Steve Shu on Management, Consulting, and Strategic Initiatives

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?

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The Power of Using "We" In Client-Consultant Communications

Recently I found myself in the doctor's office seeking advice on a health issue I had been having with finger & joint pain. The way these conversations played out (with me in a reverse role as a client) triggered some thoughts about client-consultant communications that I thought I'd share here.

Now as context, many services relationships with medical professionals can be viewed as similar to consultant-client relationships. For example, David Maister (professional services guru, now retired) has characterized analogous medical professional types (to consultant types) as pharmacists, nurses, brain surgeons, and psychotherapists. Key distinctions between these services delivery types are on the customer contact and customization dimensions. So by way of example, nurses and psychotherapists deliver their value to customers with heavy client contact (whereas others provide work behind the scenes). On the customization dimension, psychotherapists and brain surgeons tend to be more involved in diagnosis and customized problem solving versus the other practitioners types which use more standardized procedures to serve their customers.

So using the nomenclature above, the doctor I had seen could be categorized in the psychotherapist category (high-level of customer interaction with custom problem-solving orientation, very similar to what I do when on the other side). When we talked about the issues with my hand pain, the doctor used the "we" term extensively. "We can solve this." "Try this drug, and let's work over the next two weeks to see what we can learn about its effectiveness." "What do we know?" As a client, the approach put me into a collaborative frame for solving my problem. I found myself offering corners of my personal medical history, work habits, histories of my parents, etc. to try to get better (even if imperfect) information on the table.

The concept of using the term "we" in consulting engagements can also be very helpful for setting the tone for a collaborative consulting engagement. As an example, in some recent client meetings related to exploring business model and branding strategies, I used phrases like "we will use that information to figure out the best way to position against our competitor" or "what is our competitive advantage over competitor XYZ". The framing of these types of statements put me in a position as if I was directly part of the client's organization. I was fighting for my client as if I were the client. In turn, I felt that my posturing helped to energize the client, and we ultimately got more creative perspectives on the table. For me, a collaborative-type of positioning (while not appropriate for all engagements) goes beyond traditional empathy methods often advocated for consultants.

If you are a client, how do you like your consultants to communicate with you? If you are a consultant, what communication distances do you try to establish with clients?

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Using The "Seeding" And "Facilitating" Approach In Management Meetings And Consulting Engagements

One technique that I tend to use a lot in management meetings and consulting engagements involves the use of two slide types. The purpose of these slides is often to help the management team get aligned and make a critical decision about some set of issues.

The first slide I call the "Seeding" slide. The second slide I call the "Facilitating" slide.

The objectives of the "Seeding" slide are to articulate the general problem statement area and enable the management team to voice issues on specific areas within that vicinity. Note that in these situations, the exact problem statement may not be known or agreed upon. As such, it is often useful to research and include some frameworks or metaphors on the seeding slide that enable the management team to "warm up" and express issues from multiple perspectives.

The objectives of the "Facilitating" slide are to help the management team move forward and begin the dialogue of exploring potential solutions to the problem at hand. Is is often helpful to do some research on answers that can help seed the solution-exploration process. Research can take the form of best practices, case studies, academic solutions, etc. The meeting lead must work hard to apply their best facilitation skills on this slide - when to use open-ended questioning, when to analyze, and when to steer to closure require good judgment calls.

The pictures below are examples what "Seeding" and "Facilitating" slides might look like. The case below involves understanding and facilitating analysis of how two product development practices (within a merged software company) might be better integrated.

 

What challenges do have in facilitating management meetings and decision-making? How do you address such situations?

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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).

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What Are Your Thoughts On Hiring Two Consulting Firms At The Same Time?

In the past year I ran into a situation (mid-project in the capacity as an independent consultant) where the client was incorporating materials from my deliverables plus information from one of the major, worldwide strategy consulting firms that was also working in the same area as I was. In this case, I think it was beneficial because it is a high-stakes strategy area which requires mutiple perspectives, innovation, and cross-checking.

Yet it made me recall some other situations where other consulting firms had been used in closely-related or overlapping areas. Highlight memories include:

• Bringing in a partner consulting firm to round out industry-specific knowledge to complement our functional knowledge expertise
• Having an internal consulting group monitoring the progress of a larger, external consulting firm
• Having an adjacent room on the client site to a "competing" consulting firm
• Getting the consulting firms to work out and remove overlapping work areas by request of the CEO
• Having the consulting groups to exchange, provide feedback, and critique the other firm's deliverables and engagement progress
• Setting up the upstream consulting firm (e.g., strategy) to complement that downstream consulting firm (e.g., IT implementation)

Although there are many trends by companies to try reduce the number of suppliers (even in the professional services area), there are benefits of using multiple consultants. Some tradeoffs and considerations:

• Getting the consultants to cooperate
• Inefficiency created by overlapping work
• Benefits by factoring in best perspectives from each firm (similar to the way some of the most innovative firms use a larger network design architects to feed ideas)
• Keeping each of the consulting teams on their toes

What are your experiences and thoughts about using multiple, management consultants and/or consulting firms?

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Musings On Conducting Competitive Intelligence Ethically

Competitive intelligence (CI) is an activity done by a wide range of professionals ranging from marketers to product managers to consultants to strategic planners. Now I’ve held back for many years on posting on the subject of conducting CI ethically. I tend to be more on the conservative side, and by posting my thoughts on this subject publicly, I’ve had concerns that some clients and future employers would see me as too soft on the issue. Would a client shy away from hiring me because I was unwilling to go the “distance” to get a job done?

In spite of my concerns, I’ve decided to address the issue here. In my experience with the business world, I’ve seen the topic of ethics (in the context of CI) discussed much less frequently than I would have expected, and that should change. Here I’ll provide some examples of bread and butter methods and more infrequently used methods for conducting CI. People should feel free to comment on other methods they have used. I’ll also provide some examples of activities that I either think are questionable or outright unethical.

Here are some examples of ethical, secondary research methods for performing CI:

• Pulling annual reports and shareholder presentations on competitors from the web
• Analyzing securities and exchange commission (SEC) filings and financial statements
• Gathering marketing collateral information from trade show booths of competitors
• Obtaining industry reports from investment banks and/or financial institutions
• Reverse engineering the positioning focus of competitors from marketing collateral
• Searching through LinkedIn to analyze salesforce profiles and reverse engineer likely go-to-market methods
• Analyzing resumes of employees of competitor
• Using Google satellite to analyze geographic profile and size of competitor facilities
• Using Crunchbase or Techcrunch to analyze private companies
• Using Compete, Alexa, and other web services to analyze web traffic
• Analyzing advertising copy and positioning
• Purchasing third-party reports (e.g., Gartner, Forrester, Parks Associates) to round out research
• Looking through job postings by the company on the web

Here are some examples of ethical, primary research methods for performing CI:

• Interviewing a distributor that has experience with competitors and asking questions whether client’s proposed offer would be competitive
• Asking distributor to describe any non-confidential information that they would be comfortable sharing about either the competitor or distributor’s relationship with competitor
• Visiting retail outlets of competitor to infer go-to-market methods, assess general profile of locations, etc.
• Directly purchasing a competitor’s service or product
• Surveying salespeople within client organization to get their feedback on what they’ve run into with respect to selling against the competition
• Conducting focus groups with general customers to get their feedback on competitor’s products versus the client’s prospective offerings
• Obtaining general information by calling into a competitor’s call center

Finally, here are some examples of questionable or unethical methods of performing CI (and these topics come up somewhat frequently in my experience):

• Misrepresenting oneself as a potential customer of competitor in order to get pricing information not made generally public
• Asking a current distributor or employee of competitor to share proprietary information about competitors and violate non-disclosure agreements
• Interviewing a competitor’s employees for the sole purpose of gathering competitive information as opposed to intending to consider such people for direct hire

One problem that I see organizations run into is that they can get focused on one single issue. For example, they may say “I must know exactly how competitor XYZ is pricing”. This type of logic can be dangerous because it tends to lead to one solution. It may also tempt one to try to take unethical shortcuts. If the problem statement is reframed around “getting a better picture of whether my client’s market offer is competitive”, then this can lead to more flexible and varieties of solutions. Tools like conducting customer focus groups, surveying salespeople, etc. then become possibilities for solving the real problem at hand.

As a closing note, in a framework I alluded to in a prior post, one way to think about activities are to classify them in two dimensions: (ethical – unethical) & (legal-illegal). The other framework that I use for weighing ethical issues is to determine how I would feel if my activities were plastered all over major press outlets. Would I be embarrassed by my team’s or my personal activities? Posing that type of question is often a nice litmus test for good behavior.

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Perspectives on Facilitating a Consulting Engagement Related to Business Development and Innovation

One of the projects I have been working on recently with a partner involves helping an incumbent software vendor explore new business opportunities and facilitating strategy direction with the leadership team. The project involves research & planning with culmination of a key phase being a go/no-go and a commitment of money for development. Innovation and business development engagements can be tricky to facilitate due to the cast of characters and specific nature of innovation problems, so I wanted to share some experiences with facilitating these types of situations.

First, here are some examples on how these projects can die out (e.g., before getting funded):

• Innovation is more radical and not incremental, and the primary decision-maker needs "numbers" as a first step to prove out the case for innovation (too much analytical, left brain early on)
• The team is diverse but cannot effectively develop a set of innovative solutions that range from incremental to more innovative (on either or both dimensions of technology and end-user meaning and associations)
• If the team can develop a range of solutions, the method of managing the portfolio is ineffective or mismatched with the type of innovation area (e.g., incremental innovation areas not researched in enough detail versus radical innovation areas not given enough breathing room)
• The method for more fully developing the innovation solution does not balance (based on the type of innovation) gathering information from current end-users versus a larger, ecosystem of industry players and participants beyond end-users

So we have the following as potential backdrop: a mix of left-brains and right-brains and a diverse team that may address primarily incremental innovations but that recognizes the need for more radical, game-changing innovations. Wherein lies the risk tolerance of the leadership team, we cannot yet articulate in concrete terms. Yet the goal is to get everyone on the same page and committed.

A common method of attack that I use for facilitating these types of engagements is to work from common ground to more specific ground and from right-brain (creative) appeal to left-brain (analytical) appeal and then back to teamwork. So the storyboard presentation for getting on the same page with respect to an innovation project may be:

• Review industry trends (facilitation strategy: develop common ground)
• Get on the table the high-level, company situation (e.g., via strength, weaknesses, opportunities, threats -> SWOT matrix) (facilitation strategy: develop common ground)
• Portray the potential innovation projects on a canvas that shows the current situation versus the potential future (facilitation strategy: develop common ground, but more targeted to right-brain)
• Portray the innovation projects on a conceptual frontier of risks versus returns (e.g., like here), sort of like an investment portfolio (facilitation strategy: develop common ground with segueway to left-brain)
• Provide deeper-dive summaries (e.g., ROIs where possible or at some more numeric info if that's all that can be done) on specific projects (facilitation strategy: develop more targeted to left-brains but provide offshoot points for open discussion with right-brains)
• Provide summary on the roadmap for tying everything together, identifying unknowns and open issues, and providing governance for individual innovation projects (facilitation strategy: develop trajectory for people to start working together before passing judgment on all projects)

In a prior post, I talked about the importance of articulating and rearticulating problem statements. That principle still applies, but in many strategy projects, there's also an element of facilitating a diverse set of people that cut across left- and right-brain problems. As consultants and managers, we need to think about that aspect as well.

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Perspectives On Consultants Using Twitter

I don't often point to comments in other blogs, but Ian Brodie shares some good perspectives on consultants using Twitter (link). It is worth a read if you are a professional consultant and trying to update your perspectives on Twitter usage. I'd agree with a lot of Ian's writeup with two adds for me that Twitter allows me to 1) interact with a wide demographic of people, and 2) experiment with ideas more frequently (albeit more limited) than other social media mechanisms. There is also perceived lower risk given the transitory nature of tweets. Characterizing it from a somewhat different angle, for me Twitter is more about exploration as opposed to exploitation.