Steve Shu on Management, Consulting, and Strategic Initiatives

A Peek At The Difficulties of Incubating New Initiatives Within Large Companies

Entrepreneurial situations in large companies differ from that of startups, yet one thing that they seem to share is that they often represent "hope" in one way or another. In the case of large corporations, these new initiatives can not only turn out to be profitable "ventures" but also boost morale and reward key employees through growth opportunities. Yet many of these new initiatives have difficulty getting off the ground. Frustration is common. This post provides a peek at some of the situations, complexities, and steps to resolution that I have seen.

First, here's a picture of a common situation in a large company faced with the prospect of starting a new initiative or business line:

• Perceivably significant yet amorphous business opportunity
• No money committed / no budget
• No or limited organizational resources
• Established products and sales & marketing channels
• Mature and complex business and product approval processes.

What adds a level of complexity to the situation (and sometimes leads to insanity for those working directly within the environment) is that:

• Venture requires substantial investment to ultimately succeed
• Finance cycle of start-up opportunities (opportunity timing) does not align well with the long, finance planning cycles of large companies (sometimes can be 14+ month delays!)
• Star players in the current organization have limited availability for the new organization
• Articulating and aligning on a business opportunity requires collaboration by many functions, and these functions are separate and overloaded in the current organization
• Sales and product development processes often need to be understood at more than the surface-level.

Here are some ideas for addressing many of the above issues:

• Recognize that it's not usually possible or desirable to speed up the process by cutting corners
• Break the process into smaller pieces to get rolling
• Search for the right sponsor and core team
• Secure a portion of time for each of the star players
• Give the employees a real chance to make things work 
• Consider getting a commitment for small amount of money to get rolling
• Start to articulate what the business opportunity looks like and document it
• Consider using a facilitator that can pull the pieces together, help layout program plan, and frame strategic issues and options
• Paint the vision for the org structure and build emotional attachment to the cause
• Involve those from sales and product development that will be eager to provide input and testing grounds
• Aim for pioneer sales and business development deals with lighthouse accounts (concrete wins)
• Rinse, refine, increase committment, and repeat.

It may take a leap of faith to get things started. But the leap of faith can be smaller than the temptation of the opportunity as a whole. Sometimes the keys are to look for forward motion and to take some initial steps as opposed to wanting to knock it out of the park too soon.

Let me know your thoughts and experiences!

*********************************************************************************************************************

Please enter your email address to subscribe to updates on Steve Shu's blog. Thanks for subscribing!

The Business Plan Is Alive And Well But It May Not Be What You Think

As many times I have written a "business plan", it seems the flavor of it can vary quite substantially. I think the notion of this catches a good number of people by surprise. And why shouldn't that be the case? Many textbooks and templates seem to cover business plan outlines with relatively similar structures. My suspicion is that the perspective that gets lost in the mix is intent. The intent of a business plan affects its format and content dramatically (more than outline). For this post, I thought it would be good to share some perspectives on why the process and plan should vary.

Business plan as a process - The process of vetting ideas, getting buy-in, and achieving alignment is most important in these situations. Example situations are new business launches in larger companies (e.g., intrapreneurship). Business plans can often take the form of workshop sessions and Powerpoint documents as opposed to a traditional textual Word document. See a popular post of mine, "In Consulting The Process Is An Essential Part Of The Deliverable".

Business plan as a sales document - This situation is particularly appropriate for fund raising (e.g., angels, VCs). Key goals of the document are to establish trust with prospects, enable the investment idea to be shared via networks, and persuade people of the merits of an investment opportunity. Often need a mix of instruments here (Powerpoint & Word docs, napkin drawings, demo), depending on the team, industry, and phase of product development (e.g., technology feasibility, commercial feasibility, ramp-up).

Business plan as a hypothesis test or investigative framework - An entrepreneurial way of looking at a business plan is more as a framework or series of hypotheses tests. Questions may be: do customers really want product aspect A, do customers prefer this variation over that one, do customers perceive me as Y relative to my competitors, and will the dog eat the dog food? The business planning effort can be more organic than written and involve focus groups, customer prospect interviews, etc. But the framework process should be systematic in determining which hypotheses are true/false to prove out aspects the business over time.

Some other ways that come to mind are viewing the business plan as a communication tool, a dissertation (that must be closely inspected), debate tool, product development stage gate requirement, and RFP response requirement (e.g., for government grants).

How do you view you business planning efforts? To what extent could you benefit from new ways of thinking about them?

*********************************************************************************************************************

Please enter your email address to subscribe to updates on Steve Shu's blog. Thanks for subscribing!

Using a “Frontier Chart” to Evaluate and Plan Project Portfolio Strategy

The introduction of new product or service lines into an existing customer base is a challenge that companies often face with new business development. Sometimes the opportunities can be readily quantified using traditional financial analysis (e.g., using net present value, scenario, and waterfall buildup methods). At other times, there may be hazards of trying to quantify an opportunity too early in the process before conceptual alignment of the stakeholders. For example, people can simply get stuck "in the weeds with the numbers".

In this post, I share a method that I have sometimes found useful as a first step in framing and getting alignment among parties (especially when looking at new product development situations involving platforms upon which multiple products or product lines can be built). To be honest, I am not sure if there is a name for the type of chart I describe below, but I call it a "frontier chart" (which is derived from investment portfolio theory from finance).

The basic idea is that there are a set of lower risk projects out on the left side of the chart which have more known (potentially lower) expected returns. In contrast, projects on the right side might have higher risks but also higher, expected returns. So as an example of a project on the left side, a software company may have early customer engagements with a straightforward, add-on product that it directly developed (say a GPS mapping tool). As an example of a project on the right side, that same software company may be looking to introduce new platform capabilities such that indirect, 3rd parties can develop applications (e.g., Apple's "there's an app for that"). The later project venture is more risky, but the payoff could be larger than the former project.

A key benefit of using a frontier chart is that it can help to get buy-in on the high-level things and projects that people tend to agree with. There will be plenty of time later to put on our "propeller hats" and get bogged down in detailed numbers and execution tactics.

The ability to facilitate a company's management team to move forward is priceless, and sometimes facilitation can be more difficult when introducing new products or services (which is outside of the core, day-to-day business). Consider using frontier charts and thinking about platform strategies (the latter which may be topic for another post).

*********************************************************************************************************************

Please enter your email address to subscribe to updates on Steve Shu's blog. Thanks for subscribing!

Business Development May Be On The Upswing Careerwise, But What Is Business Development?

Earlier this year I had heard from sources at various business schools that given the recession and slower consulting and investment banking hiring, a lot of MBA graduates were looking to careers in business development. This is a great development, but in my experience the term "business development" means quite different things to different people. Here's a paraphrasing of some of the types of statements I've heard in the workplace:

• "Business development is about new customer acquisition and sales."
• "Sales personnel are divided into existing accounts and hunters. Business development looks for breakthrough, strategic sales."
• "Business development handles strategic partnerships & deals."
• "Channel sales are the primary focus of the business development team."
• "The VP of Business Development works financing, acquisition, and strategy activities."
• "Business development establishes the cross-promotional marketing deals."
• "Business development focuses on strategic initiatives (whether partnership, financing, product) identified by the Board."
• "The business development team is facilitating design of a new product with XYZ company and our development team."
• "Business development sells product to the channel."
• "Oh. You handle a mixture of finance, marketing & sales, strategy functions. You're business development."
• "Business development folks are jacks of many different trades."
• "Business development is about getting larger partners to commercialize on brand extensions that you may not be able to handle on your own."
• "The sales team does that. You want to know what business development does? We need to talk about that in my office. Come on in, and please shut the door so we can have some privacy."

There is an element of truth in all of these statements. Business development can be all of these things. It really depends on company. In my mind, however, the role of business development is to find new strategic opportunities for the company and start the company on the path to execute (incubation). It is not uncommon for business developers to have a combination of strategy, marketing & sales, finance, legal, and operations background.

Based on my experience in business development, here's the flavors I've run into (roughly from more to less common):

• Partnership development
• Strategic market development and sales
• Strategic marketing
• Mergers, acquisitions, and financing
• New business line exploration
• Channel sales
• New product development

What are your experiences with business development professionals? To what extent is it a well-defined function within your business? What types of issues have you run into?

*********************************************************************************************************************

Please enter your email address to subscribe to updates on Steve Shu's blog. Thanks for subscribing!


Powered by FeedBlitz

Musings On Winning and Losing Moves Within Startup Situations Within Larger Companies

Though anecdotal, I've seen a slight rise in activity with companies looking to incubate new businesses or start-up climates within a larger company. These are challenging situations to get off the ground. Based on a mixture of consulting to a number companies in these situations and being involved with at least one of these situations as a manager within the company, here are some thoughts on winning and losing moves:

1. Structure: Having a start-up sponsor in name or position only (losing move) - Successful, external startups have managers that will fight to win, pave new ground, work out kinks, get the best resources, etc. If the sponsor is a senior executive that provides only oversight, does not push or provide guidance, and does not empower delegates, this could be a warning sign for an effort that will not bear fruit. If you have a start-up sponsor that provides political and boundary management only, then it might be a good idea (winning move) to get a powerful delegate that answers to the sponsor and can help to "fly cover" in the organization. Situations where cover may be needed include designing new marketing material, getting special access to the sales team, breaking new ground in the legal contracts area, and getting financial budgets approved outside of normal (overly conservative) control mechanisms.
2. Strategy & Goals: Failing to clearly articulate the ultimately goal and problem statement of the startup early on (losing move) - I guess an addendum to this might be making the strategy too complicated. For example, when faced with the startup options of creating new revenue, helping cross-sell other services within the larger company, reducing customer churn, or all of the above, I would tend to advise leaning away from trying to knock down too many of these at once. All options can be on the radar and should be part of early brainstorming & strategy sessions, but viewing the startup as a standalone business may be the best option of getting traction first.
3. Core Team Makeup: Failing to bring in new blood when new blood is needed (losing move) - At risk of disrespecting both large company employees and entrepreneur-types, these groups often don't understand one another. For example, entrepreneurs-types can lack respect for large company bureaucracy, but this is dangerous because buy-in and tapping into the resources (people, structure, assets) of a large company can be tremendous. On the other hand, large company employees can become accustomed to the culture, pace, and processes of existing businesses - these may be incompatible with aspects of a new venture. Bringing in new blood for a start-up within a larger company is often a winning move, and the resources need to be different & complementary.
4. Extended Team Resources and Horse Trading: Failing to capitalize on resources of the larger entity (losing move) - If entrepreneurial types are brought into the new business, there needs to be complementary intrapreneurs (winning move) that understand the structure of the large company and can help get things like data from business units within other areas of the company, identify potential A-team resources already within the company that can help (e.g., marketing, business development, project management, finance), or tap into key channels and partners external to the company (e.g., lighthouse accounts).

There are many more winning and losing moves to create startups within larger firms. What are your experiences? Where do you see pain points?

*********************************************************************************************************************

Please enter your email address to subscribe to updates on Steve Shu's blog. Thanks for subscribing!


Powered by FeedBlitz