New Product Introduction (NPI): What is your target?

Businesses commit high-valued resources (people, cash and windows of opportunity) to develop and introduce new products to market. Unfortunately, in many cases, product development is well along before attention is applied to whether the NPI process is appropriate for the product and the targeted market. This is particularly true of products where the product definition was developed without broad based customer involvement known as the "Voice of the Customer (VOC)".

By not engaging sufficient customer or "market" input the NPI process is starved of critical information that is needed to determine what "acceptance" criteria the product will have to satisfy to be a success. This can be a critical problem for a company that has traditionally designed and developed products to an acceptance criteria defined by a narrow (often just one) set of customers and then decide to convert an existing product or technology for use in a larger market. The normal NPI process used for this new endeavor will fall short of what is needed. It needs to reflect the condition that many customers will determine the success of the product and not just a few or one.

In every case the NPI needs to recognize the unique constraints of the market (customer community) that the product is intended to serve - one customer or many. An NPI process designed to successfully guide development of a product to meet or exceed customer acceptance criteria is radically different than one that will need to measured by market acceptance. The precision of the effort to determine market acceptance into a design criteria by an anonymous customer is a critical and challenging task. The customers voice has to be represented (and defended) in the same way that a detail specification in a customer acceptance criteria is adhered to in order to deliver the product. Internal resistance to accepting external acceptance factors needs to be dealt with effectively or the success of the product will be compromised.

An extreme example of this problem involved a team of extremely talented engineers developing a software tool for a market unfamiliar to anyone on the development team. Developing the product was looked upon as solving a difficult problem. When the product was released the response was far short of what was expected.

I was asked to look into why the product was struggling and discovered that the product specifications were developed without any involvement from any users. I scheduled several meetings with "typical" customers and the feedback was valuable - but too late to save the product. The product did do what it was designed to do, it solved a critical problem, it was recognized by customers as a technical achievement but it did not integrate with the work flow of the user so that they could view it as an inline productive tool. The end result was that the product was withdrawn and the team dissolved.

Could this have been averted? Yes! Surveying customers ahead of time to determine how they would use such a tool would have revealed the critical work flow integration requirement that may have resulted in a successful product or possibly a decision to go in a different direction.

The moral to the story. Know your target audience. Make sure they are represented throughout the NPI process. Invest in a sold NPI process or spend more time (and money) later trying to get the product right, in front of the customer, once it is in the market.

Product Customization - Boom or Bust

A challenge that many companies (small & large) wrestle with is the issue of product customization outside of the standard features that allow some form of user customization at order configuration. This often requires an investment in engineering, new documentation, quoting an engineering change charge and/or new product price and tailoring the manufacturing/build/test cycle to deliver a quality product - on time.

Why is this a difficult question? Sales rushes in with an order from a valued or targeted customer to buy the standard product except for . . . In the desire to either keep the customer, add a new customer or (more probable) meet sales objectives the order is accepted. The question is whether your order process is designed to operate effectively in this mode.

• Is the sales process sufficiently capable of capturing the necessary specifications without committing an engineer to an onsite meeting with the customer?
• Do you have engineering change staff (often called sustaining engineering) or will you need to siphon off valuable engineering time from engineers who are committed and personally invested in the design of new products?
• Do you have a production build group that has the flexibility to efficiently do "one of" builds?
• Is your accounting process setup to accurately collect the cost of this type of business so that you know where your profit (or loss) is occurring separate from your normal production business?

The answers to these questions are not good if customized products are not the focus of your business model. Too often the end result is business that you wished you had not taken or "bought" which is more likely the case. The goodwill with a valued customer is put at risk, the future with a new customer is questionable, and your profit margin is unknown if the customized product does not have the same product quality and performance your standard products have.

More significantly is the lost opportunity of the organization to keep valuable (and hard to find) strategic resources applied to the future of the business. One hour (you wish it would be just one hour) of engineering time redirected to a "one of" customized project is not just one hour out of the day as it is difficult to get back into the flow with where the project was let alone the impact on engineering morale when they are used for a project like this.

Consequently the promised upfront gains of an organization redirecting their business model to take on a customization project are not met. A common result of this decision is:

• profits performance is compromised,
• customer relationships are strained, and
• strategic direction for the future of the business is put into limbo.

The answer? Stay the course and do what you do well and avoid the temptation to be a marketplace super hero!

Another Government Mandate To Take Care of You

A reaction to the east coast snow storm this weekend where there were several incidents of plane travelers strandede in planes for extended periods of time was for the Department of Transportation to order airlines to let passengers off stranded airplanes or face fines. The fine would be $27,500 for each violation over a three hour limit. This would total $1,375M for a commuter plane carrying 50 passengers or $5.5M for a larger plane carrying 200 passengers. Is this reasonable? What is our government doing to us in making this mandate?

It is true that there are a number of unusual stories where, in specific instances, mistakes were made and passengers were inconvenienced and kept for an unusually long time. However, for the number of trips per day that are taken by air travelers in this country these examples are few and far between. THis doesn't make it right but this new mandate will have significant ramifications to the relative low cost of air travel that the flying public has become used to.

Why will cost go up? Unfortunately the airlines are not omniscient and will have significant difficulty predicting when disastrous snow or weather conditions will create a situation where it will have a "stranded" passenger condition. This occurs when the planes themselves either cannot move on the ground (ice and snow) or cannot land at their destination such as when airplanes are grounded due to fog resulting in too many¨aircraft for the existing facilities to handle. The latter occurred to me flying from Denver to Seattle. Seattle closed while we were en-route and the decision was made to land in Portland and wait until landing conditions improved. We waited 6 hours on the ground partly due to waiting for conditions to improve and then for the few jetways to be available to land passengers. We were in a DC-10 at the time and Portland only had equipment and staff to handle three of jetways at a time and many aircraft were ahead of us.

Consequently we will have airlines faced with enormous fines if they cannot get passengers off the planes within three hours. How many extra staff will need to be on hand in the event of a weather or other incident that could "strand" passengers. What about baggage? Security is not too keen on passengers and baggage being separated particularly if when they re-board the plane the same passengers are not on the plane. What happens if the pane is at an airport where they do not have an office and use other facilities. Will the other airline or operation have liability if it does not have the crew and equipment to meet the need even if the primary carrier has the plane ready to let the passengers off? What an enormous problem and a great opportunity to finger point.

In this instance we have a government bureaucrat without any financial responsibility for the outcome making a decision so that we can all feel better. The traveling public used to be capable of letting an airline know when its service level was bad by avoiding it. The airline either corrected its ways or went out of business.

Who will absorb the cost of this mandate? You will! Will we still have isolated instances where conditions beyond the control of the airline result in inconvenience? Yes! But we will do it at a higher price because of mandates and fines imposed by an ever increasing governmental role in the lives of its citizens and free enterprise.

Do you feel better?

Is Your Organization Ready to Sell?

I recently considered (a pre-January 1st vow) expanding my workout schedule to include weight training in addition to lap swimming to address the rapidly escaping muscle mass that age brings in later life.

I regularly pass a well known gym in the area and thought that it would be convenient using that location for my new workout. I stopped in one morning to get membership information. The lobby desk was unattended so I waited a few minutes until someone returned. During my wait I scanned the counter looking for a brochure that might answer my questions.

I had visited the gym web site the night before but it did not show any schedule of membership rates or packages. A young woman soon returned and I asked to see a club brochure to understand what package/price would best fit my interest.

The woman looked at me sheepishly and said that they did not have any brochures and that sales people came in later in the day - it was 8:30am. I then asked her what the typical prevailing prices were for a membership. She quickly said that she did not think she could do that as everyone was different.

I was getting more confused and was hesitant to ask another price related question. She stood looking at me and seemed to want to leave it at that. So I saaid thanks and said goodbye. It was obvious that no one in ownership/management cared enough to create a customer experience encouraged membership.

It was obvious the woman at the desk had not been prepared for a sales scenario. She did not offer a tour (while she gathered her thoughts on how to address the price question), she did not get my contact information, she did not provide me with a contact name to reach later that day, she was not coached on how to keep a prospective member in the door until they made a buy decision or secured a commitment to meet or connect with someone who could.

• Is this the case at your company? Of course you are prepared to sell - aren't you - but what about your front office? How do you score on the following check list?
• Do you have an up-to-date price list of your products and services to answer customer inquiries?
• Do all people that have contact with customers know how to triage interest from a customer so that they do not get away without taking them to the next level?
• What is your policy on returning inquiries from a customer?
• Phone calls - within the hour or within thee promised period on voice mail.
• Fax - same day or no less than 24 hours.
• E-mail - same as fax or less.
• Are you on time with appointments?
• If customers come to your office for appointments, are you on time. If they have to wait are they notified before the appointment time passes, and are they kept abreast of delays as the time progresses past the scheduled time (i.e. waiting for your schedule doctors appointment)?
• Do you sit in on customer contact calls or visits to gauge the effectiveness of your sales training?
• How regularly due you audit your sales process and materials?
• If you use a web page (server side database) to collect customer requests information is it monitored regularly and are they responded to within the promise response time?
• Is your web page accurate, are the phone numbers correct, are the contact e-mail addresses current?
• If the customer request escalates into a quote is it processed in a timely manner with timely follow up to move the quote into an order.

Be ready to sell! A casual attitude toward a sales opportunity does not differentiate you in the market place and lead to a revenue opportunity. In the case of the gym above, I had heard that they were have trouble with membership. I thought it was due to the economy but now after experiencing the short comings of their sales process, their revenue problems could be greatly eased if they had a better "sales" attitude in their organization. How about your organization?

Bringing Order to Chaos

We have all been there! Taking over a company or group that has lost its way or suffering under market conditions that has overwhelmed it. Or, a major customer relationship erupts requiring immediate triage to stabilize and return to a normal business relationship. Or, you are blind sided by a third party trying to disrupt your organization by hiring away key employees affecting product development, sales and operations, or undercutting you position at key accounts. What do you do?

Your plan of action is a result of a quick but careful assessment of the conditions that exist. Many contradictory factors may be in play: Lack of organization and individual confidence, trust issues (mistrust, blame, defensiveness), break down in business discipline, poor communication, poor vision execution, etc. The effectiveness of your action plan is based on how you organize and prioritize what you do first, second and so on!

The following is a five-step process that I have used successfully to deal with severe organization dysfunction and poor performance:

• Focus Employees On What They Can Control - The biggest distraction that I find that needs to be contained is the disruption that things people cannot control causes. Uncontrollable events can be very distracting to many employees and they are far more productive and satisfied when they can offload the unexpected and uncontrollable issues and Focus on What They Can Control.
• Establish a Crisis Path - As a sizable part of the organization returns to processing controllable events there needs to be a timely response to the uncontrollable. Every organization has people who are more adept and comfortable dealing with uncontrollable problems where boundaries are poorly defined. They thrive on solving crisis. These people are capable of rising to the occasion in creating and developing solutions that solve tough problems in a timely and effective manner.
• Establish a Horizon - A dysfunctional organization has lost track of what it is working toward. It may be difficult to target a long term goal right away. Daily (or in more severe cases hourly) goals or targets might be necessary at the beginning to measure progress and accomplishment for the organization. A sustainable track record of attaining daily goals will lead to increased confidence in setting longer term weekly and then monthly goals.
• Eliminate the Root Causes of the Uncontrollable - As the organization begins to redirect itself toward a successful direction and uncontrollable crisis are contained; resources need to be applied to eliminating the causes of repetitive crisis. Possible reasons for this condition are:
• Poor quality that is either occurring in the organization or by a supplier in the supply chain.
• Critical business processes that are not being complied with.
• Customer communication on commitments and expectations has broken down leading to an unrealistic demand on company resources.
• Honesty, Transparency and Communication - Through all of this it is imperative to be as honest with employees and customers as possible. Ongoing urgent or crisis situations breeds skepticism. Telling the ruth is golden over telling people what they want to hear. I have had amazing response from employees and customers alike when I present the truth about a situation rather than using double talk or worse - delay and deny - to deal with a problem.

Are these the only steps you can use to bring order to chaos. No! These five-steps have worked successfully for me in laying a foundation of stability in addressing severe organizational dysfunction in a number of management assignments in my career. Some of you may have circumstances that required a different tact and I would certainly appreciate hearing from you on what worked best for you.

Do You Have An Effective Market Strategy?

"Strategy should be developed from the bottom up, not the top down . . .In military warfare, the serious student of strategy begins with the study of the bayonet"

- Marketing Warfare, Ries & Trout

What is the underlying message in this quote? A smarter strategy will overcome just working harder in the trenches. Do not confront your opposition head-on when they have the high ground. If you are number 2 you seek higher ground. If you are number 3 you seek a flanking action to go around the high ground, And, if you are just entering the market your tactics would involve going under the high ground.

As a market leader your strategy would be defensive to protect your market position. For years Microsoft protected its strong position with its bundling strategy which positioned its browser, for example, ahead of others, possibly better performing, products. Apple comes to the market late and offers leading design, technology rich products that exceed the capabilities of the market leaders and taking advantage of their disadvantages.

Do openings exist when the market is dominated by one leader? As a company becomes a market leader it begins to struggle with being all things to all customers. Its success may have originally been serving a market segment very well and, over time, adding improvements to the product or service to make it attractive to a larger customer base. What often happens then is that the sharp features set and message that originally attracted customers becomes fuzzy and less distinct allowing smaller companies to step in and grab market share with targeted product solutions that respond to rapidly changing needs in the market place.

Customers react well to products that are refreshed regularly to meet their changing needs. Larger companies find this difficult to do as they become more bureaucratic and key decision makers become removed from the front lines where they were in constant contact with the market.

The strategic planning development process is a critical aspect of the ability of a company to hold or gain market share. Many companies fall into the top-down approach where decisions are made without the benefit of direct contact with tactics currently at play in the market. A bottom-up approach is able to use this tactical information to more effectively define what it will take to overpower a competitor or market leader for a segment of the market. This process is more likely to include the anticipation of what a stronger competitor will do and the best way to attack the weakness in the competitors strength so that they cannot respond without giving up its strength.

A market leader is more likely to believe they can do anything if they allocate enough resources. However, a poorly conceived strategy using a top-down approach will shift resources away from the point of battle where they are needed.

What is your market strategy process? Is it top-down where you are not incorporating current tactical information from the marketplace? Are your key resources improperly allocated to be effective in the development and execution of a market growth strategy?

Examine your market strategic planning process to make sure it is appropriate to your market objectives and position in the market place.

Resource: QuickMBA

The Benefits of Revenue Linearity

"Through improved revenue linearity and strong working capital management, we improved DSO, decreased inventories and, as a result, generated $46.8 million in positive operating cash flow, our 46th consecutive quarter of positive operating cash flow."

Chairman and CEO Robert Hagerty, Polycom Inc.

Many companies measure revenue on a monthly basis and overlook the "flow" of revenue during the month. In some cases companies are captives of their customers as it relates to the demand curve that they place on them. We often receive promotion offers to order by . . . which are designed to improve the linear flow of revenue for the company. In other instances, companies do not apply sufficient planning(forecasting)/control to the manufacturing process which can result in a hockey stick flow of revenue at the end of the month. This can be particularly true for build to order products versus those that are more commodity oriented. Insufficient order backlog can also produced a non-linear revenue flow as manufacturing will produce products for potential orders that do not arrive until late in the month placing extreme demands on operations as they do final assembly, configuration and test to ship by the end of the month.

Why is linear flow necessary and valuable to the financial performance of the company?

Revenue Linearity Example: Ideally if you have a monthly revenue budget set at $1.2M and there are 20 working days in the month then a linear flow would be to deliver to finish goods and ship $60K per working day.

This example assumes that there are sufficient orders and customer approved ship dates to ship available inventory each day at a $60K rate. This linear flow allows the collection process to begin earlier than if the bulk of the $1.2M is shipped the last week of the month. Also, inventories and work-in-process can be optimized to support a $60K/day flow instead of a large "burp" the last week of the month (in some cases this could occur over a few days).

By the end of the first month or by the 15th of the next or second month a good portion of the cash from the first part of the month would be received or on its way. A non-liner flow would push many receivables out into the third month putting pressure on working capital and credit lines.

The graphic below highlights the difference in collection is a linear and non-linear revenue pattern. In the Linear example the first collections are on their way by the middle of next month and would continue to increase as the each receivable aged. In the non-Linear example we see a substantial portion of the receivables delayed and additional 15 days or more depending upon the severity of the non-linearity. The cash is delayed but demands for cash regular wages, utilities, inventory for the current month revenue still exist and would have to be paid by reserves or a draw on the credit line.

When build-to-order products are involved the scheduling and production performance are critical to produce the linear flow. Lean manufacturing methods have improved the ability of manufacturing operations to meet scheduled delivery dates that also support linear revenue flow.

In the case of Polycom above, it improved revenue linearity along with strong working capital management and produced an attractive positive operating cash flow.

What is your linear revenue strategy? Are you taking advantage of revenue linearity to improve cash flow in your company?

Cash Flow Planning and Profits

Cash Flow Planning is something that many companies do not integrate with the normal budgeting and profit forecast process. For some companies this is not a serious problem in a "normal" economy as they have sufficient cash reserves or credit line that can absorb the normal ebbs and flows of cash demands of the company. In todays economy where cash reserves have been depleted or credit lines tightened or "lost" raises a new demand for "accurate" cash flow planning.

If I make a profit then whats the big deal about cash flow? Profits on most company financials do not represent cash but a sale that is a liability on the customer to pay at some time in the future. Until the customer pays the company uses working capital to pay for inventory, employee wages, heat, lights and other expenses. It is the management of customer payments and company obligations that results in either positive or negative cash flow.

Isn't it just a matter of making sure receivables are greater than payables - right? This would be a simplistic view of managing cash flow as this attitude would most likely not recognize factors that influence the changes in Days Sales Outstanding (DSO) or balancing non-uniform demands for cash such as new products, tax payments. capital expenditures or debt reduction.

DSO is a measure of the number of days that a company takes to collect revenue after a sale has been made. Why would DSO vary?

1. Products that have quality issues and do not operate properly will cause payments to be delayed until the products perform.
2. The customer mix changes where the majority of customers paying in 45 days days may transition to customers who push payments out to 60 days - or more.
3. Customer cash flow problems can filter down to you where they may delay payments to improve their own cash flow situation.

So if I do a good job on collections cash flow can be managed? Managing the inflow of cash is important but it is also critical that you look what expense and asset strategies you are using in the company. Such as:

1. Carrying inventory that is not being used consumes cash making it unavailable for other purposes such as paying wages, lease payments, etc. Excess inventory can even result in lost cash if the inventory becomes absolute and is written off - thrown away.
2. Capital expenditures such as equipment or buildings consume cash prior to getting a return on the investment. Timing of investing in capital expenditures can put positive cash flow at risk.
3. Factory cost or the cost of goods sold - labor and material - will put pressure on cash if productivity and quality objectives are not kept to insure that a dollar of sales will yield a predictable gross margin. Loss of control in labor cost, productivity, quality or material cost can create products that cost more than expected and/ or delivered later that expected resulting in a cash flow crisis.
4. Vendor financial stability can become a problem where they may need to tighten their collection policies which may require you to pay early if there are not otters sources for the same product or service that will let you pay on the same schedule you have planned into your cash flow plan.

Summary

Good cash flow management is not an accident. Intentional action is required on a regular basis to make sure that all of the factors that support your cash flow plan are in order. Cash is king - but you have to take a proactive role with your organization to make sure you achieve your cash flow objectives. Integrated cash flow planning is essential. Developing cash models of your business will help you and your team understand the sensitivity of your specific business model to factors that can cripple or impede good cash flow management.

Are you Managing or Leading?

I am passionate about the four key elements that I feel are critical to running a successful company. These elements are Leadership, Process, Metrics and Organized Financials. The cornerstone of this four-step methodology is Leadership. Do not use confuse this with the term "management" or "managing". Leadership involves inspiring others with a clear vision of how things can be done better. Those who manage tend to implement someone else's vision or what they believe is the "corporate" vision and normally slow things down by limiting what their part of the organization can do to just what has been asked or expected - to play it safe and no more.

Leaders work between the lines and interact with their organization to test their vision and assumptions by getting feedback from those who actually work in the operations they are responsible for. Taking the time to understand what is holding people back from higher levels of job satisfaction and job performance. Leaders try to find out how the employee can be unleashed to higher levels of performance than they thought possible and then get out of the way. This is true for individual contributors and those in intermediate supervision positions as well.

Too often artificial ceilings trap employee performance because of misunderstandings, poor vision implementation and access to the facts that drive the business. The Leader looks for this condition and gets to the bottom of the problem. Few people intentionally perform poorly when provided with reasonable training, equipment, work environment and motivation. The leader is conscious of the whole picture and looks beyond the traditional boundaries to see that his business (or department) is successful and that their employees are excited about what they are doing and are onboard with the direction of the business.

Have you trapped yourself into a "manager" mindset? Are you excited about your business? Are you transferring that excitement to others in your business? Can you recognize that excitement in those who produce your products or deliver your services. Take a fresh look at your business, take a new look at your business plan (even better - develop one), identify what is necessary to energize not just your key people but all employees. Become a facilitator and less a controller. Celebrate the independent accomplishments of employees and supervision when they do well and lift the performance of the team(s).

Be a leader!

WWDD: What Would Deming Do?

"No one has to change. Survival is optional." W. Edwards Deming

Several lifetimes ago (1983) I attended a 3.5 day seminar in San Diego and joined over 300 people from various manufacturing and service companies to listen to W. Edwards Deming. Deming is attributed to be the father of the evolution of manufacturing in the use of statistical methods to manage business processes and the attitude of continuous improvement.

We all sat at narrow tables in a large ballroom with Deming on a raised dais. We were equipped with a full 3" binder that contained a Xeroxed volume containing his many lessons on how to apply statistical methods to solve business problems and improve product performance. Deming was not a gifted speaker but his stories and anecdotes were riveting and despite the size of the group few people left early.

Deming did carry a chip on his shoulder since he had not, by then, received recognition in America for what he had done in Japan. Others, American based statisticians, were claiming ownership of the movement but it was clear that Deming had fostered a miraculous change in post-war Japanese industry that resulted in significant inroads in American markets with lower cost and higher quality products. In the early 80's it was clear that American companies were waking up to what they had to do to just catch up let alone get back in the lead.

What Would Deming Do Today? American industries have gone a long ways in implementing the the following Deming philosophy into their business.

Deming would evoke disbelief in his management seminars when he insisted that 94 percent or more of all problems, defective goods or services came from the system, not from a careless worker or a defective machine. He would go on to say that to improve an organization’s goods or services, the system had to be improved rather than searching for the guilty worker or broken equipment.

In almost all cases, when top managers implemented his ideas, they were surprised to find that they agreed with him: The management and the system they were managing were the true source of both problems and improvements.

However, in today's economy we find an increasing presence of government in business in terms of regulation, company ownership and increasingly complex taxation and fee structures. What role should government take in adopting the Deming philosophy as it becomes inextricably involved with the ability of business to operate in the free-enterprise marketplace. Can government, a body that sees some form of leadership change every two years, plagued by lack of accountability, has many political appointees that are not carefully recruited and placed because of their ability to perform in their jobs, has extreme difficulty in managing itself (post office, budget deficits, perks) let alone managing profit based organizations?

Successful adoption of the Deming principles begins at the top of the organization. It requires a constancy of purpose, breaking barriers between functions, driving out fear as the common denominator for change or performance, elimination of slogans, exhortations and targets and a solid understanding of the processes that they are managing. This is a tall order for a government process that consistently demonstrates an inability to be accountable to its citizens and other stakeholders for the management of basic services.

What would Deming do? He would get government out of the business of managing business.

Sailing with Martin: A Management Example

I recently had the pleasure of sailing in a sail boat race on Puget Sound at the invitation of Martin who runs a local high tech manufacturing company. It was a beautiful fall day with sun and plenty of wind for sailing. As a precaution I dressed for rain - the normal weather for this time of year. The boat was 42' long so it easily accommodated the onboard crew of 5. To be competitive in a race, the crew has to efficiently respond to changing conditions such as weather, water (current, depth, tide), proximity to other "vessels" and to effectively execute ship board maneuvers necessary to keep the boat tuned (trimmed) to the optimize its sailing characteristics.

Martin, who has extensive competitive sailing experience, was the captain. Sailing is a passion for Martin and the boat is his love. What makes Martin different from other experienced sailors is his ability to manage the multiple activities of processing the external factors affecting the boat - wind, current, etc. - and the onboard operations - steering, lines, sails, etc. and then effectively communicate what he needs to his "experienced" crew to perform. Of course this is all done in a foreign language that relies upon unusual words: leeward, sheets and stays, spar, weather, tack, jibe, luff, halyard, helm, guy, pinch, reach, backstay, about - to name a few key words. It is one thing to watch "Master and Commander" on TV and hear these terms and watch others understand what to do but another when you hear them thrown at you assuming you know what to do when the boat is under way, healed over, rail in the water, and everyone is moving fast toward their assigned job. As a novice I found myself often saying "Huh?"

Martin is in his element when the boat is under sail. He is constantly checking the trim of the boat to optimize its speed under the current heading. Is the mainsail right, could the foresail be tighter, is the helmsman falling off the wind or pinching too much, are the lines set for the next planned maneuver, what is happening to the boats ahead and what does that suggest will happen to him, what is the current depth, how fast is the current adding to or taking away hull speed, are we on course for the next turn? Martin is constantly in motion "managing" the boat to be as successful as possible under the prevailing conditions. His boat is not the youngest in the race and does not have a lot of the hot-technology equipment that many of the other boats have but Martin makes up for reasonable handicaps using his sailing savvy and tenacious sailing skills to be competitive.

How does this experience apply to business management? The similarities with running a business are striking. We are constantly buffeted by either known or unknown market factors that can affect your ability to navigate your business through uncertain business conditions. While you cannot control the unknowns you can address the "knowns" of your business to improve your ability to "weather" the storm successfully. In order to do your job well you find a way to constantly get a "bearing" on where you are in terms of your sales pipeline, your ability to keep your operations "trimmed" to operate at optimum profitability, how effectively you are communicating within your organization so that all know what to do and when to do it, be aware of market conditions and familiar with how the rest of the market is performing and what changes you need to make to perform better.

I have known Martin for many years and while I do not have a detail knowledge of his business management skills I do know that his industry has undergone stress and he has successfully "navigated" his company through troubled waters to profitable performance. I am sure his sailing talents are at work in his business office.

There is a lot we can learn by observing others in personal pursuits such as sailing and how we can apply those lessons or impressions to our business practices. While there may be obvious differences between businesses and industries it is amazing how common the skills and strategies are to managing successfully.

Are You Average or Good?

"The average organization when someone asks when you want something, they pull out a calendar, but in a good organization, they look at their watch and we really got to get that way." General Stanley McChrystal, US Army

Many of us will never confronted with the challenges of General McChrystal managing the war in Afghanistan where procrastination and delays in taking action could be measured in lives lost. However, as business leaders we are engaged in battles that are fought by our organizations each day. Successful outcomes of major or minor engagements is often a function of the sense of urgency that key people apply to each situation. We have all heard the proverb "For want of a nail, . . ." where permitting a small undesirable situation will allow a gradual and inexorable worsening that in business results in lost business, margin erosion, lower profits, marginal quality, etc.

What is the answer?

As the leader of your organization you are responsible for setting the example and leading the way. Here are some questions that you should try answering which will indicate how effective you are in promoting and modeling a sense of urgency in your organization.

• When something needs to be done do you search for your calendar or look at your watch.
• Do you put off until tomorrow decisions and actions that could be completed today?
• How hard do you fight throughout the day to make sure you make your commitments or re-prioritize as soon as it becomes obvious that a targeted task can not be completed, set a new date and communicate the change to those involved?
• Are you able to transfer the excitement that you feel for your work to those around you so that they become individually motivated like you?
• Do you publicly recognize those who are demonstrating a sense of urgency in their individual jobs or as teams of people?

Summary

Urgency as an end all is not the answer. Working is a highly urgent mode for too long can create stress and lead to job dissatisfaction. Too many urgencies is an indication of a fundamental problem in the organization that needs to be addressed.

The key lies in knowing when and how to respond to demanding conditions accordingly. Hopefully putting the right people in key positions, providing adequate training and operating procedures and support infrastructure will help everyone work effectively. An organization that adopts an "urgent" profile by doing the above, leader included, will find it meeting or exceeding customer expectations on a regular basis.

Apple Support: A Life Saver

I recently did a no-no on my quad processor Mac Pro that I spent weeks adding software and configuring. I will not bore you with the details leading to the incident or complexity of the mess that I created. To say the least I thought all was lost. I looked toward a discussion forum that in the past had provided good advice and direction in dealing with much smaller issues. But this time no cigar!

I happened to notice a new feature on the Apple Support page which promised that you could speak to an expert. My first impression was how much that would cost but I was desperate by this time as deadlines were beginning to press in on me. I clicked on the link and within a few pages, which collected information on my circumstances, I was at a button which said that talking to an expert was just one click away and that they would call me in one minute - right! I was game. I had not been asked for my first born yet (she is now 36 and a lawyer so they would have had a real problem) so I clicked . . . and in approximately one minute my phone rang. An auto dialer then asked me to wait while it connected me and I expected to then enjoy the traditional, too loud, music typical of support calls. Seconds later I was talking to a very competent and professional technical guy who handled the knowledge of what I had done to my machine in a non-condescending manner. Between the two of us (more him than me) my machine was brought back to life. I was able to discover that I had not completely shot myself in the foot and I was able to get back to 99% of where I was before my incident.

I still have some cleanup to do but it looks like the overall integrity of the machine is sound, I thanked the professional voice profusely and my day improved dramatically.

Thanks Apple Support!

My Android Adventure

I recently took the impulsive plunge and bought the new myTouch 3G phone from T-Mobile. The phone uses the Android operating system from Google and drew me in with the attractive touch screen interface. I was a long term Blackberry Pearl user and wanted to move from the small keypad to a touch screen keyboard where there is just one letter per key and enjoy the speed of the 3G environment.

While I was anxiously waiting to use the new phone my 1,200 contacts had to be moved to the new SIM card from the Blackberry. This turned out to be nearly a 30 minute process and later I discovered only moved contact content if there was a phone number or notes. Only the name was moved if the contact on my Blackberry SIM had just an e-mail address which amounted to a third of the contacts.

I mistakenly assumed that the phone specific USB cable would allow me to have a PC-to-phone update link. This impression was created by the store sales person who had a “you can do anything with this phone” response to my questions and my previous Blackberry experience where the update was just a download away. Fortunately Android discussion boards resulted my downloading a product that linked to the phone through the Google cloud which may be a “policy” problem for many business account users. I was able to quickly synchronize tasks and calendar but failed for three days to master the “magical sauce” to configure the sync program to talk to Google. Most of the delay was 24 hour turnaround on e-mail tech support. After the third day I was able to talk to someone and quickly solved the problem which could have been solved by a better prompt process in their Settings form.

I did locate a company that offered a USB PC-to-phone sync process which I preferred but all attempts to download the demo, e-mail tech support and contact US phone numbers (the company was in the UK) went unanswered. Amazing!!

One feature of the synch process was the merging of Outlook Notes into the myTouch Contact list. While you could filter the Contact list to just show Contacts with phone numbers it was difficult to work with the notes when you needed to edit them. All carriage returns had been removed compressing all of the data into a contiguous list. A note editor with detail search function would have been a better solution.

Despite other setup issues I was “functional” – phone connection, receiving e-mail, viewing web pages, etc. As I used the phone I noticed some peculiarities with e-mail. The Blackberry would download and retain an image of the e-mail that was in the e-mail server that my PC had not removed. With myTouch you only got to see an image of the message and if the PC downloaded it (clearing the InBox) the InBox on the phone was also cleared. This took some getting use to.

As I used it more I noticed that it would report new messages but when I opened the InBox the same messages that I had read previously were still there without any new entries. I was able to test the e-mail use over a three day weekend (my PC was turned off) and noticed that the InBox only showed mail for the current day even though I had a list of mail from the previous day on the server. Interestingly enough the Trash folder had all of the mail that I had deleted over all three days – but no way to dump it and clear the folder out.

I added another e-mail app from the Market Apps folder called k-9 which was referred to me by the T-mobile Android support as something to try. I added it but had similar problems to the standard e-mail application. In addition, the response time of the phone went from 2 – 3 seconds to unlock the phone and get to the desktop to upwards of 10 seconds or more which was also true when trying to switch from one app to another. This was an unacceptable delay.

I noticed that the new phone had substantial connectivity issues compared to my Blackberry in the same calling areas. I was dropping calls everywhere where I was used to solid connectivity. Connectivity was also an issue in wifi mode. I setup the wifi connectivity to my in home router but could only connect when I was in the room with the router. Other phones with wifi have been able to connect when they are anywhere in the house.

Was there anything good about the phone? Yes! The 3G was impressive. Web pages came up fast (after I removed the new e-mail app) and in landscape mode formatted nicely. The only glitch was the absence of a Flash player so you just had white space where the Flash files would be on the web page. Video is limited with the standard phone. I played some youTube but I could not run video from MSN.com but then I did not seek any apps that might provide that utility.

The Google voice search funstion was impressive. This feature was very helpful when driving to find addresses that I could then select the address and see appear on the GPS mapping system. There were a few searches where the full interpretation could not be made and that might be more me than the app. The camera took great pictures and presented well on the display.

You have 14 days to return the phone. After the 8th day I was mixed in my attitude toward the phone primarily due to the limited e-mail features and the recurring problems. On the morning of the 10th day I went to use the e-mail system and it would not load e-mail that I knew was on the server. When I looked closely the e-mail address of the site was corrupted. This happened the week before but I thought it was something that I had done. This time there had not been any contact with the unit. It was working the previous evening and left alone until the next morning. I corrected the corrupted address and then the app said it was in a Force Close mode and to Close It. When I tried to re-open the app the same thing occurred. I contacted tech support and they recommended a reset of the unit which meant starting over configuring the unit. Sorry, No Sale!

Unfortunately this unit is not ready for my level of use or expectations. I will be returning it on day 11. I hope they work out the issues with this phone. There was a lot that I liked but I could not live with the poor functionality and uncertainty in reliability that I absolutely had to have operate at a high level. Hopefully they will have this worked out in six months and I can try it again.

Are You Roadkill?

A recent article by Joseph White, Senior Editor , The Wall Street Journal, titled “How Detroit’s Automakers Went from Kings of the Road to Roadkill” caught my eye. In his article Mr. White points out a number of issues that led GM into the “bankruptcy” condition it now finds itself and compounded further by government ownership. What amazed me is that over the last 30 years GM had two early warning events that illustrated their “distance” from the needs of the market and unwillingness to change caused their fall from auto leadership.

The first example was ignoring presentations from one of its own executives, Alex Mair, that detailed methods that their off-shore competitors were using to produce lighter, more fuel efficient and less costly cars. He compared a GM connecting rod with one from Japan. The GM connecting rod needed costly post forging operations to make it fit into the GM product resulting in inconsistent balancing of the weight of the piston and rod assembly. By contrast the Japanese rod came out of the forge properly balanced and ready to install without further labor operations resulting in a consistently balanced assembly. His point was that if you design in the installation and performance objectives into the process a lighter, consistently built, fuel efficient and lower cost product could be produced.

The other example is even more illustrative of the executive mind set at GM. Jim Harbour warned GM executive management early of the Japanese challenge to their domination. He showed them how the Japanese were able to use fewer hours (not just cheaper labor) to build and assemble their cars. In addition to using fewer labor hours they were able to produce a comparable volume of cars on a factory footprint half the size (labor force and physical plant) of a GM plant. GM’s President at the time responded by barring Jim Harbour from company property.

The remarkable lesson from this example, besides the NIH (Not Invented Here) mind set of GM executive management, is that the GM process was out of line with the needs of the customer. Japanese cars at the time were not just cheaper because the workers were paid less but due to a more effective process were able to ultimately move their production to the US, use American workers to produce a more cost effective and competitive car.

Is your process cost effective? Have you designed in inefficiencies and living with unnecessary non-value add operations that extend the time to produce, deliver and ultimately produces a product that has more cost (and lower profit margin) than it should?

Know your process – is it a strategic and competitive asset contributing to your bottom line!

Managing Business Crisis: The New “Normal”

The ’09 recession economy has rippled change through almost every commercial market. Customer confidence is shattered, consumption habits have radically changed, credit is tight or non-existent and anxiety on the job or at home is at an all time high. Owners and managers are in the thick of this melee trying to find firm ground to operate from. Business conditions are not like they normally were in good times and the question is where is the new “Normal”?

Many of today’s managers have not experienced a strong contraction in the economy or were not in mid-level management to experience the last major contraction, which, depending upon your industry, may have been the early 90’ or mid 80’s or back into the 70’s. Consequently many of the norms that were developed during growth or stable times do not necessarily apply in a contraction economy.

Growth and business success often allow companies to perpetuate and survive despite major weaknesses in their business model which become significant obstacles in a contraction economy. I have observed in many companies the following business “sins” that become critical in a contracting economy:

• Stable or growing business volume creates slack that covers up or absorb inefficiencies.
• Consistent business volume disguises lost opportunities or disgruntled customers experiencing poor customer service.
• Processing cycles (quotes, orders, change notices, project reviews, financial and operating performance reviews, etc.) were not monitored or optimized due to busyness.
• Granular accounting of product and Line of Business (LOB) profit performance was not developed as there was adequate profit to meet shareholder expectations.
• ROI of investments are not analyzed or tracked to understand the impact on the company’s ability to invest wisely.
• Cash flow and line of credit (LOC) were not taken seriously as there was always a way out of a tight cash situation.

Consequently what worked in a good or stable economy becomes very chaotic in an economy with a continuously contracting economy. What worked before fails to provide the confidence and corrective action that was effective in the past. Ultimately owners and managers turn from denial to the reality of “How do I manage this business crisis?” and find the new “Normal” that will allow their business to survive?
The answer lies in facing and dealing with reality and getting familiar with how their businesses are operating on a detail level. You cannot take for granted what worked before in good times will also work in to today’s economy. Everything method or practice should be questioned.

The business needs to have a sharp focus that is inline with the current needs of the business. Top management is responsible for setting and maintaining this focus. The effectiveness of a sharp focus is dependant upon accurate and timely information on how the business is operating. Reporting cycles, for example, need to be improved:

• For Executive management from weeks (or monthly) every week or daily.
• Middle management from weekly to daily.
• For line people from weekly and daily to daily and hourly.

Faster and shorter cycles looking at critical business metrics bring the good and bad to your desk keeping you in close contact with successes and short comings. Taking action sooner rather than later to a short coming will allow the business to avoid an incident of some type that reaching the bottom line or affecting the experience of the customer.

Metrics designed to report and measure the effectiveness of the business model will provide early warning indicators on where the next problem will occur. Instituting a conscious process of monitoring the business at this level will make people at all levels aware of the areas that need to be watched and attended to at their level for the business to operate effectively.

As the senior leader you are responsible for the attitude toward adopting this level of granularity in monitoring the business. You will need to be visible and available to provide encouragement and where necessary instruction on why this level of attention to detail is important.

Employees who are going above the mark in responding and solving issues that ultimately serve customer needs should be publicly recognized and complimented for their action, initiative and meeting or exceeding their goals. The new organizational climate will create tension and interpersonal friction will occur where you (or your lower level managers) will need to intervene in a constructive manner before team work performance is affected.

This new management climate is like putting on a new pair of new shoes. They are initially uncomfortable! But this is where your need to be to make sure your organization is positioned to succeed on any given day. Is it where you were – most likely not. You are now more accessible to your organization. Your presence will allow you to check performance on a much tighter loop than before and where necessary be able to provide corrective action in a timely manner.

You are now operating in your new “Normal”!