Radical Approach – Know thy Customer

One of my mentors told a Client (a manufacturer of drills) that

“People don‘t want your product.”

The president of this large manufacturing firm looked shocked but my mentor continued,

“Your Customers are not interested in drills with more bells and whistles.
They are in the business of making holes – and they want help with 2 things:

1) Making more holes in less time and
2) Making good quality holes

end of story.”

With these words of advice the manufacturer changed his entire marketing approach and for the following 5 years achieved sales records never seen in that industry before.

Think about it for a moment…
What do your Customers really want?
What specific benefit can you provide them with both today and in the future?
What are you waiting for?

Test Test & Track Track

If you are trying to start an online business but there isn’t really much money around to invest – read this article because I have gone through this cycle several times since launching my first online business in 1996. There’s so much you can learn about eBusiness before you have to spend money. And that should be great news for anyone trying to start up their e-business.

Hey, there are plenty of resources available to you when money is more important than your time. Oh, don’t worry – there will come a time in your eBiz career where your time will become more important than your money, but until it does, take advantage of the free-lunch education that’s available.

These are the salad days.. there’s plenty of free info out there.. sifting through it to find the diamonds among the other rocks is the time based challenge on your 18hr workday clock.

OK, so you want to make money online.

You know, I’m pretty fortunate. Over the past 12+ years that I’ve been running my online business, I’ve built a component to my business that allows me to get fast feedback. When I open a store, start a web site, create a new product or even write a newsletter, I can start to evaluate its effectiveness, sometimes in just a few minutes.

Having talked to thousands of other eCommerce store owners, webmasters, and Internet marketers, I can tell you that lack of feedback is why most folks fail.

Here’s the owner’s mindset of 90% of Internet business failures:

1) They are irrationally afraid of making a single mistake.

This might be the single biggest factor in a new Internet business false-start. Even though a new eBusiness owner has great information, a great eEducation, and desire to succeed, they are usually so afraid of committing an un-recoverable mistake that they don’t do anything.

Here’s a tip – there is no such thing as an un-recoverable mistake.

2) They execute their business plan backwards.

They spend time looking at technological solutions instead of market opportunities. I get more emails from people asking me what the best shopping cart solution, merchant account service, CMS or automatic search engine optimization tool is than any other correspondence.

Here’s my one and only answer for the new eBusiness owner:

Use services that require the LEAST amount of maintenance. Use the service that allows you to concentrate on selling your products. In other words, use the service that allows you to set up quickly, easily, and then forget about it.

These kinds of services are only a means to an end!

What counts is marketing your product.

3) If they can’t find the perfect product to sell, they don’t sell anything.

To that mindset, I have a few questions… If you’re new to eCommerce, how would you know, beyond the shadow of a doubt, what the perfect product is? More importantly, what sort of evidence do you have that a product isn’t going to sell?

Sure, there are 4 ways that you can research a product’s potential in the marketplace, but the only way to move out of the research phase and into the proof-of-concept phase is to actually try to sell the product online.

Bottom Line? You’ve got to try it before you know if it works.

4) If they don’t have instant success, they throw in the towel and declare their venture a failure.

Let’s put an end to this mindset, shall we?

Most of the time, your first effort at an eBusiness is going to be mediocre. That’s just a fact and it applies to everyone!

I mean, the first time you swung a golf club, tennis racquet or even the first time you rode a bike, did you do it like a pro?

Not likely.

How about your first day on the job? Did they train you first, or did they just put you in charge of a major project and say, “Do this perfectly or you’re fired”?

Probably not.

So, why would anyone think that they can “get a hole in one” their first time out?

A very few do, but most don’t. The ones that haul off and create a successful eBusiness their first time out do it because they bring with them all kinds of other business testing and feedback experience.

A friend of mine runs the marketing department of a very cool technology company. They’ve had a marketing campaign going for the last few months that costs their company about $100,000. That campaign has not broken even yet, but they’re declaring it a smashing success. In fact, they knew that it was going to lose money during its first 5 months. But because they’ve been actively seeking and tracking feedback, they know that it’ll pay off in the medium-term.

Here’s my point to all of this.

You need feedback and constant input from your business and your industry in order to determine how successful your business can be.

Here’s a few examples in practical terms:

1) Lack of sales does not indicate failure! – What if you don’t have any traffic? How can you tell if your site is converting visitors to sales or not?

2) Lack of conversion does not indicate a poor product choice! If you’re getting traffic and no sales, it’s a sales copy issue, a lack of credibility issue (does your web site look professional?) or a price issue.

3) Lack of traffic does not indicate a failure! Do you know how to get it? Have you educated yourself? Have you tested different traffic-generating methods?

And lastly, do you test?

You must test. You must track your test results. You need to test everything!

Different pictures

Different sales copy

Different on-page search engine optimization

Different off-page search engine optimization

Different price points

Different guarantees

Different web designs

Different headlines

And track it all.

If you get 100 visitors and one sale, and you do that consistently, change one thing about your web site and track the results of that change for a week.

Are your results better or worse? If they’re better, make a note of the change, and then change another! If the results are worse, change it back, make a note and then change another!

Feedback. You see – it’s all about what the marketplace tells you.

You can track visitors to sales, to page views, to abandoned shopping carts, to an email newsletter open rate, to everything!

And guess what? That’s the only way to know for sure what you’re doing is going to work.

Proof of concept is only valid when matched with empirical data.

Feedback – it tells you what’s working, and why.

So, test, test test and keep a log of what worked and what did not.

You also need to keep informed about the changing marketplace. And in most cases, you can do this without spending any money.

If you need some help along the way, drop us an email and we’ll do our best to set you back on track to making a living online.

Your Best Year Ever?

How to make 2008 your best year ever

Q: What Were Your Greatest Accomplishments In 2007?

Even if 2007 was the worst year of your life, odds are if you look close enough there’s something somewhere to be proud of.
If 2007 was a great year for you, then this question is even easier.
Here are a three business ones from my list this year:

Restructuring 2 firms, one Swiss and one international
Building 14 brand new websites and refreshing 10 existing ones
Selling $2m worth of products online
Raising 6 million EUR for one of my Clients

Now, if you were to see my notes you’d see several takeaways under each of these. You should do the same.
So, after you’ve identified each and every accomplishment, go back to each one. This time through identify what you learned or were reminded of by each of them.

Q: What Were Your Biggest Disappointments Of 2007?

Practically every company and individual resists analyzing their mistakes. That’s a shame because this is where the best learning comes from.
No matter how great everything in life is going – we all make mistakes. The trick here is to really analyze them, what preceded them, what could you have done differently, and how can you prevent them in the future.
Even though 2007 was the best year of my life so far – I still had my share of disappointments both personally and professionally.
I won’t bore you with the details but once you have your list – once again, identify the big takeaways.

Q: How Did You Limit Yourself Last Year and How Can You Stop?

Were there certain actions you took or didn’t take that came back to haunt you? If you’re even the least bit honest with yourself you’ll be able to build your list.
In order to make sure you don’t limit yourself again – you need to bring these self-defeating actions to the surface, shine light on them, and most importantly determine what you must do differently to make sure you don’t make the same mistakes all over again.
Here are just a few of mine…

Not reviewing my goals & priorities each day
I didn’t stick to a daily sleep & fitness schedule
I counted on people that were not able to deliver

Of course, just like you did with the earlier questions, identify the takeaways.
For example, one of the big takeaways for myself (even though I know better) is when I don’t review my goals daily I get sucked into what’s currently happening and easily get distracted from what’s most important. That caused me to miss the mark on a few goals I had set out for myself in 2007. I now know I won’t make the same mistake this year. What about you? In what ways did you limit yourself and what can you learn from it?

Q: What Did You Learn from the Last Three Questions?

This is where it all gets interesting. Remember the goal of this exercise is not simply to know yourself and your business better but to actually to use the information to make certain 2008 trumps 2007.
What are the big takeaways from answering the first 3 questions. What do you know about yourself or your business that you didn’t realize or weren’t thinking about?
Here’s are two random nuggets (from my complete list of 44) I got out of the exercise…
Helping entrepreneurs and their businesses grow consistently gives me my greatest feeling of accomplishment. Therefore I need to spend time daily on creating and improving tools and materials and not let the fast growth of my business pull me too far away from what I do best.

Generating income online is key to our business success and I need to reserve time each week to keep current on the best performing strategies so that I don’t get lured in to buying the tactic of the month.
You should shoot for as many distinctions as possible because it’s here that the rubber meets the road. It’s these distinctions that’ll practically guarantee that this year is the best year of your life.
Obviously, having this list isn’t going to do it all. You still need to take this new knowledge and then put it to good use. Fortunately, that’s what the last question is about…

Q: How Can You Use This Information to Make 2008 even better?

The idea here is to build in to your schedule, your interactions, your management style or whatever else you’ve surfaced in question 4 and build yourself a new better approach.
For example, I’ve already scheduled into my daily routine 2 hours a day of content creation, and 10 minutes every morning to review my goals.
Plus, I’ve already slotted on my calendar a weekly 20 minute appointment with myself to relax and then analyze whatever concerns I have.
Of course, I have a lot more – but you get the point. Besides, it’s not important what I am going to do to make 2008 great – it’s what you are going to do yourself to make 2008 great.
So, once again the questions are:

Q: What Were Your Greatest Accomplishments In 2007?

Q: What Were Your Biggest Disappointments Of 2007?

Q: How Did You Limit Yourself Last Year and How Can You Stop?

Q: What Did You Learn from the Last Three Questions?

Q: How Can I Use This Information to Make 2008 My Best Year?

Eternal Data Preservation – is it possible?

I was making my monthly backup recently when it occurred to me that long term data storage does not yet really exist. Can you believe it? There is currently no well known technological means of digitally storing data for a few hundred years. I decided to dive in and investigate and here is what I discovered.

First of all, sorting out personal needs from corporate and governmental requirements I found out that the term ‘long term data storage’ currently refers to a period of 20 to 30 years in a ‘controlled environment’. What is a ‘controlled environment’? Well, this phrase refers to the absence of ultra violet rays (basically sunlight) and heat – both of which decrease the lifespan of current data storage media. It is hard to believe that an industry has come to the conclusion that 30 years is ‘long term’ but setting that aside, let’s address personal data storage alternatives first. There are CD-R discs and CD-RW discs available as well as DVD-R, DVD+R and DVD+RW options in most electronics stores today. If you want to store your data for a few years, do not rely on RW discs – they are suitable for temporary storage or data transfer purposes only. Technically speaking, the coating is volatile and will not last more than a few years.

Next, let’s explore the coatings used on CDs and DVDs. As I put these words onto digital paper, the most durable of the CD-R coatings is Phthalocyanine. When combined with gold reflective layers and stored in a cool, dry, dark environment, experts tell us that the data ‘should last’ up to 100 years on these discs. Reality however, is that no one has been able to confirm the manufacturer’s claims given than CD and DVD technology has only been available to the masses for the past 20 years (one fifth of the claimed lifespan). The other issue is that CD and DVD readers / writers are constantly changing and also improving by increasing data storage capacity and improving read / write tasks keeping pace with Moore’s law. Thus, the conclusion is that although you may be able (under ideal conditions) to maintain integrity of some discs for up to 100 years, the chances are good that there will not be a reader available for those discs 50 years from now. Storage is apparently one thing and data retrieval an entirely different beast.

On the corporate and government fronts, DVDs and CDs are not only too expensive to archive data but also too difficult to handle given their current capacity limitations. Tape systems have worked in these environments for decades but, tape is a medium designed for 5 to 10 years at the most before the data is no longer retrievable. The other issue is quantity or volume of data that needs to be stored for more than 20 years. Imagine the vast libraries of books that are being converted into digital format, add to this collection another library of artwork and photos that are only available digitally and quintuple that amount of data with a library of films, movies and documentaries and you quickly become overwhelmed with the task faced by people with the responsibility of preserving history for future generations to appreciate.

The facts are fairly straight forward, hard drives are mechanical and will fail in under 5 years with a probability better than 70%, top quality compact discs can last 15-20 years before the coatings, dyes or composite materials will begin to break down and disintegrate.

What can we use to preserve our digital assets for eternity before it’s too late?

One possibility, Microfiche. If this is an option, it would be a case of back to the future IMHO. The basics are that data as we know it today would be printed on the microfiche using a color laser. The Microfiche could be stored for hundreds of years in a fraction of space required by other media and, when needed, the Microfiche could be scanned back into a PC using the then current scanners which would likely be much better than today’s resolution thus delivering a technology independent method of long term data archiving.

I wonder what companies would be the first to order if such a machine were to exist?

Personalities

There are four basic personality types. In order for a company to succeed in today’s global business environment, each of these personality types needs to be integrated into as many teams as possible to provide balance and, in many cases an important competitive edge. The key is having the right tools and mindset in order to accurately identify each trait and then know how to position the various types in the organization so they have the best chance of achieving success and interacting well with their managers and co-workers.

THE LEADER – THE “A” TYPE PERSONALITY

“A” type personalities are the ones that are always “looking for a better way” or building a “better mouse trap”. They have an entrepreneurial streak and don’t mind taking risk in order to receive the rewards that can go along with it.

The “A” personality is usually very independent, direct and to the point. They will probably tell you to “get to the bottom line” or give them the “executive summary” to read. They don’t like routine and often delegate routine chores to someone else.

The “A” Personality enjoys change, and one of their biggest fears is falling into a routine. They are very focused on what they are doing and are almost always relatively insensitive to others that might be around them. If they tell somebody something, or explain it, they’ll say it ONCE and expect that everybody listening understood because they’re ready to move on.

“A” type personalities are often found as business owners, managers, sales people (especially straight commission), or any position requiring a very “direct” person that typically “takes charge” and forges ahead. They are very decisive and persistent in getting what they want and need.

THE SOCIALIZER – “B” TYPE PERSONALITY

The “B” type loves to party, travel and be part of groups, and is often the center of attention. They love excitement and are often impatient and demanding as a result of being a “high energy” type. They love the limelight and the “hype” and often do very well in sales, advertising, marketing, public speaking, party planning, travel and other positions where they can have a “good time” while working.

The “B” personality is as Supportive of others as they are direct in their approach. Most people enjoy being around them or watching or listening to them “perform”. Many radio and TV personalities, actors and high-profile speakers are often “B” personalities. It is very important for the “B” personality to be liked by others and can be easily hurt if they think someone doesn’t care for them. They may take it very personally.

A “B” type believes that the world revolves around them… they can be a bit narcissistic and often think things like: “It’s all about me” “Aren’t I great?” This type often does well in sales as they tend to be very talkative and outgoing with people and are normally quite persuasive.

THE INFORMATION HOUND – “C” TYPE PERSONALITY

If you want to picture a typical “C” type personality, think of your accountant, an engineer or a computer programmer or analyst. The “C” thrives on details, accuracy and takes just about everything seriously. They are usually very neat, dress fashionably and are very calculated and precise in just about everything they do.

The “C” doesn’t like “hype”, rather, they want facts… information from which they can verify the details and make a decision. They are very consistent in everything they do because everything has an order or procedure; thus they can be predictable at times and often very dependable, however, don’t expect them to make a decision when YOU want it, as it will only come after THEY have checked all the facts and are satisfied that everything is correct.

They are deep, thoughtful and usually very sensitive. They enjoy know how and why things are the way they are rather than taking anything at face value. They often make good customer service people and sales people, especially if the product to support or sell is something “technical” or involves numbers. They are loyal and patient and can leave customers with a good feeling that they’re somebody that really cares. However, managers may need to make sure they don’t spend TOO much time with details if the objective or expected outcome doesn’t warrant the investment of their time and expertise.
ALWAYS THERE WHEN YOU NEED THEM

THE “D” TYPE PERSONALITY

The typical “D” personality doesn’t like change, preferring instead, to have a set of guidelines from which to follow and they won’t mind doing the same thing over and over. They are usually more motivated by security and benefits and are likely to get the “gold watch” if the company can provide the security they seek.

“D” types are very supportive of others and are often the type that others turn to when they have a problem. Their compassion level is usually quite high and often seem very happy and content with themselves and life in general. They are usually punctual, and consistent. They add “balance” and support in the workplace and may be the champion of the “under dog”.

OPPOSITES

The highest potential for personality clashes is when opposites are working with each other or one working for another in a business environment.
“A” and “D” personalities are opposite of each other. The “A” likes change, is impatient and a risk-taker. The “D” dislikes changes, is very patient and thinks the “A” is crazy for taking so many risks preferring instead to be very steady and seek the security of knowing what you have and what you can count on.

The “B” and “C” personalities are opposites as well. The “B” loves the glamour and the hype, the “C” insists on knowing if there is any “substance” behind it all. Where the “B” can be messy, the “C” is neat and orderly and doesn’t thing “by the book”. The “B” is Extroverted, the “C” is Introverted.

Opposite personalities can also compliment one another if each tries to understand the other’s perspective. Perhaps this is why opposites often marry and lead a very full life, since each makes up for the other’s weaknesses and each brings important characteristics into the relationship.

However, opposites can be a bad thing too, especially if undetected, and not properly managed in the work environment. We have seen many examples where a client will call us complaining of turnover in the sales department, for example. They need a better way to “assess” sales people because the ones they hire never seem to last long enough.

After assessing their sales staff, we’re sometimes surprised to find that their personalities should be very good for the job they are doing, but when we look into their manager or supervisor, we find that they are being managed by an Opposite Personality who expects them to do things in a way that is incompatible with the sales people’s personality!

An example you’ll see us use often is Oscar Madison and Felix Unger from the TV show, “The Odd Couple”. It isn’t hard to imagine the friendly, outgoing “B” type Oscar being a top sales person. He makes friends and builds relationships wherever he goes and seems to do the work of 2 or 3 other people.

If the neat, precise “C” type Felix is his manager and is always demanding that every blank on every sales report is filled out, neatly and on-time every time, it isn’t surprising to see that this won’t work out for long. Nothing is “wrong” with either person, they just need to have more insight into each other’s personalities and find reasonable middle ground from which to work. However, if the manager is inflexible and demands perfection in everything they do, it isn’t surprising to see a lot of turnover in the people that would work for him, especially if the ideal candidate for the sales job was a “B” personality.

Almost everyone has been in this position at one time or another. Even though two people may have opposite personalities, we also have a factor called “adaptability” in human nature, and when presented with a better understanding of what is needed, especially in understanding other people, many can adapt and the results are often almost immediately positive. I wonder how many issues could be resolved with just a few minutes of thinking and a few seconds of adaptation.

Grow or Die

There is much to be said about the plethora of business models but rather than bore you with details of things that simply don’t work or concepts that have become outdated in the online world of today, I thought I’d present a viewpoint based on innovation and direction.

Each firm we deal with has two possible outcomes in addition to stagnation – to grow or to die. It all depends on the choices made by executive management and their board. Some have said innovate or die but the truth is that innovation in and of itself is not a viable business strategy that delivers profits and thus an opportunity for growth.

I refer to innovation in the sense that you are trying to do something new without reinventing the wheel. When I use the term direction, I am referring to the executive management’s intention decision to move the company toward a specific goal – in a given direction. A dear colleague has provided me with a few graphics so that I don’t have to type 1000 words to present this concept.

Let’s begin with a definition so that you know where I am coming from…
A business model describes the value an organization offers to various Customers and portrays the capabilities and partners required for creating, marketing and delivering this value in addition to relationship capital with the goal of generalizing profitable and sustainable revenue streams. Whew, that is a mouthful! Here is a more visual representation of that text…

So, given that you have your infrastructure in place, a compelling offer with a solid value proposition, a relationship with your Customers either directly or via a partner and a mechanism ready to capture orders and convert them to revenue… you are in business. But is your model optimized for what you want to achieve? Obviously, application infrastructure and IT systems need to support the model on the back end.

But, what about direction? What course was plotted by those in command? There are a few directions to choose from, and at least one will make sense to executives wanting to grow their business – but in what direction might they want to grow? Here is a simple graphic to help understanding the available options.

In each of the four quadrants below there is an opportunity for growth. Each has an unique way to move the company forward so that the business model supports rather than hinders growth. By being innovative in your approach and testing what works on a consistent and frequent basis, you will be able to optimize your model for your market more effectively than 95% of your competitors.

Take a moment and think about the variables that drive your business – for a car it would be the gas pedal. The more pressure you put on the gas pedal, the faster your car is going to travel. You use a speedometer to measure this in your car so how do you measure success in your business? Well, for starters you need to select a variable that drives your business and find a way to measure the performance delta so that you know if putting pressure on this variable delivers a positive outcome or not.

At BoxOnline we have extensive experience in improving online business models and can literally guarantee that your company will increase revenues after you improve your conversion rates.

Most business process consulting firms make promises that they simply can not keep and still manage to invoice their Clients each month for unfulfilled objectives. At BoxOnline, one of our value propositions for helping our Clients increase online revenues is a success driven fee. If you do not succeed – neither do we.

If you need to grow your revenues and agree that an increase in your conversion rate might deliver the results that your board is after, we may be able to provide you with some innovative input that has already delivered results to hundreds of successful online businesses in the past year. What have you got to lose? Contact us right now..

Are you an Entrepreneur?

There is a lot of discussion these days about what defines a true entrepreneur and whether financial success is a pre-requisite of being an entrepreneur. Well, rather than argue moot points, let’s look at this from a practical, self evaluation perspective and see what is revealed. Below I compare and contrast being a freelancer with being an entrepreneur – I can’t wait to read your comments:

1. A freelancer is about the work. An entrepreneur is about the business…
2. A freelancer is a doer. A freelancer knows the tactics. An entrepreneur is a negotiator, a visionary and a thinker. An entrepreneur builds strategy and is constantly testing it.
3. A freelancer thinks the work is the business. An enterpreneur knows the business supports the work.
4. A freelancer is disinterested in ‘business controls and necessities’  – including thinking, budgets, invoices, business plans etc. which all get in the way of the ‘real’ work. An entrepreneur understands that without those ‘business controls and necessities’, it is simply not a business – it’s a job.
5. A freelancer might want to grow a Client base. An entrepreneur knows a business either grows or decays, and is constantly looking for ways to keep the growth managed and within reasonable risk parameters.
6. A freelancer lives in the now with an eye to long term Client relationships that might afford some security. An entreprenuer is looking to a vision of the business, now is a reflection of what the business will be.
7. A freelancer often doesn’t invest in his or her own equipment, training, or help. Many freelancers don’t delegate low-level skills or tasks that they don’t do well, because they think in terms of cost rather than investment and best use of time and resources. An entrepreneur knows that time is money, invests in future development and the business vision. An entrepreneur will pay for skills that he or she doesn’t have knowing that it is money well spent on quality and commitment.
8. A freelancer works from day to day. An entrepreneur has a business plan.

VCs.. arrGH!

Many venture capitalists expect entrepreneurs to go out on a limb for them – climbing high while vigilantly sawing away at a supporting branch.

When Clients ask what exactly is needed for funding, I can provide some very interesting answers based on my 20+ years of experience… Here are some of my personal favorites:

An impeccable board of directors
It may not be the first issue you are faced with but this is one of the really important ones. Your board of directors needs to be comprised of a broad spectrum of very skilled individuals experienced in the industry of your company. The venture capitalist firms all look for a strong board and that means a board that brings in money (read Sales), investors and strategic relationships – all the important things you need as an early stage company.

A winning team
You may have a great idea, but if you don’t have a strong core team, investors aren’t going to be willing to bet on your company. Think of this as an analogy to a horse race. Betting on horse races equates to betting on high-tech. Betting on a race is equivalent to betting on the industry your company is in. Betting on a horse is like betting on your company to succeed and betting on a jockey is what a VC is after. VCs want to bet on winners that have proven their abilities before. The team surrounding the jockey is also key but don’t get too caught up in having everyone on board before chasing funds. You don’t need to have a complete, world-class, all-gaps-filled team. But the founders have to have the credibility to launch the company and attract the world-class talent needed to fill in the gaps. The lone entrepreneur, even with all the passion in the world, is never enough. If you haven’t been able to convince at least one other person to drink the lemonade, investors certainly won’t. One other thing… If the founders do not have skin in the game, don’t expect others to invest their savings. To be convincing, founders need to go out on a limb, risk their personal savings, sell their car or get a second mortgage on their home to indicate that they too have risked all to make this company a success.

A compelling idea
“Every entrepreneur believes his or her idea is compelling. The reality is that very few business plans present ideas that are unique. It is very common for investors to see multiple versions of the same idea over the course of a few months, and
then again after a few years. What makes an idea compelling to an investor is that it reflects a deep understanding of a big problem or opportunity, and offers an elegant solution.”

The market opportunity
You should be targeting a sector that is not already crowded, where there is a significant problem that needs to be solved, or an opportunity that has not been exploited, and where your solution will create substantial value. Contrary to popular belief, it’s not about how big the market is; it’s about how much value you can create.

The technology
VCs ask – What makes your technology so great?
The correct answer is, ‘There are plenty of Customers with plenty of money that want to buy it’.
If you have a technological advantage today, how are you going to sustain that advantage in the future? Patents alone won’t do it. You better have the talent or the partners to assure investors that you will stay ahead of the curve.

Competitive Advantage
Every interesting business has real competition. Competition is not just about direct competitors. It includes alternatives, ‘good enough’ solutions, and the status quo. You need to convince investors that you have advantages that address all these issues, and that you can sustain these advantages over several years.

Financial projections
Your projections demonstrate that you understand the economics of your business. They should tell your story in numbers – what drives your growth, what drives your profit, and how your company will evolve over the next 5 years.

Validation
Is there any evidence that your solution will be purchased by your target Customers? Do you have an advisory board of credible industry experts? Do you have a co-development partner within the industry? Do you have Customers or Beta users to whom investors can speak? Do you already have paying customers? The more credibility and Customer traction you have, the more likely investors are going to be interested.

What I have learned is that a company needs good scores in ALL of the above areas and excellent scores in at least 3 in order to have a reasonable chance to secure funding.

Corporate Energy

Yes, this topic is a bit on the esoteric side I admit… but hear me out, there is logic and reason behind the glass. Some colleagues of mine use the following model to judge a company’s investment worthiness. I found it fascinating and have now evaluated a few hundred firms using this technique. Situations at a few companies that I previously worked with made me feel uneasy about the company and its culture but I did not know why. Today, I have a good idea what triggered my feelings and I have come to the conclusion that unless I can change things for the better, I would rather not work with such firms again. These firms were suppliers of mine as well as a few Customers. Read on and assess the technique for yourselves – I’d love to hear your thoughts.

Energy zones
An organization’s energy can be perceived as either positive (driven by enthusiasm, pride, joy or satisfaction) or negative (guided by fear, uncertainty, frustration, doubt or sorrow). Most organizations fall into one of four categories:

1) Comfort 2) Resignation 3) Aggression and 4) Passion.

Companies in the comfort zone have a high level of satisfaction but a low level of action. Thus, its employees might be very content on the one hand but they lack the vitality, alertness, motivation and emotional tension necessary for initiating bold new strategic thrusts or significant change.

Organizations in the resignation area, on the other hand, show both low and negative energy. Therefore, they are not particularly active and their employees may not identify with the company goals at all.

Businesses in the aggression area are driven by a strong, negative energy, which often expresses in an
intense internal competitive spirit and portrays in high levels of activity and alertness. Hence, unlike organizations in the resignation area, they often direct all power towards achieving company goals. The analogy here is of a ping pong match where employees hit the ball back and forth across the net either to other team members or to Customers and partners and the net result is dissatisfaction since the ball keeps coming back and there is little forward momentum as a unit. Despite progress by a few successful individuals – it is not a team effort.

Lastly, firms in the passion zone flourish and excel on their great positive energy and large amount of varying activities. Their employees feel joy and pride working in the organisation and all enthusiasm and excitement appears to be set on reaching shared organisational priorities.

Organizations in the comfort or resignation zones live in the past and have basically given up. Consequently, they are less likely to be successful, as they prefer standardised, institutionalized ways of working. They shun innovation and risk as well as suffer from conflicting priorities and a lack of
employee commitment.

Companies in the aggression or passion zones show urgency for productivity as they strive for larger-than-life goals. Their energy moreover supports them in aligning and channelling their powers and in directing them towards common goals and activities.

In short, the model suggests that high achieving organisations are full of energy. Businesses that work from a basis of passion or with passionate people for that matter, are likely to have the highest energy levels. Their work is not only driven by very positive factors but they do a lot to develop themselves and their people, too. Simply put, their cultures appear to be based on cohesion. The analogy here is of a football team (soccer for you folks in the USA) where the team has a common goal and each member knows his role within the team so that as a unit they are able to move the ball forward and achieve their goals together.

State of the Art

Over the years we have consulted a number of primary care facilities and made suggestions or at the very least, strong recommendations to help each organization increase profitability. The issue most hospitals struggle with is achieving a balance between generating a profit and providing high quality patient care. One thing is often overlooked and that relates to vendor relationships and the cost of maintaining them. Processes can be streamlined but not many hospitals have stepped up to the plate and taken account of how each vendor fits into their processes so that they actually contribute to the hospital’s profitability and efficiencies at the same time. I remember sitting with the president of a large medical products company, who said, “We’re getting very good at mowing the lawn around the tower of Piza, without ever asking why the tower is there or even why it is leaning.”

Hospital directors can increase profitability usually by more than 10% simply by initiating Customer operating partnerships with their top vendors.

– Dr. T. Box

At one point, several hospitals asked this vendor to consider becoming a prime vendor, a “master supplier” who channels supplies from a variety of sources through one warehouse into the hospital’s receiving dock with consolidated invoicing. The president assembled a small team and asked them to follow the supplies downstream from the hospital receiving dock, to the points of patient consumption in several large hospitals. The team developed a systematic channel map and noticed a very disjointed, redundant supply channel. In the first segment, the company received hospital orders, picked the supplies, packed them, shipped them to the hospital, and invoiced for them. In the second segment, the team saw the mirror image once the supplies reached the hospital: The hospital issued the orders, received the supplies, unpacked the boxes, put the supplies away in the stockroom, and paid the invoices. In a third segment, the hospital wards ordered from the stockroom and put away the supplies. The conclusion drawn was that the materials management organizations were costly, but they also found very large pockets of hidden costs in areas such as nursing. When the team looked into these findings, the hospital personnel had a difficult time accepting the actual cost. They found that the total cost of a “delivered” product at the patient’s bedside was about $5.00, contrasted with the $1.00 sales price at the hospital dock. Of the $4.00 increment, the internal hospital supply chain costs comprised about half, while the other half represented other internal factors.

A startling new perspective emerged: Over 80 percent of the business was outside the company’s traditional business definition.

The company defined the boundary of its supply chain as the hospital receiving dock, and had always assumed this business definition. New communications and computer technologies, however, had given it the capability to extend that boundary far into the Customers’ operations for their mutual benefit. The net result is that processes in the hospital were addressed to allow for less expensive delivery and more efficient use of hospital resources to help increase profitability. Without the vendor’s input, this insight into potential cost savings would not have made it into board level discussions and thus action that helped the hospital in the above example increase their bottom line by more than 14% last year. All thanks to the state of the art technology implemented by a company in the medical products supply chain. Do they sell more products to hospitals like this today? No question was the most recent response we received when we followed up with our report. If you are curious about what we recommended to the hospital board, the answer can be summed up in a single phrase: A stockless sytem. Below are a few of the immediate benefits they were able to realize.

Cost reductions. The stockless system created large cost reductions for both channel partners. The hospitals eliminated several steps in the supply chain, and greatly reduced their inventory levels. Valuable space was released, and hospital personnel were redeployed into patient care. The vendor gained large, unexpected operating benefits because the stockless system eliminated the previously erratic hospital order pattern. Moreover, the business unit was now being paid to take and process the orders that were previously processed by the company’s customer service department.

Sales increases. The company’s sales increased dramatically, even in highly-penetrated accounts. This increase was directly driven by (a) the operations-to-operations relationship that formed between the head nurses on the wards and the company ward coordinators, who were personable lead hands from the warehouse, not sales reps; and (b) a near perfect service level allowing sales reps to focus on selling new products, rather than on solving supply problems.

CEO relationships. The division president was able to establish close working relations with the CEOs of the major hospitals because The system involved large savings and major changes. Several important new joint business initiatives resulted from these dialogs.

Competitive advantage. The company developed immediate strategic advantage over its competitors, enabling it to secure the largest, most profitable accounts. This occurred because Customers became evangelists in support of the new system, they established a proven track record for performance and published it and both companies committed resources to establish operations-to-operations relationships. Once the vendor established this new way of doing business, its competitors could not easily follow. Now that is what I call state of the art.