Category Archives: Business Strategy

Are You Cheating Time on Your Own Strategy?

Business Strategy, Personal Productivity,

How do you spend your time? What you spend the most work time on ought to be what you value the most in the business. Right? That’s your real priority.

watch handsWhen I was an active consultant, one of the problems I had with business strategy consulting was getting the client companies to manage their spending and activities according to their own priorities. The danger was that they’d set strategy one way in the off site strategy meetings, then go back to the office, get back in the routine, and follow a completely different strategy in what they actually do.

I don’t know if this is universal; I didn’t read it, I just started using the term strategic alignment, which I define as making your actual work match your strategic priorities.

In my consulting mode, with groups in larger companies, I did two things to help with strategic alignment:

  1. First, I’d help them build a strategy pyramid to relate strategies, tactics, and programs (business activities).
  2. Second, I’d build a database of spending and track program spending to tactics and strategies, to see how the spending matched the priorities.

So lately I’ve been trying to apply that kind of business strategy concept to my own work. It’s scary when it’s just me, not a big company. Try this for yourself: look at how you spend your work time. It doesn’t take pyramids or database, just watching and seeing yourself accurately. Does your time spend match your priorities?

(Image credit: Janaka Dharmasena/Shutterstock)

What Amazon and iPad Teach us About Strategy

Books, Business Strategy, Technology, , , ,

I love it: now when I buy a Kindle book from Amazon.com, I can have it on my iPhone, my iPad, my Mac laptop, my Windows laptop, my Mac Desktop, or my Windows desktop.

Kindle on iPadThis makes me feel like I really own the book. If I have a spare 10 minutes, just about wherever I am, I can read the book. It’s great usability. Great convenience.

And I love the business strategy implications. By making Kindle books available on every possible hardware device, Amazon chooses not to reserve them for people who buy the Kindle hardware. Is this a sacrifice? Helping competitors? Does the iPad make the Kindle less desireable? Yes? Does having Kindle books available on the iPad mean Amazon.com will sell more Kindle books? Yes.

On the long term, Amazon wins because it focuses on what it does really well. Kindle books become the standard. It’s called focus. And strategy is focus.

3 Things Every Entrepreneur Needs to Know About Exit Strategies

Advice, Business Strategy, Entrepreneurship, Family Business, , , , , ,

I’ve been hearing that phrase, exit strategy, for about 30 years now. I used it a lot as a standard component of business plans back in the 1980s when I made a living writing them. And I ignored it myself as I built my own business, for really good reasons, for a long time. I figured out what it really meant, fairly late in the game, but in time for me. I think I can make it easier for you.

water cave exit1. The exit is when you sell the business.

Sorry if that’s obvious, but not everybody understands. In the classic high-tech high-end startup context, it’s either going public (meaning you get all registered up and sell your stock on a stock exchange, to anybody who wants to buy it) or being acquired by a larger company for publicly traded stock or money. In the small business, it’s selling the business to a buyer, or, in some cases, passing it on to the next generation of your own family.

If you don’t need outside investment, and you’re in the business for the long term, you might think you don’t need an exit strategy. You’re right, at least for a while. But even the long term becomes short term eventually.

2. Investors need exit strategies.

If you want outside investment then you have to have an exit strategy. Real investors don’t make money on your healthy company unless it sells all or part of itself. It’s cut and dried with outside investors: either you have a believable exit strategy, or investors don’t make money.

By the way, maybe I should say “if you need” outside investors instead of “want outside investors.” If you don’t need outside investors, believe me, then you don’t want them.

And if you don’t need outside investors, exit strategy can wait. But it will come.

3. Every entrepreneur eventually needs an exit.

OK, you’ve noticed I have a theme here. You need the exit strategy for sure, and right now if you need outside investors. But even if you don’t need outside investors, you’ll need the exit eventually.

You get older every day. Eventually you’re going to exit, whether you like it or not. Better to plan it. You get tired, you get health problems, you get older, and life changes. I was lucky, because we had a hard-working, loyal, smart next generation ready to go. That was more from good luck than good planning.

Think ahead. Look for the right opportunities. For example, there are some baby-boomer entrepreneurs feeling the need to sell during the great recession, having to take what they can get during a very bad market. I’m not saying they could have predicted the recession (black swan, in my opinion); but they could have been thinking about exit or succession.

Ultimately, it’s about people. Nobody lasts forever. You can aim for a business that survives a succession, or one you can sell. Aiming and planning doesn’t mean it will happen; but it can help.

(Image: Eugene Sim/Shutterstock)

Bonus material: 6 tips for involving your kids in your business

The Curious Paradox of Copying and Creativity

Business Mistakes, Business Strategy, Creativity, , , , , , , , , , , , ,

A couple of months ago I picked up this post on TechCrunch, which sort of accuses Apple of copying its iBooks application for the new iPad.

clonesI hate business copycats. Drives me crazy. As Palo Alto Software’s Business Plan Pro grew up, others copied our tag lines, our packaging, and the software. I hated that.

In the retail business you have some companies who live on copying packaging. They put imitation products inside imitation packages to fool people, so they get the wrong thing. I hate that. How do they live with themselves?

But it’s not illegal.

And it’s also the history of innovation. From VisiCalc to SuperCalc to Lotus 1-2-3 to Quattro Pro to Microsoft Excel, copying makes things better. From CP/M to DOS to Windows, copying makes things better. The original Macintosh operating system borrowed from an earlier mouse and window system developed by Xerox. The iPod was not the first MP3 player, nor is the iPad the first tablet computer. These were not new ideas, but they were improvements.

And all the cool new phones now are copying the iPhone.

Do we hate the people who copy ideas? We all do it. Kids learn their moves in sports by copying other kids. We learn to write better by copying writing we like. We learn to get along with people by copying people.

The entire history of human creativity is built on copying. What, if not copying, is the cause of those identifiable periods in music and art and writing, like the Baroque or Renaissance? What except copying makes Gothic cathedrals? Try to name a good movie that didn’t borrow from some earlier movie. Even Shakespeare was often redoing older classical themes.

And yet, when I look at all the stuff in the market that’s copying something else, it makes me mad. Do your own thing. Be original. Make it better. Don’t just copy my thing. Even if it’s barely legal, it’s still sleazy.

A lot of great art starts with copying, borrowing themes, ideas, and so on. But business, starting with one idea and adding to it, making it better, creating new things based on old things, that’s progress. Business copying, looking like somebody else just to steal some respect, is just bad business.

I’m glad cool new innovations based on existing stuff succeed. I hope all sleazy business copies fail.

(Images: galtiero boffi, Konstantin L/Shutterstock)

Want Real Strategy? Mind the Damned Gap

Business Strategy, Plan-as-you-go Planning

Mind the gap. It’s written all over the London tube (subway). They mean the gap between the trains and the platform.

Mind the gap. It should be written wherever somebody is doing strategic planning for small business. It means that extremely common gap between the brilliant strategy cooked up in the meetings and the actual day-by-day work of all the people in the company.

The gap is  lack of strategic alignment. It’s basic, like alignment between what you say and what you do.

You come out of the strategy meeting all enthused about the new strategy with new emphasis on new priorities. Then you get back to the office. The phone rings. Problems arise. You put out fires. And go back to doing what you’ve always been doing. Strategy hasn’t changed anything. It hasn’t been implemented.

One of the most important benefits of a good business planning process is strategic alignment. You set the strategy and develop the steps, agree on metrics to track progress, then follow up on those metrics with plan vs. actual analysis that can end up showing how the daily doings inside the business match (or don’t match) the larger strategy.

In most cases, its not quite as academic as it sounds. It’s about spending the time and money where your strategy says your priorities should be. I ran up against this basic truth hard in one of my favorite consulting engagements, years ago, which I’ve posted here as this true story of how the strategy pyramid helped one group in Apple Computer track actual spending and activities to enforce the implementation of the strategic plan.

Without planning processes, metrics, and tracking, that gap becomes a gigantic fissure separating your strategic from what you’re actually doing. This is one of the biggest, and most common, problems in small business.

I’m pleased to see the same things showing up in this week’s Harvard Business School Working Knowledge site:

“Explicit” strategy is the one you read about in your company’s planning memos and PowerPoint slides. The second, “implicit” strategy, is what emerges when middle managers and line employees attempt to execute the explicit strategy.

That’s the beginning of One Strategy: Aligning Planning and Execution. Noah Parsons tipped me off to that one. It’s a very interesting interview with Marco Iansiti, Harvard business school professor, co-author of One Strategy. It looks like a good book.

Moral of the story: mind the damned gap.

(Images: JMOliver, Slavoljub Pantelic/Shutterstock)

Say it Ain’t So Joel

Advice, Business Strategy, Weblogs, Writing, ,

This is disturbing on several levels. No, I don’t know Joel Spolsky but I feel like I do because I’ve been reading his work for years. He’s not just an expert on software development, he’s a very good writer and thinker. I’ve quoted him a lot.

So what’s disturbing? In Let’s Take This Offline Joel’s saying he’s going to stop blogging. That’s bad enough, because there aren’t that many thoughtful eloquent software developers around. But what’s worse is his reason (quoting):

The truth is, as much as I’ve enjoyed it, blogging has become increasingly impossible to do the way I want to as Fog Creek has become a larger company. We now have 32 employees and at least six substantial product lines. We have so many customers that I can’t always write freely without inadvertently insulting one of them. And my daily duties now take so much time that it has become a major effort to post something thoughtful even once or twice a month.

The best evidence also suggests that there are many other effective ways to market Fog Creek’s products — and that our historical overreliance on blogging as a marketing channel has meant that we’ve ignored them. I realize now that blogging made me, and Fog Creek, a big fish in a very small pond. As a result, we have the undisputed No. 1 product among the 5 percent to 10 percent of programmers who regularly read blogs about programming. Meanwhile, we’re almost unknown in every other demographic.

I think that’s a real business mistake. As I write this and as you read it, of course, we should both recognize that I know absolutely nothing about the specific business of Fog Creek software, so I’m probably way off base here. But then, in defense of what I’m about to say, I am relying on Joel’s own words. I’m taking him at his word.

The mistake here is related to one of my favorite quotes: “I don’t know the secret to success, but the secret to failure is trying to please everybody.”

I think every company needs to recognize its strengths and weaknesses. Sure, you try to bolster the weaknesses over time, but never give up a strength. Here’s my message to Joel:

Joel, your blogging is your stronghold. It’s all about focus. You can’t do everything. Having a clear and well-identified strength is really important. Keep it. Use it to defend your business while you expand elsewhere. You don’t have to give that up in order to broaden channels. You’ve got a business going, you have revenue, you can hire people to do those other things, open those other channels. If you look, you’ll find people who know how to do that, and can do it better than you will. Keep your writing and build on it.

Why Mirror Neurons Are Critical to Your Business Success

Business Strategy, , , ,

Empathy is essential. Sure, that’s obvious for your life and your relationships, but also, although not so obvious, for your business. Empathy is putting yourself in the other person’s shoes: feeling what they’re feeling, imagining what it’s like to be them. Isn’t that the key to marketing and product development? Isn’t that also the single most important factor in leadership? Dealing with people? And business strategy? I think so.

I posted Empathy as a key to business success here a bit more than a year ago. What’s new about it today is Gandhi’s Neurons: The Practice of Empathy by Bruna Martinuzzi on the American Express OPEN Forum. She links to this fascinating video by Nova Science (PBS), which examines something called mirror neurons, also dubbed Gandhi’s neurons. The mirror neurons fire as we feel for others, or with others. Narrator Robert Krulwich introduces this as new science:

We humans are really good at reading faces and bodies. ‘Cause if I can look at you and feel what you’re feeling, I can learn from you, connect to you, I can love you. Empathy is one of our finer traits, and when it happens it happens so easily, perhaps because—and this is brand new science, this is just out of the lab—we may have some special circuitry in our brains that helps us whenever we look at each other.

It’s because of mirror neurons that “you can adopt another person’s point of view,” according to Dr. V.S. Ramachandran of the University of California at San Diego. He notes that humans are intensely social. We invent dances, games, groups… we eat together, we work together, and we talk. Language and culture come from imitation. He even suggests that it was a sudden advance in mirror neurons that spurred a jump in evolution to make us human.

So, as I said earlier, marketing? Product development? Leadership? I hope the connection is obvious.

I don’t know how the science of it necessarily helps us with the actual practice; but I find it fascinating, and when I saw this, I wanted to share.

Business Strategy in Action, or Reaction, Both, or Neither

Business Mistakes, Business Stories, Business Strategy, , , , , , , , , ,

Apple vs. Kindle vs. publishers, oh my. Do you know the background? It’s all over the web. And I posted here this week about how Apple and Amazon.com and Macmillan are wrapped up in an ebook battle. And it gets better. As I write this, Wednesday evening, the news is that Amazon gave in and put Macmillan back into the mix, but at higher prices. But I just checked the site and my favorite Macmillan book, Thomas Friedman’s Hot, Flat, and Crowded, is listed there as available through third parties only. So go figure.

I’m fascinated with all of this. Really, business strategy in action. Consider these questions, and ask yourself: if you were Steve Jobs, or Jeff Bezos, what would you do?

  1. Does Apple Computer block the Kindle app on its new iPad? The iPad runs iPhone apps, and the Kindle iPhone app works great. But does that mean iPad users can buy Kindle books for their iPad for $9.95, while Apple’s iPad iBooks cost $14.99?

    2. Apple can block the Kindle app, of course. But what will users say about that? Apple users tend to take Apple as some public resource. They’re incensed when Apple acts in its own business interest instead of the public good. Would cutting off the competition be worth the dark side mask?

  2. Is Amazon.com seriously going to cut off its nose to spite its face? They took all Macmillan books off of Amazon.com because of a pricing and revenue share argument related to the iPad. But doesn’t that hurt the Amazon.com business proposition? Don’t we all go there to find the world’s largest inventory? And now they say they’re giving in, putting Macmillan back, and at the higher prices it demanded. What does that do for the Kindle pricing ceiling at $9.99? What happens to the $5 differential on iPad between a Kindle book and an iPad book?
  3. Do publishers gain by fighting either format, or either channel? Now Macmillan books are playing second fiddle at Amazon.com. It’s hard to tell from here, but it’s been presented as Macmillan squaring off against Amazon.com for a larger share of the revenue. That’s a bold move. Would you do it? How would you feel if you were a Macmillan author?
  4. What about Sony, or Barnes and Noble? These other ebook readers that were seriously planning to compete… are they just blown away? What can they do?
  5. Does this mean ebooks are finally for real? I’ve liked ebooks for more than 10 years now, read them on an early Rocket ebook reader, on a PDA, on a Kindle, and on my iPhone, as well as on a number of laptops. Are they finally going to get to critical mass? That would be nice.
  6. Do smart buyers wait for all of this to sort out? Remember the Sony Betamax format vs. VHS? You don’t want to invest on the losing side here, right? I finally bought Blue-ray HD after HD DVD lost the battle.

I’m enjoying the spectacle. I’ve got the Kindle, I’ve got the iPhone with the Kindle app on it, and I’ll probably buy an Apple iPad for its entertainment value, form factor, and long batterly life. For ebooks the iPhone Kindle app is still my favorite, so I’ll probably use the Kindle app on the iPad too, when I get it — if Apple doesn’t block it, that is. I don’t see how the bells and whistles of the new iBook reader can be worth the extra $5. But, since it’s not shipping for a few months anyhow, I’m going to wait and watch.

And I’m especially watching the strategy play out. Several of these big players can make bold decisions that will cut off competition and annoy the hell out of buyers. Is that the way it’s going to go?

(Image credit: from Mashable’s recent post on the eBook War)

eBooks: Hot, Flat, Crowded, and Not on Amazon.com. Let the Games Begin

Books, Business Stories, Business Strategy, , , , ,

(Important: late-breaking news. Since this was posted earlier today, Amazon has reversed its position on this. Macmillan is back, but with its own pricing on the Kindle. This is important. Here’s a link.)

eBook wars, you say? On one hand, it’s about time. On the other, wow, this is strategy in action. And interesting spectacle too. That’s why in athletics the championship games are more interesting: two big winners squaring off.

Mashable led over the weekend with Apple vs. Amazon: The Great Ebook War Has Already Begun, a post by Ben Parr, whose work I like a lot. Posted Saturday, it’s about Amazon and Macmillan. It’s hard to tell who’s making the move on whom here, but the announcement was that Amazon.com was removing Macmillan books from its web store:

According to the New York Times, the reason the books were pulled was the iPad. Macmillan told Amazon that it wanted to change its pricing and compensation agreement, upping the price of some books from $9.99 to $15 and splitting sales 70/30, the same model Apple uses for the iPhone app store and its upcoming iBooks store. Amazon’s apparent response was to flex its muscle and pull countless Macmillan books off the virtual shelves.

Last Friday I posted how the competition is win-win for all sides. We get a choice: Kindle books, just text, for one price, or Apple iBook books (pizazz) for a higher price. You get to decide. Ah, the magic of commerce.

But with Amazon.com and Macmillan biting off each other’s noses, it’s not so clear. Ben Parr wrote:

That’s why Amazon decided to use its biggest weapon, Amazon.com itself, against Macmillan to send a message to every publisher: If you don’t play by its rules, then you can’t be in its store. While a publisher can likely survive without the Kindle, the same cannot be said for Amazon.com. Publishers simply cannot afford to leave the world’s largest online retailer.

Who wins? In this case, the losers are Amazon.com and Macmillan, and all Macmillan authors, and anybody who wants to buy their books. Amazon? Don’t we all go there because we can find all the books imaginable there? And now we don’t? Although you can still buy Thomas Friedman’s Hot, Flat, and Crowded on Amazon.com, you can’t do it directly. They list it as available from third-party sellers, even though it’s one of the most important books of the last year. And here’s some irony: Priceless, William Poundstone’s analysis of free and fair value and all, is another victim.

Remember the old days, when things like this were about giving customers what they want?

Could it be Too Late Already for 2010 Trends?

Business Planning, Business Stories, Business Strategy, Weblogs, , , , ,

The trouble is that by the time it’s obvious, in terms of ideas and opportunities, it’s usually too late. The winners are already entrenched.

The reef metaphor is a good one, but usually you have to be early on the reef to reserve your spot. Only the big creatures, sharks and all, can cruise in late and get traction.

Coral reefs are ecosystems. Creatures and more creatures develop. Technology is too. We’ve seen technology worlds develop around personal computers, the Web, mobile phones, and lots of others.

One of the smartest people I know, a technology wizard, tipped me off to Robert Scoble’s The Google Reef post last week. That post linked to David Winer’s 2007 Twitter as coral reef post. Way before the rest of us caught on, he saw Twitter coming. Here’s his reef description:

Scattered throughout tropical seas are coral reefs that started when a ship sank and sea creatures made it their home. Then the predators of those creatures started hanging out, and their predators, all the way up the food chain. Eventually, if the ocean climate was right, a coral reef would appear, much larger than the wrecked ship that started it all.

Does it have to be a sinking ship? Reefs develop on their own too, right? I could try to stretch the idea to say personal computers developed over the wrecks of their bigger predecessors, and the Web over the wrecks of the early bulletin boards; but that’s pressing the metaphor too far. What Scoble was talking about was the development of markets around Google.

You have to see it early to win with it. We see here Dave Winer caught on to Twitter earlier than most of us. But then he also caught on to outliners, scripting, and some other things earlier than most of us. Some think of him as the original blogger, and he was there as an early RSS pioneer too. I first met him in the early 1980s, as the man behind the More outliner (and ThinkTank, and others).

Notice the timing: Twitter about three years ago. I think it does us all very little good to be onto some of these trends (Twitter, mobile apps, ebook readers, tablet computers and all) now. Now it’s obvious. If you want to really win, figure out what’s going to be big in 2013 or 2014.

And don’t guess wrong, because that can be expensive. We all assume first in the market is a great advantage, but not when it means you’re there too early. Maybe tablet computers are going to be big when Apple gets there, but they’ve disappointed most of the entrepreneurs who started earlier with them.

And good luck with that.