Play the game of business

Wrestle with the business challenges                                                                                   12/17/13
******************************

One of my friends said, after sensing my excitement with Jack Welch leadership principles, "perhaps you are doing hero worship". I think it goes far beyond that for me. I see Jack as an inspiring phenomenon, one of those rare people who clearly stand out of the pack and make me think deeper and with greater clarity.

Jack's extraordinary passion for business is something that must be seen to be believed. He is constantly encouraging us - his students, to become better at grappling with current business challenges every day.

Here is what I learned from Jack Welch at JWMI today.

***

Stay current in learning - Read and Live the Wall Street Journal
***************************************************

Read WSJ editorials as a learning experience.
Be aware of what companies are doing to each other.
Does it work or not ? => If you do that, you will constantly upgrade your skill base.

Marry the core principles learned in course work with fresh ideas.

Watch and learn from the CEOs from different companies.
See Leadership from different angles.

What can you learn from them ?
This is as valuable as the coursework.

What can you grab from WSJ's current insights ?

Put yourself in their situations - what would you do in this case?
Do you buy into it ?

Should Verizon have bought Vodafone and put $80B of new debt on the company?
Wrestle with these problems.

Grab life - business life - by the collar and wring out every bit of information from it - it is such fun.
Play the game of business.

***

For me, this is truly a brush with greatness
Dr DP

Best Leaders are Self Aware, Lousy ones are not

Self Awareness differentiates the best leaders from also rans, 12/9/13
*******************************************************

It is about 3 months since graduation from JWMI. One of the greatest things about Jack Welch's MBA program is the opportunity to continue learning about leadership even after graduation.

Here are some fantastic insights from Jack & Suzy Welch I picked up today.

Lousy Leadership lacks Self Awareness

1. Blowhards
************
Behavior: in-your-face, know-it-all, does not listen, deaf to ideas, bad personality
Impact: New ideas do not get heard, debated, expanded, improved; every voice not heard; deadly silence created; Dangerous

2. Too Remote
**************
Behavior: Not engaged with team; emotionally distant; delegates messy/sweaty people stuff
Impact: No passion; They cannot inspire; no followers; Dangerous

3. Jerks
********
Behavior: Nasty, Bullying, Insensitive, Abusive, Disrespectful, Finger-pointing, may deliver numbers
Impact: Does not win people's trust; Dangerous when protected from above

4. Too Nice
***********
Behavior: Says Yes to everyone; No edge - no capacity to make hard decisions; Scared - CYA
Impact: Confusing messages; hard decisions don't get made

5. No guts to differentiate
***************************
Behavior: Does not deliver candid, rigorous performance reviews; Sprinkles resources on weak businesses or dubious investment proposals
Impact: Star performers & Laggards given similar rewards;
People do not have an opportunity to grow, succeed and build a thriving enterprise
Promising growth opportunities do not get outsized infusions of cash & people they need;
Most Destructive to people

Reference
Welch & Welch, (2009). "Five Bosses You Don't Want (Or Want to Be)"
http://www.linkedin.com/today/post/article/20131209210429-86541065-four-bosses-you-don-t-want-or-want-to-be?trk=nus-cha-roll-art-title

Negotiate for win-win

Negotiation, the Jack Welch way, 10/18/13
***********************************

3 basic rules of Negotiation
**********************

(1) When Entering
***************
    look at it from the other side of the table; what is the other person's point of view ?
    look at it as if what you are presenting you are receiving - how does it look from the other side?

(2) When in it
************
    put a proposal together you are comfortable giving or taking
    offer a deal that you'd be happy taking if you are on other side and one you can live with

(3) When Exiting
**************
    be sure to make it a win-win
    never leave other person feeling they lost
    both parties should start to build a trusting relationship
    Trust is what makes negotiations work

Dr DP

It's Done

Reflections from the finish line, 9/15/13

It's done.
Just got past the finish line of the JWMI EMBA marathon.

Completed six quarters of intense learning, typically with 18 hours a day of hard work to seamlessly manage work, family responsibilities and education. I have learned much from this grueling pace and the highlights flash past my mind.

It is possible to run a business without compromising on ethics. Effective communication is about engaging people with emotional intelligence.

Mission & Values, Candor, Differentiation, Voice & Dignity are the pillars of leadership. Great leadership begins with creation of a team of the best players. The team with the best players wins. You get the behavior you reward. Both numbers and values should be factored into performance appraisals.

Strategy is about defining the big a-ha that differentiates from competition in the market, placing right people in right positions to drive like hell and improving constantly with best practices.

Great people decisions matter more to the firm than giving great speeches.The five dysfunctions of teams are pitfalls to watch for. Hiring the right people is the hardest of things to do. Expect 50%-75% success rate only.

Marketing is not just about selling products and services but knowing how to help the customer solve their problems in a superior way. Think about the value chain from a customer's point of view and where the firm is positioned.

Sometimes it all boils down to managerial economics. Right sizing the firm can be a competitive advantage.

Financial metrics are the lifeblood of the organization. Dashboard with metrics must be watched daily to lead the organization forward. Negotiations with suppliers and customers with better terms can be beneficial for cash flow.

There is a method to excel in operations management excellence. Six Sigma, Work-Out and Lean are all part of the game.

Sometimes organizations that are well led can still get stuck due to changing market conditions. When this happens, a turn around is needed. Kotter's 8-steps and Jack Welch's crisis communication should be leveraged to steer the organization to safety.

When new business ventures are started from within the firm, it must be recognized that a growth market opportunity may be much harder than simply running an established business. The best people and adequate resources should be assigned to the new venture. Entrepreneurship is about constantly coming up with new ideas to pursue, trying them out and not getting disheartened when failure occurs. Having out-sized resilience, great victories can be achieved and the world can be changed for the better.

Having a CEO mind-set is about keeping a sharp eye on changes in the market place, reacting quickly to opportunities, managing crises maturely and never losing sight of the strategy to win. Ideally, every action in the firm must bring in revenue or reduce costs. The value of the MBA is in giving the top down view of an industry or a business and preparing the student to ask the right questions.

                                                                                  ***

Sumi, my ever-present companion during this marathon, looks like a true partner, tired, having anchored the family responsibilities and given full support. I think Sumi owns 51% of this MBA degree.Without her kind disposition, this journey, a long held dream, would not have been possible.

Maanav, my one year old son, shakes his head joyfully from side to side in. This is a joyful moment we have longed for.

Janavi, my three year old daughter comes over to me and gives her trademark smile. "Won't you come play with me?", she says with her twinkling eyes and without a word.

More than ever before I see it more clearly now. Every moment of life is an opportunity to add beauty in every way, shape and form - at home, at work and with the community we live in. Great leadership education such as the one received at JWMI prepares me to do a far better job at this opportunity to serve.

may all beings of the world be happy.
Dr DP

Win with New Business Ventures & Entrepreneurship

JWI 575, NBVE, Week10, Wrap Up, 9/3/13

It is so hard to believe that we are in the last week of class. Nearly ten weeks have gone by and we have learned a great deal about starting new ventures and what it means to be entrepreneurial. 

Here is a synthesis of everything I have learned through this fantastic course. This is exactly my learning inventory that I am hauling away gainfully into the future. While I cannot say I have mastered any of these insights, I do feel I have internalized these principles very well.

1. What have you mastered about New Business Ventures and Entrepreneurship?
1. Attitude is everything.
********************
Always be open to new possibilities under any circumstance eg. even during a recession or when losing a job. Be open to learning.Not being open to learning is the reason why entrepreneurs don't scale (Hamm, 2002).

2. Essence of entrepreneurship
*************************
The essence of entrepreneurship is coming up with original ideas, launching a new product, entering a new market, improving operations in parent  company by encouraging people to think like entrepreneurs, seeing disruption before the upstarts do and staying a step ahead of a possibly disrupting competitor (JWI 575, W9L2).

3. Six stages of companies (JWI 975, W10 L1)
**************************************
1. Idea stage - A lone visionary has nothing more than some slides to pitch.
2. Start-up stage - A small founding team takes shape.
3. Develop product or service - Prototype or customers are identified.
4. Ship to customers - Early User products created in minimal quantities, leading to a small revenue.
5. Ship at scale - Revenues come in.
6. Large-scale operations - significant revenues come in and a quest for new growth begins.

4. Management styles
******************
Start-ups tend to be scrappy, improvising and constantly mutating. Mature giants have a corporate style. They are fact-based with well-understood products.

5. Spot the market opportunities
**************************
Understand the historic reasons that lead up to the current market situation. Think of a new product or service to fill the market need. Invent a solution. Encourage others to try new ideas. Initiate novel actions and own the outcomes (Kaplan & Warren, 2010).

6. Start with a big idea
*******************
Ideas spark a business. Create a product or service that is original, new , superior and compelling to customers. Interact with the environment and colleagues to collectively weave together resources and create an opportunity. Define a core purpose statement and a vision.

Think Big. Think Fast. Think Ahead
****************************
Ideas are no one's monopoly (Dhirubhai Ambani, http://www.ril.com/html/aboutus/quotes.html). To be effective, think effectually rather than causally (Sarasvathy, 2001). Use a means-driven approach rather than a goal-driven approach.

7. Have an outsized resilience
************************
Have the stamina to hear no over and over again and keep smiling.

8. Uncertainty and ambiguity are our friends
***********************************
Become comfortable with uncertainty.Improvise.

9. Create an extraordinary Team
**************************
Attract and retain bright people to chase the dream together.

10. Develop a plan by asking the right questions
****************************************
Create a value proposition so compelling that the customer will find it easy to make the buy decison (Welch & Welch, podcast W4).
Determine burn rate and start-up capital needed to fund the venture (W6L1).

11. Create unique value for the customer (JWI 575, W4L1)
***********************************************
(i) Start with the customer interest, problem and need: understand what the buyer is looking for
(ii) Know sources of value to customer: product or service; market pull or product push
(iii) Craft a unique value proposition
(iv) Understand where the firm sits in the value chain
(v) Identify a repeatable business model to capture significant value
(vi) Price it right based on: cost, demand, value, competion, profit and pricing objectives such as revenue, operations and patronage

12. Create a tight pitch
*******************
For [customer portrait] who [description of problem he or she faces], we offer [solution], which unlike [competitor/substitutions], offers [unique selling proposition].
I’m building this venture with [amazing team]. [Here’s why you would make a great collaborator.]

13. Win with disruptive technology (JWI 575, W4L2)
******************************************
Find new ways of solving customers' problems and doing business. First, find a technology that existing firms do not understand or appreciate fully yet.  Second, find a sector where the market share is not yet dominated by established firms.

14.Create a unique business model (Kaplan & Warren, 2010)
*************************************************
Rigorous business analysis must be done to cover five vital elements: Value proposition, market segment, structure of the value chain, cost structure and profit potential, competitive strategy

Analyze business model rigorously (Hamermesh et al, HBS 2002)
*****************************************************
How likely is the business to turn cash flow positive? How much time is required to ramp-up the revenue in order to turn cash flow positive? How large an investment is required to pursue the business model ? What are the critical success factors and associated risks? What is the projected revenue over time for the company? What is the gross margin?

15. Build a winning team
*********************
Early members of the team are vital to success and so it is absolutely important to put the best and the brightest people into new ventures (JWI 575, Welch, W5 video).
Essential qualities of a winning team includes sales ability, drive, humility, a knack for hiring up, domain knowledge, solid track record, formal credentials, creative skills, record of past collaborations and good instincts (JWI 575, WK5 L1).

16. Create a winning culture
************************
Elements of a winning start up culture include execution and accountability, transparency in decision making, wealth sharing, conflict resolution, work-life balance and
clear metrics of progress (JWI 575, W5 L2). It is important to keep asking the dumb questions but there is no need to micromanage every little detail
(JWI 575, David Calhoun, W5 video).

17. Choose the right legal structure for the business
******************************************
(i) Depending on the short term and long term needs of the company, pick a legal form of the business: Proprietorship, C-corp, S-corp, Partnership, LLC (Kaplan & Warren, 2010)
(ii) Nondisclosure agreements, employment agreements and stock option agreements (JWI 575, W7L1)  are key to enter into proper contracts with employees.

18. Build IP for sustainable competitive advantage and profitability
****************************************************
Develop, protect, enforce, and prosecute Intellectual Property (IP) rights. The four forms of IP protection are Trademark, Copyright, Patent and Trade Secret.
Basic questions to ask in protecting IP are: What are the IPs used in the business? What is their value (and hence level of risk)? Who owns it (could I sue or could someone sue me)? How may it be better exploited (e.g. licensing in or out of technology)? At what level do I need to insure the IP risk?

19. Sell, Sell, Sell to sustain a business
********************************
Without a sale the fanciest ideas cannot lead to a sustainable business. With strong sales, profits can be driven and sustainable businesses can be created.  "It all begins with a sale", said TJ Watson Sr, founder of IBM.

Know how to sell
**************
The basic principles of selling include persistence, prospecting, knowing not only the features of the product but also what problem the customer is trying to solve
and how the features of the product can help the customer, enthusiasm, positive attitude, refusing to hear no and working around objections, creating account maps,
following-up and asking for the order (JWI 575, W9L1). A combination of direct and indirect sales channels such as direct sales force, websites, social media, phone,
sales representatives, distributors, trade shows and viral marketing (Kaplan & Warren, 2010) should be used to reach customers and drive up sales.

20.Grow a small business (Welch, video, JWI 575, WK9)
*************************
Advantages of small startups are ownership, involvement, speed and transparency ie. no bureaucratic non-sense. Problem in start ups is an entitlement culture and some people who may no longer contribute effectively. Winners, people with passion and fire in their eyes are critical. The firm will need greater rigor in maintaining quality of the team. The firm needs a disciplined and organized manager with a focus on learning.

21. Understand the VC framework in evaluating projects (Roberts & Barley, 2004)
******************************************************
(i) Opportunity: Is the idea unique and exciting ?
(ii) Competitive Advantage:  Is there a moat to stay ahead of rivals?
(iii) Prototype: is there a working prototype?
(iv) Market size & growth potential: is the market big enough? is the sector fast growing?
(v) Customer: is there a customer willing to pay ?
(vi) Team: does founder understand the business side and the technical side of the company?
Is the interest of founder compatible with interest of the VC firm ?
(vii) What is the Risk vs Reward ? What are the technical, competitive and market risks ?

22. Understand VC motivation to pick the right investor
*******************************************
Money - is the VC looking for immediate returns or is the VC supportive of building long term value ?
Non-monetary benefits - does the VC bring domain expertise, network of connections, adult supervision, track record of success and compatible working styles ?

23. Compete to Win
****************
As CEO and GM, connect everything you do with the financial metrics that matter. Balance short term needs with future positioning.

24. Expect things to change as company grows
**************************************
Ownership evolves from sole owner to equity-owning employees, board members and investors. Board membership shifts. New product evolutions drives growth plan: Product design, labor requirements, brand awareness, customer loyalty, competitive environment, changing culture

25. Distribute decision making through management layers
***********************************************
At some point you cannot effectively manage your direct reports and will need layers of managers. When great engineers are asked to move from reporting to you, the CEO, to reporting to a lower level manager they could be alienated. Get key early employees to be on board with the way the management team must evolve.

26. Culture is a big issue
********************
Key questions to ask would be: how does it feel to work at this company? how does work get done? how do decisions get made? Rituals that worked before may not scale.

27. Drive entrepreneurship in a big company
************************************
The job of a big company is to stay agile, keep innovating, finding niches to sell in and keep growing (Welch, JWI 975, Staying Agile video). Leaders of the company should create an entrepreneurial atmosphere within the company where employees feel encouraged to pursue good ideas and take chances (Welch, JWI 975, Entrepreneurship in a Big Company video).
Leaders must never forget that they get the behavior that is rewarded. Recognizing that growing a business from ground up in a growth market could be hundred times harder than simply keeping an existing business running, leaders should place the best and brightest people for growth market assignments and give them the resources and freedom they need to get the job done.In this process, leaders should differentiate among the options they have for investment and be willing to say no to some and yes to others.
There could be a hundred other entrepreneurs working hard to destroy the business. Getting some of them to work for the company is one way to protect and grow the business. Entrepreneurs should find an enthusiastic champion among the leaders of the organization, get the right resources in advance and create an independent culture.

28. Spin off a new venture
**********************
A better balance of resources, encouragement and control may be achieved in an spin-off that is independent of the parent company. This is particularly true when a disruption can be identified that the existing company cannot properly seize upon. Ventures may evolve to a point where it's successful but no longer aligned with the parent company's focus. Making the venture thrive outside the corporate nest may be a better way forward.

30. When stuck, get a CEO from outside for help (Welch, video JWI 575, WK10)
***************************************
Only some can take a family owned company to a new development stage. Get an outside hire for the CEO. Go after real talent. Steal a star. Give authority for operating daily, strategic planning, whom to put in what job and equity - a real piece of the action to get him or her going.  Retain majority control.
If things get crazy, and the CEO proves to be a bad choice, move on and get another one. Remember that the new person's job is not to obey the founders but to save them.

31. Let Go
***********
(i) You will decide to step aside from the business you built
************************************************
There may be several reasons that trigger the exit: venture may have outgrown you; you may be an entrepreneur who likes creating new businesses; VCs and board members may take you "out for a long walk" to explain it is in company's best interest if you move on to other pursuits; there may be other compelling personal reasons.

(ii) Handle the transition, Grow Up & Make a clean break from the company.
************************************************************
Let others take over your vision. Give up your identity. Make it known that new management is in charge.

Culture may be intertwined with you as the founder. Your presence may be key for success of team. Carefully implement the transition. Move CEO to board chairman or product strategy role that fits the skills or move out of the company altogether.

Your company has reached a new level of maturity and responsibilities. Turn the page. Move on to something new and exciting.

2. What do you now understand but may want to learn more about?
I would like to know more about forums where new ideas - the next  big things - are being discussed and debated. Masschallenge.com is a great forum and I would like to learn more about such forums.

3. What questions can you now articulate about New Business Ventures and Entrepreneurship based on what you have learned in this course?
The following represents an excellent set of questions to ask about any new venture.
Ask Top10 Questions when pursuing a new idea (JWI 575, W1L1)
*****************************************************
(1) What is the big idea? what is the ability of your product or service?
What are you replacing ? Articulate clearly to capture people's imagination
(2) Who cares? Why ? How big is the problem? Tell a story. Measure and segment the markets to reach.
(3) Who is the competition ? What is the competitive landscape? Who are the rivals to watch? What move can you anticipate? How will they react?
(4) What is your product ? What makes it unique? Does it work yet ? Can you protect it?
(5) Who makes up your team ? What skills and experiences do you bring to the table? Who else do you need? What are your complementary skill sets ?
(6) How will you make money ? Of the many business models, which is right for your new venture ?
(7) Why will you succeeed ?  Map out scenarios. How will the market respond to your product ? how will you respond to meet demand ?
(8) Why you could fail ? Risk factors; how will you minimize cost of failure ?
(9) What are key milestones to validate the business? What tests along the way will you look for to test if you're on the right course and you have a winning idea ?
(10) How much money will you need and when ? Where can you get it? what are pros and cons of different sources ?

I am deeply grateful to have had this opportunity to learn in this outstanding JWMI forum. I truly do feel a change in my DNA ! Life looks a lot more exciting now.

Dr DP

CEO Training Part10 - The Grand Finale & Changes to DNA

JWI 599, Capstone, Week10 summary, 9/2/13

It is official. The leadership DNA within me has changed significantly for the better from the intense JWMI MBA adventure.

As a leader, what will I do differently because of this Capstone experience? What are the connections between my leadership behaviors/actions and the Capstone course ?
 
The Capstone course made the business leadership principles I learned throughout the JWMI MBA program come colorfully alive. Based on a 360-degree feedback, which includes a critical self-assessment as well as constructive feedback from other members of the cohort, I have better understood my unique strengths as a leader as well as my shortcomings as a General Manager. There are several things I will do differently as a result of this Capstone experience.

(1) Understand Strategy better and balance with Execution
Firstly, the core strategy needs to be clearly defined. Defining a clear and differentiated strategy must be the GM's job. The brand identity is at stake here. As Scott says, this defines "who you are" as a company. Find the big A-ha, place right people in right places, and keep improving every day with best practices gained from around the world. Once strategy is defined, stick with it and don't try to be overly influenced by tactical comparisons with competition. In the longer run this will lead to a win. A change in strategy mid-way could confuse the market.

(2) Be a Thought Leader: Go deeper into details and achieve the T Shaped leadership Profile
Secondly, my goal is to achieve a T shaped profile that balances horizontal facilitation across silo'd functions with vertical in-depth functional views. To have a pulse on the health of the organization I find it vitally important to balance the horizontal and vertical thinking. Being an "i" DiSC type person, I naturally gravitate towards the people side of things and the time I spend on horizontal activities (eg. M/V/V/S development, administrative responsibilities such as facilitating team meetings, aiding team cohesion) ends up being far greater than the time I spend working on first-hand study in developing an independent view of functions. Having such an indepedent view will prepare me to ask intelligent questions at team meetings that can serve the team in staying on track. By not concentrating adequately on the GM responsibilities such as cash flow, I let the CTC team down in this simulation.

(3) Trust but Verify
Thirdly, one of the biggest mistakes I did early on is to accept the proposals given by my team members without any skeptical questions. As Juan pointed out from Jack Welch's "what leaders do ?" list on p 63 of the Winning book, leaders should probe with questions that border on the skeptical side. If I had done my homework with the DSS and kept my eyes firmly on the 5 goals that matter, I could have caught the CTC shortage in Q2 production capability earlier. Going forward I will dissect every idea that is put forth to me to check for supporting data.

(4) Vary the leadership styles
Fourthly, I have facilitated most of the 18 CTC team meetings held to date and I have learned a few things. In a few meetings some felt being pushed and rushed. In contentious debates, I have heard this side of the team saying their views are being swept aside and not heard adequately while the other side says decisions are not being made swiftly despite a mountain of evidence.  To not alienate either side, varying the leadership style (Goleman, 2000) with individuals ahead of the meeting might help. Giving more air-time to introverts would also help. I have learned that a GM should talk less and listen more.

(5) Achieve better Work-Life balance
This quarter I felt my band-width stretched due to multiple priorities. Through better planning I can aim to improve on this front. I will take up only those jobs where I can play to win and be able to do 100% justice to the team that relies on me to lead.

Sweat is pouring down the brow from the intensity of the paces we were put through at JWMI MBA.
Touched the finish line and lingering a bit more to recap the wisdom gained.
Exhausted and exhilarated at the same time !
The marathon is over. wow.
Dr DP

Reference
Goleman, D. (2000). "Leadership that gets results. Harvard Business School Press. Retrieved from icampus.strayer.edu

CEO Training Part9 - Winning & Losing

JWI 599, Capstone, Week9 summary, 9/1/13

CTC ended up in the second place. Not a bad way to finish but the competitive spirit inside tugs at the heart.

EPC came across as a professionally managed team that connected very well with the financial metrics that mattered - Revenue, Net Income variance, Cash Flow and ROTC.

Conspicuous in the ranking was the missing fifth parameter which is positioning for the future. I thought our team did the best job on this front and it was a bummer that this got left out of the scorecard in the end.

Our team now knows what it is to win and what it means to lose. We know what turning around an ailing company entails. I, as one whom the team gave the privilege of serving in the GM role, now know where exactly I need to improve.

This is now a new battle-tested me. I am a much better leader now.
I know life will never be the same again. wow. The magic of it all, so wondrous this MBA journey.
Dr DP

Scale up the start-up, Transition to new management & Exit

JWI 575 New Business Ventures & Entrepreneurship, week10 summary, 9/2/13


The final week of NBVE is here. The very last stretch of the JWMI MBA marathon is in view. Everyone is giving their very best to push harder than ever and dash past the finish line.

1. Growing a small business (Welch, video)
****************************
Advantages of small startups
ownership, involvement
speed
transparency - no bureaucratic non-sense

Problem in start ups:
Entitlement culture, lugs (people who may no longer contribute effectively)
Need winners, people with passion, fire in their eyes
Need greater rigor in maintaining quality of the team
Need a disciplined and organized manager with a focus on learning

2.Help from the Outside (Welch & Welch, video)
***********************************************
29 year biochemist, works in small company founded by father 32 yrs ago
worry is - company could disappear altogether
would MBA help ?

Low growth company, fast growing industry.
Only some can take a family owned company to a new development stage.
MBA is the last thing you need right now.

Get an outside hire for the CEO
Go after real talent. Steal a star.
Give authority - operating daily; strategic planning; whom to put in what job, equity.
Give equity - a real piece of the action to get him going.

Let go and give up some equity.
But you still retain majority control.
If things get crazy, and the CEO proves to be a bad choice, move on and get another one.

Remember - the new person's job is not to obey the founders but to save them.

3. Stages of start up life (Week10, Lecture1)
**********************************************
Start-ups need to eventually transition from small to big business.
The team that got you success in start-up stage may not stick around. Even some of the founders may leave.

Management styles:
******************
Start-ups: Scrappy, Improvising, constantly mutating
Mature giants: Corporate, Fact-based, well-understood products

Six stages of companies
************************
1. Idea - lone visionary; slides to pitch
2. Start-up - small founding team
3. Develop product or service - Prototype or customers identified
4. Ship to customers - Early User products, minimal quantities, small revenue
5. Ship at scale - Revenues come in
6. Large-scale operations - significant revenues; quest for new growth

4. Lots of things change
*********************
(i) ownership - structure of the company, composition of BoD evolves
*********************************************************************
Ownership evolution
*******************
sole owner - no board
equity to hired employees & added board members - need to offer ownership stakes; stock options
investors - take positions on the board

Board membership shifts
************************
Initial Board members
**********************
- good at uncertainty and product refinement
- can make key introductions to early customers
- they will hold you to product development milestones
- less concerned about manufacturing at scale

Board members at maturity
*************************
- offer advise and oversight (Week7 Fin Man II)
- concerned about manufacturing and scale

4. New-Product Evolution drives growth path
******************************************
Growth of organization linked to market's adoption of new product
There are critical differences between early stage and late stage companies as technology matures
Reference:Utterback, James  (1996). Mastering the dynamics of innovation. Boston: Harvard Business Press.

(i) Product Design
******************
Varied at early stage
Incremental in late stage
eg. Refrigerators

(ii) Labor requirements
***********************
Specialized in early stage. Skilled people assemble parts by hand.
Generalized in late stage. Assembly line, off the shelf components, low-skilled workers assemble them

(iii) Brand awareness & Customer loyalty
*****************************************
Important early on (only game in town; people less concerned about your size and track record)
More important during product maturity (substitute suppliers exist; brand and customer service record matters)

(iv) Competitive environment
****************************
In a new field, the environment supports start-ups
Many small firms, companies adding their own special expressions of a new product or technology, customers experiment
As technology matures, industry settles into economic structure - oligopoly, few major players
eg. Automotive industry

5. Navigate changing culture
*****************************
Growth from scaling up will test team's skills like never before.

Culture is a big issue
***********************
- how does it feel to work at this company?
- how does work get done ?
- how do decisions get made ?
- Rituals that worked before do not scale
eg. Small company of 3 people - dinner outing with spouses and kids to celebrate a milestone builds a sense of community; close-knit culture is important
With 10,000 employees, this is not scalable
Traditions you create give away little signals and become too expensive or awkward to scale.
You will have difficulty undoing them later.

- Decision making becomes distributed
Start-up:
- people good at building products are valued more
- Everyone is in same room and can know everything about every decision
- Consensus is easier to achieve
Mature corporation:
- Consensus builders needed to manage process & complex decisions in large organizations. Such people may not always be great individual contributors
- supplement staff with people who have different skills & integrate smoothly into the organization
At some point you cannot effectively manage your direct reports and will need layers of managers.
When great engineers are asked to move from reporting to you, the CEO, to reporting to a lower level manager they could be alienated
Get key early employees to be on board with the way the management team must evolve.

6. Let Go: Transition-Moment of Truth
**************************************
There will come an emotionally charged and complicated moment for the founder.
Things will never be the same for you as the leader after this.

(i) You will decide to step aside from the business you built.
***************************************************************
- venture may have outgrown you.
- you may be an entrepreneur who likes creating new businesses
- VCs and board members may take you "out for a long walk" to explain it is in company's best interest if you move on to other pursuits.
- there may be other compelling reasons

(ii) Handle the transition, Grow Up & Make a clean break from the company.
**************************************************************************
Let others take over your vision. Give up your identity.
Make it known that new management is in charge.

Culture may be intertwined with you as the founder. Your presence may be key for success of team.
Carefully implement the transition. Move CEO to board chairman or product strategy role that fits the skills or move out of the company altogether.

Your company has reached a new level of maturity and responsibilities.
Cyanora ! Turn the page. Move on to something new and exciting.
This is also how Jack Welch handled transition from GE.

wow ! what a ride, this JWMI MBA.
DNA transforming for sure.

This is much much more than what I thought an MBA will give me.
How so lucky we are to have Jack Welch & Suzy Welch be our teachers and guiding forces.

Time to sprint faster than ever to the finish line this week
Dr DP

CEO Training Part 8 - Win with Magic of Extraordinary Team work

JWI 599 Capstone, Week9 summary, 9/1/13

OPs2 presentation went extremely well. The presentation delivery in each of our sections was excellent. I felt our team had the most "soul" and "customer focus" of all teams.

The intensity in our team is an order of magnitude above competition I truly believe. Because each of us put our heart - and yes soul - into this turn around. (Ok, I confess I did not give it all my soul. I ran at 60% of my horse power for this course since I am taking a second class, dealing with intense work- life challenges).

Together we in the CTC Inc cohort have gone through a down in Q2 and steady ups since then. We reached points where we were about to fall apart (I remember my team member Joe asking in exasperation, "where are we going with this guys? we are all over the place" back in Q2 of simulation when we suffered a major set back in sales.).

We debated endlessly about pricing (I remember my team member Roderick kicking my butt about not helping the team make a quick enough decision on pricing. I am only now getting a hang of this GM leadership thing and the team has taught me well).

We reached a point where we felt butterflies in the stomach (I remember my team member Aaron asking this week "wait a second, we don't have to change all format of the pitch in the nth hour...the ppt can remain with the same format and tweaked". What a guy ! He saved us so much trouble).

We watched in awe as our CFO Juan nailed the financials impressively (I remember him coming after us with phone calls late night each week with "hey have you thought about this..?". the guy is an amazing machine).

We gave critical 360-degree reviews that make us think deeply about what our strengths are that need to be celebrated and the weaknesses we need to address to evolve as better leaders.

It is official. My DNA has changed from this course. I have my CTC cohort to thank for the rest of my life for bringing the JWMI principles totally alive through the lively Capstone corporate turn-around simulation experience.

JWMI MBA is for me a DNA changing transformational experience. This is metamorphosis.
This is what it must feel like for a worm to turn into a butterfly and think on a whole new plane with newly-formed wings.

wow
Dr DP

It all begins with a Sale - sell, sell, sell

JWI 575, New Business Ventures & Entrepreneurship, Week9 Summary, 9/1/13

This week was all about becoming a really good salesman. As an entrepreneur I now understand I must sell myself and my ideas all the time to the stakeholders. The core principles of selling are crystal clear to me from this week's learning.

I. What does it mean to be entrepreneurial?
The essence of entrepreneurship is this: coming up with original ideas, launching a new product, entering a new market, improving operations in parent company by encouraging people to think like entrepreneurs, seeing disruption before the upstarts do and staying a step ahead of a possibly disrupting competitor (JWI 575, W9L2).

II. Ideas spark a business
When Walt Disney lost all his money to his business associate and had to start from scratch, he came up with a new idea of an adorable character - Mortimer the mouse. His wife advised him to change the name to Mickey and correctly predicted that this name would sell. And Mickey Mouse became a huge success. "It all began with a mouse", said Walt Disney and this can be seen on display on a wall at the Disney museum in Florida's Disney World.

III. Sales sustain a business
Without a sale the fanciest ideas cannot lead to a sustainable business. With strong sales, profits can be driven and sustainable businesses can be created. This week was all about how tolead with sales. "It all begins with a sale", said TJ Watson Sr, founder of IBM.

IV. Know how to sell
The basic principles of selling include persistence, prospecting, knowing not only the features of the product but also what problem the customer is trying to solve and how the features of the product can help the customer, enthusiasm, positive attitude, refusing to hear no and working around objections, creating account maps, following-up and asking for the order (JWI 575, W9L1). A combination of direct and indirect sales channels such as direct sales force, websites, social media, phone, sales representatives, distributors, trade shows and viral marketing (Kaplan & Warren, 2010) should be used to reach customers and drive up sales.

V. Drive entrepreneurship in a big company
The job of a big company is to stay agile, keep innovating, finding niches to sell in and keep growing (Welch, JWI 975, Staying Agile video). Leaders of the company should create an entrepreneurial atmosphere within the company where employees feel encouraged to pursue good ideas and take chances (Welch, JWI 975, Entrepreneurship in a Big Company video).
Leaders must never forget that they get the behavior that is rewarded. Recognizing that growing a business from ground up in a growth market could be hundred times hareder than simply keeping an existing business running, leaders should place the best and brightest people for growth market assignments and give them the resources and freedom they need to get the job done. In this process, leaders should differentiate among the options they have for investment and be willing to say no to some and yes to others.
There could be a hundred other entrepreneurs working hard to destroy the business. Getting some of them to work for the company is one way to protect and grow the business.
Entrepreneurs should find an enthusiastic champion among the leaders of the organization, get the right resources in advance and create an independent culture.

VI. Spin off a new venture
A better balance of resources, encouragement and control may be achieved in an spin-off that is independent of the parent company. This is particularly true when a disruption can be identified that the existing company cannot properly seize upon. Ventures may evolve to a point where it's successful but no longer aligned with the parent company's focus. Making the venture thrive outside the corporate nest may be a better way forward.

Another outstanding week of learning at JWMI.
Dr DP

Protect Intellectual Property - Trademark, Copyright, Patent & Trade Secrets

JWI 575 New Business Ventures & Entrepreneurship, week8 summary, 8/25/13

Intellectual Property (IP) is now the most important asset owned by a corporation as it forms the basis of sustainable competitive advantage and profitability. The way entrepreneurs handle the development, protection, enforcement, and prosecution of Intellectual Property (IP) can make or break the enterprise. 

I. Four forms of IP protection - Trademark, Copyright, Patent & Trade Secret

Original work of value can be legally protected through four forms of IP including Trademark, Copyright, Patent and Trade Secret (Kaplan & Warren, 2010). Each form of IP offers different levels of legal protection by the federal government of the United States. As protection levels for IP differ widely internationally and even from state to state within the US, specific steps should be taken to achieve the level of protection desired.    

Trademarks are used to protect the logo, symbol, short phrase, jingle and brand identity or service description (JWI 575, W8 L1). Simply by using a mark in the course of public commerce, the entrepreneur can establish a common-law right to that mark and may be considered its legal owner. The user can also file for a trademark by applying to the U.S. Patent and Trademark Office (USPTO) in Washington, D.C, by preparing an application describing the trademark and providing drawings.

Copyright protects a specific expression of an idea and is granted to words - written, spoken or performed, art, musical compositions, plays, photography, architectural designs, computer programs, titles and slogans. The author of the work owns the copyright at the moment of its creation. When work is made for hire, the copyright ownership resides with the employer. Registration can be made with the US Copyright Office (USCO) and the process can take eight to twelve months. To register, the owner must provide a declaration, apply to USCO with copies of material to deposit with Library of Congress and obtain a registration number. Copyrights need to be renewed to remain in force.

Patents grant the holder the right to exclude others from making, using, selling or offering for sale the patent invention. To qualify, the invention needs to be novel, useful and non-obvious. For the value of the patent to be realized, the patent must be exercised to yield the patent holder competitive advantages or profit. In return for disclosure and teaching the world about the invention, the entrepreneur enjoys about 20 years of exclusive rights. In addition to creating a revenue stream through royalties for licenses to use, patents help build a moat for the enterprise against new competitors.

The key steps to file a patent include idea conception, documentation of the idea, careful selection of a competent IP law firm, research about prior art and related patents, patent application with diagrams and flow charts and reception of patent approval letter. The entrepreneur should be vigilant to safeguard the rights by searching for patent infringement and prosecuting appropriately.

A Trade Secret is vital information a firm withholds from the public domain as such information is crucial for entrepreneurial success. For example, Coke's formula is a well kept trade secret.

II. How to perform searches for trademarks and copyrights

There are several ways to perform copyright searches. First, the US Copyright office maintains a searchable database (http://www.copyright.gov/records/) that can be leveraged. The Catalog of Copyright Entries is the U.S. Copyright Office’s official publication of copyright registrations and renewals, organized into categories of works. Part I includes registrations for books, pamphlets and periodicals (http://books.google.com/googlebooks/copyrightsearch.html).

For books registered before 1978, the Catalog of Copyright Entries can be manually searched. Hard copies can be found at the Copyright Office located in the Library of Congress, James Madison Memorial Building, 101 Independence Ave SE, Washington, DC 20559-6000, and at a number of different libraries throughout the U.S., including Stanford, University of Michigan and University of California.

Second, the United States Patent and Trademark Office (USPTO) offers search for patents, trademarks as well as copyrights (http://www.uspto.gov/main/profiles/acadres.htm). The trademark search database maintained by USPTO is a great resource (http://www.uspto.gov/trademarks/process/search/).

Finally, law firms that specialize in copyright and trademark searches can also be used (http://ct.wolterskluwer.com/companies-and-products/ctcorsearch/search-services). In these ways, a thorough search for copyrights and trademarks can be made.

III. Basic questions to ask in protecting IP
    What are the IPs used in the business?
    What is their value (and hence level of risk)?
    Who owns it (could I sue or could someone sue me)?
    How may it be better exploited (e.g. licensing in or out of technology)?
    At what level do I need to insure the IP risk? 

Dr DP

CEO Training Part7 - Negotiate better Payable Terms, improve Cash Flow and be a better GM

JWI 599 Capstone, Week8 summary, 8/25/13

What a surreal and awesome moment in my life ! To have an opportunity to get trained by Jack Welch, one of the greatest business leaders ever and be a small part of his enduring legacy.

I. Received blessing from Jack Welch
It was a high honor this week to discuss again with the inimitable Jack Welch and get his blessing as I prepare for graduation in two weeks. When I asked "what is the single most important thing you want us to carry forward into the future?", he replied, "Be a passionate pursuer of good ideas. Know that you have a winning formula of proven business leadership principles and you are better prepared to lead companies than many other MBAs out there. When you win, everybody wins. Be confident. As someone who finished the program in six months you are a role model. You set your mind to it and got it done". 

"To have the courage to speak my mind even if I am the only one with a point of view", said a Harvard Business School graduate I know when I asked the same question.

I ask myself and here is what I can say to myself without blinking an eye. "Win with self-confidence, authenticity, passion for business and extraordinary human relationships".

Thank you, Jack, for being such an outstanding and kind teacher.

II. Link Payment terms to boost Cash Flow

Prior to this course, I would never have thought of renegotiating payment terms with suppliers and customers as a means of improving organizational cash flow, as most people would think these terms are pretty much fixed.

While I am in general aware of the personal benefits of renegotiating payment terms (eg. mortgage re-finance, shifting to credit card with better terms and benefits), connecting this concept to protect the larger cash flow in the organization is new learning for me.

I had learned from the near-death IBM turn around experience of the 1993-1999 period that free cash flow is the single most important measure of corporate soundness and performance (Gerstner, 2002, page5). But I never appreciated it as much as I do now. This is like the difference between reading about fire and actually touching it to know its nature instantly.

IBM CEO Lou Gerstner taught us that companies like Compaq that get hooked on revenues as their main measure of performance will simply perish. Increased market share must result in a growing cash flow - that is cash flow after all expenses, not the notorious EBITDA . He also said that cash flow must be used in a wise manner, avoiding macho or bleary-eyed acquisitions, reinvesting in R&D, marketing, and other critical areas of the company. Gerstner sold off non-critical assets to shore up the balance sheet as soon as he came into IBM which was within months of running out of money for payroll.

IIb. Stretch payment terms to help cash flow

Getting favorable payment terms from suppliers as well as customers is key to protect and strengthen the cash flow in the business. Convincing suppliers to accept longer payment dates, being in a strong position to get customers to pay up earlier, and transferring inventory carrying costs to vendors outside the company  (for instance, through just in time delivery practices made famous by Toyota) are some of the ways to get favorable terms and help the CTC company.

CFO.com recommends six practices to stretch payment terms. First, the accounts payable director should be held responsible for monitoring the best terms other firms are getting in the industry and also how purchase managers are managing their payables. Second, the CFO should anchor this work and intervene if and when rogue suppliers start spreading rumors that the firm is having cash flow problems.

Third, Finance and Purchasing functions should build a close relationship and approach vendors with a common action plan. Fourth, vendors should be classified and approached differently with suitable terms.

Fifth, rigorous understanding of the financial baseline is critical to protect the overall cash flow health. Purchase terms should not only be based on pricing, but also delivery costs, vendor discounts and other allowances. Finally, executives in the firm should be paid for performance ie those whose actions contribute to cash flow health should be rewarded disproportionately.

In the short run, negotiating better payment terms can be beneficial for the company for reasons mentioned above. Particularly for firms like CTC that are in turn-around situations, getting cash flow right can make the difference between life and death of the company. The importance of cash flow is cited as paramount in the case of the fabled IBM corporate turn around that CEO Lou Gerstner engineered (Gerstner, 2002). When negotiating favorable terms, care must be taken to leave the right impression in the minds of the suppliers and customers. The actions of the company should not be interpreted as a weakness in cash flow as explained above.

In the longer run, strong cash flow enables a company to better withstand the ups and downs of the market and also give the privilege of investing in new ventures. A company that does not manage its cash flow well, and has its money tied in inventory or stuck with suppliers and customers may be unable to manage changes in the market and could perish. After all, survival is all about being the most adaptable to change.

III.Strengths & Shortcomings as a General Manager

This Capstone course to me is about connecting the dots and getting my feet wet with actually driving an organization from the top. Until I took this course, it was like learning about swimming in the business world by standing on the shore. In this course I have taken a deep dive into turbulent waters of business situations, gotten myself wet enough to appreciate the nuances, further understood my unique strengths as a leader who can bring people's best forward and more importantly gotten my butt kicked (pardon my language) with shortcomings. In the process I have learned exactly where the gaps to my skills as a general manager are. This is a giant leap in learning for me that excites me to the core. I simply cannot get this by reading countless books (which I have done) and sitting in numerous classes (been there, done that). I am very thankful to my colleagues in CTC Inc. for the wonderful opportunity to learn from their wisdom, styles and feedback.

The finish line of the MBA marathon is in sight. It has been exhausting and I have given this my very best shot. Sprinting faster than ever now.

Dr DP

CEO Training Part 6 - Riding the great depression

JWI 599 Capstone, week7 summary, 8/18/13

Team CTC had a rough DSS result this week. We left $14M in lost sales to our competition. The production was simply not on target and as the low price leader we ended up completely sold out. Our finances have suffered greatly.

Role plays this week taught us a few important lessons:
(i) Always have the courage to ask ! The worst thing you can hear is no.
(ii) Question your assumptions constantly. What held true in the past may not be true now. Challenge with data.
(iii) Fight for what you believe in. Do not let group think sway you.
(iv) Listen more than you speak. Ensure every team member is heard.
(v) Do not be conservative. Make bold decisions and take risk.
(vi) When in trouble, go back to the strategy and remain aligned.

I need to spend more time with the DSS and help the team with decision making when the debate is unending despite due deliberation. I must become intimately aware of cash flow as it is a GM responsibility.

another exhausting but also exhilarating week
Dr DP

Choose the right legal structure for the business - Proprietorship, C-corp, S-corp, Partnership, LLC

JWI 575 New Business Ventures & Entrepreneurship, Week7 summary, 8/18/13

This was another excellent week of learning again. I never really thought about the legal aspect of creating a business this deeply until now. I now understand clearly the critical importance of choosing the right legal structure at the very beginning of the venture itself.

After creating the mission, vision, values and strategy for the company, the structure of the firm should be chosen. The right legal form of the business depends on the short-term and long-term needs and goals of the firm (Kaplan & Warren, 2010). Due consideration should be given to the tax laws and cash flow needs of to arrive at the best fit for the legal structure of the company.

Additionally, legal contracts such as Non-Disclosure Agreements, Employment Agreements and Stock Option Agreements (JWI 575, W7L1) are key to enter into proper contracts with employees and create a cohesive and motivated work force. Great people decisions are vital especially in finding competent lawyers and accountants who need to stay ahead and abreast of the changes in laws. To stay on top of the legal issues and ensure compliance with state, federal and international laws a comprehensive checklist (Kaplan & Warren, 2010, pp 144-147) should be used.

Detailed takeaways below

Dr DP

Reference

Kaplan, J. & Warren, A. (2010). Patterns in Entrepreneurship Management. Third Edition. John Wiley & Sons, Inc.

JWI 575 New Business Ventures & Entrepreneurship, Week7 summary, 8/18/13

I. Choose the legal structure that fits the needs of the company

There are five legal forms of business - the best fit depends on needs of the company

Depending on the short term and long term needs of the company, five legal forms of the business can be considered namely sole proprietorship, C-corporation, S-corporation, Partnership or Limited Liability Company (LLC).

A sole proprietorship is the simplest form of business in which a single owner does business himself or herself. It is easy to set up and involves low start-up fees. The owner gets all the profits and retains total decision-making authority. However disadvantages include unlimited personal liability, limited skills and capabilities of the sole owner, limited access to capital from lending institutions and the lack of continuity for the business when the owner dies or becomes incapacitated.

The C-corporation is the most common form of business ownership and is preferable especially for early-stage companies that are looking to raise capital. The corporation in this case is a separate legal entity apart from its owners and may engage in business, issue contracts, sue and be sued, and pay taxes. Stockholders own the company, a board of directors drives the overall operation of the company, and officers such as the President, CEO and Vice Presidents manage and lead the day to day operations of the company. This form of business provides the most flexible structures for various rounds of private equity investments and venture capitalists demand this for of incorporation.

Advantages of a C-corporation form of business include limited liability of the stockholders, ability to attract capital, ability to continue indefinitely without depending on a single individual or a group of individuals, transferable ownership and a wide base of skills, expertise and knowledge of the employees, officers and the board of directors. Disadvantages of a C-corporation include cost and time involved in the incorporation process, double taxation wherein corporations are taxed on the profits while shareholders who receive dividends also pay tax, high administration and compliance costs.

The S-corporation elects to avoid corporate income tax and gets tax benefits by being a domestic company with only one class of stock which is owned by individuals and certain trusts. Shareholders pay the taxes directly and cannot be nonresident aliens and a maximum of 100 shareholders are allowed. Stringent rules are to be followed to maintain the S-corporation status and there are administrative and cost burdens as well. S-corporation may be beneficial for startup companies that anticipate net losses or highly profitable firms with substantial dividends to payout to shareholders.

A Partnership is defined an association of two or more people carrying on as co-owners of a business for profit. It is easy to establish and benefits from the complementary skills of the partners. Profits can be divided among the partners and each partner's asset base improves the ability of the business to borrow needed funds. So long as there is one general partner who will face unlimited liability, partners with limited liability can come together. As the partnership can react quickly and creatively to changing market conditions new opportunities can be swiftly seized. Like sole proprietorship, a partnership company can avoid double taxation. Consulting groups such as BCG or McKinsey are examples of parternships. Challenges with this form of business is unlimited liability for one partner, inability to attract capital, restrictions of continuity or elimination of general partnership and the potential for personality and authority conflicts.

An LLC is a blend of some of the best characteristics of corporations, partnerships and sole proprietorships. It is a separate legal entity like a corporation but it is entitled to be treated as either a sole proprietorship or a partnership for tax purposes. The owners do not assume liabilities for debt and may offer different classes of memberships and there are no restrictions on the number and types of owners. However there may be difficulties in expanding the business out of state or in transferring the ownership. Requirements may vary by state.

II. Legal contracts - NDA, EA, SOA

Nondisclosure agreements, employment agreements and stock option agreements (JWI 575, W7L1) are key to enter into proper contracts with employees. Nondisclosure agreements help to protect company secrets. Employment agreements spell out the terms under which intellectual property is developed by employees within the company and ultimately owned by the company. Such agreements also clarify grounds under which employment can be terminated. Stock options offer a great way to align the growth of a company with incentives for employees. By sharing the wealth created, a company can motivate long term commitment from its work force.

CEO Training Part5 - Right Product, Right Price, Right Timing

JWI 599 Capstone, week6 summary, 8/11/13

Delighted to see our firm CTC emerging as the market leader.

I. Leadership Dashboard
********************
Here is how we are doing versus metrics that matter:
Is the firm profitable ? Yes !
Is contribution margin (CM) on track to hit 70%-75% ? Yes !
Is the team delivering numbers and are the behaviors consistent with core values ? Yes !



But this is no time to be complacent. We had CTC meeting #10 today to go over the next decisions.

Pricing => hold; market is growing; demand is growing; we are investing in marketing and increasing quality spend

Marketing => CTC is the best in market; spend just a little bit more

People vs Machines => we have a nice balance of labor & automation => hold

Supplier => expect to be limited by raw materials for production capacity this quarter

Customer => continue to get market research and sell like hell; figure out the right price, quality and volume for the new products

Quality => invest some more to get to target level

II. New product introduction
************************

The marketplace is central to everything we do (Gerstner, 2002) in CTC. In the technology business that CTC is in, change in the marketplace is the only constant. Newer and better products built with state-of-art technologies are constantly replacing older offerings. Therefore, staying wedded to an old product is not an option for CTC. A better strategy is to anticipate the lifetime of the core product and readily introduce a new product to take its place when the demand begins to drop.

Some factors are key to the success of new product introductions.

Right product
Firstly, it must be the right product for the customer at the current time and economic conditions. CTC must constantly evaluate the market conditions and invest in Research & Development to be ready with new product introductions.

Right timing
Secondly, timing of new product introduction is critical. This is especially so in the technology industry where the competitive landscape changes all the time. A product that is ahead of its time may not find adequate customers and the firm can suffer by absorbing the development cost of tools by being the front runner. Close followers can benefit from this investment made ahead by the market leader. On the other hand, if a product comes in too late it can miss the window of opportunity and lose the investment made to create it.

Right price
Pricing affects perception of quality and also influences sales volume. Therefore price point for the new products must be set carefully. When a new product is introduced the customer will need to know exactly why they should buy it and not the core product the firm has been selling till now. The up side from the value proposition of the new product must be so clear to the customer that the decision to shift is relatively easy. The price to value ratio has to be compelling to get customers to shift the demand to the new product.

Short term and Long term implications
In the short term, developing new products will require commitment to research and development. Firms under pressure in the market and running short of funds may be tempted to cut R&D to survive a market down turn. However, successful firms do the exact inverse. They commit to innovation through R&D investment, recognizing that it represents a lifeline for the firm going into the future.
In the longer term, new products will be the ones that bring in profits to the customer.

CTC must commit to investing at least 5% of the revenues in R&D each year. This investment level must be benchmarked against spending by competition. By committing to be a market leader in innovation, CTC has a better chance to survive and thrive over the long term as a superior agent of the customer.

Dr DP

Project financials, pitch effectively to investors and select the right investor

JWI 575 New Business Ventures & Entrepreneurship, week6 summary, 8/11/13


I am grateful for another outstanding week of learning at JWMI. The lecture materials, case studies and DQ discussions continue to expand my thinking in exciting ways.

Financial projection, business pitch and investor selection
This week I learned more about the critical skills needed to succeed with entrepreneurship. I understand the importance of accurately projecting the financial needs of the firm ahead of time (JWI 575, W6L1) and attracting investors with a succinct pitch. I recognize the vital need for self-confidence in picking the right investor after taking into account the motivations of the parties concerned and the fit for the firm (JWI 575, W6L2).

Understanding and anticipating the "burn rate", the rate at which the capital will be depleted in the firm, is a critical first step. Ability to quickly communicate to the investors the unique value proposition in the business plan is the second step. The business plan must address the customer segment being targeted, the customer pain point being solved and the differentiation in products and services versus competition. Moreover, the business plan must highlight the amazing team that is collaborating and building the venture.

Finally, the investor must be selected carefully after due considerations. Some investors may be impatient and want to cash out quickly while others may be more patient and open to a longer term partnership. Beyond money, factors that venture capitalists (VCs) could bring such as domain expertise, connections to influential people and a track record of launching successful companies should be considered. Compatibility in working styles with the VCs is also crucial for successful cooperation in high pressure environments with well defined deliverables and deadlines.

These are valuable concepts that I will use in business ventures going forward. I will need to develop further my skill in pitching business ideas to investors and prospective employees and other stakeholders more effectively.

Dr DP

(I) Fund the venture (W6L1)
***************************
Determine burn rate and therefore start-up capital needed

(II) Attract the right equity investors with a tight pitch
******************************************************
For [customer portrait]
who [description of problem he or she faces],
we offer [solution],
which unlike [competitor/substitutions],
offers [unique selling proposition].
I’m building this venture with [amazing team].
[Here’s why you would make a great collaborator.]

Links to Business Pitch
************************
    http://www.masschallenge.org/
    http://www.alumni.hbs.edu/careers/pitch/
    http://www.ted.com/talks/lang/eng/david_s_rose_on_pitching_to_vcs.html
    http://faculty.babson.edu/academic/sye3/RocketPitch/Student/index.htm (Look for the link to Sample Rocket Pitches in the presentation.)

(III) Pick the right investor (W6L2)
*********************************
This is a critical partnership over a long time
Understand investor motivation: make money, derive value & satisfaction

What investor brings to the table:

(a) money
*********
aligned objectives    immediate return to investors (short term cash) OR
                      build long term value, bold bet with huge long term payout
(b) non-monetary benefits
**************************
- domain expertise
- network of connections
- Adult supervision - keep you on your toes
- larger VCs - record of successful investments; introduce to other companies in portfolio - learn from, sell to
- compatible working styles


(IV) Framework used by Venture Capitalists to evaluate projects (Roberts & Barley, 2004):
*****************************************************************************************
(i) Opportunity
Is the idea exciting, interesting and unique? What is the value proposition?
Does it attempt to offer a solution to a customer pain point? What is the big A-ha (Welch, 2005), the differentiator that hooks customers and investors alike?
What is the time window for this opportunity?

(ii) Competitive Advantage
What is the moat that keeps competitors from taking away the business?
For example, is there a new technology? In order to create a barrier, the technology has to be hard to execute.

(iii) Prototype
Is there a working prototype to demonstrate the promised solution or is this just at the idea stage?

(iv) Market size and growth potential
Is the market big enough? Is the sector fast growing?
Explosive growth makes it difficult for rivals to catch up or incumbents to respond.

(v) Customer
Is there any proven customer engagement?
Interest from a customer who is willing to pay could strengthen the business case and make it more attractive to investors (Kaplan & Warren, 2010).

(vi) Team
Does the founder understand the business side and the technical side of the company?
Is the interest of the founder compatible with the interest of the VC firm?
If the founder wants to retain control as the CEO it may restrict the ability of the VC firm to extract financial gains from the investment in a timely manner.

Are the business functions appropriately staffed by talented and the best qualified people?
Do the team members have the desired qualities such as creative skills, drive to win and humility (JWI 575, W5L1)?
Who among the team are assets to the company? Who are likely to be liabilities and need to be replaced?

(vii) Risks vs. Reward
What are the technical, competitive and market risks? Can the technology become obsolete quickly?
How many competitors exist and how are their offerings differentiated?
Do the current economic environment and the global context support the market for this business case?
Can the company run out of funds before customer adoption ? (Steve Blank, 2009)
What is the financial return projected for the investment?

(viii) Business Model
What is the price point? What is the customer acquisition strategy? What is the revenue target? 
What is the expense model? What is the cash flow needed to get to break even?

Rigorous business model analysis (Hamermesh et al, HBS 2002)
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How likely is the business to turn cash flow positive?
How much time is required to ramp-up the revenue in order to turn cash flow positive?
How large an investment is required to pursue the business model ?
What are the critical success factors and associated risks?

(ix) Financial analysis
What is the projected revenue over time for the company? What is the gross margin?

CEO Training Part4 - Role plays & Team evaluations

JWI 599 Capstone Week5 Summary, 8/4/13

At the core the problem boils down to a lag in spending for marketing and quality. The concern is competition may be outspending the CTC team. The team regrouped and corrected the course this week with strategic moves in marketing and quality. If our decisions are right we should see contribution margin stepping up nicely to 62% vs target of 70%-75%.

Through the role plays we learned how to work together with the Union and build bridges for a brighter future together. We also succeeded in getting favorable deals from suppliers. 

As the GM, I learned how to evaluate the performance of each team member by thinking critically about where they each can improve further. As every team member is performing at the highest level, this was another great week for everyone.

Dr DP

CEO Training Part 3 - OPs review

JWI 599 Capstone, week4 update

We focused on creating a power point for an Operations (Ops) review by executives. It was great fun to assemble charts from diverse points of view including general management, finance, marketing, production, R&D and Quality.

We rehearsed as a team and made 10 revisions to the ppt file. The presentation went very well and was rated by the executives as one of the best ever.

When team work is realized, great things are possible

Dr DP

Build winning teams, Create winning culture, Think like a Venture Capitalist

JWI 575, New Business Ventures & Entrepreneurship, Week5 Summary, 8/4/13

This week I learned how to build a winning team and nourish it by creating a winning culture. Early members of the team are vital to success and so it is absolutely important to put the best and the brightest people into new ventures (JWI 575, Welch, W5 video). Essential qualities of a winning team includes sales ability, drive, humility, a knack for hiring up, domain knowledge, solid track record, formal credentials, creative skills, record of past collaborations and good instincts (JWI 575, WK5 L1). Elements of a winning start up culture include execution and accountability, transparency in decision making, wealth sharing, conflict resolution, work-life balance and clear metrics of progress (JWI 575, W5 L2). It is important to keep asking the dumb questions but there is no need to micromanage every little detail (JWI 575, David Calhoun, W5 video).

The Ockham case study (Wasserman, 2004) helped to apply and reinforce the concepts learned this week to a practical business situation. Learning how venture capitalists evaluate potential opportunities (Roberts, 2004) helped me to think more like an investor and less like a technologist.

The skills learned this week will help me build superior management teams, create winning cultures and shape business plans that can win the hearts and minds of investors such as venture capitalists.

Dr DP

References
Wasserman, N (2004), Ockham Technologies: Living on the Razor’s Edge. Boston, MA: Harvard Business School Publishing. Retrieved from icampus.strayer.edu 
Roberts, M. (2004), How venture capitalists evaluate potential venture opportunities. MA: Harvard Business School Publishing. Retrieved from icampus.strayer.edu

Create unique value for customers & drive with disruptive innovation

JWI 575 New Business Ventures & Entrepreneurship, 7/28/13

I gained several pathbreaking insights from this week's learning. All of these are immediately applicable to improve my effectiveness in what I do at work where the business model is being challenged by many new disruptive forces including cloud computing, BIG DATA, mobile computing and social media.

I. Create a compelling value proposition
Jack and Suzy Welch's podcast taught me how to present value propositions - they must change the game and be transformative for the customer. The value proposition should be so compelling that the customer finds it relatively easy to make his or her decision to buy.

II. Create unique value for the customer (JWI 575, W4L1)
I learned the six key steps to create unique value for the customer:
(i) Start with the customer interest, problem and need: understand what the buyer is looking for
(ii) Know sources of value to customer: product or service; market pull or product push
(iii) Craft a unique value proposition
(iv) Understand where the firm sits in the value chain
(v) Identify a repeatable business model to capture significant value
(vi) Price it right based on: cost, demand, value, competion, profit and pricing objectives such as revenue, operations and patronage

III. Win with disruptive technology (JWI 575, W4L2)
I also learned how to look out for disruptive technologies that allow new ways of solving customers' problems and doing business. To win with a disruptive technology, I understand clearly that there are two key elements that matter: First, I need to find a technology that existing firms do not understand or appreciate fully yet. Second, I need to find a sector where the market share is not yet dominated by established firms.

IV. Leverage five elements of a business model (Kaplan & Warren, 2010)
To create a unique business model, I now understand that rigorous business analysis must be done to cover five vital elements: Value proposition, market segment, structure of the value chain, cost structure and profit potential, competitive strategy

The DQs helped us take specific firms and apply the concepts mentioned above to analyze what is special in the business models and what disruptive elements led to the success of firms. It was also wonderful to learn from the experiences of my classmates.

This has been a great learning experience for me.

Dr DP

CEO Training Part 2 - Forecasting, Virtual Teaming, Decision making

JWI 599 Capstone week3, 7/21/13

Got together with an outstanding cohort of diverse talents including general management, finance, marketing, production, HR, Quality and R&D. Elected as the General Manager of the team, I find the opportunity to serve as a coordinator a great fit for my talents. The DiSC representation in this team is well balanced. The Charter development was an outstanding experience that brought the team quickly together. Each team member is demonstrating very high level of commitment and excellence in tasks. Each meeting with this team elevates my thinking and helps me improve as a leader.

intense, challenging and exhausting in a good way
Dr DP, Chennai

Competitive Analysis - Assess, Anticipate, Compete to Win with a plan

JWI 575 New Business Ventures & Entrepreneurship, 7/21/13

This week we learned about assessing the competitive landscape, anticipating competitive moves as in a chess board game, developing a plan and competing to win.

Dr DP

Framework to evaluate new ventures - market, offering, team

JWI 575 New Business Ventures & Entrepreneurship, Week2 Summary, 7/9/13

This week we learned a framework for evaluating strong vs weak opportunities. Evaluate every promising new venture using 3 factors of success - market, offering, team.

Dr DP


I. Flying solo - A reality check (Welch, Business week 2007)
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First, Need a great idea that creates or fills a market need - the exciting product/service idea should change the market
Second, need great leadership - passion, bursting with energy

Entrepreneurship grants independence - but only after months/years of toil
New business will control your life
You may only have a customer of two in the beginning - you will need to work with their whims in the trenches, taking orders
You will be owned by the venture - you will become poorer before you get rich; torn between giving up control vs selling stock to raise money

AS the leader, you own all the outcomes, good and bad

II. Company man or Free Agent? (Welch, Business week 2007)
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Imagine your life 5, 10, 20 years out
What do you want to be ? independent contractor, company man or entrepreneur?
It all comes down to fit

Independent contractors
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Advantage for hiring companies: no benefits to be paid, no appraisals, no neuroses management, no HR/legal battles - just move on
Advantage for contracotrs: maximize earning power - work for multiple firms at once, work overtime or just as much needed, be own boss, no politics, 360 eval
Disadvantage for contractors: No insurance benefits, No vacations, No job security

Company man
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- part of something bigger: comaraderie, with a room full of co-workers working together
- identity: belonging to an organization; fulfilled rather than overwhlemed or diminished
- thrill of building something, a product, service or team
- fun of laughing, debating, sweating it out with colleagues while competing for customers and profits
- energized by prospect of leadership: rise to be managers or CEO, strategic planning, budgeting

Entrepreneurship
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- Characteristics of both independent contractors, company types
- invent something, build and belong
- risky

III. Recession is a good time to start a new business (Welch, Business week 2009)
*************************************************
New idea - Do considerably more for less
Layoffs - Plenty of Smart and Hungry people available
Humility - recognition that livelihood depends on true team work, relentless productivity
Money - available for breakthrough ideas from VCs, regional banks

IV. What's the Big Idea? (JWI 575 W2L1 )
*************************
ABSOLUTELY MUST HAVE A GREAT IDEA before you start a company.
- must be superior
- validate: others should also think it is the greatest gift to mankind

Gauge the idea: Is it a big time winner or a dud ?
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- Iterative process: You won't always know in advance; just get out there and try things
- Invest time and resources: get some early customer engagement
- Dive in, assemble a great team, be responsive to changes in the marketplace
- move forward with a solid sense that you've got enough of a big idea

Before going all out, check the basics
(1) Know the history: how did the world come to this point of need? sequence of events, stakeholders in the value chain, orgs stuck in ways, customer expectation
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(2) Know your customer:Analyze the market. Tell a story - a day in the life of one human being who is going to be happier as a result of the new big idea.
**********************            Learn all about this person and how she makes decisions.
            Tell people exactly how someone's life will change as a result of the product.
            Truly compelling big idea > simple to answer
            Sense and Respond - Read your customers' responses, quickly alter the vision to match the feedback obtained
(3) Know your competitors:  is anyone else doing it? lock on to a unique angle you bring to the solution. Market timing is key. Understand why you are in a position to win.
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(4) Know the state of art:Understand ingredients necessary for your innovation. Is it feasible to build? what elements will you rely on to build your vision ?
*************************
(5) KISS: Keep it simple. Do not try to design a product that does everything for everybody. Focus the minimal amount of special value you can deliver. Nail that. Go from there.
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(6) Who cares ? Why?:
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Customer side - who might care about what you're developing?
Business side - who is committed to working with you to keep your idea moving forward
Adapt and Adjust with guidance from stakeholders.
Sense when change is needed, keep taking steps forward.
Not the strongest or most intelligent, but the one that is most adaptable to change

V. Analyze the market & Plan the Business (JWI 575 W2L2)
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Who is going to buy this ? (everybody, it depends, not sure yet - these are weak answers)
How else are people satisfying their needs today ?
Business plan elements: who what where when why how of your potential business

(i) Size the market opportunity
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Top down - estimate consumer spending on the issue; capture 1% of the market
Bottom up - estimate how much product you might successfully sell in a month
New Product category - Look at related markets and spending habits and technology-adoption history

Look carefully at what you will be replacing
Brand new product => initial sales roughly based on existing sales of substitutes; refine response with consumer response trial offers & repeat users
Recalibrate continually
If results lower than expected, modify product to appeal to larger segment of market

Conduct market research and segment the markets (refer to marketing class)

(ii) Pick your niche
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major sea changes under way in society
educated guess about how people are changing their behaviors, which emerging technologies will profoundly affect people, what people buy and how they buy it

(iii) Know the story - learn all you can about the history of the market
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    why does the opportunity exist now
    who has come before you and tried to solve it in other ways?
    what is the source of the problems you are trying to solve ?

(iv) Identify experts
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who understands this market today ? what are they talking about it?
Who are the thought leaders ? - cite their opinions in justifying market need
Take time to listen to expert opinions on future of the market you want to enter

(v) Learn how to keep score
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which metrics will you measure to determine if the market is adopting your solution ?
eg. 40% of my customers must become repeat customers
my customer base should double within 30 days
Establish next steps to take if product becomes a runaway success or not

(vi) Know how to keep ahead of competition
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How will others respond to you ?
How will you in turn respond to them ?
Study how competitors react to the introduction of your product and whether their responses are consistent with your expectations


(vii) Pick the right market (size, dynamics)
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Total Addressable Market: current user base + industry reports, census data, analyst projections, annual reports)
Initial Target Market: Focus on the group you are most likely to succeed

(viii) Understand Market Dynamics
**********************************
What do buyers spend now ?
Who do they spend it with ?
How do they make their spending decisions?
What features are important to them?
What overall values, quirks, tastes do they have ?

(ix) What are the trends ?
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- is the market growing, how fast ?
- what makes the market grow ?
- is growth the result of overall expansion or customer switching ?
- why will people switch to your product or consider a new purchase ?
- what are product life cycles in the market and required technology investments to stay ahead of the curve?
- who has buying power in your industry's value chain ? eg. WalMart can dictate terms for price, quality, delivery schedule to manufacturers
- Do external factors influence the potential size of your market ?

(x) Look at market segments
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Geography "NorthEast customers bought 60% more heating oil in winter 1999"
Industry "Financial services firms comprise 40% of the market for supercomputers"
Type of buyer "Early adopters seeking professional edge make up 40% of the market for Blackberry"
Distribution channel "30% of customers shop at WalMart at least once a week"
Market share " Coke owns 45% of market, Pesi 40%, assorted juice drinks own 15%"