked to on our way back to the room?” She responded “Oh, just some friends I made this week. I don’t remember all of their names, but they are really nice.”

I decided to watch her on the way back to the pool to see if I could figure this mystery out or if I was reading too much into it. As soon as we left the room and got to the elevator I saw it. Two other people were waiting for the elevator and once she got close enough she said “Hello. Are you going down to the pool?” They responded “Yes we are” and smiled. If it were me (or most other people I know), this is where the small talk ends and the silence generally sets in. But my daughter said two more words that changed the conversation from small talk to getting to know one another. She said “I’m Hannah” and smiled.

In society, it is a norm to reciprocate. When someone smiles at you, you feel obligated to smile back. When someone reaches out their hand, you extend yours as well for a handshake. Well, when someone tells you their name, what do you feel obligated to do? That’s right, tell them your name. That is exactly what happened. The two individuals smiled and said “My name is Tim and this is my wife Jennifer”. Although you can’t remember everyone’s name, you will remember those that took the effort to tell you what their name is. Why? Because not many people do it.

The next thing I noticed is Hannah didn’t do this to everyone, just people within a normal talking distance. What is that distance? Approximately 5 ft – that’s right, the size of an elevator. We got on the elevator and she did it again to the kids who were already on it when the doors opened. They gave her their name as well and continued talking to her as we got off the elevator and went to the pool.

Throughout the rest of the week, she would recognize people and vice versa. Sometimes it turned into a longer conversation and sometimes it just turned into an additional wave or smile. Regardless, she was making an impact with those individuals long after the small talk. With a scientific background, I had to ensure there wasn’t a variable (such as being a cute little 4 year old) that artificially caused this situation to occur. So I decided to try this as well and the results were the same. Although I met the same number of people that I normally would, the conversations that happened after the introduction of my name lead to more meaningful conversations and one lead to a friendship being formed beyond the vacation.

Overall, it is a simple step that doesn’t take much more than 2 extra words within a 5 foot radius. But the impact of being remembered is exponential. Imagine the possibilities both personally and professionally when this is applied.

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2Up – The Power Of Thinking Like the Boss’ Boss

When you are considering how to position a business idea, who do you imagine is the audience? The normal reaction is your boss. This is both right and wrong. Confusing I know, but let me explain why.

Consider what your boss will do after you pitch your idea. Most likely, he or she will have to consider the impact to their areas of responsibility and then the impact to the broader organization. If the idea could be visible to others or possibly impact something outside of their jurisdiction, they will need to let someone know. Guess who that someone is? Their boss. This should not dissuade you from pitching ideas. To make any change you must have ideas that cause people to think. What it should do is just be a consideration you know going into any meeting. Always think about the 2Up – i.e. the pitch you give to your boss (1Up from you) to give to their boss (2Up from you).

Example of a 1Up pitch to your boss – I want to get $1ooK to change our packaging for product line A. It is a small change and reduce our costs by $0.4o per box. I have already looked at the changes and know there is bandwidth on the design team to make this happen in the next quarter. I would just need to meet with a couple of people on distribution to make sure everything is ok first.

Example of a 2Up pitch to your boss’ boss – By investing $1ooK into a packaging redesign on product line A, we envision a 4% reduction in packaging cost resulting in a $150K savings per year. In addition, we envision other product lines being able to benefit from similar changes producing similar cost savings per year. A conservative estimate for all product lines could put us in range of saving approximately $5ooK per year. Prior to making those changes we would want to ensure product line A revisions are smooth, quality is maintained, and cost reduction is actually realized.

There is a significant difference. The 1Up is very focused on tasks, people, and limited scope. In all actuality, is sounds complicated and doesn’t look like a lot of return to the company. The 2Up is all numbers and the vision of what could be. Focused on what you need to put in, what you think you can get out, and how much more you think you can push it.

Now consider you go to your boss and make the 2Up pitch. What you are looking for is challenging on your assumptions and numbers. Get a dialogue going about the bigger picture and not the smaller details. Instead of it sounding like a lot of work, it sounds like a lot of opportunity and is usually followed by “how soon can we start”.

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What Can Improve Margin?

We have all heard the mantra ” do more with less” and we get it. Scaling, leverage, efficiency… put whatever term you want on it, all of these terms denote the need to increase your margin. There are all different definitions of margin, so let’s start out this discussion with a quick outline of how I am defining margin. Simply put, margin is the difference between what you put in and what you get out.

What are the options with margin? Overall, your goal is to increase the spread between input and output, so you have essentially two angles to play:

1) Decrease what you put in – focus on value
Most individuals consider this part of the equation easy. Just look at your inputs (people, money, time) and try find something similar that is cheaper, right? This is where you find outsourcing (people), discount vendors/parts (money), or process improvements (time). All of these strategies could work, however most are not as effective as people anticipate. Why? The trick with decreasing what you put into something is you must stay focused on value.

Focusing on value makes your considerations of changing input(s) much different.

  • Does your change just include cheaper products? If so, do your cheaper products still hold up and provide the quality experience you are used to getting?
  • Does your new process just make it easier to cut corners? If so, what is now being missed that will catch up with you later?
  • Do your new people just have less experience? Less experience is not always bad. However, if you find they are spending more time to figure out how to do something right vs knowing how to, then what are you really saving?

If you fail to consider what impacts value, then making the changes to decrease cost of input is only going to decrease what you get out. Thus, not increasing your spread between the two (i.e. margin).

2) Increase what you get out – focus on leverage
When looking at the output, the first thing to consider is what are you getting out of everything now? Often, we think we have done a great job by getting something complete and moving on to the next project, but we do not realize the additional potential of leverage.

To determine how to get the most out of leverage, you have to experiment. Here are a couple areas to consider when looking for leverage points:

  • New channels – Keeping everything else the same, is there  a new distribution method for your product or service?
  • New uses – Who else could use your product or service that isn’t on your original target market?
  • New packages – Could you offer your product or service in a new way to serve another group? Could you combine it with another product or service to create a completely different offer?
  • Follow Up – This is the most under utilized area of any program. Have you considered what would happen if you just followed up with customers once or twice after a product or service is completed? It has to be a genuine interest on your part, but trust me, it goes a long way to have a proactive touch point from a company.

Now that you have considered what is already available, you should also consider what you should do that is different. This is where you need to step back and look at all of your input (people, money, time) to determine what else could be done. Here are areas of focus for using leverage to think differently:

  • Completely new products or services – How you could harness all of the input for something completely different. This is tough to pull off, but building a business case is the best route to sell the concept.
  • Change your mix – How much of your revenue comes from product? How much comes from service? If you are 100% product or 100% service, there is opportunity to change that. Consider how to move the mix of product and service to still complement each other for existing customers but also drive new opportunities for market growth.
  • Find new partners – Are you completely working alone or have you enlisted the help of a partner network. Often there are companies that are experts in a niche that is a great complement to yours. If you have not considered who else is out there that plays in the same space, look around. You could put their marketing and sales resources to work for your (for the right price).

Value + Leverage = Increased Margin

By thinking about your input and output in terms of value and leverage, you should be able to change things to create more opportunities. If you are looking to make big changes, plan on a couple offsite days with a cross functional group to evaluate. If you are looking to make smaller incremental changes, then you can probably get good traction by taking an hour or two a day for a week or so.

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The Value In Finding Problems and Running Toward The Mess

When is the last time you started the day with a statement like “I can’t wait to run into a problem today” or “Where is the best place to find a mess”? Sounds like things you should actually try to avoid on a daily basis, right? If you want to just do your job and get done with it, then yes, try to avoid these situations. However, if you want to make an impact, then you should actually work to find problems and run toward the mess.

Why should I look for problems or a mess?
Problems represent obstacles and a mess is an irritant to most people. A colleague of mine pointed out one day that we shouldn’t think of these as something to avoid, instead, they should be something we go toward. When approached correctly, these represent opportunities for new solutions. New solutions represent new products, services, jobs, or even companies. It depends on what you can do once you find a problem as to the potential upside.

What should I do when I find a problem or a mess?
1. Figure out the type it is:

  • Efficiency problem – process oriented issue where quantity is generally impacted
  • Effectiveness problem – value oriented issue where quality is generally impacted

2. Determine who it impacts:

  • People that could gain from change – work to get them involved
  • People that could lose from change – work to let them know what is coming and why it is important
  • People that could help you in making the change – get people on your side

3. Find out what it is worth:

  • Ultimately you want to know how much could it save on costs or increase in sales
  • Would it require money to get you there or just time?

4. Do something about it:

  • Start to socialize the concept with others. In this instance, it is better to give than receive. So when talking to others, find out how it can help them, not you.
  • Make a proof of concept. Depending on your skills, get as close to a viable and functioning solution as possible. It doesn’t have to be perfect, but it does need to get the point across.

When people find out you are interested in solving problems and cleaning up messes, you become more valuable. Once your interest turns into action, your value increases yet again. And if your action has a positive impact on results, then your value becomes exponentially higher. So in order for you to increase your value, start by finding problems and running toward the mess.

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Give Them Something To React To

To get something done right, the first step is actually getting something done. And trust me, doing something and doing something right are two completely different things. To get something done, you need to get someone’s attention. And what is the best way to get someone’s attention? Give them something to react to. But you have to remember, getting a reaction doesn’t signify agreement, it is simply the start to a conversation. Your goal is to start a conversation that ultimately leads toward the positive change you were hoping to achieve.

More often than we would like to admit, we have talked about what we want to do or attempted to convince others of an idea to execute with little to show for it. Think about the last time someone told you about something cool, but there was nothing to look at, what did you say? Probably something along the lines of “come back when you have something to show me.” Now consider what happens when someone puts something in front of you and says “what do you think?” There is a very different result – you actually provide input and the discussion moves forward.

What you will find on most occasions is an inability to actually make change until something is present to react to. A drawing, a prototype, a spreadsheet… anything is better than a blank stare. However, getting that first tangible item should be done with one objective in mind, to start a conversation by getting a reaction. What type of reaction you get is another story. Regardless of positive or negative feedback, my thought is any reaction is a good reaction. Why? Because you can now move forward with change knowing what you are up against and begin a dialogue that moves your efforts forward.

How to react to negative feedback:
Take the input and understand if it is due to actual function or because of impact to that person’s role. After consideration, determine if you need to change your direction or just change your presentation. You might even consider bringing this person into an advisory role to show them how much their input means to you. Then make sure to follow up with that person with your modifications and ensure you address the original critique.

How to react to positive feedback.
First of all, be very hesitant to take good news at face value. Not trying to sound pessimistic, but there are a lot of people that will do anything to a avoid conflict. Ask questions along the lines of “so you would recommend this to your friends and family?” or “if you were going to focus on one thing to improve, what would it be?” If you still get positive feedback, thank them and see of you can get a name of someone you don’t know from their network. Don’t push it too hard, but just know there should always be constructive feedback so continue to find people willing to give it to you.

Regardless of feedback, attempt to not take it personally. I can admit on more than one occasion I have reacted from an emotional standpoint instead of an objective one. That does not get you very far. Try to remember that it does not have to be your idea that solves the problem, rather your action that makes a solution happen. Taking this attitude means you are in it for the greater good, not the personal glory.

Going from getting something done to getting something done right can be quite a process. Just know that every time you strive to improve your work, you must have something tangible to show in order to get a reaction. Through iterative feedback and taking on multiple perspectives, you can make significant change in a relatively short period of time.

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