Posts Tagged Management

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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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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